RAHWAY, N.J. / Oct 31, 2024 / Business Wire / Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2024.
“Our third-quarter results were strong, as we continue to make progress heading into 2025 and beyond," said Robert M. Davis, chairman and chief executive officer, Merck. "Our pipeline is advancing and expanding, demonstrating our success in creating a sustainable innovation engine, and positioning Merck with a more diversified portfolio to drive growth. I continue to remain confident in the strength of our business and our ability to execute, and I want to thank our colleagues across the globe for their focus and commitment as we work to create lasting value for patients, shareholders and all our stakeholders.”
Financial Summary
$ in millions, except EPS amounts | Third Quarter | |||
2024 | 2023 | Change | Change Ex- | |
Sales | $16,657 | $15,962 | 4% | 7% |
GAAP net income1 | 3,157 | 4,745 | -33% | -30% |
Non-GAAP net income that excludes certain items1,2* | 3,985 | 5,427 | -27% | -23% |
GAAP EPS | 1.24 | 1.86 | -33% | -30% |
Non-GAAP EPS that excludes certain items2* | 1.57 | 2.13 | -26% | -23% |
*Refer to table on page 7. | ||||
In the third quarter of 2024, total worldwide sales were $16.7 billion, an increase of 4% compared with the third quarter of 2023; excluding the impact of foreign exchange, growth was 7%. Sales growth in the third quarter of 2024 was primarily due to increased usage of KEYTRUDA globally, contributions from new launches, including WINREVAIR and CAPVAXIVE, and strong growth in Merck’s Animal Health business. Revenue growth in the third quarter of 2024 was partially offset by lower sales of JANUVIA and JANUMET, lower combined sales of GARDASIL/GARDASIL 9 and lower sales of LAGEVRIO. Third-quarter GARDASIL/GARDASIL 9 sales declined year-over-year due to reduced demand in China; outside of China, the company achieved double-digit sales growth for GARDASIL/GARDASIL 9 in almost every major region globally.
For the third quarter of 2024, Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.24 and non-GAAP EPS was $1.57. The declines in GAAP and Non-GAAP EPS in the third quarter of 2024 versus the prior year were largely due to a net charge of $0.79 per share in the aggregate for the acquisition of Eyebiotech Limited (EyeBio) and a related development milestone, the acquisition of CN201 (now known as MK-1045) from Curon Biopharmaceutical (Curon), as well as a payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement. There were no significant business development transaction charges in the third quarter of 2023.
Non-GAAP EPS in both periods excludes acquisition- and divestiture-related costs, costs related to restructuring programs, as well as income and losses from investments in equity securities.
Year-to-date results can be found in the attached tables.
Third-Quarter Sales Performance
The following table reflects sales of the company’s top products and significant performance drivers.
