Non-GAAP Financial Measures

This presentation includes the presentation and discussion of certain financial information that differs from what is reported under U.S. GAAP. These non-GAAP financial measures, including, but not limited to, adjusted gross margins, adjusted R&D as % of total revenues, adjusted SG&A as % of total revenues, adjusted earnings from operations, adjusted EBITDA, adjusted net earnings, adjusted EPS, adjusted net cash provided by operating activities, adjusted free cash flow, adjusted effective tax rate, adjusted segment profitability for North America and constant currency figures 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"). In the Appendix, 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.

2018 Guidance

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 including those related to the acquisition of Meda AB (publ), 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.

Mylan N.V. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

(Unaudited; in millions)

Adjusted Net Earnings and Adjusted EPS

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions, except per share amounts)

2018

2017

2018

2017

U.S. GAAP net earnings and U.S. GAAP EPS

$ 176.7

  • $ 0.34 $ 88.3

    • $ 0.16 $

      301.3

      • $ 0.58 $

        451.7

        • $ 0.84

          Purchase accounting related amortization (primarily included in cost of sales) (a) Litigation settlements and other contingencies, net

          428.7 (20.4)

  • 370.7 15.2

    1,282.4 1,074.9

    (50.6) (25.8)

    Interest expense (primarily clean energy investment financing and accretion of contingent consideration)

    Clean energy investments pre-tax loss

    Acquisition related costs (primarily included in SG&A and cost of sales) (b) Restructuring related costs (c)

    12.1 12.6 4.9 80.8

    10.3 22.4 15.2 73.4

    31.0 37.2

    58.6 66.4

    17.4 60.2

    202.3 112.8

    Other special items included in:

    Cost of sales (d)

    65.4

    12.3

    139.4 39.2

    Research and development expense (e) Selling, general and administrative expense (f) Other expense, net (g)

    3.2

    15.1

    100.3 89.9

    (0.7)

    4.0

    33.2 12.7

    1.3

    (3.1)

    25.5 4.8

    Tax effect of the above items and other income tax related items Adjusted net earnings and adjusted EPS

    (116.6)

    (34.1)

    (445.7)

    (244.5)

    $ 648.0

  • $ 1.25 $ 589.7

  • $ 1.10 $ 1,695.1

  • $ 3.28 $ 1,679.5

  • $ 3.13

Weighted average diluted ordinary shares outstanding

516.5

537.0

516.5

537.0

  • (a) The increase in purchase accounting related amortization is primarily due to the increase in amortization expense as a result of the full impact of certain product rights acquisitions which occurred in 2017, the current year impact of the 2018 product rights acquisitions and IPR&D impairment charges of $15.5 million and $87.5 million during the three and nine months ended September 30, 2018, respectively.

  • (b) Acquisition related costs incurred in 2017 and through the nine months ended September 30, 2018 consist primarily of integration activities.

  • (c) For the three months ended September 30, 2018, approximately $51.8 million is included in cost of sales, $0.3 million is included in R&D, and $28.7 million is included in SG&A. For the nine months ended September 30, 2018, approximately $97.2 million is included in cost of sales, $17.0 million is included in R&D, and $88.4 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) The three and nine months ended September 30, 2018 increases relate primarily to expenses of $48.9 million and $104.9 million, respectively, for certain incremental manufacturing variances and site remediation activities as a result of the activities at the Company's Morgantown facility.

  • (e) R&D expense for the three months ended September 30, 2018 includes expenses related to on-going collaboration agreements, including Momenta. For the nine months ended September 30, 2018, R&D expense includes $73.5 million related to four non-refundable upfront payments for development agreements entered into during the current period. The remaining expense relates to the on-going collaboration agreements, including Momenta. R&D expense for the three months ended September 30, 2017 includes $8.0 million related to Momenta collaboration expense. For the nine months ended September 30, 2017, R&D expense includes an upfront expense of approximately $50.0 million related to a joint development and marketing agreement for a respiratory product, $22.5 million related to Momenta collaboration expense, and other similar smaller agreements.

