Merck beats on Q1 earnings amid 'strong underlying performance'

Global pharmaceuticals firm Merck said in its first-quarter earnings on Thursday that, despite a 9% decrease in total worldwide sales year-on-year to $14.49bn, it saw a “strong underlying performance” across key growth drivers, particularly in oncology and vaccines.

Excluding the impact of foreign exchange and the Covid-19 antiviral ‘Lagevrio’, Merck said growth was 15%.

It said the cancer immunotherapy Keytruda saw sales grow 20% to $5.8bn, while human papillomavirus vaccines Gardasil and Gardasil 9 sales were ahead 35% at $2bn.

Lagevrio sales, on the other hand, declined 88% to $392m.

Net income came in at $2.82bn, or $1.11 per share, both of which were down 35% from the same quarter last year.

Adjusted earnings per share were also 35% lower at $1.40 per share, although that was still well ahead of the $1.32 per share analysts had pencilled in according to FactSet.

Looking ahead, Merck raised and narrowed its expected worldwide sales range for 2023 to be between $57.7bn and $58.9bn, including the negative impact of foreign exchange of about two percentage points.

The outlook included around $1bn of Lagevrio sales.

However, the firm lowered and narrowed its expected GAAP earnings per share range to be between $5.85 and $5.97, reflecting the Zetia antitrust litigation settlement.

The non-GAAP earnings per share range was expected to be between $6.88 and $7.00, including a negative foreign exchange impact of about four percentage points.

Merck said its outlook did not reflect any impact from the proposed acquisition of Prometheus Biosciences, which was expected to close in the third quarter.

The acquisition would result in a one-time charge to both GAAP and non-GAAP results of about $10.3bn, or $4.00 per share.

“Inspired by our commitment to bring bold science forward to address critical unmet patient needs, we began 2023 with significant advancements across our innovative pipeline,” said chairman and chief executive officer Robert Davis.

“Our first-quarter results are a reflection of the focused execution of our science-led strategy, strong performance across our key growth drivers, continued momentum commercially and operationally, and most importantly, the collective and dedicated efforts of our colleagues around the world.

“I’m proud of the progress we’ve made, and we will continue to move with speed and agility to deliver value for patients and shareholders, now and well into the future.”

At 0722 EDT (1222 BST), shares in Merck & Co were up 1.43% in pre-market trading in New York, at $115.05.

Reporting by Josh White for Sharecast.com.