| Third Quarter | ||||
$ in millions | 2024 | 2023 | Change | Change | Commentary |
Total Sales | $16,657 | $15,962 | 4% | 7% | Approximately 2 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases, consistent with practice in that market. |
Pharmaceutical | 14,943 | 14,263 | 5% | 8% | Increase driven by growth in oncology and cardiovascular, partially offset by declines in diabetes, vaccines and virology. |
KEYTRUDA | 7,429 | 6,338 | 17% | 21% | Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC), renal cell carcinoma (RCC) and non-small cell lung cancer (NSCLC), as well as continued strong global demand from metastatic indications. Approximately 3 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases. |
GARDASIL/GARDASIL 9 | 2,306 | 2,585 | -11% | -10% | Decline primarily due to lower demand in China compared with prior year, partially offset by higher sales in the U.S., driven by public-sector buying patterns, higher pricing and demand, as well as higher demand in most international regions. |
PROQUAD, M-M-R II and VARIVAX | 703 | 713 | -1% | -1% | Decline primarily due to timing of shipments and lower tenders in Latin America, largely offset by higher demand in certain international markets. |
JANUVIA/JANUMET | 482 | 835 | -42% | -38% | Decline primarily due to lower pricing in the U.S., as well as ongoing generic competition in many international markets. |
BRIDION | 420 | 424 | -1% | 0% | Relatively flat compared with prior year due to generic competition in certain international markets, particularly in Europe and Japan, largely offset by higher demand and pricing in the U.S. |
LAGEVRIO | 383 | 640 | -40% | -36% | Decline primarily due to lower demand in Japan, partially offset by uptake from commercial launch in the U.S. |
Lynparza* | 337 | 299 | 13% | 13% | Growth primarily due to higher global demand. |
Lenvima* | 251 | 260 | -3% | -4% | Decline primarily due to timing of shipments in China in the prior year, partially offset by higher demand in the U.S. |
VAXNEUVANCE | 239 | 214 | 12% | 13% | Growth largely driven by continued uptake from launches in Europe and Japan, partially offset by lower demand in the U.S. due to competition. |
PREVYMIS | 208 | 157 | 32% | 36% | Growth primarily due to higher global demand, particularly in the U.S. |
ROTATEQ | 193 | 156 | 24% | 25% | Growth primarily due to public-sector buying patterns in the U.S. and timing of shipments in China. |
WINREVAIR | 149 | - | - | - | Represents continued uptake since launch in the U.S. in the second quarter. |
WELIREG | 139 | 54 | 156% | 157% | Growth primarily driven by higher demand in the U.S., largely attributable to ongoing uptake of a new indication. |
Animal Health | 1,487 | 1,400 | 6% | 11% | Growth primarily driven by higher demand and pricing for both Companion Animal and Livestock product portfolios, as well as sales related to July 2024 acquisition of Elanco aqua business. Approximately 2 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases. |
Livestock | 886 | 874 | 1% | 7% | Growth primarily driven by higher pricing and higher demand for poultry and swine products, as well as sales related to acquisition of Elanco aqua business. |
Companion Animal | 601 | 526 | 14% | 17% | Growth primarily driven by uptake from new product launches, including the injectable formulation of BRAVECTO in certain international markets, as well as higher pricing across product portfolio. Sales of BRAVECTO were $266 million and $235 million in current and prior year quarters, respectively, which represented growth of 13%, or 16% excluding impact of foreign exchange. |
Other Revenues** | 227 | 299 | -24% | -22% | Decline primarily due to lower payments received for out-licensing arrangements and lower royalty income. |
*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. | |||||
Third-Quarter Expense, EPS and Related Information
The table below presents selected expense information.
$ in millions | GAAP | Acquisition- | Restructuring | (Income) | Non- |
Third Quarter 2024 | |||||
Cost of sales | $4,080 | $639 | $192 | $- | $3,249 |
Selling, general and administrative | 2,731 | 43 | 31 | - | 2,657 |
Research and development | 5,862 | 24 | - | - | 5,838 |
Restructuring costs | 56 | - | 56 | - | - |
Other (income) expense, net | (162) | (27) | - | 58 | (193) |
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Third Quarter 2023 |
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Cost of sales | $4,264 | $552 | $33 | $- | $3,679 |
Selling, general and administrative | 2,519 | 17 | 40 | - | 2,462 |
Research and development | 3,307 | 10 | - | - | 3,297 |
Restructuring costs | 126 | - | 126 | - | - |
Other (income) expense, net | 126 | (24) | - | 17 | 133 |
GAAP Expense, EPS and Related Information
Gross margin was 75.5% for the third quarter of 2024 compared with 73.3% for the third quarter of 2023. The increase was primarily due to the favorable impact of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9), partially offset by higher restructuring costs (primarily reflecting asset impairment charges), as well as higher amortization of intangible assets.
Selling, general and administrative (SG&A) expenses were $2.7 billion in the third quarter of 2024, an increase of 8% compared with the third quarter of 2023. The increase was primarily due to higher administrative, promotional, selling, and acquisition-related costs, partially offset by the favorable impact of foreign exchange.
