UPDATE: Mylan Swings To 3Q Loss On Charges; Upgrades 2009 EPS View
30 October 2009 - 1:16AM
Dow Jones News
Mylan Inc. (MYL) swung to a third-quarter loss, weighed down by
litigation and acquisition-related expenses, as its core
operational performance exceeded Wall Street expectations.
The Pittsburgh generic drug maker cut costs in the quarter and
cited higher volumes, market growth, and new product launches for
its growth, prompting it to again boost its full-year earnings
projections.
Mylan shares recently rose 4.5% to $16.48 in early trading and
have more than doubled in the past year.
"We view Mylan's strong 3Q results as a continued indication of
the company's improving underlying profitability," said JPMorgan
analyst Chris Schott in a note to analysts.
He noted the results were impressive as they didn't include a
substantial contribution from a generic version of Abbott
Laboratories' (ABT) anti-epilepsy drug Depakote ER. Mylan had
180-day exclusivity to sell the generic and launched Feb. 2.
Looking forward, the company now sees 2009 earnings, excluding
items, of $1.24 to $1.28 a share, well above the current analyst
view of $1.17 a share, according to Thomson Reuters.
Mylan has steadily increased its earnings guidance throughout
the year - in February it projected 90 cents to $1.10 a share - and
last projected $1.13 to $1.20.
Wall Street has been eager to get more information on 2010
guidance, and Mylan's Chairman and Chief Executive Robert Coury
said in a statement that "we are confident that this momentum will
continue into 2010 and enable us to once again deliver the revenue
and earnings performance growth that we envision."
In the three months ended Sept. 30, Mylan swung to a loss of $40
million, or 13 cents a share, from year-earlier profit of $182.4
million, or 47 cents a share. The latest quarter includes
acquisition-related expenses and litigation charge including a
settlement related to allegations it underpaid rebates to
Medicaid.
Excluding items, earnings were 32 cents a share, well above
analyst expectations of 27 cents a share.
Revenue dropped 24% to $1.26 billion, but that also beat Street
expectations of $1.23 billion.
The top-line drop came from a 2008 revenue gain of $455 million
from selling of product rights to hypertension drug Bystolic, which
Mylan co-developed with Forest Laboratories Inc. (FRX). Excluding
this gain, total revenue rose by $62.2 million, or 5.2%, over the
year-ago period.
Excluding foreign-exchange impacts, revenue excluding the gain
rose 9%.
Generics revenue rose 3.7% to $1.12 billion, with North America
seeing a 9.2% increase to $502.5 million.
Interest expense in the quarter dropped to $77 million from
$93.5 million a year ago, as it cut its debt and overall interest
rates. The company is carrying $5.1 billion in long-term debt on
its balance sheet, mainly from the $6.7 billion purchase of Merck
KGaA's (MRK.XE) generics business in 2007.
Last month, Standard & Poor's Ratings Services raised
Mylan's ratings closer to investment grade, citing the company's
successful integration of those operations and a view that
increasing cash flows will be used to repay debt.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com