Pfizer's (NYSE:PFE) overall story so far in 2017 has been a mediocre one. The big pharma company's stock is up year to date, but barely half as much as the S&P 500 index. Although Pfizer topped earnings estimates in the first two quarters of 2017, its top-line growth was either weak or nonexistent. But even in the midst of general mediocrity, there has been some good news.

Investors were hoping for more good news when Pfizer announced its third-quarter earnings results before the market opened on Tuesday. And they got some. However, they also received some bad news, along with some so-so news as well. Here's what you need to know the most from Pfizer's third-quarter earnings results.

Three scientists in lab

Image source: Getty Images.

Bad news

Let's get the bad news out of the way first. Pfizer's essential health segment continued to weigh down the rest of the business. The company reported revenue for the unit of $5.05 billion, down 12% year over year. However, that decline was worsened by the negative impact of Pfizer's divestiture of its Hospira Infusion Systems (HIS) business in February. Essential health's revenue dropped 7% from the prior-year period adjusting out the HIS impact.

Pfizer continues to feel the sting of losses of exclusivity for several products, which caused a 22% year-over-year operational decline in sales in the third quarter. In the U.S., competition for antidepressant Pristiq hurt significantly, while in Europe Pfizer experienced the most pain from loss of exclusivity for Lyrica and antifungal medication Vfend.

Even an area where Pfizer investors had come to expect better results fared poorly. Revenue from sterile injectable pharmaceuticals fell 12% on an operational basis from the third quarter in 2016, primarily due to legacy
Hospira product shortages in the U.S. 

There were also at least a couple of notable problems in Pfizer's innovative health segment. Sales for Viagra plunged 31% from the prior-year period to $206 million. Autoimmune disease drug Enbrel continued to face headwinds, with revenue falling 13% year over year to $613 million. And Pfizer's top-selling product, pneumococcal vaccine Prevnar 13, saw a 1% slip in sales to $1.52 billion.

So-so news

Pfizer didn't report a revenue decline in the third quarter, but there was nothing to get excited about with its top line. The company announced total revenue of $13.2 billion, up less than 1% over the same period in 2016. Pfizer's challenges with its essential health segment and a handful of top drugs weighed on its overall revenue.

The drugmaker also provided uninspiring tightening of its guidance for full-year 2017 revenue. Pfizer now expects 2017 revenue between $52.4 billion and $53.1 billion. The company previously guided toward full-year revenue of $52 billion to $54 billion.

Good news

Despite blahs on the top line, Pfizer reported third-quarter earnings of $2.84 billion, or $0.47 per diluted share. That was well above earnings from the prior-year period of $1.36 billion, or $0.22 per diluted share. However, year-over-year comparisons are skewed by the impact of acquisitions and divestitures.

Pfizer's adjusted earnings provide a better sense of the company's progress. Third-quarter adjusted earnings came in at $4.06 billion, or $0.67 per diluted share. That reflects an 8% year-over-year jump for Pfizer's bottom line, and a 10% increase on a per share basis. It also beat the consensus analysts' adjusted earnings estimate of $0.65 per share.

The company also boosted its full-year 2017 earnings outlook. Pfizer now expects adjusted diluted earnings per share of $2.58 to $2.62. Previously, the company projected full-year revenue between $2.54 and $2.60.

Quite a few of Pfizer's innovative health products performed well in the third quarter. Sales for smoking cessation medication Chantix, for example, increased 21% over the prior-year period.

Even some essential health legacy products shined. Lipitor was one of the most impressive, with sales growing 16% year over year. Pfizer's biosimilar to Remicade, branded as Inflectra in the U.S., generated revenue during the third quarter of $112 million, up from $49 million in the same period last year. 

Best news

Pfizer's best performers, though, were in a league of their own. Cancer drug Ibrance generated revenue of $878 million in the third quarter, soaring 60% higher than the prior-year period. Sales for rheumatoid arthritis drug Xeljanz jumped 48% year over year to $348 million. Anticoagulant Eliquis, which Pfizer co-markets with Bristol-Myers Squibb, brought in revenue for Pfizer of $644 million in the third quarter, up 43% from the same period in 2016.

The best news of all for Pfizer is in its future. Eliquis, Ibrance, Xeljanz, and prostate cancer drug Xtandi have years of patent exclusivity remaining and plenty of runway for growth. Pfizer's pipeline should provide what CEO Ian Read refers to as "an expected multiyear wave of potential new product launches and product line extensions." Even the current weak link for the company, its essential health segment, should see revenue declines taper off in the next few years.

Pfizer also announced recently that it is considering selling or spinning off its consumer healthcare business. The only mention of this in the company's announcement of third-quarter results was a reminder from CFO Frank D'Amelio that Pfizer is "reviewing strategic alternatives" for the unit. If Pfizer does eventually decide to sell or spin off consumer healthcare, it could be very good news for investors.

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