HERTFORDSHIRE, England and PITTSBURGH, March 1, 2017 /PRNewswire/ -- Mylan N.V. (NASDAQ, TASE: MYL) today announced its financial results for the quarter and year ended December 31, 2016 and provided 2017 guidance.
Fourth Quarter 2016 Financial Highlights
- Total revenues of $3.27 billion, up 31% compared to the prior year period
- North America segment third party net sales of $1.57 billion, up 22%
- Europe segment third party net sales of $927.4 million, up 50%
- Rest of World segment third party net sales of $729.2 million, up 28%
- U.S. GAAP diluted earnings per ordinary share (“U.S. GAAP EPS”) of $0.78, up 105% compared to U.S. GAAP EPS of $0.38 in the prior year period
- Adjusted diluted earnings per ordinary share (“adjusted EPS”) of $1.57, up 29% compared to $1.22 in the prior year period
Full Year 2016 Financial Highlights
- Total revenues of $11.08 billion, up 18% compared to the prior year
- U.S. GAAP EPS of $0.92, down 46% compared to $1.70 in the prior year
- Adjusted EPS of $4.89, up 14% compared to $4.30 in the prior year
- U.S. GAAP cash provided by operating activities of $2.05 billion, up 2% compared to the prior year
Mylan CEO Heather Bresch commented, “Our strong 2016 results were highlighted by year-over-year constant-currency total revenue growth of 18% and adjusted EPS growth of 14%. The fourth quarter capped off the year with impressive revenue growth of 31% and adjusted EPS growth of 29%. Again, we saw all of our regions contribute to our results for the year, with double-digit revenue increases in North America, Europe and Rest of World, reflecting the resilience, differentiation and diversity of our global platform and our unwavering focus on execution. The diversity of our business was further demonstrated by our six global therapeutic franchises that delivered approximately $1 billion or more in revenue: Respiratory and Allergy, CNS and Anesthesia, Infectious Disease, Cardiovascular, Gastrointestinal, and Diabetes and Metabolism.
“We look forward in 2017 to delivering yet another strong year of performance, with anticipated 2017 revenues of $12.25 billion to $13.75 billion and adjusted EPS of $5.15 to $5.55. We also continue to advance toward our long-stated 2018 adjusted EPS target of $6.00.”
Mylan President Rajiv Malik said, “In addition to executing on our core business, we completed during the year our acquisitions of Meda and the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, which further built our scale and breadth from a product and geographic perspective. We continued the successful integration of Mylan, bringing these transactions into our One Mylan platform. Further, we continued executing on the many drivers of our organic growth, as evidenced, for instance, by the U.S. Food and Drug Administration’s acceptance of our abbreviated new drug application for Generic Advair Diskus® and our submissions for biosimilars Pegfilgrastim and Trastuzumab. With regard to the pricing environment, we continued to see erosion both globally and in U.S. generics in the mid-single digits which was in line with our expectations, and we continue to expect a comparable environment in 2017 given the breadth and make-up of our global portfolio.”
Mylan CFO Ken Parks added, “In 2016, Mylan once again benefited from the depth and breadth of our portfolio which drove significant cash flow generation. Our adjusted free cash flow increased by more than 15% to $2.1 billion. We are positioned well to reduce debt levels, while also allowing for financial flexibility for future growth opportunities and maintaining our commitment to our investment grade credit rating.”
