HERTFORDSHIRE, England and
PITTSBURGH, July 29, 2019
/PRNewswire/ -- Mylan N.V. (NASDAQ: MYL) today announced its
financial results for the three and six months ended June 30,
2019.
Second Quarter 2019 Financial Highlights
- U.S. GAAP diluted loss per ordinary share ("U.S. GAAP EPS") of
$(0.33) as compared to earnings of
$0.07 per ordinary share in the prior
year period and adjusted diluted earnings per ordinary share
("adjusted EPS") of $1.03, as
compared to $1.07 in the prior year
period.
- Total revenues of $2.85 billion,
up 2% compared to the prior year period.
- Revenue Highlights:
-
- Rest of World segment net sales of $805.2 million, up 5%, up 10% on a constant
currency basis.
- North America segment net
sales of $1.02 billion, up 2% on an
actual and constant currency basis.
- Europe segment net sales of
$989.6 million, flat, up 6% on a
constant currency basis.
- U.S. GAAP net cash provided by operating activities for the
three months ended June 30, 2019 of $668.9 million, compared to $430.2 million in the prior year period and
adjusted free cash flow for the three months ended June 30,
2019 of $723.7 million, compared to
$661.4 million in the prior year
period.
- U.S. GAAP net cash provided by operating activities for the six
months ended June 30, 2019 of $629.2
million, compared to $1.05
billion in the prior year period and adjusted free cash flow
for the six months ended June 30, 2019 of $750.8 million, compared to $1.33 billion in the prior year period, both
driven primarily by an increased investment in working capital.
- 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 said:
"Mylan's second quarter performance was strong as we delivered or
exceeded on expectations across all financial metrics. In addition,
based upon our strong execution against our plan, we remain on
track to deliver on our 2019 guidance."
Mylan CFO Ken Parks added, "Mylan
continues to generate strong cash flow with approximately
$724 million of adjusted free cash
flow in the second quarter of 2019, up 9% from the prior year and
ahead of our expectations. Our performance highlights our stable
and durable cash flow profile and allows us to remain committed to
our deleveraging strategy to repay $1.1
billion of debt by the end of 2019. We also remain
fully committed to maintaining our investment grade credit rating.
For the full year 2019, we are reaffirming our guidance ranges for
total revenue of $11.5 billion to
$12.5 billion, adjusted EPS guidance
range of $3.80 to $4.80 and adjusted free cash flow range of
$1.9 billion to $2.3 billion."
Financial
Summary
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(Unaudited; in
millions, except per share amounts and %s)
|
2019
|
|
2018
|
|
Percent
Change
|
|
2019
|
|
2018
|
|
Percent
Change
|
Total Revenues
(1)
|
$
|
2,851.5
|
|
|
$
|
2,808.3
|
|
|
2%
|
|
$
|
5,347.0
|
|
|
$
|
5,492.8
|
|
|
(3)%
|
North America Net
Sales
|
1,023.4
|
|
|
1,000.8
|
|
|
2%
|
|
1,946.3
|
|
|
1,986.1
|
|
|
(2)%
|
Europe Net
Sales
|
989.6
|
|
|
990.6
|
|
|
—%
|
|
1,884.9
|
|
|
2,029.0
|
|
|
(7)%
|
Rest of World Net
Sales
|
805.2
|
|
|
764.1
|
|
|
5%
|
|
1,447.6
|
|
|
1,390.8
|
|
|
4%
|
Other
Revenues
|
33.3
|
|
|
52.8
|
|
|
(37)%
|
|
68.2
|
|
|
86.9
|
|
|
(22)%
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$
|
932.6
|
|
|
$
|
962.5
|
|
|
(3)%
|
|
$
|
1,737.8
|
|
|
$
|
1,946.8
|
|
|
(11)%
|
U.S. GAAP Gross
Margin
|
32.7
|
%
|
|
34.3
|
%
|
|
|
|
32.5
|
%
|
|
35.4
|
%
|
|
|
Adjusted Gross Profit
(2)
|
$
|
1,533.1
|
|
|
$
|
1,495.7
|
|
|
3%
|
|
$
|
2,873.8
|
|
|
$
|
2,915.5
|
|
|
(1)%
|
Adjusted Gross Margin
(2)
|
53.8
|
%
|
|
53.3
|
%
|
|
|
|
53.7
|
%
|
|
53.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net (Loss)
Earnings
|
$
|
(168.5)
|
|
|
$
|
37.5
|
|
|
(549)%
|
|
$
|
(193.5)
|
|
|
$
|
124.6
|
|
|
(255)%
|
U.S. GAAP
EPS
|
$
|
(0.33)
|
|
|
$
|
0.07
|
|
|
(571)%
|
|
$
|
(0.38)
|
|
|
$
|
0.24
|
|
|
(258)%
|
Adjusted Net Earnings
(2)
|
$
|
532.8
|
|
|
$
|
551.5
|
|
|
(3)%
|
|
$
|
954.7
|
|
|
$
|
1,047.1
|
|
|
(9)%
|
Adjusted EPS
(2)
|
$
|
1.03
|
|
|
$
|
1.07
|
|
|
(4)%
|
|
$
|
1.85
|
|
|
$
|
2.03
|
|
|
(9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(2)
|
$
|
596.7
|
|
|
$
|
682.7
|
|
|
(13)%
|
|
$
|
1,130.9
|
|
|
$
|
1,346.5
|
|
|
(16)%
|
Adjusted EBITDA
(2)
|
$
|
847.4
|
|
|
$
|
866.6
|
|
|
(2)%
|
|
$
|
1,557.6
|
|
|
$
|
1,680.5
|
|
|
(7)%
|
|
___________
|
(1)
|
Amounts exclude
intersegment revenue that eliminates on a consolidated
basis.
|
(2)
|
Non-GAAP financial
measures. Please see "Non-GAAP Financial Measures" for additional
information.
|
Second Quarter 2019 Financial Results
Total revenues for the three months ended
June 30, 2019 were $2.85
billion, compared to $2.81
billion for the comparable prior year period, representing
an increase of $43.2 million, or 2%.
Total revenues include both net sales and other revenues from third
parties. Net sales for the current quarter were $2.82 billion, compared to $2.76 billion for the comparable prior year
period, representing an increase of $62.7
million, or 2%. Other revenues for the current
quarter were $33.3 million, compared
to $52.8 million for the comparable
prior year period, a decrease of $19.5
million.
The increase in net sales included an increase in the
North America segment of 2% and in
the Rest of World segment of 5%. Net sales in the Europe segment were essentially flat when
compared to the prior year period. Mylan's net sales were
unfavorably impacted by the effect of foreign currency translation,
primarily reflecting changes in the U.S. Dollar as compared to the
currencies of Mylan's subsidiaries in India, the European Union and Australia. The unfavorable impact of foreign
currency translation on current period net sales was approximately
$93.6 million, or 3%. On a constant
currency basis, net sales increased by approximately $156.3 million, or 6%. This increase was
primarily driven by new product sales, partially offset by a
decrease in net sales from existing products as a result of lower
volumes and, to a lesser extent, pricing. Below is a summary of net
sales in each of our segments for the three months ended
June 30, 2019:
- Net sales from North
America segment totaled $1.02
billion in the current quarter, an increase of $22.6 million or 2% when compared to the prior
year period. This increase was primarily driven by new product
sales partially offset by lower volumes of existing products and,
to a lesser extent, pricing. New product sales were primarily
driven by sales of Fulphila™ (biosimilar to Neulasta®) and the
Wixela™ Inhub™. The volume decline from
existing products was due to changes in the competitive
environment. The impact of foreign currency translation on current
period net sales was insignificant within North America.
