Merck (MRK) Q3 earnings report 2023

Merck on Thursday reported third-quarter revenue and adjusted earnings that topped expectations on strong sales of its blockbuster cancer drug Keytruda, HPV vaccine Gardasil and surprisingly, its Covid drug Lagevrio. 

The pharmaceutical giant also increased its full-year sales forecast to $59.7 billion to $60.2 billion, barely higher than the $58.6 billion to $59.6 billion guidance provided in August. 

Merck lowered its adjusted profit guidance to $1.33 to $1.38 per share, from a previous forecast of $2.95 to $3.05 a share. But that updated outlook reflects an upfront charge of $5.5 billion, or $1.70 per share, related to the corporate’s recent drug collaboration agreement with Daiichi Sankyo. 

That guidance also includes previously announced one-time charges related to the corporate’s acquisitions of Prometheus Biosciences and Imago BioSciences, together with one other upfront payment related to a collaboration cope with Kelun-Biotech. 

Here’s what Merck reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly referred to as Refinitiv:

• Earnings per share: $2.13 adjusted vs. $1.95 expected
• Revenue: $15.96 billion vs. $15.32 billion expected

Shares of Merck closed nearly 2% higher on Thursday. The stock is down 5% this yr. It has a market value of roughly $268 billion, making it considered one of the most important pharmaceutical firms based within the U.S.

Merck raked in $15.96 billion in revenue for the quarter, up 7% from the identical period a yr ago. 

The corporate posted net income of $4.75 billion, or $1.86 per share. That compares with $3.25 billion, or $1.28 per share, for a similar period a yr ago. 

Excluding certain items, Merck’s adjusted earnings per share were $2.13 for the period. 

Merck’s pharmaceutical business, which develops a big selection of medication for various disease areas, posted $14.26 billion in revenue through the quarter. That is up 10% from the identical period a yr ago. 

Excluding Lagevrio, pharmaceutical sales grew 9%. The Covid antiviral treatment brought in $640 million in sales for the quarter, up 47% from the third quarter of 2022. Merck said that growth was because of higher demand in Japan, partially offset by lower demand in Australia and the nonrecurrence of sales within the U.K.

Analysts had been expecting the drug to rake in just $140.8 million in sales, based on FactSet estimates. Lagevrio’s revenue is surprising since sales of Covid products from firms like Pfizer and Moderna have plummeted this yr because the world emerges from the pandemic and relies less on vaccines and coverings for defense. 

Merck’s popular antibody treatment Keytruda, which is used to treat several sorts of cancer, booked $6.34 billion in revenue, up 17% from the year-earlier quarter. Analysts had been expecting $6.20 billion in Keytruda sales, FactSet estimates said.

That increase was driven by higher uptake for the treatment of earlier-stage cancers and powerful global demand for metastatic indications, which refers to when a cancer has spread to a unique a part of the body part than where it began, Merck CFO Caroline Litchfield said during an earnings call Thursday.

The corporate has been under pressure to scale back its dependence on Keytruda, which is slated to lose patent protection in 2028. But Merck is attempting to defend its patent edge over Keytruda by developing latest formulations of the drug, akin to a version that might be injected under the skin.

Merck’s pharmaceutical business also saw a jump in sales of Gardasil, a vaccine that stops cancer from HPV, essentially the most common sexually transmitted infection within the U.S.

Gardasil generated $2.59 billion in sales, which is up 13% from the third quarter of 2022. Analysts had been expecting sales of $2.64 billion, based on FactSet estimates.

Litchfield said the rise was because of underlying global demand, particularly in China. Meanwhile, Gardasil sales decreased within the U.S. because of the Centers for Disease Control and Prevention’s purchasing patterns.

The corporate’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.40 billion in sales, up 2% from the identical period a yr ago.

Merck will hold a conference call at 9 a.m. ET on Thursday.

Correction: Merck acquired Imago BioSciences. An earlier version misstated an organization name.

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