HERTFORDSHIRE, England and
PITTSBURGH, Aug. 9, 2017
/PRNewswire/ -- Mylan N.V. (NASDAQ, TASE: MYL) today announced
its financial results for the quarter and six months ended
June 30, 2017.
Second Quarter 2017 Financial Highlights
- Total revenues of $2.96 billion,
up 16% compared to the prior year period
-
- North America segment third
party net sales of $1.28 billion,
down 9%; and up approximately 4% excluding the decrease in sales of
the EpiPen® Auto-Injector of approximately $172 million
- Europe segment third party net
sales of $954.3 million, up 59%
- Rest of World segment third party net sales of $692.6 million, up 29%
- U.S. GAAP diluted earnings per ordinary share ("U.S. GAAP EPS")
of $0.55, up 67% over the prior year
period. Adjusted diluted earnings per ordinary share ("adjusted
EPS") of $1.10, down 5% over the
prior year period.
- U.S. GAAP cash provided by operating activities of $567.8 million, up 36% compared to $416.6 million in the prior year period
- Mylan is not providing forward looking guidance for U.S. GAAP
reported financial measures or a quantitative reconciliation of
forward-looking non-GAAP financial measures. Please see "Non-GAAP
Financial Measures" for additional information.
Mylan CEO Heather Bresch
commented, "Our industry, along with the entire healthcare sector,
is at an inflection point. This is providing investors an
opportunity to differentiate between pharmaceutical companies
focused solely on generics and/or specialty medicines and those
capable of delivering a broad and diverse portfolio across multiple
channels in various geographies, which remains Mylan's
strategy.
Today, we are a global pharmaceutical company that is a leader
in each of our regions, as demonstrated by our second quarter
performance. We generated total revenues of close to $3 billion, a 16% year-over-year increase driven
by growth in our Europe and Rest
of World segments, which now account for more than half of Mylan's
total revenues. Challenges in our North
America segment resulted in adjusted EPS of $1.10, down 5% compared to the same period in
2016.
"Given the region's ongoing challenges and the uncertain U.S.
regulatory environment, we have elected to defer all major U.S.
launches from our full year 2017 financial guidance to 2018,
including generic Advair® and generic Copaxone®. As a result, we
now expect to deliver total revenues this year of between
$11.5 billion and $12.5 billion, and
adjusted EPS of between $4.30 and
$4.70.
"Notwithstanding the above, as we look to 2018, we are moving
our target of $6.00 in adjusted EPS
to at least $5.40. This new target
represents 20% growth from 2017 based on the midpoint of our
revised adjusted EPS guidance range. Looking ahead, we continue to
have great confidence in our underlying business in every region
and the opportunities we have for long-term growth."
President Rajiv Malik said, "Our
global integrated platform has long given us the strength to manage
whatever headwinds come our way and ensure sustainable growth. By
having always managed Mylan for long-term success, we have been
able to harvest many exciting opportunities, the most recent of
which include our Meda and Topicals Business acquisitions, which
continue to meet and exceed our expectations.
"We also continue to navigate a challenging competitive and
pricing environment and expect generic price erosion for the year
of mid-single digits globally, with high-single-digit erosion
expected in North America.
Furthermore, we continue to make great progress on our key pipeline
programs, and while we may experience delays, mostly in the U.S.,
in realizing some of these opportunities, our confidence in our
ability to bring these important products to market and maximize
their potential has not changed."
Mylan CFO Ken Parks added, "In
the second quarter, Mylan once again drove strong cash flow
generation, as demonstrated by the 48% increase in adjusted free
cash flow to $613.1 million. This
strength positions us 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
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(Unaudited; in
millions)
|
2017
|
|
2016
|
|
Percent
Change
|
|
2017
|
|
2016
|
|
Percent
Change
|
Total
Revenues
|
$
|
2,962.2
|
|
|
$
|
2,560.7
|
|
|
16%
|
|
$
|
5,681.7
|
|
|
$
|
4,752.0
|
|
|
20%
|
North America
(1)
|
1,279.6
|
|
|
1,401.5
|
|
|
(9)%
|
|
2,494.5
|
|
|
2,559.0
|
|
|
(3)%
|
Europe
(1)
|
954.3
|
|
|
600.9
|
|
|
59%
|
|
1,846.3
|
|
|
1,185.2
|
|
|
56%
|
Rest of World
(1)
|
692.6
|
|
|
537.5
|
|
|
29%
|
|
1,273.1
|
|
|
971.8
|
|
|
31%
|
Other
Revenues
|
35.7
|
|
|
20.8
|
|
|
72%
|
|
67.8
|
|
|
36.0
|
|
|
88%
|
(1)
|
As previously
reported, 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.
|
Second Quarter 2017 Financial Results
Total Revenues
Total revenues were $2.96 billion
in the second quarter of 2017, compared to $2.56 billion in the prior year period. Third
party net sales for the current quarter were $2.93 billion compared to $2.54 billion for the prior year period,
representing an increase of $386.6
million, or 15%. The increase in total revenues included
third party net sales growth in the Europe segment of 59%, and in the Rest of
World segment of 29%. Third party net sales declined in the
North America segment by 9%.
Contributing to the overall increase in total revenues were net
sales from the acquisitions of Meda AB (publ) ("Meda") and the
non-sterile, topical-focused business of Renaissance Acquisition
Holdings, LLC (the "Topicals Business") totaling approximately
$633.1 million. This increase was
partially offset by a net decrease in net sales of existing
products and lower new product introductions of approximately
$232.9 million. The decrease from
existing products was due primarily to lower pricing and, to a
lesser extent, lower volumes in the current period. Other third
party revenues for the current quarter were $35.7 million compared to $20.8 million in the prior year period, an
increase of $14.9 million and was
principally the result of an increase in royalty income from
arrangements acquired in the Meda acquisition. The unfavorable
impact of foreign currency translation on current quarter total
revenues was approximately $14.0
million or less than 1%. Below is a summary of third party
net sales in each of our segments for the three months ended
June 30, 2017:
- Third party net sales from North
America were $1.28 billion
for the quarter, a decrease of 9% when compared to the prior year
period. Net sales from the acquisitions of Meda and the Topicals
Business totaled approximately $150.7
million in the current quarter. Net sales were negatively
impacted in the current quarter due to a decline in sales of
existing products as a result of lower volume and pricing. As
anticipated, the U.S. generics products experienced price erosion
in the mid-single digits. Sales of the EpiPen® Auto-Injector
declined in the current quarter as a result of increased
competition, the impact of the launch of the authorized generic and
higher accrued governmental rebates. The impact of foreign currency
translation on current period third party net sales was less than
1% within North America.
- Third party net sales from Europe were $954.3
million for the quarter, an increase of 59% when compared to
the prior year period. The increase was primarily the result of net
sales from the acquisition of Meda which totaled approximately
$378.2 million. This increase was
partially offset by lower volume on existing products. The
unfavorable impact of foreign currency translation on current
period third party net sales was $18.8
million, or 3% within Europe.
