Mead Johnson Nutrition Company MJN reported first-quarter 2016 results with adjusted earnings per share (EPS) of 87 cents beating the Zacks Consensus Estimate by 3.6%. Adjusted earnings, however, deteriorated from the prior-year quarter number by 20%. Including the impact of certain one-time items, reported net earnings came in at $72.7 million or 39 cents per share, down 64.9% or 61.8% year over year, respectively. Net Sales Net sales in the reported quarter totaled $962.1 million, down 12% year over year (down 6% at constant exchange rate or CER). The top line however comfortably beat the Zacks Consensus Estimate of $945 million. Volume adversely affected sales in the reported quarter by 8%. Foreign exchange also hurt sales by 6%. However, pricing had a positive impact of 2% on first-quarter sales. Segments in Detail Currently, the company has three reportable segments – Asia, Latin America and North America/Europe. Sales in Asia (representing 52% of total sales) declined 14% year over year (down 9% at CER) to $500.6 million. While volume affected this segment’s revenues by 9%, foreign exchange impacted sales by 5%. More challenging market dynamics and market share losses experienced in the second and third quarter of 2015 primarily affected results at this segment. In China, increased price-based promotion and a shift in consumer preferences over the prior year have also impacted sales. In Latin America (19%), sales dropped 22% year over year (down 6% at CER) to $160.3 million. Foreign exchange hurt growth at this segment by 16% while volume had a 13% impact. However, pricing gains in the overall segment contributed 7% growth to this segment’s sales, which partially offset the negatives. Higher sales of premium infant products in most markets also contributed to this segment’s sales growth of 7%; excluding Venezuela. In North America/Europe (28%), sales dropped 3% (down 1% at CER) to $301.2 million, on account of foreign exchange that marred sales growth by 2% and volume had an impact of 1%. Market share pressure and increased competitive activities in the U.S. primarily affected this segment’s performance. Margins Adjusted gross margin during the reported quarter was 64.1%, in line with the prior-year quarter figure as decline in cost of sales was offset by a lower sales figure. Adjusted operating margin deteriorated 180 bps year over year to 25.4%, on account of a 5% rise in adjusted advertising and promotion expenses. However, adjusted selling, general and administrative expenses fell 15% and adjusted research and development expenses contracted 2%. Balance Sheet and Cash Flow Mead Johnson exited the quarter with cash and cash equivalents of $1.70 billion, in line with the equivalent figure at the end of 2015. Long-term debt was $3.02 billion, compared with $2.98 billion of Dec 31, 2015. As of Mar 31, 2016, the company generated operating cash flow of $160.1 million, against the year-ago quarter’s equivalent of $274.5 million. Updated Guidance Mead Johnson reiterated its guidance for full-year 2016. The company expects to deliver adjusted EPS of $3.48–$3.60, based on the current exchange rates. Meanwhile, the Zacks Consensus Estimate for EPS is pegged at $3.51, within the company's guided range. At the top-line front, the company expects year-over-year sales growth of 0-2% at CER. The Zacks Consensus Estimate for revenues lies at $3.89 billion. Our Take Mead Johnson embarked on a promising journey this year, posting square beats in the first quarter of 2016. However, the company performance disappointingly on a year-over-year basis with each of its segments registering a sales decline. The company’s business in Venezuela was a particular drag. On a brighter note, management seemed encouraged with Mead Johnson’s progress in its Chinese business during the quarter, with the company's fully imported product line accounting for 45% of total sales in China. However, on account of the adoption of a product innovation strategy, the company had to incur higher advertising and promoting expenses in the nation. Foreign currency exchange also had a significant impact on Mead Johnson’s first-quarter results, particularly in China, Mexico and Argentina. Zacks Rank & Key Picks Mead Johnson presently carries a Zacks Rank #3 (Hold). Better-ranked medical stocks are NuVasive, Inc. NUVA, Orthofix International N.V. OFIX and Boston Scientific Corp. BSX. While Nuasive and Orthofix sport a Zacks Rank #1 (Strong Buy), Boston Scientific carries a Zacks Rank #2 (Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BOSTON SCIENTIF (BSX): Free Stock Analysis Report ORTHOFIX INTL (OFIX): Free Stock Analysis Report NUVASIVE INC (NUVA): Free Stock Analysis Report MEAD JOHNSON NU (MJN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research