- Net sales from Europe
segment totaled $989.6 million in the
current quarter, a decrease of $1.0
million, when compared to the prior year period. This
decrease was primarily the result of the unfavorable impact of
foreign currency translation of approximately $59.5 million or 6%, and to a lesser extent,
pricing on existing products. The unfavorable impact of foreign
currency translation was offset by new product sales, including
Hulio™ and the TOBI Podhaler®, and higher volumes of existing
products. Constant currency net sales increased by approximately
$58.5 million, or 6%, when compared
to the prior year period.
- Net sales from Rest of World segment totaled
$805.2 million in the current
quarter, an increase of $41.1 million
or 5% when compared to the prior year period. This increase was
primarily the result of higher volumes of existing products
primarily driven by products sold in China and new product sales in Australia and emerging markets. These
increases were partially offset primarily by the unfavorable impact
of foreign currency translation and, to a lesser extent, by lower
pricing on existing products. Overall, net sales from Rest of World
were unfavorably impacted by the effect of foreign currency
translation by approximately $31.9
million, or 4%. Constant currency net sales increased by
approximately $73.0 million, or 10%
when compared to the prior year period.
U.S. GAAP gross profit was $932.6
million and $962.5 million for
the second quarter of 2019 and 2018, respectively. U.S. GAAP
gross margins were 33% and 34% in the second quarter of 2019
and 2018, respectively. U.S. GAAP gross margins were negatively
impacted by the incremental amortization from product acquisitions
and by expenses related to the recall of Valsartan products, each
of which decreased gross margins by approximately 50 basis points.
Gross margins were also negatively impacted as a result of lower
gross profit for sales of existing products partially offset by the
impact from new product sales. In addition, gross margins were
negatively affected by approximately 25 basis points as a result of
incremental manufacturing expenses, site remediation expenses and
incremental restructuring charges incurred during the current
period principally as a result of the activities at the Company's
Morgantown plant. Adjusted
gross profit was $1.53 billion
and adjusted gross margins were 54% for the second quarter of 2019
compared to adjusted gross profit of $1.50
billion and adjusted gross margins of 53% in the prior year
period.
R&D expense for the three months ended
June 30, 2019 was $147.6
million, compared to $206.7
million for the comparable prior year period, a decrease of
$59.1 million. This decrease was
primarily due to lower expenditures related to the reprioritization
of global programs, and higher payments in the prior year period
related to licensing arrangements for products in development.
SG&A expense for the three months ended
June 30, 2019 was $668.6
million, compared to $623.3
million for the comparable prior year period, an increase of
$45.3 million. The increase was
primarily due to continued investments in selling and marketing
activities. Also impacting the quarter was higher share-based
compensation expense due to a reduction of approximately
$23.5 million in the second quarter
of 2018 related to certain performance-based awards and a decrease
in bad debt expense of approximately $28.5 million related to
a special business interruption event for one customer in the prior
year period.
During the second quarter of 2019, the Company recorded a net
charge of $20.9 million in
Litigation settlements and other contingencies, net compared to
a net gain of $46.4 million in the
comparable prior year period. During the three months ended
June 30, 2019, the Company recognized expense of approximately
$18.0 million for a settlement in
principle related to the modafinil antitrust matter, approximately
$30.0 million for a settlement in
principle with the SEC in connection with the SEC staff's
investigation of the Company's public disclosures regarding its
2016 settlement with the Department of Justice concerning the
EpiPen Medicaid Drug Rebate Program, which remains subject to SEC
approval, and a gain of $24.8 million
for fair value adjustments related to the contingent consideration
for the acquisition of the exclusive worldwide rights to develop,
manufacture and commercialize a generic equivalent to
GlaxoSmithKline's Advair Diskus® and Seretide® Diskus incorporating
Pfizer Inc.'s proprietary dry powder inhaler delivery platform (the
"respiratory delivery platform"). During the three months ended
June 30, 2018, the Company recorded a gain of approximately
$32.7 million for a fair value
adjustment related to the respiratory delivery platform contingent
consideration. The fair value adjustment was the result of changes
to assumptions relating to the timing of product launch along with
other competitive and market factors. In addition, the Company
recognized a net gain for litigation settlements primarily related
to the favorable resolution of certain patent infringement
matters.
U.S. GAAP (loss) net earnings decreased by
$206.0 million to a loss of
$168.5 million for the three months
ended June 30, 2019, compared to earnings of $37.5 million for the prior year period and
U.S. GAAP EPS decreased from $0.07 in the prior year period to $(0.33) in the current quarter. The Company
recognized a U.S. GAAP income tax provision of
$116.4 million in the current year
period, compared to a U.S. GAAP income tax benefit of $18.8 million for the comparable prior year
period. The increase primarily relates to tax expense of
approximately $129.9 million for a
settlement in principle with the Internal Revenue Service ("IRS")
to resolve federal tax matters related to the 2015 EPD Business
Acquisition (as defined below), including adjusting the interest
rates used for intercompany loans and confirming our status as a
non-U.S. corporation for U.S. federal income tax purposes. We are
currently in the process of memorializing our closing agreement
with the IRS, which we expect to enter into in the third quarter.
Adjusted net earnings decreased to $532.8 million compared to $551.5 million for the prior year period.
Adjusted EPS decreased to $1.03 from $1.07 in
the prior year period.
EBITDA was $596.7
million for the current quarter and $682.7 million for the comparable prior year
period. After adjusting for certain items as further detailed in
the reconciliation below, adjusted EBITDA was $847.4 million for the current quarter and
$866.6 million for the comparable
prior year period.
Six Months Ended June 30,
2019 Financial Results
Total revenues for the six months ended
June 30, 2019 were $5.35
billion, compared to $5.49
billion for the comparable prior year period, representing a
decrease of $145.8 million, or 3%.
Total revenues include both net sales and other revenues from third
parties. Net sales for the six months ended June 30,
2019 were $5.28 billion, compared to
$5.41 billion for the comparable
prior year period, representing a decrease of $127.1 million, or 2%. Other revenues for
the six months ended June 30, 2019 were $68.2 million, compared to $86.9 million for the comparable prior year
period.
The decrease in net sales included a decrease in the
Europe segment of 7% and in the
North America segment of 2%. These
decreases were partially offset by an increase in the Rest of World
segment of 4%. Mylan's net sales were unfavorably impacted by the
effect of foreign currency translation, primarily reflecting
changes in the U.S. Dollar as compared to the currencies of Mylan's
subsidiaries in India,
Australia, and the European Union.
The unfavorable impact of foreign currency translation on current
year net sales was approximately $225.6
million, or 4%. On a constant currency basis, the increase
in net sales was approximately $98.5
million, or 2% for the six months ended June 30, 2019.
This increase was primarily driven by new product sales, partially
offset by a decrease in net sales from existing products as a
result of lower volumes and, to a lesser extent, pricing. Below is
a summary of net sales in each of our segments for the six months
ended June 30, 2019:
- Net sales from North
America segment totaled $1.95
billion during the six months ended June 30, 2019, a decrease of $39.8 million or 2% when compared to the prior
year period. This decrease was due primarily to lower volumes of
existing products, driven by changes in the competitive environment
and the impact of the Morgantown
plant remediation activities, and to a lesser extent pricing. These
decreases were partially offset by new product sales, including
Wixela™ Inhub™ and Fulphila™ (biosimilar
to Neulasta®). The impact of foreign currency translation on
current period net sales was insignificant within North America.
- Net sales from Europe
segment totaled $1.88 billion during
the six months ended June 30, 2019, a
decrease of $144.1 million or 7% when
compared to the prior year period. This decrease was primarily the
result of the unfavorable impact of foreign currency translation of
approximately $137.0 million or 7%.
Sales of existing products were negatively impacted by lower
pricing and, to a lesser extent, volumes, partially offset by new
product sales. Constant currency net sales decreased by
approximately $7.1 million when
compared to the prior year period.
- Net sales from Rest of World segment totaled
$1.45 billion during the six months
ended June 30, 2019, an increase of
$56.8 million or 4% when compared to
the prior year period. This increase was primarily the result of
new product sales, primarily in Australia and emerging markets, and higher
volumes of existing products. Increased volumes of existing
products was primarily driven by the Company's anti-retroviral
therapy franchise. This increase was partially offset primarily by
the unfavorable impact of foreign currency translation and, to a
lesser extent, by lower pricing on existing products. Overall, net
sales from Rest of World were unfavorably impacted by the effect of
foreign currency translation of approximately $83.7 million, or 6%. Constant currency net sales
increased by approximately $140.5
million or 10% when compared to the prior year period.
U.S. GAAP gross profit was $1.74
billion and $1.95 billion for
the six months ended June 30, 2019
and 2018, respectively. U.S. GAAP gross margins were 33% and
35% for the six months ended June 30,
2019 and 2018, respectively. U.S. GAAP gross margins were
negatively affected by approximately 140 basis points as a result
of incremental manufacturing expenses, site remediation expenses
and incremental restructuring charges incurred during the current
period principally as a result of the activities at the Company's
Morgantown plant. In addition,
gross margins were negatively impacted as a result of lower gross
profit for sales of existing products partially offset by the
impact from new product sales. Gross margins were also negatively
impacted by approximately 50 basis points related to the
incremental amortization from product acquisitions and by
approximately 30 basis points for expenses related to the recall of
Valsartan products. Adjusted gross profit was $2.87 billion and adjusted gross margins were 54%
for the six months ended June 30,
2019 compared to adjusted gross profit of $2.92 billion and adjusted gross margins of 53%
in the prior year period.
R&D expense for the six months ended
June 30, 2019 was $320.2
million, compared to $411.6
million for the comparable prior year period, a decrease of
$91.4 million. This decrease was
primarily due to lower expenditures related to the reprioritization
of global programs, and higher payments in the prior year period
related to licensing arrangements for products in development.
SG&A expense for the six months ended
June 30, 2019 was $1.28 billion,
compared to $1.23 billion for the
comparable prior year period, an increase of $45.7 million. This increase was primarily due to
continued investment in selling and marketing activities. Also
impacting the six-month period was higher share-based compensation
expense due to a reduction of approximately $23.5 million in the second quarter of 2018
related to certain performance-based awards and a decrease in bad
debt expense of approximately $23.3 million related to a
special business interruption event for one customer in the prior
year period.
During the six months ended June 30, 2019 the Company
recorded a net charge of $21.6
million in Litigation settlements and other
contingencies, net compared to a net gain of $30.2 million in the comparable prior year
period. During the six months ended June 30, 2019, the Company
recognized litigation related charges of approximately $50.5 million primarily related to the matters
settled during the second quarter of 2019, which was partially
offset by a gain of $28.9 million for
fair value adjustments related to the respiratory delivery platform
contingent consideration. During the six months ended June 30,
2018, the Company recognized a gain of approximately $14.7 million related to a favorable litigation
settlement, which was partially offset by litigation related
charges of approximately $13.3 million related to an
anti-trust and a patent infringement matter. In addition, the
Company recognized a net gain of $30.0 million for a fair
value adjustment of the respiratory delivery platform contingent
consideration. The fair value adjustment was the net result of
changes to assumptions relating to the timing of product launch
along with other competitive and market factors.
U.S. GAAP net (loss) earnings decreased by
$318.1 million to a loss of
$193.5 million for the six months
ended June 30, 2019, compared to earnings of $124.6 million for the prior year period and
U.S. GAAP EPS decreased from $0.24 in the prior year period to $(0.38) for the six months ended June 30,
2019. The Company recognized a U.S. GAAP income tax
provision of $26.9 million
compared to a U.S. GAAP income tax benefit of $95.4 million for the comparable prior year
period. The change includes the impact of the previously described
settlement in principle with the IRS. Adjusted net earnings
decreased to $954.7 million compared
to $1.05 billion for the prior year
period. Adjusted EPS decreased to $1.85 from $2.03 in
the prior year period.
EBITDA was $1.13
billion for the six months ended June 30, 2019, and
$1.35 billion for the comparable
prior year period. After adjusting for certain items as further
detailed in the reconciliation below, adjusted EBITDA was
$1.56 billion for the six months
ended June 30, 2019 and $1.68
billion for the comparable prior year period.
Cash Flow
U.S. GAAP net cash provided by operating
activities for the three and six months ended
June 30, 2019 was $668.9 million
and $629.2 million, compared to
$430.2 million and $1.05 billion in the comparable prior year
periods. Capital expenditures were approximately $44.1 million and $97.2
million for the three and six months ended June 30,
2019 compared to approximately $45.2
million and $75.9 million for
the comparable prior year periods.
Adjusted net cash provided by operating activities for
the three and six months ended June 30, 2019 was $767.8 million and $848.0
million compared to adjusted net cash provided by operating
activities of $706.6 million and
$1.40 billion for the comparable
prior year periods. Adjusted free cash flow, defined as
adjusted net cash provided by operating activities less capital
expenditures, was $723.7 million and
$750.8 million for the three and six
months ended June 30, 2019, compared to $661.4 million and $1.33
billion in comparable the prior year periods.
Conference Call and Earnings Materials
Mylan N.V. will host a conference call and live webcast, today
at 8:30 a.m. ET, to discuss its
financial results for the second quarter ended June 30, 2019. The earnings call can be accessed
live by dialing either 855.895.8759 in the United States and Canada or 503.343.6044 for international
callers. The password is "Analyst Call." Please join the call five
minutes prior to the start time to avoid operator hold times. The
webcast can also be viewed at the following address on the
Company's website: investor.mylan.com. The Q2 2019 "Earnings Call
Presentation", which will be referenced during the call can be
found at investor.mylan.com. A replay of the webcast will also be
available on our website for a limited time beginning later this
week.
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 R&D
and as a % of total revenues, adjusted SG&A and as a % of total
revenues, adjusted earnings from operations, adjusted interest
expense, adjusted other income, adjusted effective tax rate,
notional debt to Credit Agreement Adjusted EBITDA leverage ratio,
long term average debt to Credit Agreement Adjusted EBITDA leverage
ratio target, adjusted net cash provided by operating activities,
adjusted free cash flow, constant currency total revenues and
constant currency net sales 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. Primarily due to acquisitions and other significant events
which may impact comparability of our periodic operating results,
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 was 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 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 and Credit Agreement Adjusted EBITDA (as defined
below) pursuant to our Credit Agreements is appropriate to provide
additional information to investors to demonstrate the Company's
ability to comply with financial debt covenants and assess the
Company's ability to incur additional indebtedness. We also report
sales performance using the non-GAAP financial measures of
"constant currency" total revenues and net sales. These measures
provide information on the change in total revenues and net sales
assuming that foreign currency exchange rates had not changed
between the prior and current period. The comparisons presented at
constant currency rates reflect comparative local currency sales at
the prior year's foreign exchange rates. We routinely evaluate our
net sales and total revenues 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 believe that this
presentation also provides useful information to investors for the
same reason. The "Summary of Total Revenues by Segment" table below
compares net sales on an actual and constant currency basis for
each reportable segment for the quarters ended June 30, 2019
and 2018 as well as for total revenues. Also, 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, 2019 (the "Form
10-Q").
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, 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.
Reconciliation
of U.S. GAAP Net Earnings to Adjusted Net Earnings and U.S. GAAP
EPS to 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, 2019 compared to the prior year
period:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in millions,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP net (loss)
earnings and U.S. GAAP
EPS
|
$
|
(168.5)
|
|
|
$
|
(0.33)
|
|
|
$
|
37.5
|
|
|
$
|
0.07
|
|
|
$
|
(193.5)
|
|
|
$
|
(0.38)
|
|
|
$
|
124.6
|
|
|
$
|
0.24
|
|
Purchase accounting
related amortization
(primarily included in cost of sales) (a)
|
440.0
|
|
|
|
|
430.3
|
|
|
|
|
875.4
|
|
|
|
|
853.7
|
|
|
|
Litigation
settlements and other contingencies, net
|
20.9
|
|
|
|
|
(46.4)
|
|
|
|
|
21.6
|
|
|
|
|
(30.2)
|
|
|
|
Interest expense
(primarily clean energy
investment financing and accretion of contingent
consideration)
|
6.9
|
|
|
|
|
9.2
|
|
|
|
|
14.2
|
|
|
|
|
18.9
|
|
|
|
Clean energy
investments pre-tax loss
|
16.2
|
|
|
|
|
23.0
|
|
|
|
|
33.2
|
|
|
|
|
46.0
|
|
|
|
Acquisition related
costs (primarily included in
SG&A) (b)
|
5.5
|
|
|
|
|
10.2
|
|
|
|
|
13.6
|
|
|
|
|
12.5
|
|
|
|
Restructuring related
costs (c)
|
57.6
|
|
|
|
|
76.1
|
|
|
|
|
77.5
|
|
|
|
|
121.5
|
|
|
|
Share-based
compensation expense (d)
|
16.8
|
|
|
|
|
—
|
|
|
|
|
34.8
|
|
|
|
|
—
|
|
|
|
Other special items
included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
(e)
|
112.1
|
|
|
|
|
64.0
|
|
|
|
|
197.2
|
|
|
|
|
74.0
|
|
|
|
Research and
development expense (f)
|
27.1
|
|
|
|
|
50.5
|
|
|
|
|
60.2
|
|
|
|
|
97.1
|
|
|
|
Selling, general and
administrative expense
|
10.8
|
|
|
|
|
32.1
|
|
|
|
|
24.7
|
|
|
|
|
33.9
|
|
|
|
Other expense, net
(g)
|
—
|
|
|
|
|
6.8
|
|
|
|
|
—
|
|
|
|
|
24.2
|
|
|
|
Tax effect of the
above items and other income tax
related items (h)
|
(12.6)
|
|
|
|
|
(141.8)
|
|
|
|
|
(204.2)
|
|
|
|
|
(329.1)
|
|
|
|
Adjusted net earnings
and adjusted EPS
|
$
|
532.8
|
|
|
$
|
1.03
|
|
|
$
|
551.5
|
|
|
$
|
1.07
|
|
|
$
|
954.7
|
|
|
$
|
1.85
|
|
|
$
|
1,047.1
|
|
|
$
|
2.03
|
|
Weighted average
diluted ordinary shares
outstanding
|
516.3
|
|
|
|
|
516.3
|
|
|
|
|
516.5
|
|
|
|
|
516.6
|
|
|
|
|
____________
|
Significant items for
the three and six months ended June 30, 2019 include the
following:
|
(a)
|
The increase in
purchase accounting related amortization is primarily due to
amortization expense related to certain product rights acquisitions
which occurred in 2018 and 2019.
|
(b)
|
Acquisition related
costs consist primarily of transaction costs including legal and
consulting fees and integration activities.
|
(c)
|
For the three months
ended June 30, 2019, approximately $46.3 million is included
in cost of sales and $11.3 million is included in SG&A. For the
six months ended June 30, 2019, approximately $60.8 million is
included in cost of sales, approximately $0.1 million is included
in R&D, and approximately $16.6 million is included in
SG&A. Refer to Note 17 Restructuring included in Part I,
Item 1 of the Form 10-Q for additional information.
|
(d)
|
Beginning in 2019,
share-based compensation expense is excluded from adjusted net
earnings and adjusted EPS. The full year impact for the year ended
December 31, 2018 was insignificant. As such, the three and six
months ended June 30, 2018 amounts were not added back to U.S.