- Third party net sales from Rest of World were
$692.6 million for the quarter, an
increase of 29% when compared to the prior year period. This
increase was primarily driven by the acquisition of Meda which
contributed net sales of approximately $104.2 million. In addition, net sales from
existing products increased principally as a result of higher sales
from our anti-retroviral ("ARV") franchise, including active
pharmaceutical ingredients, and increased sales in emerging
markets. Sales from new products, primarily in Australia, also had a favorable impact.
Throughout the segment, sales from new products and higher volumes
on existing products more than offset lower pricing. Third party
net sales from Rest of World were favorably impacted by the effect
of foreign currency translation by approximately $8 million, or 2% during the three months ended
June 30, 2017.
Total Gross Profit
Gross profit was $1.23 billion and
$1.17 billion for the second quarter
of 2017 and 2016, respectively. Gross margins were 41% and 46% in
the second quarter of 2017 and 2016, respectively. Gross margins
were negatively impacted in the current quarter by increased
amortization expense as a result of the acquisitions of Meda and
the Topicals Business by approximately 335 basis points and lower
gross profit from the sales of existing products in North America, including the EpiPen®
Auto-Injector, by approximately 320 basis points, partially offset
by the contributions from the acquired businesses. Adjusted gross
profit was $1.60 billion and adjusted
gross margins were 54% for the second quarter of 2017 compared to
adjusted gross profit of $1.45
billion and adjusted gross margins of 56% in the prior year
period. Adjusted gross margins were negatively impacted in the
current quarter as a result of lower gross profit from the sales of
existing products in North
America, including the EpiPen® Auto-Injector, by
approximately 260 basis points, partially offset by the
contributions from acquired businesses.
Total Profitability
Earnings from operations increased $62.5
million from the comparable prior year period primarily due
to the increase in gross profit, partially offset by higher
SG&A expense.
R&D expense increased slightly from the comparable prior
year period due to the impact of acquisitions partially offset by
lower expenditures principally related to the Company's respiratory
programs due to the timing of clinical activities.
SG&A expense increased from the comparable prior year period
primarily due to the additional expense related to the acquired
businesses, partially offset by lower acquisition related costs,
including consulting and legal costs and integration savings.
During the second quarter of 2017, the Company recorded a gain
of $50.0 million in litigation
settlements and other contingencies, net primarily as a result of a
gain of approximately $88.1 million
for a fair value adjustment related to the contingent consideration
for the respiratory delivery platform. The fair value adjustment
was the result of changes to assumptions relating to the timing of
the product launch along with other competitive and market factors.
Offsetting this gain, were litigation accruals of approximately
$38.3 million during the current
quarter primarily related to modafinil and EpiPen® Auto-Injector
litigation matters.
U.S. GAAP net earnings increased by $128.6 million to $297.0
million for the three months ended June 30, 2017,
compared to $168.4 million for the
prior year period. Second quarter 2017 U.S. GAAP net earnings were
positively impacted by the increase in earnings from operations and
the non-operating gains described above. Partially offsetting this
increase was higher interest expense in the current quarter
primarily related to the Meda acquisition financing. U.S. GAAP EPS
increased from $0.33 to $0.55 in the current quarter. Adjusted net
earnings decreased to $589.9 million
compared to $592.4 million for the
prior year period. Adjusted EPS decreased to $1.10 from $1.16 in
the prior year period. The current quarter includes the full
dilutive impact of 26.4 million shares issued for the Meda
acquisition.
EBITDA, which is defined as net earnings (excluding the losses
from equity method investees) plus income taxes, interest expense,
depreciation and amortization, was $903.9
million for the quarter ended June 30, 2017 and
$621.7 million for the comparable
prior year quarter. After adjusting for certain items as further
detailed in the reconciliation below, adjusted EBITDA was
$930.9 million for the quarter ended
June 30, 2017 and $821.4 million
for the comparable prior year quarter.
Six Months Ended June 30,
2017 Financial Results
Total Revenues
For the six months ended June 30, 2017, Mylan reported
total revenues of $5.68 billion,
compared to $4.75 billion for the
comparable prior year period, representing an increase of
$929.7 million, or 20%. Total
revenues include both net sales and other revenues from third
parties. The increase in total revenues included third party net
sales growth in the Europe segment
of 56%, and in the Rest of World segment of 31%. Third party net
sales for the six months ended June 30, 2017 were $5.61 billion, compared to $4.72 billion for the comparable prior year
period, representing an increase of $897.9
million, or 19%. Contributing to the overall increase in
total revenues was net sales from the acquisitions of Meda and the
Topicals Business totaling approximately $1.24 billion. This increase was partially offset
by a net decrease in net sales from existing products and lower new
product introductions of approximately $318.0 million. Other third party revenues for
the six months ended June 30, 2017 were $67.8 million, compared to $36.0 million for the comparable prior year
period, an increase of $31.8 million.
The increase in other third party revenues was principally the
result of an increase in royalty income from arrangements acquired
in the Meda acquisition.
- Third party net sales from North
America decreased by $64.5
million or 3% during the six months ended June 30, 2017 when compared to the prior year
period. Net sales of existing products decreased due to lower
pricing and volume. This was partially offset by net sales from the
acquisitions of Meda and the Topicals Business, totaling
approximately $332.0 million.
For the six month period ending June 30,
2017, the U.S. generics products experienced price erosion
in the mid-single digits. Sales of the EpiPen®
Auto-Injector declined in the six month period as a result of
increased competition, the impact of the launch of the authorized
generic and higher accrued governmental rebates. The impact of
foreign currency translation on the current period third party net
sales was insignificant within North
America.
- Third party net sales from Europe increased by $661.1 million or 56% during the six months ended
June 30, 2017 when compared to the
prior year period. This increase was primarily the result of net
sales from the acquisition of Meda of approximately $716.0 million during the six months ended
June 30, 2017. Net sales of existing
products decreased primarily as a result of lower volume. The
unfavorable impact of foreign currency translation on current
period third party net sales was $43.1
million, or 4% within Europe.
- Third party net sales from Rest of World increased by
$301.3 million or 31% during the six
months ended June 30, 2017 when
compared to the prior year period. This increase was primarily the
result of net sales from the acquisition of Meda totaling
approximately $190.9 million.
In addition, net sales from existing products increased
principally as a result of higher sales from our ARV franchise.
Throughout the segment, sales from new products, particularly in
Australia, and higher volumes on
existing products more than offset lower pricing. The
favorable impact of foreign currency translation was $20.8 million, or 2%.
Total Gross Profit
Gross profit for the six months ended June 30, 2017 was
$2.31 billion and gross margins were
41%. For the six months ended June 30, 2016, gross profit was
$2.08 billion and gross margins were
44%. Gross margins were negatively impacted in the current period
by increased amortization expense as a result of the acquisitions
of Meda and the Topicals Business by approximately 350 basis
points, lower gross profit from the sales of existing products in
North America, including
the EpiPen® Auto-Injector, by approximately 250 basis points,
partially offset by the contributions from the acquired businesses
noted above. Adjusted gross margins were approximately 54% for the
six months ended June 30, 2017, compared to approximately 55%
for the six months ended June 30, 2016. Adjusted gross margins
were negatively impacted in the current period as a result of lower
gross profit from the sales of existing products in North America, including the EpiPen®
Auto-Injector, by approximately 200 basis points, partially offset
by the contributions from the acquired businesses.