Research and development (R&D) expenses were $5.9 billion in the third quarter of 2024, an increase of 77% compared with the third quarter of 2023. The increase was primarily due to a charge of $1.35 billion for the acquisition of EyeBio and a $100 million charge for a related development milestone, as well as a charge of $750 million to acquire CN201 (MK-1045) from Curon. The increase in R&D expenses was also driven by higher compensation and benefit costs, as well as higher clinical development spending. The increase in R&D expenses was partially offset by the favorable impact of foreign exchange.
Other (income) expense, net, was $162 million of income in the third quarter of 2024 compared with $126 million of expense in the third quarter of 2023. The favorability was primarily due to a $170 million payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement, lower exchange losses and lower net interest expense.
The effective tax rate of 22.7% for the third quarter of 2024 includes a 7.2 percentage point combined unfavorable impact related to the EyeBio and Curon transactions.
GAAP EPS was $1.24 for the third quarter of 2024 compared with $1.86 for the third quarter of 2023. GAAP EPS in the third quarter of 2024 includes a net charge of $0.79 per share in the aggregate for the EyeBio, Curon and Daiichi Sankyo transactions. There were no significant business development transaction charges in the third quarter of 2023.
Non-GAAP Expense, EPS and Related Information
Non-GAAP gross margin was 80.5% for the third quarter of 2024 compared with 77.0% for the third quarter of 2023. The increase was primarily due to the favorable impact of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9).
Non-GAAP SG&A expenses were $2.7 billion in the third quarter of 2024, an increase of 8% compared with the third quarter of 2023. The increase was primarily due to higher administrative, promotional and selling costs, partially offset by the favorable impact of foreign exchange.
Non-GAAP R&D expenses were $5.8 billion in the third quarter of 2024, an increase of 77% compared with the third quarter of 2023. The increase was primarily due to a charge of $1.35 billion for the acquisition of EyeBio and a $100 million charge for a related development milestone, as well as a charge of $750 million to acquire CN201 (MK-1045) from Curon. The increase in R&D expenses was also driven by higher compensation and benefit costs, as well as higher clinical development spending. The increase in R&D expenses was partially offset by the favorable impact of foreign exchange.
Non-GAAP other (income) expense, net, was $193 million of income in the third quarter of 2024 compared with $133 million of expense in the third quarter of 2023. The favorability was primarily due to a $170 million payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement, lower exchange losses and lower net interest expense.
The non-GAAP effective tax rate of 21.9% for the third quarter of 2024 includes a 6.0 percentage point combined unfavorable impact related to the EyeBio and Curon transactions.
Non-GAAP EPS was $1.57 for the third quarter of 2024 compared with $2.13 for the third quarter of 2023. Non-GAAP EPS in the third quarter of 2024 includes a net charge of $0.79 per share in the aggregate for the EyeBio, Curon and Daiichi Sankyo transactions. There were no significant business development transaction charges in the third quarter of 2023.
A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.
Third Quarter | ||
$ in millions, except EPS amounts | 2024 | 2023 |
EPS |
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GAAP EPS | $1.24 | $1.86 |
Difference | 0.33 | 0.27 |
Non-GAAP EPS that excludes items listed below2 | $1.57 | $2.13 |
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Net Income |
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GAAP net income1 | $3,157 | $4,745 |
Difference | 828 | 682 |
Non-GAAP net income that excludes items listed below1,2 | $3,985 | $5,427 |
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Excluded Items: |
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Acquisition- and divestiture-related costs3 | $679 | $555 |
Restructuring costs | 279 | 199 |
Loss from investments in equity securities | 58 | 17 |
Decrease to net income | 1,016 | 771 |
Estimated income tax (benefit) expense | (188) | (89) |
Decrease to net income | $828 | $682 |
Pipeline and Portfolio Highlights
In the third quarter, Merck continued to develop and augment its strong, diverse pipeline and achieve key regulatory and clinical milestones.