Total Revenues | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
(Unaudited; in millions) | 2016 | 2015 | Percent | 2016 | 2015 | Percent | |||||||||||||
Total Revenues (1) | $ | 3,267.8 | $ | 2,490.7 | 31% | $ | 11,076.9 | $ | 9,429.3 | 18% | |||||||||
North America (2) | 1,565.0 | 1,287.9 | 22% | 5,629.5 | 5,100.4 | 10% | |||||||||||||
Europe (1) (2) | 927.4 | 616.4 | 50% | 2,953.8 | 2,205.6 | 34% | |||||||||||||
Rest of World (2) | 729.2 | 570.5 | 28% | 2,383.8 | 2,056.6 | 16% | |||||||||||||
Other Revenues | 46.2 | 15.9 | 191% | 109.8 | 66.7 | 65% | |||||||||||||
(1) | For the year ended December 31, 2015, adjusted third party net sales from Europe totaled $2.22 billion and adjusted total revenues were $9.45 billion. Adjusted third party net sales from Europe and adjusted total revenues are non-GAAP financial measures. |
(2) | As a result of our acquisition of Meda on August 5, 2016 and the integration of our portfolio across our branded, generics and over-the-counter platforms in all of our regions, effective October 1, 2016, we expanded our reportable segments as follows: North America, Europe and Rest of World. As a result, the amounts previously reported under the Specialty segment have been recast to North America and amounts related to Brazil are included in Rest of World for all periods presented. Segment amounts represent third party net sales. |
Fourth Quarter 2016 Financial Results
Total Revenues
Total revenues were $3.27 billion in 2016, compared to $2.49 billion in the prior year period. Third party net sales for the current quarter were $3.22 billion compared to $2.47 billion for the prior year period, representing an increase of $746.8 million, or 30%. Other third party revenues for the current quarter were $46.2 million compared to $15.9 million in the prior year period, an increase of $30.3 million as a result of an increase in royalty income, including the impact of current year acquisitions. Below is a summary of third party net sales in each of our segments for the three months ended December 31, 2016:
- Third party net sales from North America were $1.57 billion for the quarter, an increase of 22% when compared to the prior year period. This increase was principally due to net sales from the acquisitions of Meda AB (“Meda”) and the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC (the “Topicals Business”), and to a lesser extent, net sales from new products. Partially offsetting this increase was lower pricing and volumes on existing products. The impact of foreign currency translation was insignificant within North America.
- Third party net sales from Europe were $927.4 million for the quarter, an increase of 50% when compared to the prior year period. This increase was primarily the result of net sales from the acquisition of Meda, and to a lesser extent, net sales from new products and higher volumes on existing products, partially offset by lower pricing. The unfavorable impact of foreign currency translation on current period third party net sales was approximately $19.5 million, or 4% within Europe.
- Third party net sales from Rest of World were $729.2 million for the quarter, an increase of 28% when compared to the prior year period. This increase was primarily due to net sales from the acquisition of Meda, and to a lesser extent, net sales from new products. In addition, net sales from existing products increased slightly, as higher volumes offset lower pricing throughout the region, including in our anti-retroviral (“ARV”) franchise. The favorable impact of foreign currency translation on current period third party net sales was approximately $17.2 million, or 3% within Rest of World.
Total Gross Profit
Gross profit was $1.34 billion and $1.06 billion for the fourth quarter of 2016 and 2015, respectively. Gross margins were 41% and 43% in the fourth quarter of 2016 and 2015, respectively. Gross margins were negatively impacted in the current quarter due to increased amortization of intangible assets, the amortization of acquisition-related inventory fair value adjustments and intangible asset impairment charges. This negative impact was partially offset by the positive impact of net sales from new products. Adjusted gross profit was $1.85 billion and adjusted gross margins were 57% for the quarter compared to adjusted gross profit of $1.40 billion and adjusted gross margins of 56% in the prior year period. Adjusted gross margins were positively impacted in the current quarter as a result of net sales from new products and the net impact of acquisitions.
Total Profitability
Earnings from operations decreased $108.1 million from the comparable prior year period primarily due to the Modafinil antitrust litigation settlement of $165 million, higher amortization expense and operating expenses related to recent acquisitions.
R&D expense increased from the comparable prior year period due to the inclusion of Meda and the Topicals Business, expenses incurred related to the Company’s collaboration with Momenta Pharmaceuticals, Inc. (“Momenta”) and the continued development of our respiratory, insulin and biologics programs. SG&A expense increased from the comparable prior year period primarily due to the additional expense related to the acquisitions of Meda and the Topicals Business as well as restructuring charges incurred in the current quarter.