Total Profitability
Earnings from operations increased $184.1
million from the comparable prior year period primarily due
to the increase in gross profit, partially offset by higher
SG&A expense.
R&D expense for the six months ended June 30, 2017 was
$398.6 million, compared to
$433.1 million for the comparable
prior year period, a decrease of $34.5
million. The decrease was due to lower
expenditures totaling approximately $60.6
million principally related to the Company's respiratory and
biologics programs due to the timing of clinical activities when
compared to the prior year period. Partially offsetting this
decrease was the impact from the acquisitions of Meda and the
Topicals Business, which increased R&D expense by approximately
$31.9 million in the current year
period.
SG&A for the six months ended June 30, 2017 was
$1.25 billion, compared to
$1.13 billion for the comparable
prior year period, an increase of $121.5
million. The increase is due primarily to additional expense
related to the acquisitions of Meda and the Topicals Business which
increased SG&A by approximately $194.4
million. Partially offsetting this increase were lower
acquisition related costs, including consulting and legal costs and
integration savings.
During the six months ended June 30, 2017, the Company
recorded a gain of approximately $88.1
million for a fair value adjustment related to the
contingent consideration for the respiratory delivery platform. The
fair value adjustment was the result of changes to assumptions
relating to the timing of the product launch along with other
competitive and market factors. Offsetting this gain, were
litigation accruals of approximately $37.3
million primarily related to the modafinil and EpiPen®
Auto-Injector litigation matters and a fair value loss of $9.9
million related to Jai Pharma Limited contingent consideration.
Other expense, net, was $29.8
million for the six months ended June 30, 2017,
compared to $133.8 million for the
comparable prior year period. For the six months ended June 30, 2016, other expense,
net included foreign exchange losses of $53.7
million which included $84.2 million of unrealized
mark-to-market losses related to the Company's Swedish kronor
("SEK") non-designated foreign currency contracts that were entered
into to economically hedge the SEK purchase price for the Meda
acquisition, partially offset by foreign currency gains and the
write off of approximately $33.2 million of financing
fees related to the termination of the bridge credit agreement
relating to the Meda acquisition.
U.S. GAAP net earnings increased by $181.1 million to $363.4
million for the six months ended June 30, 2017,
compared to $182.3 million for the
prior year period. For the six months ended June 30, 2017, U.S. GAAP net earnings were
positively impacted by the increase in earnings from operations and
the non-operating gains described above. Partially offsetting this
increase was higher interest expense primarily related to the Meda
acquisition financing. U.S. GAAP EPS increased from $0.36 to $0.68 in
the current period. Adjusted net earnings increased to $1.09 billion from $978.7
million for the prior year period. Adjusted EPS increased to
$2.03 from $1.92 in the prior year period. The current
period includes the full dilutive impact of 26.4 million shares
issued for the Meda acquisition.
EBITDA was $1.56 billion for the
six months ended June 30, 2017, and
$1.04 billion for the comparable
prior year period. After adjusting for certain items as further
detailed in the reconciliation below, adjusted EBITDA was
$1.74 billion for the six months
ended June 30, 2017 and $1.41 billion for the comparable prior year
period.
Cash Flow
Net cash provided by operating activities was $1.02 billion for the six months ended
June 30, 2017 compared to $497.1
million for the prior year period. Capital expenditures were
approximately $109.3 million for the
six months ended June 30, 2017 compared to approximately
$121.0 million for the comparable
prior year. Adjusted net cash provided by operating
activities was $1.20 billion for
the six months ended June 30, 2017 compared to $686.5 million for the prior year period.
Adjusted free cash flow, defined as adjusted net cash provided by
operating activities less capital expenditures, was $1.09 billion for the six months ended
June 30, 2017, compared to $565.5
million in the prior year. Increases in 2017 were driven
primarily by working capital improvements.
Guidance
Mainly as a result of expected delays in the timing of certain
key new product launches, Mylan is revising its previous 2017
guidance. Mylan now expects 2017 total revenues in the range of
$11.5 billion to $12.5 billion, the
midpoint of which represents an increase of 8% versus 2016. As
discussed in the "Non-GAAP Financial Measures" section below, Mylan
is not otherwise providing forward looking guidance for U.S. GAAP
reported financial measures or a quantitative reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable U.S. GAAP measure. Adjusted EPS is expected to be in the
range of $4.30 to $4.70, the midpoint
of which represents a decrease of 8% versus 2016.
The following table provides a summary of Mylan's revised 2017
full year guidance ranges.
Full Year 2017 Financial Guidance
(In millions,
except for EPS and %s)
|
|
2017 Guidance
Range
|
2017
Midpoint
|
Total
Revenues
|
|
$11,500 -
$12,500
|
$12,000
|
Adjusted Gross
Margins
|
|
53.5% -
55.0%
|
54.3%
|
Adjusted R&D as %
of Total Revenues
|
|
6.0% -
7.0%
|
6.5%
|
Adjusted SG&A as
% of Total Revenues
|
|
19.0% -
20.0%
|
19.5%
|
Adjusted
EBITDA
|
|
$3,750 -
$3,950
|
$3,850
|
Adjusted Net
Earnings
|
|
$2,300 -
$2,500
|
$2,400
|
Adjusted
EPS
|
|
$4.30 -
$4.70
|
$4.50
|
Adjusted Cash
Provided by Operating Activities
|
|
$2,500 -
$2,800
|
$2,650
|
Capital
Expenditures
|
|
$400 -
$500
|
$450
|
Adjusted Free Cash
Flow
|
|
$2,000 -
$2,400
|
$2,200
|
Adjusted Effective
Tax Rate
|
|
18.0% -
18.5%
|
18.3%
|
Average Diluted
Shares Outstanding
|
|
535.0 -
540.0
|
537.5
|
Conference Call
Mylan N.V. will host a conference call and live webcast, today
at 10:00 a.m. ET, to review the
company's financial results for the second quarter ended
June 30, 2017. The briefing can be accessed live by calling
800.514.4861 or 678.809.2405 for international callers (ID#:
53957196) or at the following address on the company's website:
investor.mylan.com. A replay of the webcast will also be available
on the website.
