PITTSBURGH, Aug. 1, 2013 /PRNewswire/ -- Mylan Inc. (Nasdaq: MYL) today announced its financial results for the three and six months ended June 30, 2013.

Financial Highlights

• Adjusted diluted EPS of $0.68 for the three months ended June 30, 2013 compared to $0.60 for the same prior year period, an increase of 13%
• Total revenues of $1.70 billion for the three months ended June 30, 2013 compared to $1.69 billion for the same prior year period, an increase of 1%. On a constant currency basis and excluding the impact of Escitalopram in both periods, total revenues would have increased approximately 10%
• On a GAAP basis, diluted EPS of $0.46 for the three months ended June 30, 2013 compared to $0.33 for the same prior year period, an increase of 39%
• Adjusted diluted EPS of $1.29 for the six months ended June 30, 2013 compared to $1.12 for the same prior year period, an increase of 15%
• Total revenues of $3.33 billion for the six months ended June 30, 2013 compared to $3.27 billion for the same prior year period, an increase of 2%. On a constant currency basis and excluding the impact of Escitalopram in both periods, total revenues would have increased approximately 12% 
• On a GAAP basis, diluted EPS of $0.72 for the six months ended June 30, 2013 compared to $0.62 for the same prior year period, an increase of 16%

Mylan CEO Heather Bresch commented: "Our second quarter results once again demonstrate the strength of our diverse, global platform. We continue to anticipate strong performance across our global platform for the remainder of the year and are reaffirming our 2013 adjusted diluted EPS guidance range of $2.75 - $2.95 per share. 

"As we look to 2014, we are projecting revenue growth of 12% over 2013 and year-over-year growth in adjusted diluted EPS of 19% from the midpoint of our 2013 guidance range. Longer-term, we are targeting a compound annual growth rate (CAGR) in revenues of 13% through 2018 and a CAGR of 16% in adjusted diluted EPS over this period, culminating in a target adjusted diluted EPS of at least $6.00 in 2018. We look forward to providing greater detail on our long-term outlook and strategic growth drivers at our Investor Day event later today."

John Sheehan, Mylan's CFO, added: "We continue to be pleased with the performance of our business in 2013, with our second quarter and first half results in line with our expectations. We saw continued robust growth in Europe, marking the fourth consecutive quarter of growth in this region, as well as solid double-digit growth in Asia Pacific. We also continued to see double-digit growth in our Specialty business and now expect this segment to deliver growth of closer to 20% for the year, with out-performance in other areas of our business off-setting this slower trajectory. Our ability to generate strong cash flows combined with our recent capital market transactions has further enhanced our financial flexibility as we move into the second half of 2013."

Financial Results Summary

Three Months Ended June 30, 2013

For the three months ended June 30, 2013, Mylan reported total revenues of $1.70 billion compared to $1.69 billion in the comparable prior year period, an increase of $13.9 million or 0.8%. The effect of foreign currency translation had an unfavorable impact of approximately 1% on total revenues primarily reflecting a stronger U.S. Dollar in comparison to the currencies of the other major markets in which Mylan operates. Translating total revenues for the current quarter at prior year comparative period exchange rates would have resulted in year-over-year growth of approximately $34 million, or 2%.

A tabular summary of Mylan's revenues for the three and six months ended June 30, 2013 and 2012 is included at the end of this release. Also included at the end of this release are the reconciliations of adjusted financial results to the most closely applicable GAAP financial result.

Third party net revenues from Mylan's Generics segment, which are derived from sales in North America, Europe, the Middle East and Africa (collectively, EMEA) and Australia, India, Japan and New Zealand (collectively, Asia Pacific) were $1.45 billion in the quarter ended June 30, 2013, compared to $1.47 billion in the comparable prior year period, representing a decrease of $20.9 million. Excluding the unfavorable effect of foreign currency translation, Generics third party net revenues were essentially unchanged versus the comparable prior year period.

Third party net revenues from North America were $717.6 million for the current quarter, compared to $837.3 million for the comparable prior year period, representing a decrease of $119.7 million, or 14.3%. The decrease in third party net revenues was due to a greater amount of revenue from new product launches in the prior year ($240 million) as compared to the current year ($91 million), which was due principally to the launch of Escitalopram, our most significant product launch in the prior year. Excluding the impact of Escitalopram in both periods, third party net revenues in North America were essentially flat on a year-over-year basis. The effect of foreign currency translation was insignificant within North America.

