Pfizer Inc.’s (NYSE: PFE) shares continue to trade in red after the company narrowly missed revenue estimates for the second quarter of 2019. Adjusted EPS topped expectations. The company’s stock was down 2.17% in premarket hours on Tuesday.

Total revenues fell 2% year-over-year to $13.3 billion, missing the consensus estimate of $13.4 billion. Revenue results reflect an unfavorable impact from foreign exchange of 4%, which offset operational growth of 2%.

Pfizer beat earnings estimates for Q2 2019 but missed on revenue

Reported net income rose 30% to $5 billion, or $0.89 per share, compared to the prior-year quarter. Adjusted income decreased 2% to $4.5 billion while adjusted EPS rose 4% to $0.80, beating forecasts of $0.75.

During the quarter, revenue in the Biopharma business grew 2% to $9.6 billion, driven by growth in key brands such as Ibrance, Xeljanz and Eliquis. The growth was partially offset by lower revenues from Enbrel and Prevnar 13. Revenues in the Upjohn segment fell 11% to $2.8 billion, hurt by declines in the US and China. Consumer Healthcare segment revenues fell 3% to $862 million.   

Pfizer updated its guidance for fiscal year 2019 to reflect the formation of its JV with GlaxoSmithKline plc and the expected completion of the Array BioPharma acquisition. The company now expects revenues of $50.5-52.5 billion versus the prior outlook of $52-54 billion. Adjusted EPS is estimated to be $2.76-2.86 compared to the previous range of $2.83-2.93.

Pfizer also announced an agreement to combine its Upjohn business with Mylan NV (NASDAQ: MYL), creating a new global pharmaceutical company. The agreement is structured as an all-stock, Reverse Morris Trust transaction and is expected to close in mid-2020. Pfizer’s shareholders will own 57% of the combined company and Mylan’s shareholders will own 43%.

Michael Goettler will be the Chief Executive Officer of the new entity. The new company is expected to have pro forma 2020 revenues of $19-20 billion. Pro forma 2020 adjusted EBITDA is estimated to be $7.5-8.0 billion, including phased synergies of approx. $1 billion annually to be realized by 2023. Pro forma free cash flow for 2020 is expected to be more than $4 billion.

Pro forma for the separation of the Upjohn business, Pfizer expects to generate 2020 revenues of approx. $40 billion.

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