Mylan N.V. MYL reported mixed results for fourth-quarter 2017 as EpiPen sales declined. Adjusted earnings of $1.43 per share beat the Zacks Consensus Estimate of $1.41 but was down from $1.57 reported in the year-ago quarter.

Mylan N.V. Price and Consensus

Mylan N.V. Price and Consensus | Mylan N.V. Quote

Fourth-quarter revenues of $3.24 billion missed the Zacks Consensus Estimate of $3.27 billion and were down 1% from the prior-year period.

Mylan’s stock has lost 10.9% over a year, better than the industry’s decline of 36.1%.

Quarter in Detail

The company posts results in three segments on a geographic basis namely North America, Europe and Rest of World.

North America segment’s third-party net sales came in at $1.30 billion, down 17% on a sales decline of existing products as a result of lower volume and pricing, partially offset by contribution from new products. The generics business in North America experienced higher price erosion than the previous quarters including the impact of the loss of market exclusivity of olmesartan and olmesartan HCTZ. Sales of the EpiPen Auto-Injector plunged significantly (a decrease of $131.9 million) due to effect of the launch of authorized generic and higher governmental rebates.

Third-party net sales from Europe were $1.07 billion, up 16%. This was propelled by new product introductions across the region combined with volume expansion and pricing on existing products. Favorable foreign currency translation had an impact of 9% within the continent.

Rest of World segment’s third-party net sales of $815.7 million was up 12%, driven by new products and increased net sales from the anti-retroviral franchise and higher sales in the emerging markets plus a favourable foreign currency translation had an impact of 3%.

Adjusted gross margin contracted to 55.5% from 56.6% in the year-ago quarter due to lower gross profit from the sales of existing products in North America including the EpiPen Auto-Injector, partially offset by the contributions from new products.

During 2017, Mylan repurchased approximately 12.4 million shares for approximately $500.2 million under its previously approved share repurchase program. In January 2018, Mylan bought back additional ordinary shares worth 9.8 million for approximately $432.0 million and completed that share buyback program.

2017 Results

Revenues for 2017 came in at $11.91 billion, up 8% from 2016. However, the top line missed the Zacks Consensus Estimate of $11.95 billion. While adjusted EPS of $4.56 was down 7% from 2016 but surpassed the consensus mark of $4.54. 

2018 Outlook

Mylan expects revenues of $11.75-$13.25 billion in 2018. The Zacks Consensus Estimate of $12.64 billion is well within the guidance provided by the company.

Mylan anticipates adjusted EPS of around $5.20-$5.60 in 2018 while the Zacks Consensus Estimate is pegged at $5.34.

Our Take

Mylan’s fourth-quarter results were mixed with the bottom line exceeding expectations but sales lagging the same due to weak EpiPen sales. The generic business in the United States continues to experience pricing pressure.

We note that Mylan has already won an FDA approval for a generic version of Teva Pharmaceuticals’ TEVA Copaxone 40 mg. Notably, this is the first generic of Copaxone that has been approved. Since Mylan was one of the first applicants to submit a substantially complete ANDA (abbreviated new drug application) for glatiramer acetate Injection, 40 mg/mL containing a Paragraph IV certification, the company and other first filers may be eligible for 180 days of generic drug exclusivity. The company also received an FDA approval for a biosimilar version of Roche Holdings’ RHHBY Herceptin.

Although volatility in the US markets is expected to continue in 2018, yet these regulatory body approvals should position Mylan better in the year ahead and help it combat the decline in EpiPen sales. Meanwhile, the company received a complete response letter from the FDA regarding its ANDA for the generic version of GlaxoSmithKline plc’s GSK asthma drug Advair Diskus and is working to address the issues.

Zacks Rank

Mylan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.