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 ("U.S. GAAP"). These
non-GAAP financial measures, including, but not limited to,
adjusted EPS, adjusted gross profit, adjusted gross margins,
adjusted net earnings, EBITDA, adjusted EBITDA, adjusted net cash
provided by operating activities, adjusted free cash flow, adjusted
SG&A as a percentage of total revenues, adjusted R&D as a
percentage of total revenues and adjusted effective tax rate are
presented in order to supplement investors' and other readers'
understanding and assessment of the financial performance of Mylan
N.V. ("Mylan" or the "Company"). Management uses these measures
internally for forecasting, budgeting, measuring its operating
performance, and incentive-based awards. 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 U.S. GAAP. We
believe that non-GAAP financial measures are useful supplemental
information for our investors and when considered together with our
U.S. GAAP financial measures and the reconciliation to the most
directly comparable U.S. GAAP financial measure, provide a more
complete understanding of the factors and trends affecting our
operations. The financial performance of the Company is measured by
senior management, in part, using the adjusted metrics included
herein, along with other performance metrics. Management's annual
incentive compensation is derived, in part, based on the adjusted
EPS metric and the adjusted free cash flow metric. In addition, the
Company believes that including EBITDA and supplemental adjustments
applied in presenting adjusted EBITDA pursuant to our debt
agreements 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. We also report sales performance
using the non-GAAP financial measure of "constant currency" total
revenues and third party net sales. This measure provides
information on the change in net sales assuming that foreign
currency exchange rates had not changed between the prior and
current period. The comparisons presented as constant currency
rates reflect comparative local currency sales at the prior year's
foreign exchange rates. We routinely evaluate our third party net
sales performance at constant currency so that sales results can be
viewed without the impact of foreign currency exchange rates,
thereby facilitating a period-to-period comparison of our
operational activities, and we believe that this presentation also
provides useful information to investors for the same reason. The
"Summary of Total Revenues by Segment" table below compares third
party net sales on an actual and constant currency basis for each
reportable segment for the three and six months ended June 30,
2017 and 2016. Also, other than as described, set forth below,
Mylan has provided reconciliations of such non-GAAP financial
measures to the most directly comparable U.S. GAAP financial
measures. Investors and other readers are encouraged to review the
related U.S. GAAP financial measures and the reconciliations of the
non-GAAP measures to their most directly comparable U.S. GAAP
measures set forth below, and investors and other readers should
consider non-GAAP measures only as supplements to, not as
substitutes for or as superior measures to, the measures of
financial performance prepared in accordance with U.S. GAAP.
For additional information regarding the components and uses of
Non-GAAP financial measures refer to Management's Discussion and
Analysis of Financial Condition and Results of Operations-- Use of
Non-GAAP Financial Measures section of Mylan's Quarterly Report on
Form 10-Q for the three months ended June 30, 2017.
Mylan is not providing forward looking guidance for U.S. GAAP
reported financial measures or a quantitative reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable U.S. GAAP measure because it is unable to predict with
reasonable certainty the ultimate outcome of certain significant
items without unreasonable effort. These items include, but are not
limited to, acquisition-related expenses including those related to
the Meda transaction, restructuring expenses, asset impairments,
litigation settlements and other contingencies, including changes
to contingent consideration and certain other gains or losses.
These items are uncertain, depend on various factors, and could
have a material impact on U.S. GAAP reported results for the
guidance period. With respect to the targeted adjusted EPS in 2018,
the target does not represent Company guidance and the Company is
not providing a U.S. GAAP target or reconciliation because the
Company has not quantified all future amounts, including U.S. GAAP
amounts, related to this target.
Reconciliation of Adjusted Earnings and Adjusted
EPS
Below is a reconciliation of U.S. GAAP net earnings and U.S.
GAAP EPS to adjusted net earnings and adjusted EPS for the three
and six months ended June 30, 2017 compared to the prior year
period:
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in millions,
except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP net
earnings and U.S. GAAP diluted earnings per share
|
$
|
297.0
|
|
|
$
|
0.55
|
|
|
$
|
168.4
|
|
|
$
|
0.33
|
|
|
$
|
363.4
|
|
|
$
|
0.68
|
|
|
$
|
182.3
|
|
|
$
|
0.36
|
|
Purchase accounting
related amortization (primarily included in cost of sales)
(a)
|
355.0
|
|
|
|
|
255.4
|
|
|
|
|
704.2
|
|
|
|
|
504.7
|
|
|
|
Litigation
settlements, net (b)
|
38.2
|
|
|
|
|
(0.1)
|
|
|
|
|
37.3
|
|
|
|
|
(1.6)
|
|
|
|
Interest
expense
|
5.3
|
|
|
|
|
7.7
|
|
|
|
|
12.6
|
|
|
|
|
13.4
|
|
|
|
Accretion of
contingent consideration liability and other fair value adjustments
(c)
|
(79.9)
|
|
|
|
|
10.3
|
|
|
|
|
(62.2)
|
|
|
|
|
20.3
|
|
|
|
Clean energy
investments pre-tax loss
|
21.7
|
|
|
|
|
20.1
|
|
|
|
|
44.0
|
|
|
|
|
45.6
|
|
|
|
Acquisition related
costs (primarily included in cost of sales and selling, general and
administrative expense) (d)
|
27.0
|
|
|
|
|
174.6
|
|
|
|
|
58.3
|
|
|
|
|
236.2
|
|
|
|
Restructuring related
costs (e)
|
16.2
|
|
|
|
|
7.7
|
|
|
|
|
39.3
|
|
|
|
|
20.9
|
|
|
|
Other special items
included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
8.0
|
|
|
|
|
8.4
|
|
|
|
|
15.1
|
|
|
|
|
22.2
|
|
|
|
Research and
development expense (f)
|
9.7
|
|
|
|
|
10.3
|
|
|
|
|
74.8
|
|
|
|
|
76.4
|
|
|
|
Selling, general and
administrative expense
|
2.0
|
|
|
|
|
7.2
|
|
|
|
|
7.9
|
|
|
|
|
2.2
|
|
|
|
Other expense,
net
|
(0.8)
|
|
|
|
|
0.5
|
|
|
|
|
5.3
|
|
|
|
|
2.7
|
|
|
|
Tax effect of the
above items and other income tax related items
|
(109.5)
|
|
|
|
|
(78.1)
|
|
|
|
|
(210.3)
|
|
|
|
|
(146.6)
|
|
|
|
Adjusted net earnings
and adjusted EPS
|
$
|
589.9
|
|
|
$
|
1.10
|
|
|
$
|
592.4
|
|
|
$
|
1.16
|
|
|
$
|
1,089.7
|
|
|
$
|
2.03
|
|
|
$
|
978.7
|
|
|
$
|
1.92
|
|
Weighted average
diluted ordinary shares outstanding
|
537.0
|
|
|
|
|
509.7
|
|
|
|
|
537.0
|
|
|
|
|
509.6
|
|
|
|
____________
Significant items for the three and six months ended
June 30, 2017 include the following:
(a)
|
The increase in
purchase accounting related amortization is due to the amortization
expense associated with the intangible assets related to the
Topicals Business and Meda acquisitions.
|
(b)
|
Litigation
settlements, net increase is due to additional accruals for the
modafinil and EpiPen® Auto-Injector litigation matters.
|
(c)
|
Change to contingent
consideration liability is due to a gain recognized for the fair
value adjustment of $88 million for the respiratory delivery
platform contingent liability.
|
(d)
|
Acquisition related
costs incurred in 2016 primarily relate to the acquisition of the
Topicals Business (June 2016) and costs related to the Meda
acquisition. These costs primarily related to consulting,
professional, and legal costs. Acquisition related costs incurred
in 2017 consist primarily of integration activities.
|
(e)
|
Restructuring related
costs includes approximately $3.4 million recognized in cost of
sales, $0.1 million recognized in R&D, and $12.7 million
recognized in SG&A for the three months ended June 30, 2017.
