Generic-drug maker Mylan
This quarter, revenue rose 32% year over year, with the acquisition of Matrix contributing more than two-thirds of that increase. On the old Mylan side, generic versions of Pfizer's
On the other hand, margins fell 700 basis points from the year-ago quarter, in an industry that lives and dies by that metric. But in this case, there's more to the story. The company had to amortize intangible assets associated with the Matrix acquisition, which contributed to some of the margin drop. The rest can probably be excused by the fraction of revenue that came from generic drugs still in their exclusivity period. Mylan's trailing-12-month gross margin comes in at 52%, well within the range of its last six quarters. The change in gross margin is something to keep an eye on, but it's not freak-out material yet.
Mylan also announced that it will be offering $1.4 billion of convertible preferred stock, and about 40 million shares of common stock -- bringing in an additional $600 million or so -- in order to pay off debt it took on to finance its Merck generics acquisition. That should lower interest charges in the coming quarters, and while the dilutive financing will lower EPS, the acquisition of Merck's generics should boost earnings enough to cover the increased share count.
The acquisition should help Mylan compete well with big boys Teva
Further generic Foolishness: