HERTFORDSHIRE, England and
PITTSBURGH, Nov. 9, 2016
/PRNewswire/ -- Mylan N.V. (NASDAQ, TASE: MYL) today announced its
financial results for the quarter and nine months ended
September 30, 2016.
Third Quarter 2016 Financial Highlights
- Total revenues and adjusted total revenues of $3.06 billion, each up 13% compared to the prior
year period predominantly due to net sales from acquisitions and
new product launches
- Generics segment third party net sales of $2.61 billion, up 17% (up 16% on an adjusted
basis) compared to the prior year period
- Specialty segment third party net sales of $418.7 million, down 4% compared to the prior
year period
- U.S. GAAP diluted loss per ordinary share of $0.23, compared to U.S. GAAP diluted earnings per
ordinary share ("U.S. GAAP EPS") of $0.83 in the prior year period primarily as a
result of 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 "Medicaid Drug Rebate
Program Settlement") and the recognition in the current quarter of
$90 million of expense related to the
Strides Settlement (as defined below) and the Agila acquisition. As
a result of this settlement, the Company will have access to
approximately $80 million of cash in
the fourth quarter of 2016 which is currently contingently
restricted.
- Adjusted diluted earnings per ordinary share ("adjusted EPS")
of $1.38, down 3% compared to the
prior year period primarily driven by the significant contribution
in the prior year period of new products
Nine Months Ended September 30, 2016 Financial
Highlights
- Total revenues and adjusted total revenues of $7.81 billion, up 13% and 12%, respectively,
compared to the prior year period
- Generics segment third party net sales of $6.68 billion, up 12% on a U.S. GAAP and adjusted
basis when compared to the prior year period
- Specialty segment third party net sales of $1.07 billion, up 12% compared to the prior year
period
- U.S. GAAP EPS of $0.12, down from
$1.32 in the prior year period
primarily due to the Medicaid Drug Rebate Program Settlement, the
Strides Settlement and certain transaction and financing costs
related to our acquisition of Meda AB (publ.) ("Meda")
- Adjusted EPS of $3.31, up 7%
compared to the prior year period
- U.S. GAAP cash provided by operating activities of $1.70 billion, up 25% compared to the prior year
period
Mylan CEO Heather Bresch
commented, "Our third quarter results were consistent with the full
year guidance we provided a few weeks ago. During the quarter, we
reported strong performance across our European and Rest of World
regions, as well as solid performance across our North American
region despite challenging year-over-year comparisons due to the
significant contribution from new products in last year's third
quarter. In our Specialty segment, while EpiPen® Auto-Injector
scripts grew quarter-over-quarter, volumes were down due to the
lack of wholesaler purchases in the quarter in anticipation of our
upcoming generic launch.
"Looking ahead, with the underlying strength of our diverse,
global business, as well as our ability to execute against our
long-term growth drivers, we remain committed to our recently
updated full year 2016 adjusted EPS guidance range of $4.70 to $4.90, and to our $6.00 adjusted EPS target in 2018, with targeted
growth in the low-teens in both 2017 and 2018. Over the next 18 to
24 months, we will focus on integrating and driving efficiencies
across our global platform and we will be considering how best to
deploy our capital and leverage our differentiated platform over
the longer-term to ensure Mylan's sustainable growth for many years
to come. We look forward to providing a comprehensive business,
portfolio and pipeline update at our upcoming Investor Day, which
will be held in conjunction with the release of our fourth quarter
2016 earnings."
Mylan President Rajiv Malik
commented, "While our industry continues to evolve, the factors
that have always been critical to our success remain constant:
maintaining one of the industry's broadest portfolios; consistent
execution of new product launches; and being able to reliably
supply significant volumes to our customers. Mylan's ability to
deliver for customers through the strength of our portfolio and
pipeline and reputation for quality and reliability continue to
make us a partner of choice. Further, given the diversity of our
business and strength of our offering to customers, we continue to
see pricing across our very broad generics portfolio to be in line
with our expectations, with year-over-year price erosion in the
mid-single digits, including in the U.S. We continue to anticipate
price erosion in the mid-single digits for the remainder of the
year."
Mylan CFO Ken Parks added, "As of
the end of the third quarter, our adjusted cash provided by
operating activities was $1.9 billion
year-to-date, an increase of 19% compared to the prior year period.
We continue to have ample financial flexibility to continue to
execute on our business model, improve net leverage, enhance our
capital structure and strategically deploy capital for bolt-on
opportunities, while maintaining our commitment to an investment
grade credit rating. Mylan remains committed to the Euro bond
market. Subject to prevailing market conditions, the terms and
specific timing are to be determined."
Total Revenues
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(Unaudited; in
millions)
|
2016
|
|
2015
|
|
Percent
Change
|
|
2016
|
|
2015
|
|
Percent
Change
|
Total
Revenues*
|
$
|
3,057.1
|
|
|
$
|
2,695.2
|
|
|
13%
|
|
$
|
7,809.1
|
|
|
$
|
6,938.6
|
|
|
13%
|
Generics Third Party
Net Sales*
|
2,610.8
|
|
|
2,238.4
|
|
|
17%
|
|
6,676.4
|
|
|
5,937.1
|
|
|
12%
|
North
America**
|
1,098.8
|
|
|
1,090.6
|
|
|
1%
|
|
3,028.6
|
|
|
2,894.1
|
|
|
5%
|
Europe*
|
842.0
|
|
|
611.9
|
|
|
38%
|
|
2,033.9
|
|
|
1,589.2
|
|
|
28%
|
Rest of
World**
|
670.0
|
|
|
535.9
|
|
|
25%
|
|
1,613.9
|
|
|
1,453.8
|
|
|
11%
|
Specialty Third Party
Net Sales
|
418.7
|
|
|
437.8
|
|
|
(4)%
|
|
1,069.1
|
|
|
950.7
|
|
|
12%
|
Other
Revenues
|
27.6
|
|
|
19.0
|
|
|
45%
|
|
63.6
|
|
|
50.8
|
|
|
25%
|
* For the three months ended September 30, 2015, adjusted
third party net sales in Europe
totaled $629.0 million, adjusted
generics segment third party net sales totaled $2.26 billion and adjusted total revenues were
$2.71 billion. For the nine months
ended September 30, 2015, adjusted third party net sales in
Europe totaled $1.61 billion, adjusted generics segment third
party net sales totaled $5.95 billion
and adjusted total revenues were $6.96
billion. Adjusted third party net sales in Europe, adjusted generics segment third party
net sales and adjusted total revenues are non-GAAP financial
measures.
** Beginning in the first quarter of 2016, the Company
reclassified sales from its Brazilian operation from Rest of World
to North America. The amount
reclassified for the three and nine months ended September 30, 2015 was approximately $11.0 million and $32.3
million, respectively.
Q4 2016 Change in Reporting Segments
Due to 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 are expanding our reportable segments. We will report our
results in three segments on a geographic basis as follows: (1)
North America, (2) Europe and (3) Rest of World. This change in
segment reporting will begin with our consolidated financial
statements for the year ending December 31,
2016. Comparative segment financial information will be
recast for prior periods to conform to this revised segment
structure.
Third Quarter
2016 Financial Results
|
Total Revenue
Generics segment third party net sales were
$2.61 billion for the quarter on a
U.S. GAAP basis, an increase of 17% when compared to the prior year
period. The favorable impact of foreign currency translation on
Generics segment third party net sales was approximately
$19.8 million, or 1% in the current
quarter. Adjusted Generics segment third party net sales increased
16% when compared to the prior year period.
- Third party net sales from North
America were $1.10 billion
for the quarter, an increase of 1% when compared to the prior year
period. This increase was principally due to net sales from the
acquisitions of Meda and the non-sterile, topicals-focused business
from Renaissance Acquisition Holdings, LLC (the "Topicals
Business"), and to a lesser extent, net sales from new products,
partially offset by lower volumes and pricing on existing products.
The prior year period included the significant contribution of new
products. The impact of foreign currency translation was
insignificant within North
America.
- Third party net sales from Europe were $842.0
million for the quarter on a U.S. GAAP basis, an increase of
38% 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. Pricing and
volumes on existing products were essentially flat in the third
quarter of 2016 as a result of our diversified product portfolio.
The unfavorable impact of foreign currency translation on current
period third party net sales was approximately $7.9 million, or 1% within Europe. Adjusted third party net sales from
Europe increased 34% when compared
to the prior year period.
- Third party net sales from Rest of World were
$670.0 million for the quarter, an
increase of 25% when compared to the prior year period. This
increase was primarily due to net sales from the acquisition of
Meda principally in emerging markets, 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. Sales within our ARV franchise progressively improved
throughout the quarter as HIV tender volumes increased. The
favorable impact of foreign currency translation on current period
third party net sales was approximately $26.7 million, or 5% within Rest of World.
Specialty segment third party net sales were
$418.7 million for the quarter, a
decrease of 4% when compared to the prior year period. This
decrease was primarily the result of lower unit volumes due to the
timing of wholesaler purchases of the EpiPen® Auto-Injector
in anticipation of the authorized generic launch.
Total Gross Profit
Gross profit was $1.28 billion and
$1.32 billion for the third quarter
of 2016 and 2015, respectively. Gross margins were 42% and 49% in
the third quarter of 2016 and 2015, respectively. Gross margins
were negatively impacted in the current quarter by higher purchase
accounting related items, primarily amortization, as a result of
the acquisition of Meda and the Topicals Business, and the
significant contribution in the prior year period of new products.
Adjusted gross profit was $1.74
billion and adjusted gross margins were 57% for the quarter
compared to adjusted gross profit of $1.58
billion and adjusted gross margins of 58% in the prior year
period. Adjusted gross margins were positively impacted by the
acquisition of Meda and new products, offset by the significant
contribution in the prior year period of new products.
Total Profitability
Earnings from operations decreased $731.8
million from the comparable prior year period primarily due
to the Medicaid Drug Rebate Program Settlement, higher amortization
expense and operating expenses related to recent acquisitions. In
addition, during the third quarter, the Company and Strides Arcolab
Limited agreed on a settlement of substantially all outstanding
regulatory, warranty and indemnity claims (the "Strides
Settlement") related to the acquisition of Agila Specialties
Limited ("Agila").
At the acquisition date of Agila, the Company estimated and
accrued approximately $20 million for
contingent consideration related to certain escrow arrangements. As
a result of the settlement, the company will have access to
approximately $80 million in cash in
the fourth quarter of 2016 which is currently contingently
restricted. Approximately $110
million will be paid to either settle these pre-acquisition
claims or be remitted to Strides. As such, the company recorded
approximately $90 million of expense
in the third quarter of 2016. This amount is included in litigation
settlements and other contingencies, net in the Condensed
Consolidated Statements of Operations for the three and nine months
ended September 30, 2016. Prior to the Strides Settlement, the
maximum contingent consideration remaining was approximately
$173 million and was related to the
satisfaction of certain regulatory conditions, including potential
regulatory remediation costs and the resolution of certain
pre-acquisition contingencies.
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.
U.S. GAAP net earnings attributable to Mylan N.V. ordinary
shareholders ("U.S. GAAP net earnings") decreased by $548.4 million to a net loss of $119.8 million for the quarter ended
September 30, 2016, as compared to U.S. GAAP net earnings of
$428.6 million for the prior year
period. Third quarter 2016 U.S. GAAP net earnings were negatively
impacted by the reduction of earnings from operations and increased
non-operating expenses including losses on the Company's SEK
denominated foreign currency contracts. Partially offsetting these
decreases was the recognition of an income tax benefit of
$205.5 million in the third quarter
primarily due to approvals received from the relevant Indian
regulatory authorities to legally merge our wholly owned
subsidiary, Jai Pharma Limited, into Mylan Laboratories Limited
(the "Jai Pharma Merger") resulting in the recognition of a
deferred tax asset of $150 million
with a corresponding benefit to income tax provision. U.S. GAAP EPS
decreased from $0.83 to a loss per
share of $0.23 in the current
quarter. Adjusted net earnings decreased by $7.4 million to $726.4
million compared to $733.8
million for the prior year period. Adjusted EPS decreased 3%
to $1.38 compared to $1.43 in the prior year period, primarily driven
by the significant contribution in the prior year period of new
products.
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 $294.7 million for the quarter
ended September 30, 2016, and $835.7
million for the comparable prior year quarter. After
adjusting for certain items as further detailed in the
reconciliation below, adjusted EBITDA was $1.06 billion for the quarter ended
September 30, 2016 and $986.9
million for the comparable prior year quarter.
Nine Months
Ended September 30, 2016 Financial Results
|
Total Revenue
Generics segment third party net sales were
$6.68 billion for the nine months
ended September 30, 2016 on a U.S.
GAAP basis, an increase of 12% when compared to the prior year
period. The unfavorable impact of foreign currency translation on
Generics segment third party net sales was approximately
$12.0 million in the current year
period. Adjusted Generics segment third party net sales also
increased 12% when compared to the prior year period.
- Third party net sales from North
America were $3.03 billion
for the nine months ended September 30,
2016, an increase of 5% when compared to the prior year
period. This increase was principally due to net sales from the
acquisitions of Meda and the Topicals Business, the two additional
months of net sales from our established products ("incremental
established products sales"), and to a lesser extent, net sales
from new products as a result of our global platform. This increase
was partially offset by lower pricing on existing products while
volumes on existing products increased slightly. 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 were $2.03
billion for the nine months ended September 30, 2016 on a U.S. GAAP basis, an
increase of 28% when compared to the prior year period. This
increase was primarily the result of the acquisition of Meda, the
incremental established products sales, and to a lesser extent, net
sales from new products. In addition, there were higher volumes on
existing products, while pricing was essentially flat as a result
of our diversified product portfolio. The unfavorable impact of
foreign currency translation on current year third party net sales
was approximately $10.2 million, or
1% within Europe. Adjusted third
party net sales from Europe
increased 27% when compared to the prior year period.