U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders (“U.S. GAAP net earnings”) increased by $222.9 million to $417.5 million for the quarter ended December 31, 2016, compared to $194.6 million for the prior year period. Fourth quarter 2016 U.S. GAAP net earnings were negatively impacted by the reduction of earnings from operations and increased non-operating expenses including higher interest expense. Partially offsetting these decreases were fair value gains recorded on certain acquisition related contingent consideration and the recognition of an income tax benefit of $192.6 million in the fourth quarter primarily due to the mix of earnings between our U.S. and non-U.S. subsidiaries. U.S. GAAP EPS increased from $0.38 to $0.78 in the current quarter. Adjusted net earnings increased by $222.0 million to $842.2 million compared to $620.2 million for the prior year period. Adjusted EPS increased 29% to $1.57 compared to $1.22 in the prior year period.
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 $878.5 million for the quarter ended December 31, 2016, and $657.5 million for the comparable prior year quarter. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $1.21 billion for the quarter ended December 31, 2016 and $827.2 million for the comparable prior year quarter.
Year Ended December 31, 2016 Financial Results
Total Revenues
Total revenues were $11.08 billion in 2016, compared to $9.43 billion in the prior year. Third party net sales for the current year were $10.97 billion compared to $9.36 billion for the prior year, representing an increase of $1.60 billion, or 17%. Other third party revenues for the current year were $109.8 million compared to $66.7 million in the prior year, an increase of $43.1 million which is consistent with the fourth quarter increase. Below is a summary of third party net sales in each of our segments for the year ended December 31, 2016:
- Third party net sales from North America were $5.63 billion for the year ended December 31, 2016, an increase of 10% when compared to the prior year. The increase was principally due to net sales from the acquisitions of Meda, the Topicals Business and the incremental sales from the EPD Business, and to a lesser extent, net sales from new products. These increases were partially offset by lower volume and pricing on existing products. As anticipated, the U.S. generics products experienced price erosion in the mid-single digits. The unfavorable impact of foreign currency translation on current year third party net sales was approximately $7 million, or less than 1% within North America.
- Third party net sales from Europe were $2.95 billion for the year ended December 31, 2016, an increase of 34% when compared to the prior year. This increase was primarily the result of net sales from the acquisition of Meda and the incremental sales from the EPD Business, and to a lesser extent, net sales from new products. In addition, higher volumes on existing products were partially offset by lower pricing throughout Europe. The unfavorable impact of foreign currency translation on current year third party net sales was approximately $30 million, or 1% within Europe.
- Third party net sales from Rest of World were $2.38 billion for the year ended December 31, 2016, an increase of 16% when compared to the prior year. This increase was primarily driven by the acquisition of Meda, the incremental sales from the EPD Business, and to a lesser extent, new products. In addition, higher sales volumes in Japan, India, Australia and emerging markets positively contributed to the sales growth in this segment. These increases were partially offset by lower pricing throughout the segment, including the ARV franchise. However, sales within our ARV franchise increased progressively throughout 2016. The favorable impact of foreign currency translation on third party net sales was approximately $21 million, or 1%.
Total Gross Profit
Gross profit was $4.70 billion and $4.22 billion for the year ended December 31, 2016 and 2015, respectively. Gross margins were 42% and 45% for the year ended December 31, 2016 and 2015, respectively. Gross margins were negatively impacted in the current year due to increased amortization of intangible assets and purchase accounting related items consistent with the fourth quarter. This negative impact was partially offset by the positive impact of net sales from new products. Adjusted gross profit was $6.21 billion and $5.25 billion for the year ended December 31, 2016 and 2015, respectively. Adjusted gross margins were 56% in both 2016 and 2015. Adjusted gross margins were positively impacted in the current year as a result of net sales from new products and the net impact of acquisitions.
Total Profitability
Earnings from operations were $701.6 million for the year ended December 31, 2016, a decrease of 52% from the comparable prior year. This decrease was primarily due to an increase in litigation settlements, higher amortization expense and operating expenses related to acquisitions completed during 2016.
R&D expense for the year ended December 31, 2016 increased from the comparable prior year consistent with the fourth quarter drivers.
SG&A expense increased from the comparable prior year period principally due to the additional expense related to the acquisition of Meda and the additional two months of expense from the EPD Business.
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