The Many Reasons Mylan Is So Keen to Acquire Perrigo
On April 21, 2015, Teva (TEVA) launched a proposal to acquire Mylan for $82 a share in a 50% cash, 50% stock deal worth $43 billion. Mylan rejected the offer.
According to Mylan estimates, the acquisition of Perrigo would generate a minimum $6 EPS by 2018. The combined company would have pro forma revenue of ~$15.3 billion on the basis of 2014.
Mylan’s closing share price on the day of its earnings release was down ~3%. The company refuses to let go of its attempt to acquire Perrigo.
In 1Q15, the Generic segment contributed ~88% to Mylan’s net revenue. The segment generated ~49% of its revenue from North America.
With the acquisition of Abbott Laboratories’ (ABT) non-US developed markets specialty and branded generics business, Mylan relocated its headquarters to the Netherlands.
Humana’s (HUM) EBITDA margins declined from 7.1% in 1Q14 to 6.5% in 1Q15, but increased sequentially from 3.9% in 4Q14.
Humana’s (HUM) revenues from commercial enrollments increased by 28.4%, from $2.2 billion in 1Q14 to $2.8 billion in 1Q15.
Humana’s (HUM) revenues from Medicare PDP (prescription drug plan) enrollments increased by 15.9%, from $865 million in 1Q14 to $1,003 million in 1Q15.
Humana’s (HUM) revenues from Medicare enrollments increased by 12.5%, from $7.84 billion in 1Q14 to $8.82 billion in 1Q15.
Humana posted its 1Q15 earnings on April 29, 2015. With a posted diluted EPS of $2.47, the company missed Wall Street estimates of $2.54.
On April 28, Teva declared a cash dividend of $0.34 for 1Q15, a positive for long-term investors. It repurchased ~8 million shares for $0.4 billion in 1Q15.
Teva’s increased profitability for its generic medicines was partially offset by decreased profitability of its specialty medicines, which were down by 13% in 1Q15 from 1Q14.
Teva’s new drug application for ProAir RespiClick was approved, with an expected launch of 2Q15. ProAir is the first breath-actuated dry-powder inhaler used to treat acute asthma symptoms.
In 1Q15, Teva beat Wall Street analysts’ revenue estimates of $4.81 billion, posting revenues of $4.98 million, an increase of ~3.5%.
Teva beat Wall Street adjusted EPS estimates of $1.25 by a wide margin, posting $1.36 EPS. This represents a growth of ~9%.
Pfizer slashed its reported revenue range by $500 million. Yet the estimated negative impact of foreign exchange is more than $500 million.
Pfizer is on a fast track to return value to its shareholders. In 1Q15, the company repurchased $6 billion of common stock.
Pfizer’s revenues from the Established Products segment declined 16% in 1Q15. This was primarily due to increasing generic competition.
Prevnar 13 is a vaccine used to treat adults with pneumococcal disease, including pneumonia. Global revenues from the drug grew by 48%.
A lower effective tax rate and share repurchases had a positive impact on EPS. The company has consistently beaten Wall Street analysts’ EPS estimates for the last eight quarters.
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