Mylan Beats On Q2 Earnings, Revenues Miss, Keeps '16 View

Mylan N.V.’s (NASDAQ:MYL) second-quarter 2016 earnings of $1.16 per share beat the Zacks Consensus Estimate by a penny. Reported earnings soared 28% from the year-ago quarter.

Revenues grew 8% to $2.56 billion, but fell short of the Zacks Consensus Estimate of $2.61 billion. The top line witnessed year-over-year growth on the back of solid revenue growth at the Generics and Specialty segments.

Total revenues in the reported quarter were not significantly impacted by the effect of foreign currency translation.

Segments Drive Revenues

Generics third-party net sales, derived from sales in North America, Europe and Rest of World, climbed 4% to $2.14 billion. Segmental third-party net sales increased 6% to $1.01 billion in North America. While new product launches aided revenues, factors offsetting this increase were lower pricing and volumes on existing products.

Third-party net sales from the European market increased 6% to $604.2 million. The increase was mainly due to net sales from new products combined with higher volumes on existing products while pricing was basically flat in the current period due to the company’s diversified product portfolio.

Third-party net sales from Rest of World declined 2% to $523.2 million. Segmental performance benefited from incremental new product launches across the region and higher sales in Japan and emerging markets. Lower pricing and sales volumes in the region, including the anti-retroviral (ARV) franchise, unfavorably impacted third-party net sales. However, sales within the ARV franchise gradually improved through the quarter as HIV tender volumes increased, thereby resulting in sales growth of more than 30% sequentially.

Third-party net sales at the Specialty segment increased 33% to $402.5 million. Specialty segment sales benefited from higher unit volumes, the realization of the benefits of customer contract negotiations over the last several quarters for EpiPen, and higher sales of Perforomist and Ultiva.

Adjusted gross margin during the second quarter of 2016 expanded to 56% from 54% in the year-ago quarter on the back of contribution from new product launches and favorable Specialty sales.

2016 Outlook Intact

Mylan reiterated its outlook for 2016. The company continues to expect earnings in the range of $4.85 to $5.15 per share. The Zacks Consensus Estimate for earnings is $4.93 per share.

Meanwhile, Mylan completed the acquisition of the Swedish drug maker, Meda. In Jun 2016, Mylan also acquired the non-sterile, topicals-focused specialty and generics business of privately held Renaissance Acquisition Holdings. While the Renaissance business gives Mylan a complementary portfolio of about 25 branded and generic topical products, which when combined with Meda's offerings position Mylan to be a leader in dermatology.

MYLAN NV Price

Our Take

Mylan’s second-quarter results were mixed with the company beating on the bottom line while missing top-line estimates. Nevertheless, we are encouraged by the continued strong performance of the Generics business and double-digit revenue growth in the Specialty business. We are also positive on the Meda acquisition.

Mylan currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Corcept Therapeutics Inc. (NASDAQ:CORT) , ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) and Geron Corp. (NASDAQ:GERN) . All three stocks sport a Zacks Rank #1 (Strong Buy).