GAAP net earnings.
|
(e)
|
The three months
ended June 30, 2019 increased $48.1 million primarily related
to the impact of the Valsartan product recall, the termination of a
contract and certain other inventory write-offs. The six months
ended June 30, 2019 increased $123.2 million for certain
incremental manufacturing variances and site remediation activities
as a result of the activities at the Company's Morgantown plant and
the items also impacting the change for the three-month
period.
|
(f)
|
R&D expense for
the three months ended June 30, 2019 consists primarily of
payments for product development arrangements of approximately
$23.4 million, which includes $18.4 million related to the
expansion of the YUPELRI® agreement with Theravance, and the
remaining expense relates to on-going collaboration
agreements. R&D expense for the six months ended June 30,
2019 consists primarily of payments for product development
arrangements of approximately $46.7 million, including $18.4
million for the expansion of the YUPELRI® agreement and $23.3
million related to non-refundable upfront licensing amounts for a
product in development. The remaining expense relates to on-going
development collaborations. Refer to Note 4 Acquisitions and
Other Transactions included in Part I, Item 1 of the Form 10-Q
for additional information. R&D expense for the three months
ended June 30, 2018 includes two non-refundable upfront
payments totaling approximately $30.5 million for development
agreements entered into during the quarter, and the remaining
expense relates to on-going collaboration agreements, including
Momenta Pharmaceuticals, Inc. For the six months ended
June 30, 2018, R&D expense includes $73.5 million related
to four non-refundable upfront payments for development agreements
entered into during the prior year period.
|
(g)
|
The 2018 amount
primarily related to mark-to-market losses of investments in equity
securities historically accounted for as available-for-sale
securities and the cumulative realized gains on such
investments.
|
(h)
|
The impact of changes
related to uncertain tax positions is excluded from adjusted
earnings.
|
Reconciliation
of U.S. GAAP Net Earnings to EBITDA and Adjusted
EBITDA
|
|
Below is a
reconciliation of U.S. GAAP net earnings to EBITDA and adjusted
EBITDA for the three and six months ended June 30, 2019
compared to the prior year period (in millions):
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP net (loss)
earnings
|
$
|
(168.5)
|
|
|
$
|
37.5
|
|
|
$
|
(193.5)
|
|
|
$
|
124.6
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Net contribution
attributable to equity method investments
|
16.2
|
|
|
22.9
|
|
|
33.2
|
|
|
46.0
|
|
Income tax provision
(benefit)
|
116.4
|
|
|
(18.8)
|
|
|
26.9
|
|
|
(95.4)
|
|
Interest
expense
|
131.2
|
|
|
139.2
|
|
|
262.4
|
|
|
270.9
|
|
Depreciation and
amortization
|
501.4
|
|
|
501.9
|
|
|
1,001.9
|
|
|
1,000.4
|
|
EBITDA
|
$
|
596.7
|
|
|
$
|
682.7
|
|
|
$
|
1,130.9
|
|
|
$
|
1,346.5
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation expense (income)
|
16.8
|
|
|
(0.8)
|
|
|
34.8
|
|
|
20.6
|
|
Litigation
settlements and other contingencies, net
|
20.9
|
|
|
(46.4)
|
|
|
21.6
|
|
|
(30.2)
|
|
Restructuring & other special
items
|
213.0
|
|
|
231.1
|
|
|
370.3
|
|
|
343.6
|
|
Adjusted
EBITDA
|
$
|
847.4
|
|
|
$
|
866.6
|
|
|
$
|
1,557.6
|
|
|
$
|
1,680.5
|
|
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 7,500 marketed products around the world,
including antiretroviral therapies on which more than 40% of people
being treated for HIV/AIDS globally 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 approximately 35,000-strong workforce is
dedicated to creating better health for a better world, one person
at a time. Learn more at Mylan.com. We routinely post information
that may be important to investors on our website at
investor.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,
reaffirming our 2019 financial guidance and business outlook; that
our performance highlights our stable and durable cash flow
profile, and allows us to remain committed to our deleveraging
strategy to repay $1.1 billion of
debt by the end of 2019; we remain fully committed to maintaining
our investment grade credit rating; for the full year 2019, we are
reaffirming our guidance ranges for total revenue of $11.5 billion to $12.5
billion, adjusted EPS guidance range of $3.80 to $4.80 and
adjusted free cash flow range of $1.9
billion to $2.3 billion; and
any other statements about Mylan's future operations, anticipated
business levels, future earnings, planned activities, anticipated
growth, market opportunities, strategies, competition, and other
expectations and targets for future periods. 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," "pipeline," "intend,"
"continue," "target," "seek," 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: with respect to the
proposed combination of Mylan and Upjohn Inc. ("Upjohn"), Pfizer
Inc.'s off-patent branded and generic established medicines
business (the "Combination"), the parties' ability to meet
expectations regarding the timing, completion and accounting and
tax treatments of the Combination, changes in relevant tax and
other laws, the parties' ability to consummate the Combination, the
conditions to the completion of the Combination, including receipt
of approval of Mylan's shareholders, not being satisfied or waived
on the anticipated timeframe or at all, the regulatory approvals
required for the Combination not being obtained on the terms
expected or on the anticipated schedule or at all, the integration
of Mylan and Upjohn being more difficult, time consuming or costly
than expected, Mylan's and Upjohn's failure to achieve expected or
targeted future financial and operating performance and results,
the possibility that the combined company may be unable to achieve
expected benefits, synergies and operating efficiencies in
connection with the Combination within the expected time frames or
at all or to successfully integrate Mylan and Upjohn, customer loss
and business disruption being greater than expected following the
Combination, the retention of key employees being more difficult
following the Combination, changes in third-party relationships and
changes in the economic and financial conditions of the business of
Mylan or Upjohn; actions and decisions of healthcare and
pharmaceutical regulators; failure to achieve expected or targeted
future financial and operating performance and results;
uncertainties regarding future demand, pricing and reimbursement
for our or Upjohn's products; any regulatory, legal or other
impediments to Mylan's or Upjohn's ability to bring new products to
market, including, but not limited to, where Mylan or Upjohn 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"); success
of clinical trials and Mylan's or Upjohn's ability to execute on
new product opportunities; any changes in or difficulties with our
or Upjohn's manufacturing facilities, including with respect to
remediation and restructuring activities, supply chain or inventory
or the ability to meet anticipated demand; the scope, timing and
outcome of any ongoing legal proceedings, including government
investigations, and the impact of any such proceedings on our or
Upjohn's financial condition, results of operations and/or cash
flows; the ability to meet expectations regarding the accounting
and tax treatments of acquisitions, including Mylan's acquisition
of Mylan Inc. and Abbott Laboratories' non-U.S. developed markets
specialty and branded generics business (the "EPD Business
Acquisition"); 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; any
significant breach of data security or data privacy or disruptions
to our or Upjohn's information technology systems; 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; the impact of competition;
identifying, acquiring, and integrating complementary or strategic
acquisitions of other companies, products, or assets being more
difficult, time-consuming or costly than anticipated; the
possibility that Mylan may be unable to achieve expected synergies
and operating efficiencies in connection with strategic
acquisitions, strategic initiatives or restructuring programs
within the expected time-frames or at all; uncertainties and
matters beyond the control of management, including but not limited
to general political and economic conditions and global exchange
rates; 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, 2018, 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 or through our website, and Mylan strongly
encourages you to do so. Mylan routinely posts information that may
be important to investors on our website at investor.mylan.com, and
we use this website address as a means of disclosing material
information to the public in a broad, non-exclusionary manner for
purposes of the SEC's Regulation Fair Disclosure (Reg FD). The
contents of our website are not incorporated into this release.
Mylan undertakes no obligation to update any statements herein for
revisions or changes after the date of this release other than as
required by law.