For the six months ended June 30, 2017, approximately $16.3 million
is included in cost of sales, $1.4 million is included in R&D
and $21.6 million is included in SG&A.
|
(f)
|
R&D expense for
the three months ended June 30, 2017 includes $8.7 million related
to Momenta collaboration expense. For the six months ended
June 30, 2017, R&D expense includes an upfront expense of
approximately $50 million related to a joint development and
marketing agreement for a respiratory product, $14.5 million
related to Momenta collaboration expense and other similar smaller
agreements. For the six months ended June 30, 2016, R&D expense
includes a $45 million upfront payment to Momenta and $15 million
of milestone payments to Theravance Biopharma.
|
Below is a reconciliation of U.S. GAAP net earnings to EBITDA
and adjusted EBITDA for the three and six months ended
June 30, 2017 compared to the prior year period (in
millions):
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP net
earnings
|
$
|
297.0
|
|
|
$
|
168.4
|
|
|
$
|
363.4
|
|
|
$
|
182.3
|
|
Add
adjustments:
|
|
|
|
|
|
|
|
Net contribution
attributable to equity method investments
|
21.7
|
|
|
24.9
|
|
|
54.9
|
|
|
55.8
|
|
Income tax
provision
|
27.7
|
|
|
34.7
|
|
|
32.9
|
|
|
39.8
|
|
Interest
expense
|
136.3
|
|
|
90.3
|
|
|
274.5
|
|
|
160.6
|
|
Depreciation and
amortization
|
421.2
|
|
|
303.4
|
|
|
836.7
|
|
|
600.5
|
|
EBITDA
|
$
|
903.9
|
|
|
$
|
621.7
|
|
|
$
|
1,562.4
|
|
|
$
|
1,039.0
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
18.9
|
|
|
25.4
|
|
|
42.0
|
|
|
51.9
|
|
Litigation
settlements and other contingencies, net
|
(50.0)
|
|
|
(0.1)
|
|
|
(41.0)
|
|
|
(1.6)
|
|
Restructuring & other special
items
|
58.1
|
|
|
174.4
|
|
|
180.1
|
|
|
315.8
|
|
Adjusted
EBITDA
|
$
|
930.9
|
|
|
$
|
821.4
|
|
|
$
|
1,743.5
|
|
|
$
|
1,405.1
|
|
About Mylan
Mylan is a global pharmaceutical company committed to setting
new standards in healthcare. 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
excellence a habit; do what's right, not what's easy; and impact
the future through passionate global leadership. We market a
growing portfolio of more than 7,500 products around the world,
including antiretroviral therapies on which approximately 50% of
people being treated for HIV/AIDS in the developing world depend.
We market our products in more than 165 countries and territories.
We are one of the world's largest producers of active
pharmaceutical ingredients. Every member of our more than
35,000-strong workforce is dedicated to creating better health for
a better world, one person at a time. Learn more at
mylan.com.
FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements." These
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may include, without limitation, 2017
full-year financial guidance and targeted 2018 adjusted EPS; that
Mylan continues to have great confidence in its underlying business
in every region and the opportunities Mylan has for long-term
growth; that Mylan expects generic price erosion for the year of
mid-single digits globally, with high-single-digit erosion expected
in North America; that Mylan
continues to make great progress on its key pipeline programs, and
while it may experience delays, mostly in the U.S., in realizing
some of these opportunities, Mylan's confidence in its ability to
bring these important products to market and maximize their
potential has not changed; and that Mylan's strong cash flow
generation positions it well to reduce debt levels, while also
allowing for financial flexibility for future growth opportunities
and maintaining its commitment to its investment grade credit
rating. These may often be identified by the use of words such as
"will," "may," "could," "should," "would," "project," "believe,"
"anticipate," "expect," "plan," "estimate," "forecast,"
"potential," "intend," "continue," "target," and variations of
these words or comparable words. Because forward-looking 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: the ability to
meet expectations regarding the accounting and tax treatments of
Mylan's acquisition (the "EPD Transaction") of Mylan Inc. and
Abbott Laboratories' non-U.S. developed markets specialty and
branded generics business (the "EPD Business") and the acquisition
of Meda by Mylan (the "Meda Transaction"); changes in relevant tax
and other laws, including but not limited to changes in the U.S.
tax code and healthcare and pharmaceutical laws and regulations in
the U.S. and abroad; actions and decisions of healthcare and
pharmaceutical regulators; the integration of the EPD Business and
Meda being more difficult, time-consuming, or costly than expected;
operating costs, customer loss, and business disruption (including,
without limitation, difficulties in maintaining relationships with
employees, customers, clients, or suppliers) being greater than
expected following the EPD Transaction and the Meda Transaction;
the retention of certain key employees of the EPD Business and Meda
being difficult; the possibility that Mylan may be unable to
achieve expected synergies and operating efficiencies in connection
with the EPD Transaction, the Meda Transaction, and the
December 2016 announced restructuring
program in certain locations, within the expected time-frames or at
all and to successfully integrate the EPD Business and Meda; with
respect to the Company agreeing to the terms of a $465 million settlement with the U.S. Department
of Justice and other government agencies related to the
classification of the EpiPen® Auto-Injector and EpiPen Jr®
Auto-Injector (collectively, "EpiPen® Auto-Injector") for purposes
of the Medicaid Drug Rebate Program, the inability or unwillingness
on the part of any of the parties to finalize the settlement, any
legal or regulatory challenges to the settlement, and any failure
by third parties to comply with their contractual obligations;
expected or targeted future financial and operating performance and
results; the capacity to bring new products to market, including
but not limited to where Mylan uses its business judgment and
decides to manufacture, market, and/or sell products, directly or
through third parties, notwithstanding the fact that allegations of
patent infringement(s) have not been finally resolved by the courts
(i.e., an "at-risk launch"); any regulatory, legal, or other
impediments to Mylan's ability to bring new products, including but
not limited to generic Advair, to market; success of clinical
trials and Mylan's ability to execute on new product opportunities,
including but not limited to generic Advair; any changes in or
difficulties with our inventory of, and our ability to manufacture
and distribute, the EpiPen® Auto-Injector to meet anticipated
demand; the potential impact of any change in patient access to the
EpiPen® Auto-Injector and the introduction of a generic version of
the EpiPen® Auto-Injector; the scope, timing, and outcome of any
ongoing legal proceedings, including government investigations, and
the impact of any such proceedings on financial condition, results
of operations, and/or cash flows; the ability to protect
intellectual property and preserve intellectual property rights;
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 impact of
competition; changes in the economic and financial conditions of
the businesses of Mylan; the inherent challenges, risks, and costs
in identifying, acquiring, and integrating complementary or
strategic acquisitions of other companies, products, or assets and
in achieving anticipated synergies; 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 U.S. GAAP and related standards or on
an adjusted basis. For more detailed information on the risks and
uncertainties associated with Mylan's business activities, see the
risks described in Mylan's Annual Report on Form 10-K for the year
ended December 31, 2016, as amended,
and our other filings with the Securities and Exchange Commission
(the "SEC"). You can access Mylan's filings with the SEC through
the SEC website at www.sec.gov, and Mylan strongly encourages you
to do so. Mylan undertakes no obligation to update any statements
herein for revisions or changes after the date of this release.