- Third party net sales from Rest of World were
$1.61 billion for the nine months
ended September 30, 2016, an increase
of 11% when compared to the prior year period. This increase was
primarily driven by the acquisition of Meda, the incremental
established products sales, and to a lesser extent, new products,
as well as higher volumes in Japan, India
and emerging markets. These increases were partially offset by
lower pricing in the region, including the ARV franchise. However,
sales within our ARV franchise progressively grew throughout the
first nine months of the year, and on a sequential basis third
quarter sales increased over 30% from the second quarter of 2016.
The favorable impact of foreign currency translation on current
year third party net sales was approximately $9.1 million, or 1% within Rest of World.
Specialty segment third party net sales were
$1.07 billion for the nine months
ended September 30, 2016, an increase
of 12% when compared to the prior year period. This increase was
primarily the result of the realization of the benefits of customer
contract negotiations over the last several quarters related to the
EpiPen® Auto-Injector, and higher sales of the
Perforomist® Inhalation Solution and ULTIVA®,
partially offset by lower volumes across the segment.
Total Gross Profit
Gross profit was $3.36 billion and
$3.15 billion for the nine months
ended September 30, 2016 and 2015,
respectively. Gross margins were 43% and 45% for the nine months
ended September 30, 2016 and 2015,
respectively. Gross margins were positively impacted in the current
year by new products and higher sales within Specialty. These
increases were offset by the negative impact of increased purchase
accounting related items, primarily amortization, as a result of
the acquisitions of Meda and the Topicals Business, and the
significant contribution in the prior year period of new products.
Adjusted gross profit was $4.36
billion and adjusted gross margins were 56% for the nine
months ended September 30, 2016
compared to adjusted gross profit of $3.85
billion and adjusted gross margins of 55% in the prior year
period. Adjusted gross margins were positively impacted by the
acquisition of Meda, new products and higher sales within
Specialty, which offset the impact of the significant contribution
of new products in the prior year period.
Total Profitability
Earnings from operations were $385.8
million for the nine months ended September 30, 2016, a decrease of 63% from the
comparable prior year period. This decrease was primarily due to
the Medicaid Drug Rebate Program Settlement, the Strides
Settlement, higher amortization expense and operating expenses
related to acquisitions completed during 2016.
R&D expense for the nine months ended September 30, 2016 increased from the comparable
prior year period due to an upfront payment to Momenta for
$45.0 million and additional expenses
incurred in the current period related to the Company's
collaboration agreement. In addition, R&D expense increased due
to the inclusion of Meda, the Topicals Business and the two
additional months of expense related to our established products in
the current year compared to the prior year period as well as our
continued investment in the development of our respiratory, insulin
and biologics programs. SG&A expense increased from the
comparable prior year period principally due to additional expense
related to the acquisitions of Meda, the Topicals Business and the
two additional months of expense related to our established
products in the current year.
U.S. GAAP net earnings decreased by $590.5 million to $62.5
million for the nine months ended September 30, 2016, compared to $653.0 million for the prior year period. U.S.
GAAP EPS decreased from $1.32 to
$0.12 as a result of the reduction of
earnings from operations and higher non-operating expenses
including losses related to the Company's SEK denominated foreign
currency contracts, the write off of financing fees related to the
termination of the Bridge Credit Agreement entered into in
connection with Mylan's public offer to the shareholders of Meda to
acquire all of the outstanding shares of Meda (the "Offer") as well
as a higher average share count due to the impact of ordinary
shares issued in the prior year in the transaction (the "EPD
Transaction") in which Mylan N.V. acquired Mylan Inc. and Abbott
Laboratories' non-U.S. developed markets specialty and branded
generics business (the "EPD Business"). Partially offsetting these
decreases was the recognition of an income tax benefit of
$165.7 million in the current year
period primarily due to the Jai Pharma Merger. Adjusted net
earnings increased by $187.9 million
to $1.71 billion for the nine months
ended September 30, 2016 compared to
$1.52 billion for the prior year
period. Adjusted EPS increased 7% to $3.31 for the nine months ended September 30, 2016 compared to $3.08 in the prior year period.
EBITDA was $1.33 billion for the
nine months ended September 30, 2016,
and $1.73 billion for the comparable
prior year period. After adjusting for certain items as further
detailed in the reconciliation below, adjusted EBITDA was
$2.47 billion for the nine months
ended September 30, 2016 and
$2.19 billion for the comparable
prior year period.
Cash Flow
Net cash provided by operating activities was $1.70 billion for the nine months ended
September 30, 2016 compared to $1.36
billion for the prior year period. The increase in net cash
provided by operating activities was primarily the result of the
impact of higher non cash expenses on earnings. Capital
expenditures were approximately $239.5
million for the nine months ended September 30, 2016
compared to approximately $207.3
million for the comparable prior year period. Adjusted cash
provided by operating activities was $1.93 billion for the nine months ended
September 30, 2016 compared to $1.61
billion for the prior year period. Adjusted free cash flow,
defined as adjusted cash provided by operating activities less
capital expenditures, was $1.69
billion for the nine months ended September 30, 2016,
compared to $1.41 billion in the
prior year period.
Conference Call
Mylan will host a conference call and live webcast, today,
November 9, 2016, at 4:30 pm 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.
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 total revenues, adjusted Generics segment
third party net sales, adjusted third party net sales from
Europe, adjusted cash provided by
operating activities, adjusted gross profit, adjusted gross
margins, adjusted net earnings, EBITDA, adjusted EBITDA, and
adjusted free cash flow, 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. 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. 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. 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 and the geographic regions within the Generics
segment for the three and nine months ended September 30, 2016
and 2015. 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 quarter ended September 30, 2016.
