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August 9, 2018

Mylan Q2 financial results: revenue decline led by falling sales in North America

Global healthcare company Mylan has reported its revenue declined by 5% in the second quarter (Q2) of 2018 to $2.81bn with net sales in North America falling by 22% to $1bn.

By Allie Nawrat

Global healthcare company Mylan has reported its revenue declined by 5% in the second quarter (Q2) of 2018 to $2.81bn with net sales in North America falling by 22% to $1bn.

Mylan’s total net sales fell by 6% from $2.93bn in 2017 to $2.76bn due to a decline in sales from existing products due to lower volumes and pricing, as well as a $12.9m negative impact from the adoption of new accounting standards. Foreign currently translation favourably impacted revenue by $65.5m.

The reduction in net sales in North America was the result of lower volumes of existing products, including EpiPen, a slight decline in pricing, $24.9m from the adoption of new accounting standards and the timing of purchases and actions associated with restructuring at its Morgantown manufacturing facility. This was partially offset by new product sales.

Europe’s net sales grew by 4% from $954.3m in Q2 2017 to $990.6m. The growth was primarily fuelled by the favourable impact of foreign currency translation of $68.4m (7%), which was partially offset by a decline in new product sales, the reduction in pricing and volumes, as well as 3% lower constant currency net sales.

Sales in the rest of the world grew 10% to $764.1m driven by new product sales, particularly from the anti-retroviral therapy franchise, partially offset by lower pricing and negative impact of foreign currency translation of $6.6m (1%).

Mylan CEO Heather Bresch said: “During the second quarter, Mylan continued to do its part to expand access to medicine around the world. Our Europe and Rest of World segments continue to deliver growth in line with our expectations. However, our efforts to serve patients in the US have been shaped by the industry’s transformation there, and our results and guidance for 2018 are directly correlated with the ongoing rebasing of the U.S. healthcare environment.”

The company also announced its US generally accepted accounting principles (GAAP) gross profit declined from $1.23bn in Q2 2017 to $962.5m and its US GAAP gross margins fell by 7% from 2017 to 34%. The latter was negatively impacted by 275 basis points due to amortisation from product acquisitions and in process research and development impairment changes and 300 basis points due to expenses linked to the remediation and restructuring of Mylan’s Morgantown facility.

US GAAP net earnings declined by $259.5m to $37.5m and US GAAP earnings per share (EPS) fell by $0.55 to $0.07 between Q2 2017 and 2018. Adjusted EPS decreased $1.07 from $1.10.

In response to these figures, Mylan announced it was revising its full year (FY) 2018 guidance. The company now expects revenues between $11.25bn and $12.25bn, which are flat on FY 2017. Its adjusted EPS is now in the range of $4.55 to $4.90 and its adjusted free cash flow is between $2,100 and $2,500.

Mylan CFO Ken Parks added: “In the second quarter, Mylan once again generated strong cash flow taking first half 2018 adjusted free cash flow to $1.3bn, up 22% from the prior year and a healthy 126% of adjusted net earnings of $1.05bn. Despite the rebasing of our adjusted EPS guidance, we remain confident in our full year adjusted free cash flow outlook and intend to repay more than $1.1 billion in debt maturing over the next 12 months utilizing our solid cash generation. We also remain committed to our investment grade credit rating. Our performance continues to showcase the strength and durability of the cash flow generating capabilities of our business, as well as to expand our financial flexibility as we execute on our business plan for 2018 and beyond.”

Across the half year (H1) 2018 the company’s revenues declined 3% to $5.49bn and net sales fell by 4% to $5.41bn. North America experienced a 20% reduction in sales, whereas Europe saw an increase of 10% and the rest of the world saw a 9% rise in sales.

US GAAP gross profit declined from $2.31bn in H1 2017 to $1.95bn and gross margins fell by 6% to 35%.

US GAAP net earnings fell by $238.8m to $124.6m in Q2 2017 and US GAAP EPS fell by $0.68 to $0.24. Adjusted EPS was $2.03 in both Q2 2017 and Q2 2018.

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