Third party net revenues from EMEA were $375.5 million for the current quarter, compared to $326.6 million for the comparable prior year period, representing an increase of $48.8 million, or 14.9%. Foreign currency translation had a slightly favorable impact on sales for the current quarter, as translating current quarter third party net revenues from EMEA at prior year comparative period exchange rates resulted in an increase in third party net revenues of approximately 13%. This increase was principally the result of a double-digit increase in revenues in France as a result of new product revenue and favorable volume. Partially offsetting this increase was unfavorable pricing in a number of European markets in which Mylan operates as a result of government imposed pricing reductions and competitive market conditions.

Third party net revenues from Asia Pacific were $357.4 million for the current quarter, compared to $307.5 million for the comparable prior year period, an increase of $49.9 million, or 16.2%. However, foreign currency translation had an unfavorable impact on sales for the current quarter, principally reflecting the significant strengthening of the U.S. Dollar versus the Indian Rupee and Japanese Yen. Excluding the effect of foreign currency translation, calculated as described above, third party net revenues would have increased by approximately $75 million, or 24%. This increase is primarily driven by higher revenues by Mylan India, as a result of increased sales of antiretroviral finished dosage form generic products, which are used in the treatment of HIV/AIDS, and an increase in sales of active pharmaceutical ingredients (API). In addition, local currency revenues increased in Japan due to higher volumes and new product introductions.

For the current quarter, Mylan's Specialty segment reported third party net sales of $236.9 million, an increase of $30.3 million, or 14.7%, from the comparable prior year period of $206.6 million. The most significant contributor to Specialty segment revenues continues to be the EPIPEN® Auto-Injector, sales of which increased as a result of favorable pricing and volume. The EPIPEN® Auto-Injector is the number one epinephrine auto-injector for the treatment of severe allergic reactions.

Gross profit for the three months ended June 30, 2013, was $742.4 million and gross margins were 43.6%. For the three months ended June 30, 2012, gross profit was $702.6 million, and gross margins were 41.6%. Adjusted gross profit, as further defined below, for the three months ended June 30, 2013 was $834.2 million and adjusted gross margins were 49% as compared to adjusted gross profit of $819.3 million and adjusted gross margins of 49% in the comparable prior year period. Adjusted gross margins were positively impacted in the current quarter as a result of the increase in sales of the EPIPEN® Auto-Injector and margins on new products, which was offset the impact of unfavorable pricing on existing products in all regions within our Generics segment.

Earnings from operations were $308.6 million for the three months ended June 30, 2013, compared to $261.5 million for the comparable prior year period. Adjusted earnings from operations, as further defined below, for the three months ended June 30, 2013 was $413.9 million as compared to adjusted earnings from operations of $398.2 million in the comparable prior year period. This increase was driven by higher gross profit in the current year, as discussed above, and lower selling, general and administrative costs ("SG&A"), partially offset by increases in research and development costs ("R&D"). The decrease in SG&A in the current quarter includes a fair value adjustment to reduce the contingent consideration liability by approximately $10 million. In the comparable prior year period, the Company recorded a fair value adjustment to increase the contingent consideration liability by approximately $8 million, resulting in a net year over year decrease of $18 million to SG&A. The Company also incurred lower sales and marketing costs in Japan of approximately $11 million as compared to the prior year as a result of the collaboration with Pfizer Japan. Under the collaboration, Pfizer Japan is responsible for commercialization of the combined generics portfolio and managing the marketing and sales effort.
R&D increased primarily due to expenditures related to the development of Mylan's respiratory and biologics programs.

Interest expense for the three months ended June 30, 2013, totaled $81.8 million, compared to $75.7 million for the comparable prior year period. Adjusted interest expense, as further defined below, for the three months ended June 30, 2013 was $64.9 million as compared to adjusted interest expense of $61.1 million in the comparable prior year period. The increase was the result of a higher level of average borrowings in 2013.

Other (expense) income, net, was expense of $7.2 million in the current quarter compared to income of $4.2 million in the comparable prior year period. Other (expense) income, net for the current quarter includes charges of approximately $8.7 million related to the June 2013 Senior Credit Agreement refinancing transaction, primarily the write-off of deferred financing costs and interest rate swap termination fees. Also included in other (expense) income, net, are losses from equity affiliates, foreign exchange gains and losses and interest and dividend income.

Net earnings attributable to Mylan Inc. increased $39.1 million, or 28.2%, to $177.7 million for the three months ended June 30, 2013 as compared to $138.6 million for the prior year comparable period. Adjusted earnings increased $7.6 million, or 3.0%, to $261.6 million for the three months ended June 30, 2013 as compared to adjusted earnings of $254.0 million for the prior year comparable period.