Mylan is not reaffirming or providing forward looking guidance
for U.S. GAAP reported financial measures or a 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 recently closed 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 target of at
least $6.00 in adjusted EPS in 2018
with targeted growth in the low teens in both 2017 and 2018, it
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 (loss) earnings
attributable to Mylan N.V. and U.S. GAAP diluted (loss) earnings
per share to adjusted earnings attributable to Mylan N.V. and
adjusted EPS for the three and nine months ended September 30,
2016 compared to the respective prior year period:
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(In millions,
except per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP net (loss)
earnings attributable to Mylan N.V. and U.S. GAAP diluted (loss)
earnings per share
|
$
|
(119.8)
|
|
|
$
|
(0.23)
|
|
|
$
|
428.6
|
|
|
$
|
0.83
|
|
|
$
|
62.5
|
|
|
$
|
0.12
|
|
|
$
|
653.0
|
|
|
$
|
1.32
|
|
Purchase accounting
related amortization (primarily included in cost of sales)
(a)
|
427.1
|
|
|
|
|
219.2
|
|
|
|
|
931.8
|
|
|
|
|
609.8
|
|
|
|
Litigation
settlements, net (b)
|
468.0
|
|
|
|
|
2.3
|
|
|
|
|
466.4
|
|
|
|
|
19.1
|
|
|
|
Interest expense
(primarily related to clean energy investment financing)
|
5.5
|
|
|
|
|
11.5
|
|
|
|
|
18.9
|
|
|
|
|
39.9
|
|
|
|
Accretion of
contingent consideration liability and other fair value adjustments
(c)
|
100.4
|
|
|
|
|
9.7
|
|
|
|
|
120.7
|
|
|
|
|
28.5
|
|
|
|
Clean energy
investments pre-tax loss (d)
|
23.8
|
|
|
|
|
24.1
|
|
|
|
|
69.4
|
|
|
|
|
68.3
|
|
|
|
Financing related
costs (included in other expense, net)
|
—
|
|
|
|
|
40.8
|
|
|
|
|
—
|
|
|
|
|
40.8
|
|
|
|
Acquisition related
costs (primarily included in SG&A, other expense, net and
interest expense) (e)
|
110.5
|
|
|
|
|
92.3
|
|
|
|
|
346.7
|
|
|
|
|
243.7
|
|
|
|
Acquisition related
customer incentive (included in third party net sales)
|
—
|
|
|
|
|
17.1
|
|
|
|
|
—
|
|
|
|
|
17.1
|
|
|
|
Restructuring and other special items included
in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
21.7
|
|
|
|
|
5.1
|
|
|
|
|
47.9
|
|
|
|
|
19.8
|
|
|
|
Research and
development expense (f)
|
22.2
|
|
|
|
|
0.6
|
|
|
|
|
98.7
|
|
|
|
|
18.5
|
|
|
|
Selling, general and
administrative expense
|
12.3
|
|
|
|
|
8.6
|
|
|
|
|
31.3
|
|
|
|
|
41.3
|
|
|
|
Other expense,
net
|
(1.4)
|
|
|
|
|
(1.2)
|
|
|
|
|
1.3
|
|
|
|
|
6.9
|
|
|
|
Tax effect of the
above items and other income tax related items
|
(343.9)
|
|
|
|
|
(124.9)
|
|
|
|
|
(490.5)
|
|
|
|
|
(289.5)
|
|
|
|
Adjusted net earnings
attributable to Mylan N.V. and adjusted diluted EPS
|
$
|
726.4
|
|
|
$
|
1.38
|
|
|
$
|
733.8
|
|
|
$
|
1.43
|
|
|
$
|
1,705.1
|
|
|
$
|
3.31
|
|
|
$
|
1,517.2
|
|
|
$
|
3.08
|
|
Weighted average
diluted ordinary shares outstanding
|
526.3
|
|
|
|
|
514.0
|
|
|
|
|
515.2
|
|
|
|
|
493.2
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes amortization
of the purchase accounting inventory fair value step-up for Meda,
the Topicals Business and Jai Pharma Limited totaling approximately
$56.1 million and $58.6 million for the three and nine months ended
September 30, 2016. Includes amortization of the purchase
accounting inventory fair value step-up for the EPD Business of
approximately $35.4 million for the nine months ended
September 30, 2015.
|
(b)
|
Includes $465 million
related to the Medicaid Drug Rebate Program Settlement for the
three and nine months ended September 30, 2016. This amount is
included in litigation settlements and other contingencies, net in
the Condensed Consolidated Statements of Operations.
|
(c)
|
Includes
approximately $90 million related to the Strides Settlement for the
three and nine months ended September 30, 2016. This amount is
included in litigation settlements and other contingencies, net in
the Condensed Consolidated Statements of Operations.
|
(d)
|
Adjustment represents
exclusion of the pre-tax loss related to Mylan's clean energy
investments and related financing, the activities of which qualify
for income tax credits under Section 45 of the Code. The amount is
included in other expense, net in the Condensed Consolidated
Statements of Operations.
|
(e)
|
Acquisition related
costs primarily relate to ongoing acquisition and integration
activities. Such costs included in other expense, net is
approximately $44.4 million and $128.6 million of losses related to
the Company's SEK non-designated foreign currency contracts for the
three and nine months ended September 30, 2016, respectively.
Included in SG&A for the three and nine months ended
September 30, 2016 is approximately $39.7 million and $102.4
million, respectively, primarily related to consulting,
professional and legal costs. Included in interest expense, net for
the three and nine months ended September 30, 2016 is
approximately $19.7 million and $33.6 million of interest expense,
respectively, related to the issuance of $1.00 billion aggregate
principal amount of 2.500% Senior Notes due 2019, $2.25 billion
aggregate principal amount of 3.150% Senior Notes due 2021, $2.25
billion aggregate principal amount of 3.950% Senior Notes due 2026
and $1.00 billion aggregate principal amount of 5.250% Senior Notes
due 2046 for the period prior to the completion date of the
Offer.
|
(f)
|
R&D expense
includes a $45 million upfront payment to Momenta and $15 million
of milestone payments to Theravance Biopharma for the nine months
ended September 30, 2016. In addition, included in this amount
for the three and nine months ended September 30, 2016 is
approximately $9.0 million and $22.3 million, respectively, of
R&D expense incurred related to the Company's collaboration
with Momenta.
|
Below is a reconciliation of U.S. GAAP net (loss) earnings
attributable to Mylan N.V. to EBITDA and adjusted EBITDA for the
three and nine months ended September 30, 2016 compared to the
respective prior year period (in millions):
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP net (loss)
earnings attributable to Mylan N.V
|
$
|
(119.8)
|
|
|
$
|
428.6
|
|
|
$
|
62.5
|
|
|
$
|
653.0
|
|
Add
adjustments:
|
|
|
|
|
|
|
|
Net contribution
attributable to the noncontrolling interest and equity method
investments
|
29.7
|
|
|
27.8
|
|
|
85.5
|
|
|
77.7
|
|
Income tax (benefit)
provision
|
(205.5)
|
|
|
26.5
|
|
|
(165.7)
|
|
|
44.0
|
|
Interest
expense
|
144.4
|
|
|
95.1
|
|
|
305.0
|
|
|
268.5
|
|
Depreciation and
amortization
|
445.9
|
|
|
257.7
|
|
|
1,046.4
|
|
|
691.4
|
|
EBITDA
|
$
|
294.7
|
|
|
$
|
835.7
|
|
|
$
|
1,333.7
|
|
|
$
|
1,734.6
|
|
Add
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
19.2
|
|
|
16.1
|
|
|
71.1
|
|
|
66.4
|
|
Litigation
settlements and other contingencies, net
|
558.0
|
|
|
2.3
|
|
|
556.4
|
|
|
19.1
|
|
Restructuring & other special
items
|
189.0
|
|
|
132.8
|
|
|
504.8
|
|
|
364.9
|
|
Adjusted
EBITDA
|
$
|
1,060.9
|
|
|
$
|
986.9
|
|
|
$
|
2,466.0
|
|
|
$
|
2,185.0
|
|
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 offer a growing
portfolio of more than 2,700 generic and branded pharmaceuticals,
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.