Mylan N.V. and
Subsidiaries Condensed Consolidated Statements of
Operations (Unaudited; in millions, except per share
amounts)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$
|
2,926.5
|
|
|
$
|
2,539.9
|
|
|
$
|
5,613.9
|
|
|
$
|
4,716.0
|
|
Other
revenues
|
35.7
|
|
|
20.8
|
|
|
67.8
|
|
|
36.0
|
|
Total
revenues
|
2,962.2
|
|
|
2,560.7
|
|
|
5,681.7
|
|
|
4,752.0
|
|
Cost of
sales
|
1,736.8
|
|
|
1,389.0
|
|
|
3,371.3
|
|
|
2,673.3
|
|
Gross
profit
|
1,225.4
|
|
|
1,171.7
|
|
|
2,310.4
|
|
|
2,078.7
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
181.1
|
|
|
179.5
|
|
|
398.6
|
|
|
433.1
|
|
Selling, general and
administrative
|
620.9
|
|
|
581.4
|
|
|
1,252.2
|
|
|
1,130.7
|
|
Litigation
settlements and other contingencies, net
|
(50.0)
|
|
|
(0.1)
|
|
|
(41.0)
|
|
|
(1.6)
|
|
Total operating
expenses
|
752.0
|
|
|
760.8
|
|
|
1,609.8
|
|
|
1,562.2
|
|
Earnings from
operations
|
473.4
|
|
|
410.9
|
|
|
700.6
|
|
|
516.5
|
|
Interest
expense
|
136.3
|
|
|
90.3
|
|
|
274.5
|
|
|
160.6
|
|
Other expense,
net
|
12.4
|
|
|
117.5
|
|
|
29.8
|
|
|
133.8
|
|
Earnings before
income taxes
|
324.7
|
|
|
203.1
|
|
|
396.3
|
|
|
222.1
|
|
Income tax
provision
|
27.7
|
|
|
34.7
|
|
|
32.9
|
|
|
39.8
|
|
Net
earnings
|
297.0
|
|
|
168.4
|
|
|
363.4
|
|
|
182.3
|
|
Earnings per ordinary
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.56
|
|
|
$
|
0.33
|
|
|
$
|
0.68
|
|
|
$
|
0.37
|
|
Diluted
|
$
|
0.55
|
|
|
$
|
0.33
|
|
|
$
|
0.68
|
|
|
$
|
0.36
|
|
Weighted average
ordinary shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
535.0
|
|
|
504.4
|
|
|
534.7
|
|
|
497.1
|
|
Diluted
|
537.0
|
|
|
509.7
|
|
|
537.0
|
|
|
509.6
|
|
Mylan N.V. and
Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited; in millions)
|
|
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
ASSETS
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
612.8
|
|
|
$
|
998.8
|
|
Accounts receivable,
net
|
2,951.0
|
|
|
3,310.9
|
|
Inventories
|
2,610.2
|
|
|
2,456.4
|
|
Prepaid expenses and
other current assets
|
791.9
|
|
|
756.4
|
|
Total current
assets
|
6,965.9
|
|
|
7,522.5
|
|
Intangible assets,
net
|
15,202.0
|
|
|
14,447.8
|
|
Goodwill
|
9,801.0
|
|
|
9,231.9
|
|
Other non-current
assets
|
3,537.3
|
|
|
3,524.0
|
|
Total
assets
|
$
|
35,506.2
|
|
|
$
|
34,726.2
|
|
LIABILITIES AND
EQUITY
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
|
1,026.2
|
|
|
$
|
290.0
|
|
Other current
liabilities
|
4,143.5
|
|
|
4,750.7
|
|
Long-term
debt
|
14,025.6
|
|
|
15,202.9
|
|
Other non-current
liabilities
|
3,478.0
|
|
|
3,365.0
|
|
Total
liabilities
|
22,673.3
|
|
|
23,608.6
|
|
Noncontrolling
interest
|
—
|
|
|
1.4
|
|
Mylan N.V.
shareholders' equity
|
12,832.9
|
|
|
11,116.2
|
|
Total liabilities and
equity
|
$
|
35,506.2
|
|
|
$
|
34,726.2
|
|
Mylan N.V. and
Subsidiaries Reconciliation of Non-GAAP Financial
Measures (Unaudited; in millions)
|
|
|
Summary of Total
Revenues by Segment
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2017
|
|
2016
|
|
%
Change
|
|
2017
Currency
Impact (1)
|
|
2017
Constant
Currency
Revenues
|
|
Constant
Currency %
Change (2)
|
Third party net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North America
(3)
|
$
|
1,279.6
|
|
|
$
|
1,401.5
|
|
|
(9)
|
%
|
|
$
|
3.0
|
|
|
$
|
1,282.6
|
|
|
(8)
|
%
|
Europe
(3)
|
954.3
|
|
|
600.9
|
|
|
59
|
%
|
|
18.8
|
|
|
973.1
|
|
|
62
|
%
|
Rest of World
(3)
|
692.6
|
|
|
537.5
|
|
|
29
|
%
|
|
(8.1)
|
|
|
684.5
|
|
|
27
|
%
|
Total third party net
sales (3)
|
2,926.5
|
|
|
2,539.9
|
|
|
15
|
%
|
|
13.7
|
|
|
2,940.2
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other third party
revenues
|
35.7
|
|
|
20.8
|
|
|
72
|
%
|
|
0.3
|
|
|
36.0
|
|
|
73
|
%
|
Consolidated total
revenues
|
$
|
2,962.2
|
|
|
$
|
2,560.7
|
|
|
16
|
%
|
|
$
|
14.0
|
|
|
$
|
2,976.2
|
|
|
16
|
%
|
|
|
|
Six Months
Ended
|
|
June
30,
|
|
2017
|
|
2016
|
|
%
Change
|
|
2017 Currency
Impact (1)
|
|
2017 Constant
Currency Revenues
|
|
Constant Currency
% Change (2)
|
Third party net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North America
(3)
|
$
|
2,494.5
|
|
|
$
|
2,559.0
|
|
|
(3)
|
%
|
|
$
|
0.8
|
|
|
$
|
2,495.3
|
|
|
(2)
|
%
|
Europe
(3)
|
1,846.3
|
|
|
1,185.2
|
|
|
56
|
%
|
|
43.1
|
|
|
1,889.4
|
|
|
59
|
%
|
Rest of World
(3)
|
1,273.1
|
|
|
971.8
|
|
|
31
|
%
|
|
(20.8)
|
|
|
1,252.3
|
|
|
29
|
%
|
Total third party net
sales (3)
|
5,613.9
|
|
|
4,716.0
|
|
|
19
|
%
|
|
23.1
|
|
|
5,637.0
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other third party
revenues
|
67.8
|
|
|
36.0
|
|
|
88
|
%
|
|
0.5
|
|
|
68.3
|
|
|
90
|
%
|
Consolidated total
revenues
|
$
|
5,681.7
|
|
|
$
|
4,752.0
|
|
|
20
|
%
|
|
$
|
23.6
|
|
|
$
|
5,705.3
|
|
|
20
|
%
|
______________________
(1)
|
Currency impact is
shown as unfavorable (favorable).
|
(2)
|
The constant currency
percentage change is derived by translating third party net sales
or revenues for the current period at prior year comparative period
exchange rates, and in doing so shows the percentage change from
2017 constant currency third party net sales or revenues to the
corresponding amount in the prior year.
|
(3)
|
Effective October 1,
2016, the Company expanded its 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.