In cardiovascular disease, Merck continued to build on positive momentum in its U.S. launch of WINREVAIR. As of the end of September 2024, more than 3,700 patients have been prescribed WINREVAIR. The company also received the European Commission’s (EC) approval of WINREVAIR, in combination with other pulmonary arterial hypertension (PAH) therapies, for the treatment of adult patients with PAH with World Health Organization (WHO) functional Class II to III. WINREVAIR is the first activin signaling inhibitor approved for the treatment of PAH in Europe. WINREVAIR has launched in Germany and Merck is working to obtain reimbursement for WINREVAIR in other countries in the EU, which should occur in most other major European markets in the second half of 2025.
In oncology, Merck continued to reinforce its leadership in women’s and earlier stages of cancers and demonstrate progress in its research pipeline. At the European Society for Medical Oncology (ESMO) Congress 2024, three of the company’s data presentations were highlighted during Presidential Symposium sessions. These included overall survival (OS) data from the Phase 3 KEYNOTE-522 trial in high-risk, early-stage TNBC and from the Phase 3 KEYNOTE-A18 trial (also known as ENGOT-cx11/GOG-3047) in high-risk, locally advanced cervical cancer. In addition, new positive data on investigational candidates from Merck’s pipeline were presented, including for patritumab deruxtecan (HER3-DXd), an antibody-drug conjugate (ADC) being developed in collaboration with Daiichi Sankyo, and for sacituzumab tirumotecan (sac-TMT), an anti-TROP2 ADC being developed in collaboration with Kelun-Biotech.
The company also achieved several regulatory milestones, including new approvals for KEYTRUDA-based regimens in the U.S., Europe and Japan. In addition, Merck recently announced top-line results from the KEYNOTE-689 trial, which marks the first positive trial in two decades for patients with resected, locally advanced head and neck squamous cell carcinoma (LA-HNSCC).
In vaccines, the CDC’s Advisory Committee on Immunization Practices (ACIP) voted in October 2024 to recommend CAPVAXIVE for individuals 50 to 64 years of age. This decision expanded upon the initial unanimous recommendation in June 2024 for use of CAPVAXIVE in adults age 65 and older, among other cohorts.
At IDWeek 2024, Merck presented positive results from the Phase 2b/3 trial of clesrovimab (MK-1654), an investigational respiratory syncytial virus (RSV) preventative monoclonal antibody for infants. These results support the potential for clesrovimab to become the first and only single-dose immunization designed to protect infants with the same dose, regardless of weight, for the duration of their first RSV season (six months).
In immunology, long-term efficacy and safety data for tulisokibart (MK-7240), an investigational humanized monoclonal antibody directed to a novel target, tumor necrosis factor (TNF)-like cytokine 1A (TL1A), from the Phase 2 ARTEMIS-UC and APOLLO-CD studies in ulcerative colitis (UC) and Crohn’s disease (CD), were presented at the United European Gastroenterology (UEG) Week 2024 Congress. Both studies showed that, at week 50, maintenance of treatment efficacy was generally observed in 12-week induction responders. Phase 3 studies in UC and CD are ongoing.
In addition, Merck continued to expand and diversify its pipeline by securing strategic business development opportunities. Merck completed its acquisition of CN201 (MK-1045), a next-generation CD3xCD19 bispecific antibody with potential applications in B-cell malignancies and autoimmune diseases, from Curon. Merck also announced the expansion of the global development and commercialization agreement with Daiichi Sankyo to include MK-6070, an investigational delta-like ligand 3 (DLL3) targeting T-cell engager. The companies are planning to evaluate MK-6070 in combination with ifinatamab deruxtecan (I-DXd) in certain patients with small cell lung cancer (SCLC), as well as other potential combinations.
Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows.
Oncology | FDA Approved KEYTRUDA Plus Pemetrexed and Platinum Chemotherapy as First-Line Treatment for Adult Patients With Unresectable Advanced or Metastatic Malignant Pleural Mesothelioma, Based on Results From Phase 3 KEYNOTE-483/CCTG IND.227 Trial | |
EC Approved KEYTRUDA Plus Padcev as First-Line Treatment of Unresectable or Metastatic Urothelial Carcinoma in Adults, Based on Results From Phase 3 KEYNOTE-A39/EV-302 Trial | ||
KEYTRUDA Received 30th Approval From EC With Two New Indications in Gynecologic Cancers, Based on Results From Phase 3 KEYNOTE-868/NRG-GY018 and KEYNOTE-A18 Trials | ||
KEYTRUDA Received New Approvals in Japan for Certain Patients With NSCLC, Based on Results From Phase 3 KEYNOTE-671 Trial, and for Radically Unresectable Urothelial Carcinoma, Based on Results From Phase 3 KEYNOTE-A39/EV-302 and Phase 2 KEYNOTE-052 Trials | ||
KEYTRUDA Plus Chemotherapy Before Surgery and Continued as Single Agent After Surgery Reduced Risk of Death by More Than One-Third (34%) Versus Neoadjuvant Chemotherapy in High-Risk, Early-Stage TNBC, Based on Results From Phase 3 KEYNOTE-522 | ||
KEYTRUDA Plus Chemoradiotherapy (CRT) Reduced Risk of Death by 33% Versus CRT Alone in Patients With Newly Diagnosed, High-Risk, Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18/ENGOT-cx11/GOG-3047 Trial | ||
KEYTRUDA Ten-Year Data Demonstrated Sustained OS Benefit Versus Ipilimumab in Advanced Melanoma, Based on Results From Phase 3 KEYNOTE-006 Trial | ||
KEYTRUDA Plus Lenvima in Combination With Transarterial Chemoembolization (TACE) Significantly Improved Progression-Free Survival Compared to TACE Alone in Patients With Unresectable, Non-Metastatic Hepatocellular Carcinoma, Based on Results From Phase 3 LEAP-012 Trial | ||
KEYTRUDA Plus Trastuzumab and Chemotherapy Significantly Improved OS Versus Trastuzumab and Chemotherapy Alone in First-Line Treatment of Patients With HER2-Positive Advanced Gastric or GEJ Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-811 Trial | ||
KEYTRUDA Met Primary Endpoint of Event-Free Survival as Perioperative Treatment Regimen in Patients With Resected, LA-HNSCC, Based on Results From Phase 3 KEYNOTE-689 Trial | ||
Patritumab Deruxtecan (HER3-DXd) Demonstrated Statistically Significant Improvement in Progression-Free Survival Versus Doublet Chemotherapy in Patients With Locally Advanced or Metastatic EGFR-Mutated NSCLC, Based on Results From Phase 3 HERTHENA-Lung02 Trial | ||
Ifinatamab Deruxtecan Continued to Demonstrate Promising Objective Response Rates in Patients With Extensive-Stage SCLC, Based on Results From Phase 2 IDeate-Lung01 Trial | ||
Merck and Moderna Initiated Phase 3 Trial Evaluating Adjuvant V940 (mRNA-4157) in Combination With KEYTRUDA After Neoadjuvant KEYTRUDA and Chemotherapy in Patients With Certain Types of NSCLC | ||
Merck Initiated Phase 3 Shorespan-007 Trial for Bomedemstat, an Investigational Candidate for the Treatment of Certain Patients With Essential Thrombocythemia | ||
Merck and Daiichi Sankyo Initiated Phase 3 IDeate-Lung02 Trial of Ifinatamab Deruxtecan in Patients With Relapsed SCLC | ||
Merck and Exelixis Signed Clinical Development Collaboration To Evaluate Investigational Zanzalintinib in Combination With KEYTRUDA in Head and Neck Cancer and in Combination With WELIREG in RCC | ||
Vaccines | Clesrovimab (MK-1654), an Investigational RSV Preventative Monoclonal Antibody, Significantly Reduced Incidence of RSV Disease and Hospitalization in Healthy Preterm and Full-Term Infants, Based on Results From Phase 2b/3 MK-1654-004 Trial | |
