Mylan (MYL - Free Report) reported dismal results for second-quarter 2018 as earnings and sales both missed estimates. The company also lowered its guidance.
Adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.23 and were down from $1.10 reported in the year-ago quarter.
Second-quarter revenues of $2.81 billion missed the Zacks Consensus Estimate of $2.96 billion and were down 5% from the prior-year period.
Subsequently, the shares are trading down. Mylan’s stock has lost 16.5% in the year so far compared with the industry’s growth of 5.3%.
Concurrently, the company announced that the Board has formed a strategic review committee and is actively evaluating a wide range of alternatives. This will further dampen investors’ sentiments.
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 net sales came in at $1.0 billion, down 22%, primarily due to significantly lower volumes on existing products including EpiPen, partially offset by new product sales. Lower volumes were primarily driven by the timing of purchases and actions associated with the restructuring and remediation program at the Morgantown manufacturing facility including the discontinuation of a number of products and the significantly negative impact on production levels, product supply and operations. Pricing also declined slightly. Sales were negatively impacted by the implementation of new accounting standards.
Sales from Europe were $990.6 million, up 4% as new product sales offset the negative impact of pricing and volume.
Rest of World segment’s net sales of $764.1 million was up 10%, driven by new products primarily from the anti-retroviral franchise.
Adjusted gross margin of 53.3% was slightly down from 53.8% in the year-ago quarter.
2018 Outlook Lowered
Mylan updated its outlook as a result of the change in expected complex product launch and utilization assumptions and resizing of product opportunities in the United States, and the negative impact on operations of the restructuring and remediation program in Morgantown.
Mylan now expects 2018 total revenues in the range of $11.25 billion to $12.25 billion, down from the previous projection of $11.75-$13.25 billion, while the Zacks Consensus Estimate stands at $12.24 billion. Mylan anticipates adjusted EPS around $4.55-$4.90, down from the earlier estimate of $5.20-$5.60, while the Zacks Consensus Estimate is pegged at $5.28.
Mylan’s second-quarter results were dismal as challenges in North America persist prompting management to evaluate strategic alternatives.
Mylan continues to gain traction with its biosimilar portfolio. Mylan and partner Biocon obtained the FDA approval for Fulphila, a biosimilar of Neulasta. The CHMP also issues a positive opinion on the biosimilar of AbbVie’s (ABBV - Free Report) Humira. The company earlier received the FDA approval for a biosimilar version of Roche Holdings’ (RHHBY - Free Report) Herceptin.
However, these new approvals might not be enough to combat the persistent decline in North America. The company earlier suffered a setback when the FDA decided to not approve its Abbreviated New Drug Application for the generic version of GlaxoSmithKline’s (GSK - Free Report) asthma drug, Advair Diskus yet again.
Mylan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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