There has been good news and bad news for Mylan (NASDAQ:MYL) over the past year or so. Revenue for the big generic-drugmaker has steadily climbed, but earnings have fallen. Mylan announced its second-quarter financial results after the market closed on Tuesday. Have the company's diverging trends changed? Here are the highlights.

Mylan results: The raw numbers


Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)


$2.56 billion

$2.37 billion


Net income from continuing operations

$168.4 million

$167.8 million


Earnings per diluted share





What happened with Mylan this quarter

Generic drugs contribute the largest amount to Mylan's top line. The drugmaker's generics segment posted second-quarter sales of $2.14 billion, a 4% increase from the prior-year period. These gains stemmed largely from new products launched since July 2015.

Mylan's bigger growth engine, though, came from specialty drugs. The specialty-drug segment kicked in revenue of $402.5 million, up 33% year over year. This nice jump resulted from several factors, including a positive impact from customer contract negotiations related to EpiPen and higher sales of Perforomist and Ultiva.

Earnings increased only slightly compared with the second quarter of 2015. The GAAP results were affected by unrealized mark-to-market losses on foreign currency contracts and the write-off of financing fees related to termination of a credit agreement for financing the Meda acquisition.

On a non-GAAP basis, though, Mylan reported solid earnings growth. Adjusted earnings jumped nearly 25% year over year to $592.4 million. The company posted adjusted earnings per share of $1.16, a 28% increase from the prior-year period. 

Profitability improved in the second quarter despite higher spending. Mylan noted that research-and-development spending increased primarily as a result of its collaboration with Momenta Pharmaceuticals (NASDAQ:MNTA). The two companies announced a partnership in January to develop and commercialize six of Momenta's biosimilar candidates. 

What management had to say

Mylan CEO Heather Bresch was pleased with the company's solid second-quarter results. Bresch stated:

Our strong second quarter results delivered year-over-year total revenue growth of 8% and adjusted EPS growth of 28%. This solid performance, which included continued strength in our generics business and double-digit revenue growth in our Specialty business, yet again underscores the strategic value of Mylan's diversification and scale as well as our differentiation within our industry. Given our performance to date this year and our current trajectory, we are committed to our 2016 adjusted EPS guidance range of $4.85 to $5.15.

Bresch also commented on recent business development activity:

We also are very excited about the completion of our Meda transaction, as well as the Renaissance topicals transaction that we completed in June, which continue to build on our unique global platform to create even greater scale, breadth, diversity, and access across products, geographies, and sales channels. These transactions also further strengthen our already very strong cash flows. We see significant opportunities to further differentiate Mylan for our customers, patients, and other stakeholders as we bring these assets together.

Looking forward

Despite posting good numbers for the second quarter, Mylan's shares dipped more than 2% in after-hours trading. The less-than-enthusiastic response by investors might have stemmed from revenue coming in a little below expectations. 

Over the long run, though, Mylan's prospects seem solid. The drugmaker's partnerships with Momenta and Indian biopharmaceutical company Biocon position Mylan to go after the emerging biosimilar market. Momenta's biosimilar candidate for rheumatoid arthritis biologic Orencia is especially promising. Mylan now claims 15 biosimilar/insulin analog generic products in development resulting from the collaborations with Momenta and Biocon.

Mylan's recent acquisitions also should help the company succeed. Finalization of the Meda buyout gives Mylan opportunities to expand its over-the-counter business and build a bigger presence in emerging markets. The purchase of Renaissance gives Mylan 25 additional products and a foothold in the dermatology market.  

The second-quarter results were solid, if not spectacular. More importantly, Mylan's partnerships and acquisitions this year should give long-term investors reason to be optimistic about the future.

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