EBITDA, which is defined as net income (excluding the non-controlling interest and income from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $423.1 million for the quarter ended June 30, 2013, and $392.1 million for the comparable prior year period. After adjusting for certain items as further detailed below, adjusted EBITDA was $461.0 million for the current three-month period and $447.0 million for the comparable prior year period. 

Six Months Ended June 30, 2013

For the six months ended June 30, 2013, Mylan reported total revenues of $3.33 billion compared to $3.27 billion in the comparable prior year period, an increase of $61.7 million or 1.9%. The effect of foreign currency translation had an unfavorable impact of approximately 1% on total revenues primarily reflecting a stronger U.S. Dollar in comparison to the currencies of the other major markets in which Mylan operates. Translating total revenues for the current quarter at prior year comparative period exchange rates would have resulted in year-over-year growth of approximately $106 million, or 3%.

Third party net revenues from Mylan's Generics segment were $2.86 billion in the six months ended June 30, 2013, compared to $2.87 billion in the comparable prior year period, representing a decrease of $15.2 million, or an increase of approximately 1% when excluding the unfavorable effect of foreign currency translation.

Third party net revenues from North America were $1.45 billion for the six months ended June 30, 2013, compared to $1.61 billion for the comparable prior year period, representing a decrease of $154.6 million, or 9.6%. The decrease in third party net revenues was due to a greater amount of revenue from new product launches in the prior year ($430 million) as compared to the current year ($177 million), which was due principally to the launch of Escitalopram, our most significant product launch in the prior year. Excluding the impact of Escitalopram in both periods, third party net revenues in North America would have experienced high single-digit growth. The effect of foreign currency translation was insignificant within North America.

Third party net revenues from EMEA were $745.3 million for the six months ended June 30, 2013, compared to $662.3 million for the comparable prior year period, representing an increase of $83.1 million, or 12.5%. Foreign currency translation had a minimal impact on sales for the six months ended June 30, 2013, as translating current third party net revenues from EMEA at prior year comparative period exchange rates resulted in an increase in third party net revenues of approximately 12%. This increase was principally the result of a double-digit increase in revenues in France as a result of new product revenue and favorable volume. Partially offsetting these increases was unfavorable pricing in a number of European markets in which Mylan operates as a result of government imposed pricing reductions and competitive market conditions.

Third party net revenues from Asia Pacific were $662.5 million for the six months ended June 30, 2013, compared to $606.1 million for the comparable prior year period, an increase of $56.3 million, or 9.3%. However, foreign currency translation had a negative impact on sales, principally reflecting the significant strengthening of the U.S. Dollar versus the Indian Rupee and Japanese Yen. Excluding the effect of foreign currency translation, calculated as described above, third party net revenues would have increased by approximately $105 million, or 17%. This increase is primarily driven by higher revenues by Mylan India, as a result of increased sales of antiretroviral finished dosage form generic products, which are used in the treatment of HIV/AIDS, and an increase in sales of active pharmaceutical ingredients (API). In addition, local currency revenues increased in Japan due to higher volumes and new product introductions.

For the six months ended June 30, 2013, Mylan's Specialty segment reported third party net sales of $448.5 million, an increase of $70.8 million, or 18.8%, from the comparable prior year period of $377.6 million. The most significant contributor to Specialty segment revenues continues to be the EPIPEN® Auto-Injector, sales of which increased as a result of favorable pricing and volume. The EPIPEN® Auto-Injector is the number one epinephrine auto-injector for the treatment of severe allergic reactions. In addition, Perforomist® Inhalation Solution sales increased by double digits from the comparable prior year period as a result of favorable pricing and volume.

Gross profit for the six months ended June 30, 2013, was $1.44 billion and gross margins were 43.1%. For the six months ended June 30, 2012, gross profit was $1.37 billion, and gross margins were 42.0%. Adjusted gross profit, as further defined below, for the six months ended June 30, 2013 was $1.63 billion and adjusted gross margins were 49% as compared to adjusted gross profit of $1.58 billion and adjusted gross margins of 48% in the comparable prior year period. The increase in adjusted gross margins was primarily the result of the increase in sales of the EPIPEN® Auto-Injector and margins on new products, partially offset by the impact of unfavorable pricing on existing products in all regions within our Generics segment.