  • (f) The decrease for the three months ended September 30, 2018 is primarily related to a gain from the sale of assets. The increase for the nine months ended September 30, 2018 is primarily related to bad debt expense of approximately $26.5 million related to a special business interruption event for one customer.

  • (g) The increase for the nine months ended September 30, 2018 is 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.

Mylan N.V. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

(Unaudited; in millions)

Net Earnings to Adjusted EBITDA

Three Months Ended

September 30,2018

U.S. GAAP net earnings Add / (subtract) adjustments:

Net contribution attributable to equity method investments Income tax provision (benefit)

Interest expense Depreciation and amortization

EBITDA

Add / (subtract) adjustments:

$ 176.7

12.6

15.5

136.2

500.6

$ 841.6

Share-based compensation (income) expense (29.2)

Litigation settlements and other contingencies, net (20.4)

Restructuring & other special items 143.9

Adjusted EBITDA

$ 935.9

2017

$ 88.3

22.4 91.3

131.8 443.1

$ 776.9

$ 2,188.1

$ 2,339.2

22.2

(8.6)

64.2

15.2

(50.6)

(25.8)

109.5

487.5

289.6

$ 923.8

$ 2,616.4

$ 2,667.2

Nine Months Ended

September 30,2018

2017

$

301.3 $ 451.7

58.6 77.2

(79.9) 124.2

407.1 406.3

1,501.0

1,279.8

Mylan N.V. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

(Unaudited; in millions)

Total Revenues by Segment

Three Months Ended

Nine Months Ended

September 30,

2018

Currency

% Change Impact (1)

(14)%

September 30, 2018

(In millions)

Net sales

North America Europe

Rest of World

Total net sales

CoOnthseorlirdeavtenduteosta(l3) revenues (4)

(In millions)

Net sales

North America Europe

Rest of World

Total net salesCoOnthseorlirdeavtenduteosta(l3)

  • revenues (4)

  • (1) Currency impact is shown as unfavorable (favorable).

    $ 1,012.3

    2018

    35.1 $ 2,862.4

    $ 2,998.4

    122.0 $ 8,355.2

    1,041.3

    773.7 2,827.3

    3,070.3 2,164.5 8,233.2

    Currency 2018 2017 % Change Impact (1)

    2018

    $ 1,172.2

    30.8 $ 2,987.1

    $ 3,666.7

    98.6 $ 8,668.8

    1,040.8 0 % 17.2

    2,956.3 (4)% 74.7

    2,887.1 2,016.4 8,570.2

    2017

    743.3 4 % 55.0

    (18)%

    14 % 0.3

    24 % (2.6) (4)%

    (4)%

    • (4)% (153.8)

    • 6 % (184.0)

    • 7 %

      Constant

      Constant

      Currency

      Currency %

      Revenues

      Change (2)

      $ 1,014.8

      (13)%

      1,058.5

      2 %

      828.7

      11 %

      2,902.0

      (2)%

      35.4

      15 %

      $ 2,937.4

      (2)%

      2018

      Constant

      Constant

      Currency

      Currency %

      Revenues

      Change (2)

      $ 2,995.2

      (18)%

      2,886.3

      (0)%

      2,197.9

      9 %

      8,079.4

      (6)%

      119.4

      21 %

      $ (156.4)

      $ 8,198.8

      (5)%

      $ 2.5

      $

      75.0

      $ (3.2)

      33.4

  • (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 2018 constant currency net sales or revenues to the corresponding amount in the prior year.

  • (3) For the three months ended September 30, 2018, other revenues in North America, Europe, and Rest of World were approximately $20.9 million, $7.4 million, and $6.8 million, respectively. For the nine months ended September 30,

    2018, other revenues in North America, Europe, and Rest of World were approximately $84.5 million, $19.8 million, and $17.7 million, respectively.

  • (4) Amounts exclude intersegment revenue that eliminates on a consolidated basis.

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Mylan NV published this content on 05 November 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 05 November 2018 21:20:14 UTC