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP cost of
sales
|
$
|
1,736.8
|
|
|
$
|
1,389.0
|
|
|
$
|
3,371.3
|
|
|
$
|
2,673.3
|
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
amortization and other related items
|
(350.2)
|
|
|
(249.7)
|
|
|
(693.5)
|
|
|
(493.3)
|
|
Acquisition related
costs
|
(7.6)
|
|
|
(12.8)
|
|
|
(13.5)
|
|
|
(31.3)
|
|
Restructuring related
costs
|
(3.4)
|
|
|
(2.6)
|
|
|
(16.3)
|
|
|
(4.0)
|
|
Other special
items
|
(8.4)
|
|
|
(8.4)
|
|
|
(15.5)
|
|
|
(22.2)
|
|
Adjusted cost of
sales
|
$
|
1,367.2
|
|
|
$
|
1,115.5
|
|
|
$
|
2,632.5
|
|
|
$
|
2,122.5
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
|
1,595.0
|
|
|
$
|
1,445.2
|
|
|
$
|
3,049.2
|
|
|
$
|
2,629.5
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
54
|
%
|
|
56
|
%
|
|
54
|
%
|
|
55
|
%
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP
R&D
|
$
|
181.1
|
|
|
$
|
179.5
|
|
|
$
|
398.6
|
|
|
$
|
433.1
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(0.3)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(0.2)
|
|
Restructuring related
costs
|
(0.1)
|
|
|
(0.1)
|
|
|
(1.4)
|
|
|
(0.1)
|
|
Other special
items
|
(9.7)
|
|
|
(10.3)
|
|
|
(74.8)
|
|
|
(76.4)
|
|
Adjusted
R&D
|
$
|
171.0
|
|
|
$
|
169.0
|
|
|
$
|
321.8
|
|
|
$
|
356.4
|
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
8
|
%
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP
SG&A
|
$
|
620.9
|
|
|
$
|
581.4
|
|
|
$
|
1,252.2
|
|
|
$
|
1,130.7
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(17.5)
|
|
|
(27.0)
|
|
|
(41.5)
|
|
|
(62.7)
|
|
Restructuring related
costs
|
(12.7)
|
|
|
(4.8)
|
|
|
(21.6)
|
|
|
(13.2)
|
|
Purchase accounting
amortization and other related items
|
(4.9)
|
|
|
—
|
|
|
(5.1)
|
|
|
—
|
|
Other special
items
|
(2.8)
|
|
|
(7.4)
|
|
|
(8.7)
|
|
|
(5.8)
|
|
Adjusted
SG&A
|
$
|
583.0
|
|
|
$
|
542.2
|
|
|
$
|
1,175.3
|
|
|
$
|
1,049.0
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A as
% of total revenues
|
20
|
%
|
|
21
|
%
|
|
21
|
%
|
|
22
|
%
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP total
operating expenses
|
$
|
752.0
|
|
|
$
|
760.8
|
|
|
$
|
1,609.8
|
|
|
$
|
1,562.2
|
|
(Deduct) /
Add:
|
|
|
|
|
|
|
|
Litigation
settlements and other contingencies, net
|
50.0
|
|
|
0.1
|
|
|
41.0
|
|
|
1.6
|
|
R&D
adjustments
|
(10.1)
|
|
|
(10.5)
|
|
|
(76.9)
|
|
|
(76.7)
|
|
SG&A
adjustments
|
(37.9)
|
|
|
(39.2)
|
|
|
(77.0)
|
|
|
(81.7)
|
|
Adjusted total
operating expenses
|
$
|
754.0
|
|
|
$
|
711.2
|
|
|
$
|
1,496.9
|
|
|
$
|
1,405.4
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from operations (b)
|
$
|
841.0
|
|
|
$
|
734.0
|
|
|
$
|
1,552.3
|
|
|
$
|
1,224.1
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP interest
expense
|
$
|
136.3
|
|
|
$
|
90.3
|
|
|
$
|
274.5
|
|
|
$
|
160.6
|
|
Deduct:
|
|
|
|
|
|
|
|
Interest expense
related to clean energy investments (c)
|
(3.1)
|
|
|
(3.6)
|
|
|
(6.4)
|
|
|
(7.4)
|
|
Accretion of
contingent consideration liability
|
(8.3)
|
|
|
(10.3)
|
|
|
(16.1)
|
|
|
(20.3)
|
|
Acquisition related
costs
|
—
|
|
|
(4.0)
|
|
|
(0.2)
|
|
|
(5.9)
|
|
Other special
items
|
(2.1)
|
|
|
(21.6)
|
|
|
(4.2)
|
|
|
(25.9)
|
|
Adjusted interest
expense
|
$
|
122.8
|
|
|
$
|
50.8
|
|
|
$
|
247.6
|
|
|
$
|
101.1
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP other
expense, net
|
$
|
12.4
|
|
|
$
|
117.5
|
|
|
$
|
29.8
|
|
|
$
|
133.8
|
|
Add:
|
|
|
|
|
|
|
|
Clean energy
investments pre-tax loss
|
(21.7)
|
|
|
(20.1)
|
|
|
(44.0)
|
|
|
(45.6)
|
|
Purchase accounting
related amortization
|
—
|
|
|
(5.6)
|
|
|
—
|
|
|
(11.3)
|
|
Financing related
costs
|
(1.1)
|
|
|
(30.2)
|
|
|
(3.1)
|
|
|
(33.2)
|
|
Acquisition related
costs
|
—
|
|
|
(84.2)
|
|
|
(0.8)
|
|
|
(84.2)
|
|
Other
items
|
1.3
|
|
|
0.6
|
|
|
0.8
|
|
|
(1.6)
|
|
Adjusted other
income
|
$
|
(9.1)
|
|
|
$
|
(22.0)
|
|
|
$
|
(17.3)
|
|
|
$
|
(42.1)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP earnings
before income taxes
|
$
|
324.7
|
|
|
$
|
203.1
|
|
|
$
|
396.3
|
|
|
$
|
222.1
|
|
Total pre tax
non-GAAP adjustments
|
402.4
|
|
|
502.1
|
|
|
936.6
|
|
|
943.0
|
|
Adjusted earnings
before income taxes
|
$
|
727.1
|
|
|
$
|
705.2
|
|
|
$
|
1,332.9
|
|
|
$
|
1,165.1
|
|
|
|
|
|
|
|
|
|
U.S. GAAP income
tax provision
|
$
|
27.7
|
|
|
$
|
34.7
|
|
|
$
|
32.9
|
|
|
$
|
39.8
|
|
Adjusted tax
expense
|
109.5
|
|
|
78.1
|
|
|
210.3
|
|
|
146.6
|
|
Adjusted income tax
provision
|
$
|
137.2
|
|
|
$
|
112.8
|
|
|
$
|
243.2
|
|
|
$
|
186.4
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
18.9
|
%
|
|
16.0
|
%
|
|
18.2
|
%
|
|
16.0
|
%
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
U.S. GAAP net cash
provided by operating activities
|
$
|
567.8
|
|
|
$
|
416.6
|
|
|
$
|
1,020.7
|
|
|
$
|
497.1
|
|
Add:
|
|
|
|
|
|
|
|
Restructuring related
costs
|
34.3
|
|
|
66.9
|
|
|
89.5
|
|
|
66.9
|
|
Corporate
contingencies
|
32.5
|
