Mylan gains (MYL) hits, revenues lose estimates in the third quarter – November 6, 2018


Actions of Mylan N.V (Myl Free Report) rose 8.1% in after-market trading after the company hit gains in the third quarter. Mylan's shares have lost 25.8% so far this year, compared to the industry's 6.6% decline.

Adjusted earnings of $ 1.25 per share outperformed the Zacks Consensus Estimate at $ 1.17 and rose to $ 1.10 in the same quarter last year.

However, third-quarter revenues of $ 2.86 billion did not reach the Zacks Consensus estimate of $ 2.87 billion and fell 4 percent over the prior-year quarter.

Quarter in Detail

The company publishes the results in three segments on a geographical basis, namely North America, Europe and Rest of the World.

Net sales of the North American segment reached US $ 1.01 billion, down 14%. This decline was mainly due to lower volumes of existing products, such as the EpiPen Auto-Injector. This was partially offset by sales of new products, including the recent launch of Fulphila, a biosimilar of Neulasta. The decline in volumes was mainly driven by customers' time purchases of products, divestment of certain contract manufacturing assets, loss of product exclusivity, and shares associated with Morgantown's plant restructuring and remediation program.

The FDA completed an inspection at the Mylan plant in Morgantown, West Virginia earlier this year, and made submissions on a 483 form. Thereafter, Mylan provided a comprehensive response to the FDA. During the second quarter of 2018, Mylan initiated a restructuring and remediation program to reduce the complexity of the Morgantown plant, which led to the discontinuation and transfer of various products to other factories, a reduction in the workforce and extensive remediation activities. These actions led to a temporary interruption in the supply of certain products.

Net sales in the Europe segment were $ 1.04 billion in the quarter, an increase of $ 0.5 million, driven mainly by sales of new products and larger volumes of existing products.

Net sales of the Rest of the World segment of US $ 773.7 million were up 4%, driven by new products.

The adjusted gross margin of 55% was slightly less than 53% in the same quarter last year.

2018 Outlook Reiterated

Mylan expects total revenue for 2018 to be $ 11.25 to $ 12.25 billion. The company anticipates EPS adjusted at around $ 4.55 to $ 4.90.

Our outlet

Mylan's third-quarter results were mixed as company earnings outpaced estimates, but revenues lost the same.

Mylan proactively discontinued several products, also transferring some to other sites. This has led to a temporary disruption in the supply of certain products and reduced volumes of generic sales in North America.

However, Mylan continues to gain momentum with its biosimilar portfolio. The company has launched nearly 475 new products in the year to date in its segments, including a record number of complex generics and biosimilars. In August 2018, Mylan entered into a contract with certain subsidiaries of Novartis AG (NVS Free Report) to acquire global rights to its global cystic fibrosis products, consisting of TOBI Podhaler and TOBI. This should further expand the company's portfolio.

Mylan and partner Biocon have obtained FDA approval for Fulphila. The company previously received FDA approval for a biosimilar version of Roche Holdings & # 39; (RHHBY Free report) Herceptin.

However, the company expects approval of the generic version of GlaxoSmithKline (GSK Free report) asthma drug, Advair Diskus, Wixela. The FDA had previously issued a complete response letter (CRL) for it. However, Mylan is in discussions with the FDA regarding the progress of its review. Based on our latest agency update, the FDA is in the final stage of the label review.

However, these new approvals may not be enough to counter the persistent decline in North America.

Rating of Zacks

Mylan carries a Zacks Rank # 3 (Hold). You can see the full list of current Zacks # 1 Rank stocks (Strong Buy) here.

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