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,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$
|
2,818.2
|
|
|
$
|
2,755.5
|
|
|
$
|
5,278.8
|
|
|
$
|
5,405.9
|
|
Other
revenues
|
33.3
|
|
|
52.8
|
|
|
68.2
|
|
|
86.9
|
|
Total
revenues
|
2,851.5
|
|
|
2,808.3
|
|
|
5,347.0
|
|
|
5,492.8
|
|
Cost of
sales
|
1,918.9
|
|
|
1,845.8
|
|
|
3,609.2
|
|
|
3,546.0
|
|
Gross
profit
|
932.6
|
|
|
962.5
|
|
|
1,737.8
|
|
|
1,946.8
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
147.6
|
|
|
206.7
|
|
|
320.2
|
|
|
411.6
|
|
Selling, general and
administrative
|
668.6
|
|
|
623.3
|
|
|
1,276.5
|
|
|
1,230.8
|
|
Litigation
settlements and other contingencies, net
|
20.9
|
|
|
(46.4)
|
|
|
21.6
|
|
|
(30.2)
|
|
Total operating
expenses
|
837.1
|
|
|
783.6
|
|
|
1,618.3
|
|
|
1,612.2
|
|
Earnings from
operations
|
95.5
|
|
|
178.9
|
|
|
119.5
|
|
|
334.6
|
|
Interest
expense
|
131.2
|
|
|
139.2
|
|
|
262.4
|
|
|
270.9
|
|
Other expense,
net
|
16.4
|
|
|
21.0
|
|
|
23.7
|
|
|
34.5
|
|
(Loss) Earnings
before income taxes
|
(52.1)
|
|
|
18.7
|
|
|
(166.6)
|
|
|
29.2
|
|
Income tax provision
(benefit)
|
116.4
|
|
|
(18.8)
|
|
|
26.9
|
|
|
(95.4)
|
|
Net (loss)
earnings
|
(168.5)
|
|
|
37.5
|
|
|
(193.5)
|
|
|
124.6
|
|
(Loss) Earnings per
ordinary share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.33)
|
|
|
$
|
0.07
|
|
|
$
|
(0.38)
|
|
|
$
|
0.24
|
|
Diluted
|
$
|
(0.33)
|
|
|
$
|
0.07
|
|
|
$
|
(0.38)
|
|
|
$
|
0.24
|
|
Weighted average
ordinary shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
515.5
|
|
|
514.4
|
|
|
515.3
|
|
|
514.4
|
|
Diluted
|
515.5
|
|
|
516.3
|
|
|
515.3
|
|
|
516.6
|
|
Mylan N.V. and
Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited; in
millions)
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
211.5
|
|
|
$
|
388.1
|
|
Accounts receivable,
net
|
2,703.8
|
|
|
2,881.0
|
|
Inventories
|
2,776.2
|
|
|
2,580.2
|
|
Prepaid expenses and
other current assets
|
573.9
|
|
|
518.4
|
|
Total current
assets
|
6,265.4
|
|
|
6,367.7
|
|
Intangible assets,
net
|
12,730.7
|
|
|
13,664.6
|
|
Goodwill
|
9,692.9
|
|
|
9,747.8
|
|
Other non-current
assets
|
3,127.9
|
|
|
2,954.8
|
|
Total
assets
|
$
|
31,816.9
|
|
|
$
|
32,734.9
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
|
724.4
|
|
|
$
|
699.8
|
|
Current
liabilities
|
3,835.9
|
|
|
3,888.0
|
|
Long-term
debt
|
12,590.1
|
|
|
13,161.2
|
|
Other non-current
liabilities
|
2,763.7
|
|
|
2,818.8
|
|
Total
liabilities
|
19,914.1
|
|
|
20,567.8
|
|
Mylan N.V.
shareholders' equity
|
11,902.8
|
|
|
12,167.1
|
|
Total liabilities and
equity
|
$
|
31,816.9
|
|
|
$
|
32,734.9
|
|
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,
|
(In
millions)
|
2019
|
|
2018
|
|
%
Change
|
|
2019
Currency
Impact (1)
|
|
2019
Constant
Currency
Revenues
|
|
Constant
Currency %
Change (2)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
1,023.4
|
|
|
$
|
1,000.8
|
|
|
2
|
%
|
|
$
|
2.2
|
|
|
$
|
1,025.6
|
|
|
2
|
%
|
Europe
|
989.6
|
|
|
990.6
|
|
|
—
|
%
|
|
59.5
|
|
|
1,049.1
|
|
|
6
|
%
|
Rest of
World
|
805.2
|
|
|
764.1
|
|
|
5
|
%
|
|
31.9
|
|
|
837.1
|
|
|
10
|
%
|
Total net
sales
|
2,818.2
|
|
|
2,755.5
|
|
|
2
|
%
|
|
93.6
|
|
|
2,911.8
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(3)
|
33.3
|
|
|
52.8
|
|
|
(37)
|
%
|
|
0.7
|
|
|
34.0
|
|
|
(36)
|
%
|
Consolidated total
revenues (4)
|
$
|
2,851.5
|
|
|
$
|
2,808.3
|
|
|
2
|
%
|
|
$
|
94.3
|
|
|
$
|
2,945.8
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
%
Change
|
|
2019
Currency
Impact (1)
|
|
2019
Constant
Currency
Revenues
|
|
Constant
Currency %
Change (2)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
1,946.3
|
|
|
$
|
1,986.1
|
|
|
(2)
|
%
|
|
$
|
4.9
|
|
|
$
|
1,951.2
|
|
|
(2)
|
%
|
Europe
|
1,884.9
|
|
|
2,029.0
|
|
|
(7)
|
%
|
|
137.0
|
|
|
2,021.9
|
|
|
—
|
%
|
Rest of
World
|
1,447.6
|
|
|
1,390.8
|
|
|
4
|
%
|
|
83.7
|
|
|
1,531.3
|
|
|
10
|
%
|
Total net
sales
|
5,278.8
|
|
|
5,405.9
|
|
|
(2)
|
%
|
|
225.6
|
|
|
5,504.4
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(3)
|
68.2
|
|
|
86.9
|
|
|
(22)
|
%
|
|
1.6
|
|
|
69.8
|
|
|
(20)
|
%
|
Consolidated total
revenues (4)
|
$
|
5,347.0
|
|
|
$
|
5,492.8
|
|
|
(3)
|
%
|
|
$
|
227.2
|
|
|
$
|
5,574.2
|
|
|
1
|
%
|
|
____________
|
(1)
|
Currency impact is
shown as unfavorable (favorable).
|
(2)
|
The constant currency
percentage change is derived by translating net sales or revenues
for the current period at prior year comparative period exchange
rates, and in doing so shows the percentage change from 2019
constant currency net sales or revenues to the corresponding amount
in the prior year.
|
(3)
|
For the three months
ended June 30, 2019, other revenues in North America, Europe,
and Rest of World were approximately $19.1 million, $3.8 million,
and $10.4 million, respectively. For the six months ended June 30,
2019, other revenues in North America, Europe, and Rest of World
were approximately $41.2 million, $8.5 million, and $18.5 million,
respectively.
|
(4)
|
Amounts exclude
intersegment revenue that eliminates on a consolidated
basis.