Our global R&D and manufacturing platform includes more than 50
facilities, and we are one of the world's largest producers of
active pharmaceutical ingredients. Every member of our more than
40,000-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,
statements that, looking ahead, Mylan remains confident in the
underlying strength of its diverse, global business, as well as its
ability to execute against its long-term growth drivers; Mylan also
remains committed to its recently updated full year 2016 adjusted
EPS guidance range of $4.70 to $4.90
and its $6.00 adjusted EPS target in
2018, with targeted growth in the low-teens in both 2017 and 2018
over the next 18 to 24 months, Mylan will focus on integrating and
driving efficiencies across its global platform and will be
considering how best to deploy its capital and leverage its
differentiated platform over the long-term to ensure Mylan's
sustainable growth for many years to come; Mylan continues to
anticipate price erosion in the mid-single digits for the remainder
of the year; that Mylan continues to have ample financial
flexibility and optionality to continue to improve net leverage,
enhance its capital structure and strategically deploy capital for
bolt-on opportunities, while maintaining its commitment to an
investment grade credit rating; and that Mylan remains committed to
the Euro bond market and subject to prevailing market conditions,
the terms and specific timing are to be determined. 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: uncertainties related to the Meda
Transaction; the possibility that Mylan will not be able to
repurchase, repay or refinance Meda's outstanding debt obligations
on favorable terms or at all; the ability to meet expectations
regarding the accounting and tax treatments of the EPD Transaction
and 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 and the Meda Transaction within the
expected time-frames or at all and to successfully integrate the
EPD Business and Meda; with respect to the Medicaid Drug Rebate
Program Settlement, the inability or unwillingness on the part of
any of the parties to agree to a final 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 to market; success of
clinical trials and Mylan's ability to execute on new product
opportunities; 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, 2015, as amended, Mylan's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2016, Mylan's Quarterly Report on Form
10-Q for the quarter ended September 30,
2016, 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$
|
3,029.5
|
|
|
$
|
2,676.2
|
|
|
$
|
7,745.5
|
|
|
$
|
6,887.8
|
|
Other
revenues
|
27.6
|
|
|
19.0
|
|
|
63.6
|
|
|
50.8
|
|
Total
revenues
|
3,057.1
|
|
|
2,695.2
|
|
|
7,809.1
|
|
|
6,938.6
|
|
Cost of
sales
|
1,773.8
|
|
|
1,379.9
|
|
|
4,447.1
|
|
|
3,785.1
|
|
Gross
profit
|
1,283.3
|
|
|
1,315.3
|
|
|
3,362.0
|
|
|
3,153.5
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
199.1
|
|
|
174.8
|
|
|
632.2
|
|
|
512.9
|
|
Selling, general and
administrative
|
656.9
|
|
|
537.1
|
|
|
1,787.6
|
|
|
1,584.5
|
|
Litigation
settlements and other contingencies, net
|
558.0
|
|
|
2.3
|
|
|
556.4
|
|
|
19.1
|
|
Total operating
expenses
|
1,414.0
|
|
|
714.2
|
|
|
2,976.2
|
|
|
2,116.5
|
|
(Loss) earnings from
operations
|
(130.7)
|
|
|
601.1
|
|
|
385.8
|
|
|
1,037.0
|
|
Interest
expense
|
144.4
|
|
|
95.1
|
|
|
305.0
|
|
|
268.5
|
|
Other expense,
net
|
50.2
|
|
|
50.9
|
|
|
184.0
|
|
|
71.4
|
|
(Loss) earnings
before income taxes and noncontrolling interest
|
(325.3)
|
|
|
455.1
|
|
|
(103.2)
|
|
|
697.1
|
|
Income tax (benefit)
provision
|
(205.5)
|
|
|
26.5
|
|
|
(165.7)
|
|
|
44.0
|
|
Net (loss)
earnings
|
(119.8)
|
|
|
428.6
|
|
|
62.5
|
|
|
653.1
|
|
Net earnings
attributable to the noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
Net (loss) earnings
attributable to Mylan N.V. ordinary shareholders
|
$
|
(119.8)
|
|
|
$
|
428.6
|
|
|
$
|
62.5
|
|
|
$
|
653.0
|
|
(Loss) earnings per
ordinary share attributable to Mylan N.V. ordinary
shareholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.23)
|
|
|
$
|
0.87
|
|
|
$
|
0.12
|
|
|
$
|
1.40
|
|
Diluted
|
$
|
(0.23)
|
|
|
$
|
0.83
|
|
|
$
|
0.12
|
|
|
$
|
1.32
|
|
Weighted average
ordinary shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
523.6
|
|
|
490.5
|
|
|
505.9
|
|
|
466.2
|
|
Diluted
|
523.6
|
|
|
514.0
|
|
|
515.2
|
|
|
493.2
|
|
|
Mylan N.V. and
Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited; in
millions)
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,256.6
|
|
|
$
|
1,236.0
|
|
Accounts receivable,
net
|
|
3,098.9
|
|
|
2,689.1
|
|
Inventories
|
|
2,687.5
|
|
|
1,951.0
|
|
Prepaid expenses and
other current assets
|
|
922.1
|
|
|
596.6
|
|
Total current
assets
|
|
7,965.1
|
|
|
6,472.7
|
|
Intangible assets,
net
|
|
15,613.4
|
|
|
7,221.9
|
|
Goodwill
|
|
9,633.1
|
|
|
5,380.1
|
|
Other non-current
assets
|
|
3,326.9
|
|
|
3,193.0
|
|
Total
assets
|
|
$
|
36,538.5
|
|
|
$
|
22,267.7
|
|
LIABILITIES AND
EQUITY
|
|
Liabilities
|
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
|
$
|
4,434.6
|
|
|
$
|
1,077.0
|
|
Other current
liabilities
|
|
5,119.4
|
|
|
3,045.2
|
|
Long-term
debt
|
|
11,328.6
|
|
|
6,295.6
|
|
Other non-current
liabilities
|
|
3,827.1
|
|
|
2,084.1
|
|
Total
liabilities
|
|
24,709.7
|
|
|
12,501.9
|
|
Noncontrolling
interest
|
|
1.5
|
|
|
1.4
|
|
Mylan N.V.