CDC’s ACIP Recommended CAPVAXIVE for Pneumococcal Vaccination in Adults 50 Years of Age and Older | ||
CAPVAXIVE Demonstrated Positive Immune Responses in Adults With Increased Risk for Pneumococcal Disease, Based on Results From Phase 3 STRIDE-8 Trial | ||
Merck Announced Positive Top-line Results From Phase 3 Trial Evaluating Efficacy and Safety of GARDASIL 9 in Japanese Males | ||
Cardiovascular | EC Approved WINREVAIR in Combination With Other PAH Therapies for the Treatment of PAH in Adult Patients With Functional Class II-III, Based on Results From Phase 3 STELLAR Trial | |
Immunology | Merck Presented New Long-Term Data for Tulisokibart (MK-7240), an Investigational Anti-TL1A Monoclonal Antibody, in Inflammatory Bowel Disease at UEG Week 2024 | |
Infectious Diseases | Merck and Gilead Announced Phase 2 Data Showing a Treatment Switch to an Investigational Oral Once-Weekly Combination Regimen of Islatravir and Lenacapavir (MK-8591D) Maintained Viral Suppression in Adults at Week 48 | |
Ophthalmology | Merck and EyeBio Initiated Phase 2b/3 Clinical Trial for MK-3000 for the Treatment of Diabetic Macular Edema |
Sustainability Highlights
Merck issued its 2023/2024 Impact Report, reaffirming its commitment to operating responsibly and enabling broad access to its products. The report noted how the company reached more than 550 million people around the world with its medicines and vaccines through commercial channels, clinical trials, voluntary licensing and product donations.
Full-Year 2024 Financial Outlook
The following table summarizes the company’s full-year financial outlook.
| Full Year 2024 | |
| Updated | Prior |
Sales* | $63.6 to $64.1 billion | $63.4 to $64.4 billion |
Non-GAAP Gross margin2 | Approximately 81% | Approximately 81% |
Non-GAAP Operating expenses2** | $27.8 to $28.3 billion | $26.8 to $27.6 billion |
Non-GAAP Other (income) expense, net2 | Approximately $100 million expense | Approximately $350 million expense |
Non-GAAP Effective tax rate2 | 16.0% to 17.0% | 15.5% to 16.5% |
Non-GAAP EPS2*** | $7.72 to $7.77 | $7.94 to $8.04 |
Share count (assuming dilution) | Approximately 2.54 billion | Approximately 2.54 billion |
*The company does not have any non-GAAP adjustments to sales. | ||
**Includes one-time R&D charges of $656 million for Harpoon Therapeutics, Inc. (Harpoon) acquisition, $1.45 billion for EyeBio acquisition and related development milestone payment, and $750 million for acquisition of CN201 (MK-1045) from Curon. Outlook does not assume any additional significant potential business development transactions. | ||
***Includes net one-time charge of $1.05 per share in aggregate for the Harpoon, EyeBio and Curon transactions, and the cash payment received from Daiichi Sankyo. | ||
Merck has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the company’s future GAAP results.
Merck continues to experience strong growth, including from KEYTRUDA, new product launches and Animal Health. As a result, Merck is narrowing the range of its full-year sales outlook.
Merck now expects its full-year sales to be between $63.6 billion and $64.1 billion, including a negative impact of foreign exchange of approximately 3 percentage points, at mid-October 2024 exchange rates. Approximately 2 percentage points of the negative impact of foreign exchange is due to the devaluation of the Argentine peso, which is being largely offset by inflation-related price increases, consistent with practice in that market.