|
Reconciliation of
Income Statement Line Items
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP cost of
sales
|
$
|
1,918.9
|
|
|
$
|
1,845.8
|
|
|
$
|
3,609.2
|
|
|
$
|
3,546.0
|
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
amortization and other related items
|
(440.0)
|
|
|
(427.4)
|
|
|
(875.4)
|
|
|
(848.3)
|
|
Acquisition related
items
|
(1.6)
|
|
|
(0.8)
|
|
|
(2.1)
|
|
|
(1.0)
|
|
Restructuring and
related costs
|
(46.3)
|
|
|
(41.0)
|
|
|
(60.8)
|
|
|
(45.4)
|
|
Share-based
compensation expense
|
(0.5)
|
|
|
—
|
|
|
(0.5)
|
|
|
—
|
|
Other special
items
|
(112.1)
|
|
|
(64.0)
|
|
|
(197.2)
|
|
|
(74.0)
|
|
Adjusted cost of
sales
|
$
|
1,318.4
|
|
|
$
|
1,312.6
|
|
|
$
|
2,473.2
|
|
|
$
|
2,577.3
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
|
1,533.1
|
|
|
$
|
1,495.7
|
|
|
$
|
2,873.8
|
|
|
$
|
2,915.5
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
54
|
%
|
|
53
|
%
|
|
54
|
%
|
|
53
|
%
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP
R&D
|
$
|
147.6
|
|
|
$
|
206.7
|
|
|
$
|
320.2
|
|
|
$
|
411.6
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
—
|
|
|
(0.4)
|
|
|
(0.3)
|
|
|
(0.5)
|
|
Restructuring and
related costs
|
—
|
|
|
(11.8)
|
|
|
(0.1)
|
|
|
(16.7)
|
|
Purchase accounting
amortization and other related items
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
Share-based
compensation expense
|
(0.9)
|
|
|
—
|
|
|
(1.0)
|
|
|
—
|
|
Other special
items
|
(27.1)
|
|
|
(50.5)
|
|
|
(60.2)
|
|
|
(97.1)
|
|
Adjusted
R&D
|
$
|
119.6
|
|
|
$
|
143.9
|
|
|
$
|
258.6
|
|
|
$
|
297.2
|
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
4
|
%
|
|
5
|
%
|
|
5
|
%
|
|
5
|
%
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP
SG&A
|
$
|
668.6
|
|
|
$
|
623.3
|
|
|
$
|
1,276.5
|
|
|
$
|
1,230.8
|
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition related
costs
|
(3.9)
|
|
|
(9.1)
|
|
|
(11.2)
|
|
|
(11.1)
|
|
Restructuring and
related costs
|
(11.3)
|
|
|
(23.6)
|
|
|
(16.6)
|
|
|
(59.7)
|
|
Purchase accounting
amortization and other related items
|
—
|
|
|
(2.9)
|
|
|
—
|
|
|
(5.3)
|
|
Share-based
compensation expense
|
(15.4)
|
|
|
—
|
|
|
(33.3)
|
|
|
—
|
|
Other special
items
|
(10.8)
|
|
|
(32.1)
|
|
|
(24.7)
|
|
|
(33.9)
|
|
Adjusted
SG&A
|
$
|
627.2
|
|
|
$
|
555.6
|
|
|
$
|
1,190.7
|
|
|
$
|
1,120.8
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A as
% of total revenues
|
22
|
%
|
|
20
|
%
|
|
22
|
%
|
|
20
|
%
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP total
operating expenses
|
$
|
837.1
|
|
|
$
|
783.6
|
|
|
$
|
1,618.3
|
|
|
$
|
1,612.2
|
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Litigation
settlements and other contingencies, net
|
(20.9)
|
|
|
46.4
|
|
|
(21.6)
|
|
|
30.2
|
|
R&D
adjustments
|
(28.0)
|
|
|
(62.8)
|
|
|
(61.6)
|
|
|
(114.4)
|
|
SG&A
adjustments
|
(41.4)
|
|
|
(67.7)
|
|
|
(85.8)
|
|
|
(110.0)
|
|
Adjusted total
operating expenses
|
$
|
746.8
|
|
|
$
|
699.5
|
|
|
$
|
1,449.3
|
|
|
$
|
1,418.0
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from operations (b)
|
$
|
786.3
|
|
|
$
|
796.2
|
|
|
$
|
1,424.5
|
|
|
$
|
1,497.5
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP interest
expense
|
$
|
131.2
|
|
|
$
|
139.2
|
|
|
$
|
262.4
|
|
|
$
|
270.9
|
|
Deduct:
|
|
|
|
|
|
|
|
Interest expense
related to clean energy investments
|
(1.5)
|
|
|
(2.1)
|
|
|
(3.2)
|
|
|
(4.4)
|
|
Accretion of
contingent consideration liability
|
(3.9)
|
|
|
(5.5)
|
|
|
(8.2)
|
|
|
(11.0)
|
|
Other special
items
|
(1.5)
|
|
|
(1.6)
|
|
|
(2.8)
|
|
|
(3.5)
|
|
Adjusted interest
expense
|
$
|
124.3
|
|
|
$
|
130.0
|
|
|
$
|
248.2
|
|
|
$
|
252.0
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP other
expense, net
|
$
|
16.4
|
|
|
$
|
21.0
|
|
|
$
|
23.7
|
|
|
$
|
34.5
|
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Clean energy
investments pre-tax loss (c)
|
(16.2)
|
|
|
(23.0)
|
|
|
(33.2)
|
|
|
(46.0)
|
|
Restructuring and
related costs
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
Other items
(d)
|
—
|
|
|
(6.8)
|
|
|
—
|
|
|
(24.2)
|
|
Adjusted other
income
|
$
|
0.2
|
|
|
$
|
(8.5)
|
|
|
$
|
(9.5)
|
|
|
$
|
(35.4)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP (loss)
earnings before income taxes
|
$
|
(52.1)
|
|
|
$
|
18.7
|
|
|
$
|
(166.6)
|
|
|
$
|
29.2
|
|
Total pre-tax
non-GAAP adjustments
|
714.1
|
|
|
655.9
|
|
|
1,352.6
|
|
|
1,251.7
|
|
Adjusted earnings
before income taxes
|
$
|
662.0
|
|
|
$
|
674.6
|
|
|
$
|
1,186.0
|
|
|
$
|
1,280.9
|
|
|
|
|
|
|
|
|
|
U.S. GAAP income
provision (benefit)
|
$
|
116.4
|
|
|
$
|
(18.8)
|
|
|
$
|
26.9
|
|
|
$
|
(95.4)
|
|
Adjusted tax
expense
|
12.7
|
|
|
142.0
|
|
|
204.4
|
|
|
329.2
|
|
Adjusted income tax
provision
|
$
|
129.1
|
|
|
$
|
123.2
|
|
|
$
|
231.3
|
|
|
$
|
233.8
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
19.5
|
%
|
|
18.3
|
%
|
|
19.5
|
%
|
|
18.3
|
%
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
U.S. GAAP net cash
provided by operating activities
|
$
|
668.9
|
|
|
$
|
430.2
|
|
|
$
|
629.2
|
|
|
$
|
1,052.0
|
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Restructuring and
related costs (e)
|
56.5
|
|
|
95.9
|
|
|
140.2
|
|
|
127.4
|
|
Financing related
expense
|
—
|
|
|
2.6
|
|
|
—
|
|
|
2.6
|
|
Corporate
contingencies
|
(6.6)
|
|
|
110.2
|
|
|
(6.6)
|
|
|
110.2
|
|
Acquisition related
costs
|
—
|
|
|
2.2
|
|
|
—
|
|
|
3.7
|
|
R&D
expense
|
29.8
|
|
|
60.5
|
|
|
66.0
|
|
|
100.0
|
|
Other
|
19.2
|
|
|
5.0
|
|
|
19.2
|
|
|
5.0
|
|
Adjusted net cash
provided by operating activities
|
$
|
767.8
|
|
|
$
|
706.6
|
|
|
$
|
848.0
|
|
|
$
|
1,400.9
|
|
|
|
|
|
|
|
|
|
Deduct:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(44.1)
|
|
|
(45.2)
|
|
|
(97.2)
|
|
|
(75.9)
|
|
Adjusted free cash
flow
|
$
|
723.7
|
|
|
$
|
661.4
|
|
|
$
|
750.8
|
|
|
$
|
1,325.0
|
|
|
|
___________
|
(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 U.S. Internal Revenue Code of 1986, as
amended.