Earnings from operations were $522.5 million for the six months ended June 30, 2013, compared to $512.0 million for the comparable prior year period. Adjusted earnings from operations, as further defined below, for the six months ended June 30, 2013 was $796.9 million as compared to adjusted earnings from operations of $766.5 million in the comparable prior year period. This increase was driven by higher gross profit in the current year, as discussed above, and lower SG&A, partially offset by increases in R&D. Factors contributing to the decrease in SG&A include a fair value adjustment to reduce the contingent consideration liability by approximately $12 million. In the comparable prior year period, the Company recorded a fair value adjustment to increase the contingent consideration liability by approximately $8 million, resulting in a net year over year decrease of $20 million to SG&A. The Company also incurred lower sales and marketing costs in Japan of approximately $22 million as compared to the prior year as a result of the collaboration with Pfizer Japan. Under the collaboration, Pfizer Japan is responsible for commercialization of the combined generics portfolio and managing the marketing and sales effort. Offsetting these decreases in SG&A was acquisition related costs of approximately $25 million. R&D increased primarily due to licensing payments in the current year totaling approximately $23 million and increases related to the development of the respiratory and biologics programs.

Interest expense for the six months ended June 30, 2013, totaled $159.8 million, compared to $158.1 million for the comparable prior year period. Adjusted interest expense, as further defined below, for the six months ended June 30, 2013 was $127.5 million as compared to adjusted interest expense of $121.8 million in the comparable prior year period. The increase was the result of an increased level of borrowings in 2013.

Other (expense) income, net, was expense of $3.8 million in the six months ended June 30, 2013 compared to expense of $5.6 million in the comparable prior year period. Other (expense) income, net for the current year to date period includes charges of approximately $8.7 million related to the June 2013 Senior Credit Agreement refinancing transaction, primarily the write-off of deferred financing costs and interest rate swap termination fees. Also included in other (expense) income, net, are losses from equity affiliates, foreign exchange gains and losses and interest and dividend income.

Net earnings attributable to Mylan Inc. increased $16.9 million, or 6.3%, to $284.6 million for the six months ended June 30, 2013 as compared to $267.6 million for the prior year comparable period. Adjusted earnings increased $29.0 million, or 6.1%, to $507.5 million for the six months ended June 30, 2013 as compared to adjusted earnings of $478.5 million for the prior year comparable period.

EBITDA, which is defined as net income (excluding the non-controlling interest and income from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $774.1 million for the six months ended June 30, 2013, and $760.6 million for the comparable prior year period. After adjusting for certain items as further detailed below, adjusted EBITDA was $904.9 million for the six months ended June 30, 2013 and $858.2 million for the comparable prior year period. 

Cash Flow

Adjusted cash provided by operating activities was $283 million for the six months ended June 30, 2013, compared to $352 million for the comparable prior year period. On a GAAP basis, cash provided by operating activities was $274 million for the six months ended June 30, 2013, compared to $196 million for the comparable prior year period. Capital expenditures were approximately $126 million in the current year as compared to approximately $99 million in the same prior year period.

2013 Guidance Metrics

The Company is providing the following updated financial guidance for 2013 on an adjusted basis and excluding the impact of any acquisitions. Updates to guidance metrics provided on February 27, 2013 are highlighted with an *. Additional information regarding the updates is provided in the commentary below the table.

The Company expects 2013 total revenues to be at the low end of the above range (approximately $7.0 billion) due to the unfavorable impacts of foreign currency, principally the weakening of the Indian Rupee and Japanese Yen versus the U.S. Dollar. Within the Generics segment, the North American region is expected to generate single digit revenue growth for the full year, excluding the impact of Escitalopram, with the second half of 2013 being similar to the first half of the year. The EMEA and APAC regions are expected to generate revenue growth in the mid to high teens for 2013. The Specialty segment is expected to generate revenue growth of approximately twenty percent or more in 2013.

The Company expects its full year R&D spending to be at the high end of the above range. The Company expects adjusted diluted EPS in the range of $0.77 to $0.79 for the third quarter of 2013 and the fourth quarter of 2013 to be slightly stronger than the third quarter. There is no change to any other 2013 guidance metric, including the full year 2013 Adjusted Diluted EPS.

Non-GAAP Financial Measures

Mylan is disclosing non-GAAP financial measures when providing financial results. Primarily due to acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with accounting principles generally accepted in the U.S. (GAAP). In addition to disclosing its financial results determined in accordance with GAAP, Mylan is disclosing certain non-GAAP results that exclude items such as amortization expense and other costs directly associated with the acquisitions as well as certain other expenses, other income and operating cash flow items in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance, because the Company's management uses these measures internally for forecasting, budgeting and measuring its operating performance. In addition, the Company believes that including EBITDA and supplemental adjustments applied in presenting adjusted EBITDA pursuant to our credit agreement is appropriate to provide additional information to investors to demonstrate the Company's ability to comply with financial debt covenants (which are calculated using a measure similar to adjusted EBITDA) and assess the Company's ability to incur additional indebtedness. Whenever Mylan uses such a non-GAAP measure, it will provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely applicable GAAP measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

