TLDR
- Merck delivered an adjusted Q1 loss of $1.28 per share, surpassing analyst expectations of a $1.47 loss
- Global revenue increased 5% to $16.3 billion, exceeding Wall Street’s $15.8 billion projection
- Keytruda revenue reached $8 billion with 12% growth, while Gardasil declined 22% due to softness in China
- Winrevair revenue jumped 88% to $525 million; Januvia sales decreased 29% as May patent expiration approaches
- Annual guidance upgraded to $65.8B–$67B in revenue and $5.04–$5.16 adjusted earnings per share
Merck delivered first-quarter financial results on Thursday that exceeded Wall Street projections, propelling shares higher by 4.8% during premarket hours.
The pharmaceutical giant reported an adjusted quarterly loss of $1.28 per share, performing better than the $1.47 loss that analysts had anticipated. The reported net loss stood at $4.24 billion, or $1.72 per share, primarily due to a $3.62 per share charge associated with the $9.2 billion Cidara Therapeutics acquisition completed in January.
This contrasts sharply with the year-ago quarter, when the company recorded a profit of $5.08 billion, or $2.01 per share.
Global revenue climbed 5% to reach $16.29 billion, outperforming the FactSet consensus estimate of $15.85 billion.
Keytruda, the company’s flagship oncology therapy, continues to drive substantial growth. The medication generated $8 billion in quarterly sales, representing a 12% increase and comprising nearly half of Merck’s total revenue. This figure encompasses both the conventional intravenous formulation and the recently launched subcutaneous version, Keytruda SC.
The treatment faces heightened scrutiny as its U.S. patent protection expires in 2028, a date that will likely usher in competition from lower-priced biosimilar alternatives.
Chief Executive Officer Robert Davis has outlined strategies to construct a “patent wall” surrounding Keytruda through additional indications and combination therapies, with certain patents extending through 2029.
Gardasil Weakness Continues
However, not all product lines showed positive momentum. Gardasil, Merck’s human papillomavirus vaccine, experienced a 22% sales decline on a currency-adjusted basis during the first quarter.
The decrease stems from persistent challenges in the Chinese market, coupled with reduced sales in Japan following the conclusion of a nationwide catch-up vaccination initiative. Unfavorable purchasing patterns in the U.S. public sector further contributed to the decline.
Januvia, the company’s diabetes medication, is experiencing erosion even ahead of its May patent expiration. First-quarter sales dropped 29% as generic alternatives capture market share in advance of the official exclusivity loss.
Winrevair Picks Up the Slack
Conversely, Winrevair — Merck’s therapy for pulmonary arterial hypertension — delivered another impressive performance. Revenue soared 88% year-over-year to reach $525 million.
Bridion also made a positive contribution, with sales advancing 7% to $472 million, although this was partially counterbalanced by generic competition in overseas markets.
Merck incrementally raised its full-year outlook. The pharmaceutical company now projects worldwide revenue between $65.8 billion and $67 billion, an increase from the previous guidance range of $65.5 billion to $67 billion.
Adjusted earnings per share guidance was elevated to a range of $5.04 to $5.16, compared with the prior forecast of $5.00 to $5.15.
Earlier in the year, Merck cautioned that annual results would face headwinds from patent expirations affecting Januvia and other products. This warning had pressured the stock following fourth-quarter earnings.
The company secured FDA authorization last week for a once-daily, two-drug HIV-1 treatment combination, strengthening its product portfolio as it works to broaden revenue streams in preparation for the Keytruda patent expiration.
MRK traded up 4.8% in premarket activity on Thursday.
