Mylan First Quarter 2015 Constant Currency Revenue Increases 15% And Adjusted Diluted EPS Increases 6% To $0.70

POTTERS BAR, England and PITTSBURGH, May 5, 2015 /PRNewswire/ -- Mylan N.V. (Nasdaq: MYL) today announced its financial results for the quarter ended March 31, 2015.

Highlights

• Total revenues of $1.87 billion, up 15% on a constant currency basis versus the prior year period. Foreign currency exchange rates negatively impacted revenues in Q1 by $93 million.
  • Generics segment third party net sales of $1.64 billion, up 15% on a constant currency basis, with positive growth across all regions
  • Specialty segment third party net sales of $211.1 million, up 8%
• Adjusted gross profit of $990.6 million, up 14%; GAAP gross profit of $830.1 million, up 13%
• Adjusted gross margin of 53%, up 240 basis points; GAAP gross margin of 44%, up 140 basis points
• Adjusted diluted earnings per ordinary share ("EPS") of $0.70, up 6%; GAAP diluted EPS of $0.13, down 55% as a result of acquisition costs from the acquisition of Abbott's non-U.S. developed markets specialty and branded generics business ("EPD Business")
• Adjusted cash provided by operating activities of $336 million, up 17%; GAAP net cash provided by operating activities of $267 million, flat versus the prior year period
• Adjusted free cash flow of $288 million, up 35%
• Successfully completed the acquisition of the EPD Business

Mylan CEO Heather Bresch commented, "Our solid first quarter results, which included constant currency revenue growth of 15% and adjusted diluted EPS growth of 6%, are in line with our expectations, marked a great start to 2015 and again demonstrated our commitment to deliver strong operational execution while making progress against our short-term and long-term strategic objectives. During the quarter, Mylan reported positive revenue growth across each of our business segments and regions, with double digit constant currency revenue growth in Europe and Rest of World and high single digit revenue growth in North America and Specialty. We were excited to complete our acquisition of the EPD Business and begin realizing the significant value potential from this transaction. We continue to remain confident in our outlook for the remainder of 2015, and there is no change to our full year financial guidance. We also remain committed to our target of at least $6.00¹ in adjusted diluted EPS in 2018.

"We remain steadfast in our legally-binding commitment to acquire Perrigo and have taken numerous concrete steps to lay out a clear and certain path towards completion. This is a transaction consistent with our previous deals and our stated long-term strategy. The combination brings clear and compelling industrial logic, which will generate significant and long-term value for customers, patients, employees, shareholders and other stakeholders. This transaction brings together complementary businesses and cultures, and results in a company with unmatched scale in operations, one of the industry's broadest and most diversified portfolios, and immense reach across distribution channels around the world. With Perrigo, we have the opportunity to create a one-of-a-kind global healthcare company that is positioned to capitalize on key industry trends, including the growing number of Rx to OTC switches underway, in order to redefine how healthcare is delivered."

Mylan CFO John Sheehan added, "Mylan's first quarter results lay the foundation for strong financial and operational performance in 2015. As of the end of Q1, our debt to EBITDA leverage was 2.1 times. Mylan continues to have substantial financial firepower to execute on the right strategic opportunities for our shareholders and stakeholders."

Generics Segment Revenue

Genericssegment third party net sales were $1.64 billion for the quarter, an increase of 9% when compared to the prior year period. When translating third party net sales for the current quarter at prior year comparative period exchange rates ("constant currency"), third party net sales increased by 15%.

• Third party net sales from North America were $844.8 million for the quarter, an increase of 8% when compared to the prior year period. This increase was primarily driven by net sales from new products and acquisition as well as favorable pricing on existing products. The effect of foreign currency translation on third party net sales was insignificant in North America.
• Third party net sales from Europe were $406.2 million for the quarter, an increase of 14% when compared to the prior year period. Constant currency third party net sales increased by 33%. This increase was primarily driven by net sales from the acquisition of the EPD Business. Further contributing to this increase were higher volumes on existing products, primarily in Italy and France, which were partially offset by lower pricing throughout Europe.
• Third party net sales from Rest of World were $392.5 million for the quarter, an increase of 6% when compared to the prior year period. Constant currency third party net sales increased by 12%. This increase was primarily driven by net sales from acquisition, new product launches in Australia and higher sales volumes in India, predominately from growth in our anti-retroviral ("ARV") franchise.

