Merck Stock Down 8% On Weak Outlook, Q4 Results Miss Estimates

(RTTNews) - Biopharmaceutical company Merck & Co., Inc. (MRK) reported Tuesday a net profit for the fourth quarter compared to a loss last year, reflecting improved gross margins, sharply lower R&D expenses and 7 percent sales growth. However, both adjusted earnings per share and quarterly sales missed analysts' estimates. The company also provided a weak guidance for the full-year 2025.

In pre-market activity on the NYSE, MRK shares are trading at $91.20, down $8.59 or 8.61 percent.

"We delivered strong growth in 2024, reflecting demand for our innovative portfolio, including for KEYTRUDA, which continues to benefit more patients with cancer globally, the successful launch of WINREVAIR and strong performance of our Animal Health business," said Robert Davis, chairman and CEO.

For the fourth quarter, the company reported net income attributable to the company of $3.74 billion or $1.48 per share, compared to a net loss of $1.23 billion or $0.48 per share in the prior-year quarter.

The latest quarter results include a charge of $0.23 per share related to the execution of licensing agreements with LaNova Medicines Ltd. (LaNova) and Hansoh Pharma, while the prior-year quarter includes a charge of $1.69 per share related to a collaboration with Daiichi Sankyo.

Excluding items, adjusted earnings for the quarter was $1.72 per share, compared to $0.03 per share in the year-ago quarter.

On average, eight analysts polled expected the company to report earnings of $2.18 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide total sales for the quarter increased 7 percent to $15.62 billion from $14.63 billion in the same quarter last year, driven by growth in oncology and cardiovascular, partially offset by declines in diabetes, vaccines, immunology and virology. The Street was looking for revenues of $16.31 billion for the quarter.

Excluding the Impact of Foreign Exchange, total sales increased 9 percent.

Pharmaceutical sales increased 7 percent to $14.04 billion, with KEYTRUDA sales growing 19 percent or 21 percent in constant currency, to $7.84 billion, while GARDASIL / GARDASIL 9 sales decreased 17 percent to $1.55 billion, due to lower demand in China. JANUVIA / JANUMET sales declined 38 percent or 36 percent in constant currency, to $487 million from last year.

Animal Health sales increased 9 percent to $1.40 billion from last year, primarily driven by higher pricing in both Livestock and Companion Animal product portfolios, as well as higher demand for Livestock products.

Gross margin for the quarter improved 220 basis points to 75.5 percent, primarily due to the favorable impact of product mix and foreign exchange, partially offset by higher manufacturing-related costs and higher amortization of intangible assets.

Looking ahead to fiscal 2025, Merck now projects adjusted earnings in a range of $8.88 to $9.03 per share on sales between $64.1 billion and $65.6 billion.

The Street is looking for earnings of $9.21 per share on sales of $67.36 billion for the year.

The outlook reflects a one-time charge of approximately $0.09 per share related to an anticipated milestone payment to LaNova.

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