shareholders' equity
|
|
11,827.3
|
|
|
9,764.4
|
|
Total liabilities and
equity
|
|
$
|
36,538.5
|
|
|
$
|
22,267.7
|
|
Mylan N.V. and
Subsidiaries
Reconciliation of
Non-GAAP Financial Measures
(Unaudited; in
millions)
|
|
Summary of Total
Revenues by Segment
|
|
|
Three Months
Ended
|
|
September
30,
|
|
2016
|
|
2015
|
|
%
Change
|
|
2016
Currency
Impact (1)
|
|
2016
Constant
Currency
Revenues (2)
|
|
Constant
Currency
%
Change
|
Generics:
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North America
(3)
|
$
|
1,098.8
|
|
|
$
|
1,090.6
|
|
|
1
|
%
|
|
$
|
(1.0)
|
|
|
$
|
1,097.8
|
|
|
1
|
%
|
Europe
(4)
|
842.0
|
|
|
611.9
|
|
|
38
|
%
|
|
7.9
|
|
|
849.9
|
|
|
39
|
%
|
Rest of World
(3)
|
670.0
|
|
|
535.9
|
|
|
25
|
%
|
|
(26.7)
|
|
|
643.3
|
|
|
20
|
%
|
Total third
party net sales (4)
|
2,610.8
|
|
|
2,238.4
|
|
|
17
|
%
|
|
(19.8)
|
|
|
2,591.0
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other third party
revenues
|
14.2
|
|
|
11.5
|
|
|
23
|
%
|
|
—
|
|
|
14.2
|
|
|
23
|
%
|
Total third
party revenues
|
2,625.0
|
|
|
2,249.9
|
|
|
17
|
%
|
|
(19.8)
|
|
|
2,605.2
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
27.4
|
|
|
1.4
|
|
|
NM
|
|
|
—
|
|
|
27.4
|
|
|
NM
|
|
Generics total
revenues
|
2,652.4
|
|
|
2,251.3
|
|
|
18
|
%
|
|
(19.8)
|
|
|
2,632.6
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty:
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
418.7
|
|
|
437.8
|
|
|
(4)%
|
|
|
—
|
|
|
418.7
|
|
|
(4)%
|
|
Other third party
revenues
|
13.4
|
|
|
7.5
|
|
|
79
|
%
|
|
—
|
|
|
13.4
|
|
|
79
|
%
|
Total third
party revenues
|
432.1
|
|
|
445.3
|
|
|
(3)%
|
|
|
—
|
|
|
432.1
|
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
7.2
|
|
|
1.2
|
|
|
NM
|
|
|
—
|
|
|
7.2
|
|
|
NM
|
|
Specialty
total revenues
|
439.3
|
|
|
446.5
|
|
|
(2)%
|
|
|
—
|
|
|
439.3
|
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of
intersegment sales (5)
|
(34.6)
|
|
|
(2.6)
|
|
|
NM
|
|
|
—
|
|
|
(34.6)
|
|
|
NM
|
|
Consolidated total
revenues (4)
|
$
|
3,057.1
|
|
|
$
|
2,695.2
|
|
|
13
|
%
|
|
$
|
(19.8)
|
|
|
$
|
3,037.3
|
|
|
13
|
%
|
|
Nine Months
Ended
|
|
September
30,
|
|
2016
|
|
2015
|
|
%
Change
|
|
2016
Currency
Impact (1)
|
|
2016
Constant
Currency
Revenues (2)
|
|
Constant
Currency
% Change
|
Generics:
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North America
(3)
|
$
|
3,028.6
|
|
|
$
|
2,894.1
|
|
|
5
|
%
|
|
$
|
10.9
|
|
|
$
|
3,039.5
|
|
|
5
|
%
|
Europe
(4)
|
2,033.9
|
|
|
1,589.2
|
|
|
28
|
%
|
|
10.2
|
|
|
2,044.1
|
|
|
29
|
%
|
Rest of World
(3)
|
1,613.9
|
|
|
1,453.8
|
|
|
11
|
%
|
|
(9.1)
|
|
|
1,604.8
|
|
|
10
|
%
|
Total third
party net sales (4)
|
6,676.4
|
|
|
5,937.1
|
|
|
12
|
%
|
|
12.0
|
|
|
6,688.4
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other third party
revenues
|
33.0
|
|
|
31.7
|
|
|
4
|
%
|
|
0.3
|
|
|
33.3
|
|
|
5
|
%
|
Total third
party revenues
|
6,709.4
|
|
|
5,968.8
|
|
|
12
|
%
|
|
12.3
|
|
|
6,721.7
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
29.5
|
|
|
5.2
|
|
|
NM
|
|
|
0.3
|
|
|
29.8
|
|
|
NM
|
|
Generics total
revenues
|
6,738.9
|
|
|
5,974.0
|
|
|
13
|
%
|
|
12.6
|
|
|
6,751.5
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty:
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
1,069.1
|
|
|
950.7
|
|
|
12
|
%
|
|
—
|
|
|
1,069.1
|
|
|
12
|
%
|
Other third party
revenues
|
30.6
|
|
|
19.1
|
|
|
60
|
%
|
|
—
|
|
|
30.6
|
|
|
60
|
%
|
Total third
party revenues
|
1,099.7
|
|
|
969.8
|
|
|
13
|
%
|
|
—
|
|
|
1,099.7
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
13.7
|
|
|
5.8
|
|
|
NM
|
|
|
—
|
|
|
13.7
|
|
|
NM
|
|
Specialty
total revenues
|
1,113.4
|
|
|
975.6
|
|
|
14
|
%
|
|
—
|
|
|
1,113.4
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of
intersegment sales (5)
|
(43.2)
|
|
|
(11.0)
|
|
|
NM
|
|
|
(0.3)
|
|
|
(43.5)
|
|
|
NM
|
|
Consolidated total
revenues (4)
|
$
|
7,809.1
|
|
|
$
|
6,938.6
|
|
|
13
|
%
|
|
$
|
12.3
|
|
|
$
|
7,821.4
|
|
|
13
|
%
|
Summary of
Adjusted Total Revenues by Segment
|
|
|
Three Months
Ended
|
|
September
30,
|
|
2016
|
|
2015
|
|
%
Change
|
|
2016
Currency
Impact (1)
|
|
2016
Constant
Currency
Revenues (2)
|
|
Constant
Currency
% Change
|
Generics
(adjusted):
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North America
(3)
|
$
|
1,098.8
|
|
|
$
|
1,090.6
|
|
|
1
|
%
|
|
$
|
(1.0)
|
|
|
$
|
1,097.8
|
|
|
1
|
%
|
Europe
(adjusted)
|
842.0
|
|
|
629.0
|
|
|
34
|
%
|
|
7.9
|
|
|
849.9
|
|
|
35
|
%
|
Rest of World
(3)
|
670.0
|
|
|
535.9
|
|
|
25
|
%
|
|
(26.7)
|
|
|
643.3
|
|
|
20
|
%
|
Adjusted total
third party net sales
|
2,610.8
|
|
|
2,255.5
|
|
|
16
|
%
|
|
(19.8)
|
|
|
2,591.0
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other third party
revenues
|
14.2
|
|
|
11.5
|
|
|
23
|
%
|
|
—
|
|
|
14.2
|
|
|
23
|
%
|
Adjusted total
third party revenues
|
2,625.0
|
|
|
2,267.0
|
|
|
16
|
%
|
|
(19.8)
|
|
|
2,605.2
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
27.4
|
|
|
1.4
|
|
|
NM
|
|
|
—
|
|
|
27.4
|
|
|
NM
|
|
Adjusted
Generics total revenues
|
2,652.4
|
|
|
2,268.4
|
|
|
17
|
%
|
|
(19.8)
|
|
|
2,632.6
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty:
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
418.7
|
|
|
437.8
|
|
|
(4)%
|
|
|
—
|
|
|
418.7
|
|
|
(4)%
