Shares of Mylan (NASDAQ:MYL) were sinking 11.4% as of 11:09 a.m. EST on Wednesday. The drugmaker reported its fourth-quarter results after the market closed on Tuesday. Unfortunately, there was very little good news in Mylan's update.
Mylan's Q4 revenue fell nearly 5% year over year to $3.08 billion. The company's adjusted earnings per share (EPS) slipped more than 9% to $1.30. Both numbers were well below Wall Street expectations.
In the big scheme of things, one disappointing quarter doesn't mean a whole lot. The important question for investors is whether the issues that caused the disappointment are temporary or lasting.
One of Mylan's biggest challenges should be only temporary. The company's restructuring of its manufacturing facility in Morgantown, West Virginia, weighed on its North American sales. Mylan isn't out of the woods yet, though. It received another warning letter in Q4 from the U.S. Food and Drug Administration (FDA) about issues at the facility.
But Mylan President Rajiv Malik stated in the company's Q4 conference call that the issues are being "comprehensively addressed." He also noted that only 5 of Mylan's top 50 products based on gross margin are currently manufactured at the Morgantown facility.
Mylan also took a hit from temporary currency fluctuations in the fourth quarter. The company reported European sales increased by only 1% year over year, and sales in the rest of the world grew by 4%. However, on a constant-currency basis, European and rest-of-the-world revenue increased by 5% and 11%, respectively.
Mylan expects that its performance will improve. The company's full-year 2019 guidance projects revenue will grow by 5% at the midpoint of its forecasted range. Mylan's new products could boost sales by more than $1 billion annually.
Don't look for earnings growth yet, though. The midpoint of Mylan's adjusted EPS guidance for 2019 reflects a 6% year-over-year decrease. However, this anticipated decline is the result of increased investments in sales and marketing and research and development. Over the long run, those investments could pay off.