Everything looked great when Mylan N.V. (NASDAQ:MYL) reported its quarterly results in March. The drugmaker enjoyed a tremendous fourth quarter, with revenue and earnings soaring thanks in large part to its 2016 acquisitions.
Mylan announced its first-quarter 2017 results before the market opened on Wednesday. Was the company able to repeat its prior success? Mylan definitely came close to doing so. Here are the highlights.
Mylan results: The raw numbers
|$2.72 billion||$2.19 billion||
Net income from continuing operations
|$66.4 million||$13.9 million||
What happened with Mylan this quarter?
Mylan's revenue growth in the first quarter stemmed primarily from its 2016 acquisitions of Swedish drugmaker Meda and the topicals business of Renaissance Acquisition Holdings focused on non-sterile products. These acquisitions generated $606.6 million in added revenue.
However, Mylan's top line took a hit from a decrease in sales from new products and existing products of $85.8 million. Revenue from third parties more than doubled year over year to $32.1 million due to an increase in royalty income.
Sales were especially strong in Europe and the rest of the world, with 53% and 34% year-over-year increases, respectively. This strength was primarily a result of the Meda acquisition. North American sales increased 5%, hurt in part by lower sales of the EpiPen auto-injector resulting from increased competition and the impact of the launch of Mylan's authorized generic.
The company reported selling, general, and administrative expenses in the first quarter of $631.3 million, a 14.9% increase from the prior-year period. These higher expenses stemmed primarily from Mylan's acquisitions. However, research and development costs in the first quarter decreased 14.2% year over year to $217.5 million, mainly as a result of timing of clinical activities.
What management had to say
Mylan CEO Heather Bresch liked the company's start to 2017. Bresch said:
Mylan's results during the first quarter marked a great start to what we believe will be another year of strong financial performance, and continue to reflect the strength and diversity of our global business and demonstrate our resilience and ability to absorb both our industry's natural volatility, as well as additional headwinds, related to particular products and/or markets. We delivered year-over-year revenue growth of 24%, adjusted EPS growth of 22%, and expanded segment profitability in all three segments. These results are a true reflection of all of the great assets we have integrated, with significant contributions from acquisitions completed last year, as well as from new product launches across our business. We remain confident in our guidance and our business outlook for the full year 2017, including our adjusted EPS guidance range.
Mylan President Rajiv Malik added, "We continued to benefit from the successful execution of the integration of our global platform, with strong double-digit revenue growth in Europe and rest of world and a solid performance in North America. We also continue to execute on our key pipeline programs, as outlined during our March investor day. Our overall expectations for the global pricing environment are unchanged and we are still predicting mid-single digit price erosion globally for the year."
In its fourth-quarter and full-year 2016 update, Mylan projected full-year 2017 revenue would increase by 17% at the mid-point of its guidance range, with adjusted earnings per share increasing 9% at the mid-point of the guidance range. Based on the company's first-quarter performance, Mylan certainly started off 2017 at a pace to meet and perhaps exceed that guidance.
After its stock took a shellacking in 2016 (in large part due to public uproar over high price increases for EpiPen), Mylan has begun a slow comeback. Many investors, including billionaire David Tepper, have seen Mylan as a bargain considering the stock's beaten-down price and future prospects.
Those future prospects appear to be solid. The world's population of individuals age 65 and over is expected to grow 67% by 2030. Global pharmaceutical spending is projected to grow 40% by 2021. With operations in more than 165 countries and territories and over 7,500 marketed products, Mylan should be in good position to benefit from both trends.
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