|
|
—
|
|
|
32.5
|
|
|
—
|
|
Acquisition related
costs
|
29.4
|
|
|
26.8
|
|
|
52.3
|
|
|
88.3
|
|
R&D
expense
|
—
|
|
|
—
|
|
|
5.0
|
|
|
60.0
|
|
Income tax
items
|
—
|
|
|
(25.8)
|
|
|
—
|
|
|
(25.8)
|
|
Adjusted net cash
provided by operating activities
|
$
|
664.0
|
|
|
$
|
484.5
|
|
|
$
|
1,200.0
|
|
|
$
|
686.5
|
|
|
|
|
|
|
|
|
|
Deduct:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(50.9)
|
|
|
(69.2)
|
|
|
(109.3)
|
|
|
(121.0)
|
|
Adjusted free cash
flow
|
$
|
613.1
|
|
|
$
|
415.3
|
|
|
$
|
1,090.7
|
|
|
$
|
565.5
|
|
____________
(a)
|
U.S. GAAP gross
profit is calculated as total revenues less U.S. GAAP cost of
sales. U.S. GAAP gross margin is calculated as U.S. GAAP gross
profit divided by total revenues. Adjusted gross profit is
calculated as total revenues less adjusted cost of sales. Adjusted
gross margin is calculated as adjusted gross profit divided by
total revenues.
|
(b)
|
U.S. GAAP earnings
from operations is calculated as U.S. GAAP gross profit less U.S.
GAAP total operating expenses. Adjusted earnings from operations is
calculated as adjusted gross profit less adjusted total operating
expenses.
|
(c)
|
Adjustment represents
exclusion of activity related to Mylan's clean energy investments,
the activities of which qualify for income tax credits under
section 45 of the Code.
|
Twelve Months Ended June 30, 2017 Debt-to-Adjusted
EBITDA and Net Debt-to-Adjusted EBITDA Leverage Ratios
The stated historical non-GAAP financial measures, twelve months
ended June 30, 2017 debt-to-adjusted
EBITDA leverage ratio and twelve months ended June 30, 2017 net debt-to-adjusted EBITDA
leverage ratio, are based on the sum of Mylan's adjusted EBITDA for
the quarters ended September 30,
2016, December 31, 2016,
March 31, 2017 and June 30, 2017 as compared to Mylan's total debt
and total net debt, respectively.
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
September 30,
2016
|
|
December 31,
2016
|
|
March 31,
2017
|
|
June 30,
2017
|
|
June 30,
2017
|
Mylan N.V. adjusted
EBITDA, as reported
|
$
|
1,060.9
|
|
|
$
|
1,211.9
|
|
|
$
|
812.7
|
|
|
$
|
930.9
|
|
|
$
|
4,016.4
|
|
|
|
|
|
|
|
|
|
|
|
Notional
debt
|
|
|
|
|
|
|
|
|
$
|
15,069.3
|
|
Short-term borrowings
and capital leases
|
|
|
|
|
|
|
|
|
16.4
|
|
Total debt
|
|
|
|
|
|
|
|
|
$
|
15,085.7
|
|
Less: cash and cash
equivalents
|
|
|
|
|
|
|
|
|
612.8
|
|
Total net
debt
|
|
|
|
|
|
|
|
|
$
|
14,472.9
|
|
|
|
|
|
|
|
|
|
|
|
Debt-to-adjusted
EBITDA leverage ratio
|
|
|
|
|
|
|
|
|
3.76
|
|
|
|
|
|
|
|
|
|
|
|
Net debt-to-adjusted
EBITDA leverage ratio
|
|
|
|
|
|
|
|
|
3.60
|
|
Targeted Leverage of 3.7x Debt-to-Adjusted EBITDA at
December 31, 2017
The stated forward-looking non-GAAP financial measure, targeted
leverage at end of 2017 of ~3.7x debt-to-adjusted EBITDA, is based
on the ratio of (i) targeted net debt at December 31, 2017 and (ii) targeted adjusted
EBITDA for the year ended December 31,
2017. However, the Company has not quantified future amounts
to develop the target but has stated its goal to manage debt and
adjusted earnings and EBITDA by the end of 2017 in order to
generally maintain the target. This target does not reflect Company
guidance.
Long-term average debt-to-adjusted EBITDA leverage target of
~3.0x
The stated forward-looking non-GAAP financial measure, targeted
long term average leverage of ~3.0x net debt-to-adjusted EBITDA, is
based on the ratio of (i) targeted long-term average debt, and (ii)
targeted long-term adjusted EBITDA. However, the Company has not
quantified future amounts to develop the target but has stated its
goal to manage long-term average debt and adjusted earnings and
EBITDA over time in order to generally maintain the target. This
target does not reflect Company guidance.
Reconciliation of Adjusted EBITDA
Below is a reconciliation of U.S. GAAP net earnings to EBITDA
and adjusted EBITDA for the respective quarterly periods (in
millions):
|
Three Months
Ended
|
|
September 30,
2016
|
|
December 31,
2016
|
|
March 31,
2017
|
U.S. GAAP net
earnings
|
$
|
(119.8)
|
|
|
$
|
417.5
|
|
|
$
|
66.4
|
|
Add
adjustments:
|
|
|
|
|
|
Net contribution
attributable to equity method investments
|
29.7
|
|
|
27.2
|
|
|
33.2
|
|
Income tax
provision
|
(205.5)
|
|
|
(192.6)
|
|
|
5.2
|
|
Interest
expense
|
144.4
|
|
|
149.8
|
|
|
138.2
|
|
Depreciation and
amortization
|
445.9
|
|
|
476.6
|
|
|
415.5
|
|
EBITDA
|
$
|
294.7
|
|
|
$
|
878.5
|
|
|
$
|
658.5
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
Share-based
compensation expense
|
19.2
|
|
|
17.8
|
|
|
23.1
|
|
Litigation
settlements and other contingencies, net
|
558.0
|
|
|
116.1
|
|
|
9.0
|
|
Restructuring & other special
items
|
189.0
|
|
|
199.5
|
|
|
122.1
|
|
Adjusted
EBITDA
|
$
|
1,060.9
|
|
|
$
|
1,211.9
|
|
|
$
|
812.7
|
|
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SOURCE Mylan N.V.