North America revenue growth trends
In the first quarter, the North America segment reported revenues of $922.90 million, a YoY decline of 6%. The segment also reported profits of $394.5 million in the first quarter, a YoY decline of 14%. Excluding the impact of the ongoing remediation and restructuring program at the Morgantown facility, Mylan has reported North America segment profits of $464.1 million, a YoY rise of 1%.
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According to the first-quarter earnings conference call, Mylan is suffering a negative revenue impact due to increased pricing pressures and lower sales volumes of its existing products in the North American market. The company attributes the volume pressures to the increasing competition and ongoing remediation and restructuring program at the Morgantown facility.
At the Raymond James 40th Annual Institutional Investors Conference, Mylan said it expects to benefit from the ramp-up of recently launched products such as Yupelri, Fulphila, and Wixela in fiscal 2019. While the initial uptake of generic Copaxone was slow in fiscal 2018, Mylan also expects the product’s market share to gradually increase.
Debt ratio guidance
According to the first-quarter earnings conference call, Mylan plans to repay $1.1 billion in debt in fiscal 2019. At the end of the first quarter, the company’s debt-to-EBITDA ratio was 3.95x, which is in compliance with covenant requirements. Mylan aims to achieve a debt-to-EBITDA ratio of 3.0x in the long term by consistently reducing debt and expanding EBITDA.
Tax rate guidance
Mylan has guided for an adjusted effective tax rate of 19.0% to 20.0% in fiscal 2019. Analysts expect the company’s effective tax rate to increase YoY by 190 basis points to 19.65% in fiscal 2019 but then reduce YoY by 25 basis points to 19.40% in fiscal 2020 and remain at 19.40% in fiscal 2021.