|
(d)
|
2018 adjustment
primarily related to mark-to-market losses of investments in equity
securities historically accounted for as available-for-sale
securities and the cumulative realized gains on such
investments.
|
(e)
|
For the three and six
months ended June 30, 2019 includes approximately $44.9
million and $100.8 million, respectively, of certain incremental
manufacturing variances and site remediation expenses as a result
of the activities at the Company's Morgantown plant.
|
Reconciliation of
EBITDA and Adjusted EBITDA
|
|
Below is a
reconciliation of U.S. GAAP net earnings to EBITDA and adjusted
EBITDA for the respective quarterly periods:
|
|
|
Three Months
Ended
|
|
September 30,
2018
|
|
December 31,
2018
|
|
March 31,
2019
|
|
June 30,
2019
|
U.S. GAAP net
earnings (loss)
|
$
|
176.7
|
|
|
$
|
51.2
|
|
|
$
|
(25.0)
|
|
|
$
|
(168.5)
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Net contribution
attributable to equity method investments
|
12.6
|
|
|
20.1
|
|
|
17.0
|
|
|
16.2
|
|
Income tax provision
(benefit)
|
15.5
|
|
|
25.8
|
|
|
(89.5)
|
|
|
116.4
|
|
Interest
expense
|
136.2
|
|
|
135.2
|
|
|
131.2
|
|
|
131.2
|
|
Depreciation and
amortization
|
500.6
|
|
|
608.9
|
|
|
500.5
|
|
|
501.4
|
|
EBITDA
|
$
|
841.6
|
|
|
$
|
841.2
|
|
|
$
|
534.2
|
|
|
$
|
596.7
|
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation (income) expense
|
(29.2)
|
|
|
5.3
|
|
|
18.0
|
|
|
16.8
|
|
Litigation
settlements and other contingencies, net
|
(20.4)
|
|
|
1.1
|
|
|
0.7
|
|
|
20.9
|
|
Restructuring & other special
items
|
143.9
|
|
|
158.9
|
|
|
157.3
|
|
|
213.0
|
|
Adjusted
EBITDA
|
$
|
935.9
|
|
|
$
|
1,006.5
|
|
|
$
|
710.2
|
|
|
$
|
847.4
|
|
June 30, 2019
Notional Debt to Twelve Months Ended June 30, 2019 Mylan N.V.
Adjusted EBITDA as calculated under our Credit Agreements ("Credit
Agreement Adjusted EBITDA") Leverage Ratio
|
|
The stated non-GAAP
financial measure June 30, 2019 notional debt to twelve months
ended June 30, 2019 Credit Agreement Adjusted EBITDA leverage
ratio is based on the sum of (i) Mylan's adjusted EBITDA for the
quarters ended September 30, 2018, December 31, 2018,
March 31, 2019 and June 30, 2019 and (ii) certain
adjustments permitted to be included in Credit Agreement Adjusted
EBITDA as of June 30, 2019 pursuant to the revolving credit
facility dated as of July 27, 2018 (as amended, supplemented or
otherwise modified from time to time), among Mylan Inc., as
borrower, the Company, as guarantor, certain affiliates and
subsidiaries of the Company from time to time party thereto as
guarantors, each lender from time to time party thereto and Bank of
America, N.A., as administrative agent and the Company's term loan
credit facility dated as of November 22, 2016 (as amended,
supplemented or otherwise modified from time to time), among the
Company, certain affiliates and subsidiaries of the Company from
time to time party thereto as guarantors, each lender from time to
time party thereto and Goldman Sachs Bank USA, as administrative
agent (together, the "Credit Agreements") as compared to Mylan's
June 30, 2019 total debt and other current obligations at
notional amounts.
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
September 30,
2018
|
|
December 31,
2018
|
|
March 31,
2019
|
|
June 30,
2019
|
|
June 30,
2019
|
Mylan N.V. Adjusted
EBITDA
|
$
|
935.9
|
|
|
$
|
1,006.5
|
|
|
$
|
710.2
|
|
|
$
|
847.4
|
|
|
$
|
3,500.0
|
|
Add: other
adjustments including estimated
synergies
|
|
|
|
|
|
|
|
|
41.6
|
|
Credit Agreement
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
$
|
3,541.6
|
|
|
|
|
|
|
|
|
|
|
|
Reported debt
balances:
|
|
|
|
|
|
|
|
|
|
Long-term debt,
including current portion
|
|
|
|
|
|
|
|
|
$
|
13,264.1
|
|
Short-term borrowings
and other current
obligations
|
|
|
|
|
|
|
|
|
328.0
|
|
Total
|
|
|
|
|
|
|
|
|
$
|
13,592.1
|
|
Add /
(deduct):
|
|
|
|
|
|
|
|
|
|
Net discount on
various debt issuances
|
|
|
|
|
|
|
|
|
34.0
|
|
Deferred financing
fees
|
|
|
|
|
|
|
|
|
67.6
|
|
Fair value adjustment
for hedged debt
|
|
|
|
|
|
|
|
|
(24.0)
|
|
Total debt at
notional amounts
|
|
|
|
|
|
|
|
|
$
|
13,669.7
|
|
|
|
|
|
|
|
|
|
|
|
Notional debt to
Credit Agreement Adjusted
EBITDA Leverage Ratio
|
|
|
|
|
|
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term average debt to Credit Agreement Adjusted EBITDA
leverage ratio target of ~3.0x
The stated forward-looking non-GAAP financial measure, targeted
long term average leverage of ~3.0x debt-to-Credit Agreement
Adjusted EBITDA, is based on the ratio of (i) targeted long-term
average debt, and (ii) targeted long-term Credit Agreement 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.
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SOURCE Mylan N.V.