|
|
Other third party
revenues
|
13.4
|
|
|
7.5
|
|
|
79
|
%
|
|
—
|
|
|
13.4
|
|
|
79
|
%
|
Total third
party revenues
|
432.1
|
|
|
445.3
|
|
|
(3)%
|
|
|
—
|
|
|
432.1
|
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
7.2
|
|
|
1.2
|
|
|
NM
|
|
|
—
|
|
|
7.2
|
|
|
NM
|
|
Specialty
total revenues
|
439.3
|
|
|
446.5
|
|
|
(2)%
|
|
|
—
|
|
|
439.3
|
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of
intersegment sales (5)
|
(34.6)
|
|
|
(2.6)
|
|
|
NM
|
|
|
—
|
|
|
(34.6)
|
|
|
NM
|
|
Adjusted consolidated
total revenues
|
$
|
3,057.1
|
|
|
$
|
2,712.3
|
|
|
13
|
%
|
|
$
|
(19.8)
|
|
|
$
|
3,037.3
|
|
|
12
|
%
|
|
Nine Months
Ended
|
|
September
30,
|
|
2016
|
|
2015
|
|
%
Change
|
|
2016
Currency
Impact (1)
|
|
2016
Constant
Currency
Revenues (2)
|
|
Constant
Currency
% Change
|
Generics
(adjusted):
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
|
|
|
|
|
|
|
|
|
|
|
North America
(3)
|
$
|
3,028.6
|
|
|
$
|
2,894.1
|
|
|
5
|
%
|
|
$
|
10.9
|
|
|
$
|
3,039.5
|
|
|
5
|
%
|
Europe
(adjusted)
|
2,033.9
|
|
|
1,606.3
|
|
|
27
|
%
|
|
10.2
|
|
|
2,044.1
|
|
|
27
|
%
|
Rest of World
(3)
|
1,613.9
|
|
|
1,453.8
|
|
|
11
|
%
|
|
(9.1)
|
|
|
1,604.8
|
|
|
10
|
%
|
Adjusted total
third party net sales
|
6,676.4
|
|
|
5,954.2
|
|
|
12
|
%
|
|
12.0
|
|
|
6,688.4
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other third party
revenues
|
33.0
|
|
|
31.7
|
|
|
4
|
%
|
|
0.3
|
|
|
33.3
|
|
|
5
|
%
|
Adjusted total
third party revenues
|
6,709.4
|
|
|
5,985.9
|
|
|
12
|
%
|
|
12.3
|
|
|
6,721.7
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
29.5
|
|
|
5.2
|
|
|
NM
|
|
|
0.3
|
|
|
29.8
|
|
|
NM
|
|
Adjusted
Generics total revenues
|
6,738.9
|
|
|
5,991.1
|
|
|
12
|
%
|
|
12.6
|
|
|
6,751.5
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty:
|
|
|
|
|
|
|
|
|
|
|
|
Third party net
sales
|
1,069.1
|
|
|
950.7
|
|
|
12
|
%
|
|
—
|
|
|
1,069.1
|
|
|
12
|
%
|
Other third party
revenues
|
30.6
|
|
|
19.1
|
|
|
60
|
%
|
|
—
|
|
|
30.6
|
|
|
60
|
%
|
Total third
party revenues
|
1,099.7
|
|
|
969.8
|
|
|
13
|
%
|
|
—
|
|
|
1,099.7
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales
(5)
|
13.7
|
|
|
5.8
|
|
|
NM
|
|
|
—
|
|
|
13.7
|
|
|
NM
|
|
Specialty
total revenues
|
1,113.4
|
|
|
975.6
|
|
|
14
|
%
|
|
—
|
|
|
1,113.4
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of
intersegment sales (5)
|
(43.2)
|
|
|
(11.0)
|
|
|
NM
|
|
|
(0.3)
|
|
|
(43.5)
|
|
|
NM
|
|
Adjusted consolidated
total revenues
|
$
|
7,809.1
|
|
|
$
|
6,955.7
|
|
|
12
|
%
|
|
$
|
12.3
|
|
|
$
|
7,821.4
|
|
|
12
|
%
|
|
|
|
|
|
|
|
(1)
|
Currency impact is
shown as unfavorable (favorable).
|
(2)
|
The constant currency
revenue change is derived by translating third party net sales for
the current period at prior year comparative period exchange
rates.
|
(3)
|
Beginning in the
first quarter of 2016, the Company reclassified sales from its
Brazilian operation from Rest of World to North America. The amount
reclassified for the three and nine months ended September 30, 2015
was approximately $11.0 million and $32.3 million,
respectively.
|
(4)
|
For the three months
ended September 30, 2015, adjusted third party net sales in
Europe totaled $629.0 million, adjusted generics segment third
party net sales totaled $2.26 billion and adjusted total revenues
were $2.71 billion. For the nine months ended September 30,
2015, adjusted third party net sales in Europe totaled $1.61
billion, adjusted generics segment third party net sales totaled
$5.95 billion and adjusted total revenues were $6.96 billion.
Adjusted third party net sales in Europe, adjusted generics segment
third party net sales and adjusted total revenues are non-GAAP
financial measures.
|
(5)
|
The percentage
changes in intersegment sales are considered not meaningful (or,
"NM") in terms of the Company's total revenue as intersegment sales
eliminate in consolidation.
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP third
party net sales from Europe
|
$
|
842.0
|
|
|
$
|
611.9
|
|
|
$
|
2,033.9
|
|
|
$
|
1,589.2
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition related
customer incentive
|
—
|
|
|
17.1
|
|
|
—
|
|
|
17.1
|
|
Adjusted third party
net sales from Europe
|
$
|
842.0
|
|
|
$
|
629.0
|
|
|
$
|
2,033.9
|
|
|
$
|
1,606.3
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP Generics
segment third party net sales
|
$
|
2,610.8
|
|
|
$
|
2,238.4
|
|
|
$
|
6,676.4
|
|
|
$
|
5,937.1
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition related
customer incentive
|
—
|
|
|
17.1
|
|
|
—
|
|
|
17.1
|
|
Adjusted Generics
segment third party net sales
|
$
|
2,610.8
|
|
|
$
|
2,255.5
|
|
|
$
|
6,676.4
|
|
|
$
|
5,954.2
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP third
party net sales
|
$
|
3,029.5
|
|
|
$
|
2,676.2
|
|
|
$
|
7,745.5
|
|
|
$
|
6,887.8
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition related
customer incentive
|
—
|
|
|
17.1
|
|
|
—
|
|
|
17.1
|
|
Adjusted third party
net sales
|
$
|
3,029.5
|
|
|
$
|
2,693.3
|
|
|
$
|
7,745.5
|
|
|
$
|
6,904.9
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP total
revenues
|
$
|
3,057.1
|
|
|
$
|
2,695.2
|
|
|
$
|
7,809.1
|
|
|
$
|
6,938.6
|
|
Add:
|
|
|
|
|
|
|
|
Acquisition related
customer incentive
|
—
