Despite being a global drugmaker, the fortunes of Mylan N.V. (MYL) are tightly linked to the U.S. market. Continued headwinds in the U.S. for generic drugs caused Mylan to slash its full-year outlook for 2018 in August. This move, though, lowered the bar for the company as it entered the third quarter.
Mylan showed that it could successfully jump this lower bar with its third-quarter results announced after the market closed on Monday. While there were still challenges in the quarter, the company made progress. Here are the highlights from Mylan's third-quarter update.
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Mylan results: The raw numbers
| Metric |
Q3 2018 |
Q3 2017 |
Change (YOY) |
|---|---|---|---|
|
Sales |
$2.86 billion | $2.99 billion |
(4.2%) |
|
Net income from continuing operations |
$176.7 million | $88.3 million |
100.1% |
|
Adjusted earnings per share (EPS) |
$1.25 | $1.10 |
13.6% |
Data source: Mylan. YOY = year over year.
What happened with Mylan this quarter?
Mylan again posted a year-over-year decline in revenue. The U.S. was again the culprit, with North American sales falling 14% to $1.01 billion. There were several factors at play, including the implementation of new accounting standards, lower EpiPen sales resulting from generic products on the market, the sale of some contract manufacturing assets, a product losing exclusivity, and restructuring at Mylan's Morgantown, West Virginia, manufacturing facility.
Europe wasn't as strong for Mylan in the third quarter as it was three months ago. Net sales in Europe came in at $1.04 billion -- essentially flat year over year. However, adjusting for currency fluctuations, Mylan's European sales grew 2% from the prior-year period.
The company's best performance continued to come from the rest of the world. Sales outside of North America and Europe increased 4% to $773.7 million. On a constant-currency basis, this revenue jumped 11%. The growth stemmed in large part from new product sales from Mylan's anti-retroviral therapy franchise.
Year-over-year comparisons for Mylan's bottom line looked much better, primarily thanks to help from Uncle Sam. The company's GAAP net income received a boost from income tax falling from $91.3 million in the year-ago period to $15.5 million in the third quarter.
What management had to say
Mylan CEO Heather Bresch said:
Mylan's third-quarter performance was in line with our expectations and we delivered solid year-over-year growth. Our confidence in the company's bright future extends well beyond any single factor or particular quarter, including the current, short-term macro market turbulence our industry is experiencing. Year to date, we have launched nearly 475 new products across our segments, including a record number of complex generics and biosimilars for Mylan. These medicines represent many different therapeutic categories, channels, and dosage forms.
She added:
We remain committed to our full-year 2018 guidance, and this confirmation is not dependent on any single product approval or launch. As we look ahead, we're very optimistic about our long-term growth prospects as we have secured almost all regulatory approvals necessary for our key 2019 product drivers around the world.
Looking forward
As Bresch stated, Mylan reaffirmed its full-year 2018 guidance provided in August. The company continues to project 2018 revenue between $11.25 billion and $12.25 billion with adjusted EPS for 2018 between $4.55 and $4.90.
CFO Ken Parks said the company will continue to focus on reducing its debt in the second half of 2018 and into next year. He stated that Mylan plans to "repay at least $1.2 billion of debt maturing through year-end 2019 and remain[s] fully committed to maintaining our investment grade credit rating."
Key things for investors to watch in the coming months include Mylan's European launch of its Humira biosimilar, Hulio, and a decision by the FDA on approval for its generic version of Advair. Success for these and other new products could add to Mylan's momentum.
