Merck Q2 Results Top Estimates, But Slashes FY24 Earnings Outlook

(RTTNews) - Biopharmaceutical company Merck & Co., Inc. (MRK) reported Tuesday a net profit for the second quarter compared to a loss last year, reflecting improved gross margins and a 7 percent sales growth. Both adjusted earnings per share and quarterly sales topped analysts' estimates. However, the company slashed its adjusted earnings guidance for the full-year 2024.

In pre-market activity on the NYSE, MRK shares are trading at $122.90, down $4.88 or 3.82 percent.

For the second quarter, the company reported net income attributable to the company of $5.46 billion or $2.14 per share, compared to a net loss of $5.98 billion or $2.35 per share in the prior-year quarter.

The prior-year quarter included a charge of $4.02 per share for the acquisition of Prometheus Biosciences, Inc. Excluding items, adjusted earnings for the quarter was $2.28 per share, compared to an adjusted loss of $2.06 per share in the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $2.15 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide total sales for the quarter increased 7 percent to $16.11 billion from $15.04 billion in the same quarter last year, driven by growth in oncology, cardiovascular and vaccines, partially offset by declines in diabetes and virology. The Street was looking for revenues of $15.84 billion for the quarter.

Excluding the Impact of Foreign Exchange, total sales increased 11 percent.

Pharmaceutical sales increased 7 percent to $14.41 billion, with KEYTRUDA sales growing 16 percent or 21 percent in constant currency, to $7.27 billion, and GARDASIL / GARDASIL 9 sales increasing 1 percent, to $2.48 billion, while JANUVIA / JANUMET sales declined 27 percent or 73 percent in constant currency, to $629 million from last year.

Animal Health sales increased 2 percent to $1.48 billion from last year, primarily driven by higher pricing in both Livestock and Companion Animal product portfolios, as well as higher demand for Livestock products.

Gross margin for the quarter improved 360 basis points to 76.8 percent, primarily due to the favorable impact of product mix

Looking ahead to fiscal 2024, Merck now projects adjusted earnings in a range of $7.94 to $8.04 per share on sales between $63.4 billion and $64.4 billion. Previously, the company expected adjusted earnings in the range of $8.53 to $8.65 per share on sales between $63.1 billion and $64.3 billion.

Analysts expect annual earnings of $8.16 per share on revenues of $64.34 billion for the year.

The outlook reflects negative impact from one-time charge of approximately $1.3 billion or $0.51 per share, for the acquisition of EyeBio.

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