Merck Q4 Profit Beats In Turnaround

by Ike Obudulu Posted on February 1st, 2019

Merck & Co., Inc. (MRK) on Friday reported a turnaround to profit in the fourth quarter. The prior year result included a $2.6 billion provisional charge related to the enactment of U.S. tax legislation. Quarterly worldwide sales increased 5 Percent. Both adjusted earnings per share and sales for the quarter beat analysts’ expectations.

“The fourth-quarter and full-year results further bolster our confidence in Merck’s innovation-based strategy in which our key pillars – oncology, vaccines, animal health, and select hospital and specialty care products – are expected to drive sustainable growth over the long-term. We enter 2019 with good momentum, anticipating the many opportunities afforded by our broad and differentiated portfolio and pipeline,” said Kenneth Frazier, chairman and chief executive officer, Merck.

In the pre-market trade, MRK is trading at $74.59, up $0.16 or 0.21 percent.

Merck expects its full-year 2019 earnings per share to be between $3.97 and $4.12. Merck expects its full-year 2019 non-GAAP earnings per share to be between $4.57 and $4.72, including an approximately 1 percent positive impact from foreign exchange. Analysts expect annual earnings of $4.69 per share.

At mid-January 2019 exchange rates, Merck anticipates full-year 2019 revenue to be between $43.2 billion and $44.7 billion, including an approximately 1 percent negative impact from foreign exchange. Analysts project annual revenue of $44.54 billion.

The company reported that its net income attributable to the company for the fourth-quarter was $1.83 billion or $0.69 per share compared to a loss of $1.05 billion or $0.39 per share in the previous year. GAAP earnings per share for 2018 reflected a $1.4 billion charge related to the formation of a strategic oncology collaboration with Eisai Co., Ltd.

Non-GAAP earnings per share was $1.04 for the fourth quarter of 2018 compared with $0.98 for the fourth quarter of 2017. Analysts polled by Thomson Reuters expected the company to report earnings of $1.03 per share. Analysts’ estimates typically exclude special items.

Worldwide sales were $11.00 billion for the fourth quarter of 2018, an increase of 5 percent compared with the fourth quarter of 2017, including a 3 percent negative impact from foreign exchange. Analysts expected revenue of $10.94 billion for the quarter.

Fourth-quarter pharmaceutical sales increased 6 percent to $9.8 billion, including a 2 percent negative impact from foreign exchange. The increase was driven primarily by growth in oncology and vaccines, partially offset by lower sales in virology and the ongoing impacts of the loss of market exclusivity for several products.

Growth in oncology was driven by a significant increase in sales of KEYTRUDA, reflecting the strong momentum for the treatment of patients with NSCLC and the company’s continued launches with new indications globally. Additionally, oncology sales reflect alliance revenue of $71 million related to Lenvima and $62 million related to Lynparza, representing Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

Animal Health sales totaled $1.0 billion for the fourth quarter of 2018, an increase of 6 percent compared with the fourth quarter of 2017, including a 5 percent negative impact from foreign exchange. Growth for the quarter was driven by both inline and newly launched products reflecting sales increases in companion animal products, primarily companion animal vaccines, and higher sales of livestock products, particularly swine and poultry products.

Earnings highlights for Merck & Co Inc. (MRK):

-Earnings: $1.83 billion in Q4 vs. -$1.05 billion in the same period last year.
-EPS: $0.69 in Q4 vs. -$0.39 in the same period last year.
-Excluding items, Merck & Co Inc. reported adjusted earnings of $2.75 billion or $1.04 per share for the period.
-Analysts projected $1.03 per share
-Revenue: $11.00 billion in Q4 vs. $10.43 billion in the same period last year.

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