Merck & Co., Inc. (MRK), a leading biopharmaceutical firm, announced a notable turnaround in net profit for the second quarter, attributing the improvement to better gross margins and a 7% increase in sales. The company's adjusted earnings per share and quarterly sales surpassed analysts' forecasts. Despite the positive quarterly performance, Merck has revised down its adjusted earnings outlook for the full-year 2024.
As of pre-market trading on the NYSE, MRK shares were at $122.90, reflecting a drop of $4.88 or 3.82%.
In the second quarter, Merck reported a net income attributable to the company of $5.46 billion, or $2.14 per share, a significant improvement from a net loss of $5.98 billion, or $2.35 per share, in the same period last year. The prior-year quarter was impacted by a $4.02 per share charge related to the acquisition of Prometheus Biosciences, Inc. Excluding such items, adjusted earnings stood at $2.28 per share, compared to an adjusted loss of $2.06 per share in the previous year.
Analyst expectations, according to a Thomson Reuters poll of 16 analysts, had anticipated earnings of $2.15 per share for the quarter, typically excluding special items.
Global sales for the quarter rose 7% to $16.11 billion, up from $15.04 billion the previous year, primarily driven by gains in oncology, cardiovascular, and vaccines sectors, though tempered by declines in diabetes and virology. Analysts had projected revenues of $15.84 billion for the quarter. Excluding the impact of foreign exchange, total sales increased by 11%.
Pharmaceutical sales saw a 7% boost to $14.41 billion, with KEYTRUDA sales up by 16% (or 21% in constant currency) reaching $7.27 billion, and GARDASIL / GARDASIL 9 sales rising 1% to $2.48 billion. Conversely, JANUVIA / JANUMET sales plummeted 27% (or 73% in constant currency) to $629 million compared to last year.
Animal Health sales experienced a 2% uptick to $1.48 billion, driven mainly by increased pricing across Livestock and Companion Animal products, as well as a higher demand for Livestock products.
The gross margin improved by 360 basis points to 76.8%, largely due to a favorable product mix.
Looking forward to fiscal 2024, Merck now forecasts adjusted earnings per share to be between $7.94 and $8.04, with projected sales ranging from $63.4 billion to $64.4 billion. This is a revision from the previously anticipated adjusted earnings per share range of $8.53 to $8.65 on sales of $63.1 billion to $64.3 billion.
Analysts forecast the annual earnings to be around $8.16 per share, based on revenues of $64.34 billion for the year.
The revised outlook takes into account a one-time charge of approximately $1.3 billion, or $0.51 per share, related to the acquisition of EyeBio.