|
|
|
17.1
|
|
|
—
|
|
|
17.1
|
|
Adjusted total
revenues
|
$
|
3,057.1
|
|
|
$
|
2,712.3
|
|
|
$
|
7,809.1
|
|
|
$
|
6,955.7
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP cost of
sales
|
$
|
1,773.8
|
|
|
$
|
1,379.9
|
|
|
$
|
4,447.1
|
|
|
$
|
3,785.1
|
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
related amortization
|
(421.5)
|
|
|
(215.4)
|
|
|
(914.8)
|
|
|
(598.3)
|
|
Acquisition related
costs
|
(8.5)
|
|
|
(24.9)
|
|
|
(39.8)
|
|
|
(63.7)
|
|
Restructuring and
other special items
|
(21.7)
|
|
|
(5.1)
|
|
|
(47.9)
|
|
|
(19.8)
|
|
Adjusted cost of
sales
|
$
|
1,322.1
|
|
|
$
|
1,134.5
|
|
|
$
|
3,444.6
|
|
|
$
|
3,103.3
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
|
1,735.0
|
|
|
$
|
1,577.8
|
|
|
$
|
4,364.5
|
|
|
$
|
3,852.4
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
57
|
%
|
|
58
|
%
|
|
56
|
%
|
|
55
|
%
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP
R&D
|
$
|
199.1
|
|
|
$
|
174.8
|
|
|
$
|
632.2
|
|
|
$
|
512.9
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(0.2)
|
|
|
(0.7)
|
|
|
(0.4)
|
|
|
(1.2)
|
|
Restructuring &
other special items
|
(22.2)
|
|
|
(0.6)
|
|
|
(98.7)
|
|
|
(18.5)
|
|
Adjusted
R&D
|
$
|
176.7
|
|
|
$
|
173.5
|
|
|
$
|
533.1
|
|
|
$
|
493.2
|
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of adjusted total revenues
|
6
|
%
|
|
6
|
%
|
|
7
|
%
|
|
7
|
%
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP
SG&A
|
$
|
656.9
|
|
|
$
|
537.1
|
|
|
$
|
1,787.6
|
|
|
$
|
1,584.5
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(39.7)
|
|
|
(36.1)
|
|
|
(102.4)
|
|
|
(136.4)
|
|
Restructuring and
other special items
|
(12.3)
|
|
|
(8.6)
|
|
|
(31.3)
|
|
|
(41.3)
|
|
Adjusted
SG&A
|
$
|
604.9
|
|
|
$
|
492.4
|
|
|
$
|
1,653.9
|
|
|
$
|
1,406.8
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A as
% of adjusted total revenues
|
20
|
%
|
|
18
|
%
|
|
22
|
%
|
|
20
|
%
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP total
operating expenses
|
$
|
1,414.0
|
|
|
$
|
714.2
|
|
|
$
|
2,976.2
|
|
|
$
|
2,116.5
|
|
Deduct:
|
|
|
|
|
|
|
|
Litigation
settlements and other contingencies, net
|
(558.0)
|
|
|
(2.3)
|
|
|
(556.4)
|
|
|
(19.1)
|
|
R&D
adjustments
|
(22.4)
|
|
|
(1.3)
|
|
|
(99.1)
|
|
|
(19.7)
|
|
SG&A
adjustments
|
(52.0)
|
|
|
(44.7)
|
|
|
(133.7)
|
|
|
(177.7)
|
|
Adjusted total
operating expenses
|
$
|
781.6
|
|
|
$
|
665.9
|
|
|
$
|
2,187.0
|
|
|
$
|
1,900.0
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from operations (b)
|
$
|
953.4
|
|
|
$
|
911.9
|
|
|
$
|
2,177.5
|
|
|
$
|
1,952.4
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP interest
expense
|
$
|
144.4
|
|
|
$
|
95.1
|
|
|
$
|
305.0
|
|
|
$
|
268.5
|
|
Deduct:
|
|
|
|
|
|
|
|
Interest expense
related to clean energy investments (c)
|
(3.6)
|
|
|
(4.1)
|
|
|
(11.0)
|
|
|
(12.5)
|
|
Accretion of
contingent consideration liability
|
(10.4)
|
|
|
(9.7)
|
|
|
(30.7)
|
|
|
(28.5)
|
|
Acquisition related
costs
|
(19.7)
|
|
|
(7.5)
|
|
|
(45.6)
|
|
|
(27.4)
|
|
Other special
items
|
(2.1)
|
|
|
(30.4)
|
|
|
(8.0)
|
|
|
(42.3)
|
|
Adjusted interest
expense
|
$
|
108.6
|
|
|
$
|
43.4
|
|
|
$
|
209.7
|
|
|
$
|
157.8
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP other
expense, net
|
$
|
50.2
|
|
|
$
|
50.9
|
|
|
$
|
184.0
|
|
|
$
|
71.4
|
|
(Add) /
Deduct:
|
|
|
|
|
|
|
|
Clean energy
investments pre-tax loss
|
(23.8)
|
|
|
(24.1)
|
|
|
(69.4)
|
|
|
(68.3)
|
|
Purchase accounting
related amortization
|
(5.7)
|
|
|
(3.8)
|
|
|
(17.0)
|
|
|
(11.5)
|
|
Acquisition related
costs
|
(42.3)
|
|
|
—
|
|
|
(158.5)
|
|
|
—
|
|
Financing related
costs
|
—
|
|
|
(40.8)
|
|
|
—
|
|
|
(40.8)
|
|
Other
items
|
1.4
|
|
|
1.2
|
|
|
(1.3)
|
|
|
(6.9)
|
|
Adjusted other
income
|
$
|
(20.2)
|
|
|
$
|
(16.6)
|
|
|
$
|
(62.2)
|
|
|
$
|
(56.1)
|
|
|
|
|
Three Months
Ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
U.S. GAAP net cash
provided by operating activities
|
$
|
1,200.6
|
|
|
$
|
974.8
|
|
|
$
|
1,697.7
|
|
|
$
|
1,356.5
|
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Financing related
expenses
|
—
|
|
|
127.5
|
|
|
66.9
|
|
|
137.4
|
|
Acquisition related
costs
|
36.7
|
|
|
36.9
|
|
|
125.0
|
|
|
121.2
|
|
R&D
expense
|
3.2
|
|
|
—
|
|
|
63.2
|
|
|
12.0
|
|
Income tax
items
|
—
|
|
|
(15.0)
|
|
|
(25.8)
|
|
|
(15.0)
|
|
Other
|
—
|
|
|
0.7
|
|
|
—
|
|
|
2.7
|
|
Adjusted cash
provided by operating activities
|
$
|
1,240.5
|
|
|
$
|
1,124.9
|
|
|
$
|
1,927.0
|
|
|
$
|
1,614.8
|
|
|
|
|
|
|
|
|
|
Deduct:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(118.5)
|
|
|
(85.3)
|
|
|
(239.5)
|
|
|
(207.3)
|
|
Adjusted free cash
flow
|
$
|
1,122.0
|
|
|
$
|
1,039.6
|
|
|
$
|
1,687.5
|
|
|
$
|
1,407.5
|
|
|
|
|
|
|
|
|
(a)
|
U.S. GAAP gross
profit is calculated as U.S. GAAP total revenues less U.S. GAAP
cost of sales. U.S. GAAP gross margin is calculated as U.S. GAAP
gross profit divided by U.S. GAAP total revenues. Adjusted gross
profit is calculated as total revenues (adjusted total revenues for
2015) less adjusted cost of sales. Adjusted gross margin is
calculated as adjusted gross profit divided by total revenues
(adjusted total revenues for 2015).
|
(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.
|
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SOURCE Mylan N.V.