Mylan (MYL - Free Report) reported adjusted earnings of 90 cents per share in the first quarter of 2020, beating the Zacks Consensus Estimate of 88 cents. Also, the reported figure improved from the year-ago quarter’s 82 cents.
However, quarterly revenues of $2.62 billion missed the Zacks Consensus Estimate of $2.67 billion. Nevertheless, revenues increased 5% reportedly and 8% at constant exchange rate (“CER”) from the prior-year quarter. Overall volume growth in the reported quarter was favorably impacted by increased customer buying patterns and patient prescription trends resulting from the COVID-19 pandemic, primarily in the Europe segment.
Mylan’s stock has lost 12.6% in the year so far compared with the industry’s decline of 3.4%.
Quarter in Detail
The company posts results in three segments on a geographic basis — North America, Europe and the Rest of the World.
The North America segment’s net sales came in at $955.5 million, up 4% year over year. This increase was primarily driven by higher volumes on existing products and partially due to new product sales. The higher volumes were primarily driven by the expected growth of Yupelri and Wixela.
Net sales in the Europe segment came in at $1.02 billion, up 14% year on year. This upswing primarily resulted from higher net sales of existing products, as a result of increased volumes, and partly from new product sales. In addition to the estimated impact of COVID-19, volumes increased approximately $40.0 million due to the resolution of supply disruptions encountered in the prior-year quarter.
The Rest of the World segment’s net sales of $610.8 million were down 5% due to the unfavorable impact of foreign currency translation and the negative impact from COVID-19 in China and Japan. In addition, net sales of existing products were affected by lower pricing, primarily driven by government price cuts in Australia and Japan.
Adjusted gross margin of 53% declined from the year-ago quarter’s 54%.
2020 Guidance Reiterated
Mylan reiterated its previously-provided guidance after absorbing approximately $200 million of foreign exchange headwinds. Revenues are projected between $11.5 billion and $12.5 billion. The Zacks Consensus Estimate of $12.12 billion lies within this guidance.
Mylan’s first-quarter earnings beat estimates, while sales missed the same. As with many other companies, forward buying due to the impact of the coronavirus outbreak and the subsequent lockdown have positively impacted customer buying patterns. Wixela, the generic of GlaxoSmithKline’s (GSK - Free Report) Advair Diskus, and Yupelri, developed in collaboration with Theravance Biopharma, Inc (TBPH - Free Report) , boosted growth.
However, the impact of the outbreak is most likely to negatively impact the second-quarter results. Mylan is donating 10 million tablets of hydroxychloroquine sulfate (200mg) to the U.S. Department of Health and Human Services for possible use under an investigational new drug application authorized by the FDA or an Emergency Use Authorization granted by the agency.
Meanwhile, the company’s decision to merge with Upjohn, Pfizer's (PFE - Free Report) off-patent branded and generic established medicines business, is also encouraging. In November 2019, Mylan and Pfizer announced the name of the new entity to be Viatris. The merger will be completed in the second half of 2020.
Mylan currently 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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