Below is a reconciliation of GAAP net earnings attributable to Mylan Inc. and diluted GAAP EPS to adjusted net earnings attributable to Mylan Inc. and adjusted diluted EPS for the three and six months ended June 30, 2013 and 2012 (in millions, except per share amounts):

Below is a reconciliation of GAAP net earnings attributable to Mylan Inc. to adjusted EBITDA for the three months ended June 30, 2013 and 2012 (in millions):

Investor Meeting

Today, August 1, 2013, Mylan will host an investor meeting in New York City. The presentations will be broadcast live via webcast beginning at 1:00 PM ET and are expected to conclude at 5:00 PM ET.

To access the live webcast and view the accompanying slide presentations, visit the Investor Relations section of Mylan's website, at investor.mylan.com, at least 15 minutes before the presentation is scheduled to begin; click on the webcast icon to register and download or install any necessary software. If you are unable to view the live webcast, a replay will be available after the event's conclusion for a limited period of time. In addition to the webcast, U.S. callers can access the event, in listen-only mode, at 855.452.6801 or 804.325.4850 for international callers using conference ID 19222392.

About Mylan

Mylan is a global pharmaceutical company committed to setting new standards in health care. Working together around the world to provide 7 billion people access to high quality medicine, we innovate to satisfy unmet needs; make reliability and service a habit, do what's right, not what's easy and impact the future through passionate global leadership. We offer a growing portfolio of approximately 1,100 generic pharmaceuticals and several brand medications. In addition, we offer a wide range of antiretroviral therapies, upon which approximately 40% of HIV/AIDS patients in developing countries depend. We also operate one of the largest active pharmaceutical ingredient manufacturers and currently market products in approximately 140 countries and territories. Our workforce of more than 20,000 people is dedicated to improving the customer experience and increasing pharmaceutical access to consumers around the world. But don't take our word for it. See for yourself. See inside. investor.mylan.com

Forward-Looking Statements

This press release includes statements that constitute "forward-looking statements", including with regard to the Company's future operations, its anticipated business levels, future earnings, planned activities, anticipated growth, and other expectations and targets for future periods. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and often may be identified by the use of words such as "may," "believe," "anticipate," "expect," "plan," "estimate," "target" and variations of these words or comparable words. Because such statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: challenges, risks and costs inherent in business integrations and in achieving anticipated synergies; the effect of any changes in customer and supplier relationships and customer purchasing patterns; the ability to attract and retain key personnel; changes in third-party relationships; the impacts of competition; changes in economic and financial conditions of the Company's business; uncertainties and matters beyond the control of management; and inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance with GAAP and related standards or on an adjusted basis. These forward-looking statements should be considered in connection with any subsequent written or oral forward-looking statements that may be made by the Company or by persons acting on its behalf and in conjunction with its periodic SEC filings. In addition, please refer to the cautionary note on forward-looking statements and risk factors set forth in the Company's Annual  Report on Form 10-K for the year ended December 31, 2012, and in its other filings with the SEC. Further, uncertainties or other circumstances, or matters outside of the Company's control between the date of this release and the date that its Form 10-Q for the quarter ended June 30, 2013, is filed with the SEC could potentially result in adjustments to reported results. The Company undertakes no obligation to update statements herein for revisions or changes after the date of this release.

 

 

 

 

 

Reconciliation of cash provided by operating activities

Reconciliation of Forecasted Non-GAAP Metrics

The reconciliations below are based in part on management's estimate of adjusted net earnings and adjusted diluted EPS, adjusted EBITDA and adjusted cash provided by operating activities for the year ending December 31, 2013. Mylan expects certain known GAAP charges and payments for 2013, as presented in the reconciliations below. Other GAAP charges and payments, including those related to potential litigation, asset impairments and restructuring programs that would be excluded from the adjusted results are possible, but their amounts are dependent on numerous factors that we currently cannot ascertain with sufficient certainty or are presently unknown. These GAAP charges and payments are dependent upon future events and valuations that have not yet occurred or been performed. The unaudited forecasted amounts presented below are stated in millions, except for GAAP and adjusted earnings per share data.

Reconciliation of forecasted net earnings and EPS to adjusted net earnings

Reconciliation of forecasted net earnings to adjusted EBITDA

Reconciliation of forecasted cash provided by operating activities

 

SOURCE Mylan Inc.