Specialty Segment Revenue

Specialtysegment reported third party net sales of $211.1 million for the quarter, an increase of 8% when compared to the prior year period. This increase was primarily due to higher net sales of the EpiPen® Auto-Injector driven by increased volume.

Total Gross Profit

Adjusted gross profit was $990.6 million and adjusted gross margins were 53% for the quarter as compared to adjusted gross profit of $865.6 million and adjusted gross margins of 50% in the comparable prior year period. The current quarter increase was due to new product introductions and net sales from acquisition. GAAP gross profit for the quarter was $830.1 million and GAAP gross margins were 44% as compared to GAAP gross profit of $737.8 million and GAAP gross margins of 43% in the comparable prior year period.

Total Profitability

Adjusted earnings from operations for the quarter were $429.7 million, up 9% from the comparable prior year period. R&D expense increased primarily from the continued investment in our biologics and respiratory growth programs. SG&A expense increased from the prior year period as a result of increased costs related to acquired businesses and increased selling and marketing costs, primarily stemming from the EpiPen® Auto-Injector direct-to-consumer marketing campaign. GAAP earnings from operations were $159.3 million for the quarter, a decrease of 33% from the comparable prior year period. This decrease in earnings from operations during the current quarter was primarily the result of increased acquisition related costs and increased amortization expense as a result of the acquisition of the EPD Business.

EBITDA, which is defined as net earnings (excluding the non-controlling interest and losses from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $340.5 million for the quarter and $392.4 million for the comparable prior year quarter. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $504.6 million for the quarter and $459.7 million for the comparable prior year period. Adjusted net earnings attributable to Mylan N.V. increased by $48.7 million to $309.1 million compared to $260.4 million for the prior year comparable period. Adjusted diluted EPS increased 6% to $0.70 compared to $0.66 in the prior year comparable period. GAAP net earningsattributable to Mylan N.V. decreased by $59.3 million to $56.6 million as compared to $115.9 million for the prior year comparable period. GAAP diluted EPS decreased 55% to $0.13 compared to $0.29 in the prior year comparable period.

Cash Flow

Adjusted cash provided by operating activities was $336 million for the three months ended March 31, 2015, compared to $286 million for the comparable prior year period. On a GAAP basis, netcash provided by operating activities was $267 million for the three months ended March 31, 2015, compared to $268 million for the comparable prior year period. Capital expenditures were approximately $48 million for the three months ended March 31, 2015 as compared to approximately $72 million for the year ended March 31, 2014. Adjusted free cash flow was $288 million for the three months ended March 31, 2015, compared to $214 million in the prior year period.

Conference Call

Mylan will host a conference call and live webcast, today, May 5, 2015, at 4:30 p.m. ET, in conjunction with the release of its financial results. The dial-in number to access the call is 800.514.4861 or 678.809.2405 for international callers. To access the live webcast please log onto Mylan's website (www.mylan.com) at least 15 minutes before the event is to begin to register and download or install any necessary software. A replay of the webcast will be available at www.mylan.com for a limited time.

Non-GAAP Financial Measures

This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("GAAP"). These non-GAAP financial measures, including, but not limited to, adjusted diluted EPS, adjusted cash provided by operating activities, adjusted gross profit, adjusted gross margins, adjusted earnings from operations, adjusted net earnings attributable to Mylan N.V., constant currency total revenue, constant currency third party net sales, EBITDA, adjusted EBITDA, debt to EBITDA leverage, and adjusted free cash flow, are presented in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance. Management uses these measures internally for forecasting, budgeting and measuring its operating performance. In addition, 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 GAAP. 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.

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