Mylan (MYL - Free Report) reported disappointing results for the first-quarter as earnings and sales both missed estimates.
Adjusted earnings of 96 cents per share missed the Zacks Consensus Estimate of 99 cents but was up from 93 cents in the year-ago quarter.
First-quarter revenues of $2.68 billion missed the Zacks Consensus Estimate of $2.78 billion and were down 1% from the prior-year period.
Mylan’s stock has lost 7.3% in the last six months compared with the industry’s decline of 6.0%.
Quarter in Detail
The company posts results in three segments on a geographic basis namely North America, Europe and Rest of World.
North America segment’s third-party net sales came in at $985.3 million, down 19% due to a decrease in the sales of branded products, including EpiPen Auto-Injector, the impact of the loss of exclusivity of olmesartan and olmesartan HCTZ and the prior-year divestiture of certain contract manufacturing assets.
Sales were adversely impacted due to the implementation of new accounting standards along with lower volumes, and to a lesser extent, pricing, on other existing products partially offset by new product introductions.
Third-party net sales from Europe were $1.04 billion, up 16%. This was propelled by new product introductions across the region combined with volume expansion which offset the impact of pricing on existing products. Favorable foreign currency translation positively impacted sales by 14%.
Rest of World segment’s third-party net sales of $626.7 million was up 8%, driven by new products and increased volume from the anti-retroviral franchise and higher sales in the emerging markets.
Adjusted gross margin of 52.9% was down from 53.5% in the year-ago quarter.
During the quarter, Mylan repurchased 9.8 million ordinary shares for $432.0 million completing the previously authorized share repurchase program.
2018 Outlook Reiterated
Mylan expects revenues of $11.75-$13.25 billion in 2018 while the Zacks Consensus Estimate stands at $12.45 billion. Mylan anticipates adjusted EPS of around $5.20-$5.60 in 2018 while the Zacks Consensus Estimate is pegged at $5.35.
Mylan’s first-quarter results were dismal as challenges in North America persist. The generic business in the United States continues to experience pricing pressure. Loss of exclusivity on olmesartan products also impacted sales.
Nevertheless, things are likely to look up in the long run. Mylan has already won an FDA approval for a generic version of Teva Pharmaceuticals’ (TEVA - Free Report) Copaxone 40 mg. Notably, this is the first generic of Copaxone that has been approved. Since Mylan was one of the first applicants to submit a substantially complete ANDA for glatiramer acetate Injection, 40 mg/mL containing a Paragraph IV certification, the company and other first filers may be eligible for 180 days of generic drug exclusivity. The company also received an FDA approval for a biosimilar version of Roche Holdings’ (RHHBY - Free Report) Herceptin.
Although volatility in the U.S. market is expected to persist in 2018, yet these approvals should position Mylan better in the year ahead and help combat the decline in EpiPen sales. The company has more than 30 submissions planned in 2018. The launch of generic version of Estrace cream is also underway.
Key anticipated approvals also include a biosimilar version of Neulasta with a target action date in June 2018. The company expects to launch the biosimilar in the second half assuming approval. The EMA has also accepted applications for both the biosimilars. Mylan and partner Momenta (MNTA - Free Report) will initiate a patient clinical trial of M710 — a proposed biosimilar of ophthalmology drug Eylea — in the first half of 2018.
Mylan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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