Merck now expects its full-year non-GAAP effective income tax rate to be between 16.0% and 17.0%, which includes an unfavorable impact related to the one-time charge associated with the acquisition of CN201 (MK-1045) from Curon.
Merck now expects its full-year non-GAAP EPS to be between $7.72 and $7.77. The outlook includes a negative impact of foreign exchange of approximately $0.30 per share. The negative impact of foreign exchange is primarily due to the devaluation of the Argentine peso, which is being largely offset by inflation-related price increases, consistent with practice in that market. This revised non-GAAP EPS range reflects a net charge of $0.24 per share for the following items not previously included in the outlook:
Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions.
Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, income and losses from investments in equity securities, as well as a tax benefit in 2024 due to a reduction in reserves for unrecognized income tax benefits, resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year.
Earnings Conference Call
Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, October 31, at 9 a.m. ET via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures, and slides highlighting the results, will be available at www.merck.com.
All participants may join the call by dialing (800) 369-3351 (U.S. and Canada Toll-Free) or (517) 308-9448 and using the access code 9818590.
About Merck
At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. For more information, visit www.merck.com and connect with us on X (formerly Twitter), Facebook, Instagram, YouTube and LinkedIn.
Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA
This news release of Merck & Co., Inc., Rahway, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.
Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.
The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).
Appendix
Generic product names are provided below.
Pharmaceutical
BRIDION (sugammadex)
CAPVAXIVE (Pneumococcal 21-valent Conjugate Vaccine)
GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)
GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant)
JANUMET (sitagliptin and metformin HCl)
JANUVIA (sitagliptin)
KEYTRUDA (pembrolizumab)
LAGEVRIO (molnupiravir)
Lenvima (lenvatinib)
Lynparza (olaparib)
M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live)
PREVYMIS (letermovir)
PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live)
ROTATEQ (Rotavirus Vaccine, Live, Oral, Pentavalent)
VARIVAX (Varicella Virus Vaccine Live)
VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine)
VERQUVO (vericiguat)
WELIREG (belzutifan)
WINREVAIR (sotatercept-csrk)
Animal Health
BRAVECTO (fluralaner)
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1 | Net income attributable to Merck & Co., Inc. |
2 | Merck is providing certain 2024 and 2023 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, annual employee compensation, including senior management’s compensation, is derived in part using a non-GAAP pretax income metric. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. For a description of the non-GAAP adjustments, see Table 2a attached to this release. |
3 | Reflects expenses related to acquisitions of businesses, including the amortization of intangible assets, intangible asset impairment charges and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements. |
| MERCK & CO., INC. | ||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME - GAAP | ||||||||||||||||||||
| (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) | ||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||
| Table 1 | ||||||||||||||||||||
| GAAP | % Change | GAAP | % Change | |||||||||||||||||
| 3Q24 |
|
| 3Q23 |
| Sep YTD 2024 | Sep YTD 2023 | |||||||||||||
| Sales | $ | 16,657 |
| $ | 15,962 |
| 4 | % | $ | 48,544 |
| $ | 45,485 |
| 7 | % | ||||
| Costs, Expenses and Other | ||||||||||||||||||||
| Cost of sales |
| 4,080 |
|
| 4,264 |
| -4 | % |
| 11,365 |
|
| 12,214 |
| -7 | % | ||||
| Selling, general and administrative |
| 2,731 |
|
| 2,519 |
| 8 | % |
| 7,952 |
|
| 7,700 |
| 3 | % | ||||
| Research and development |
| 5,862 |
|
| 3,307 |
| 77 | % |
| 13,354 |
|
| 20,904 |
| -36 | % | ||||
| Restructuring costs |
| 56 |
|
| 126 |
| -56 | % |
| 258 |
|
| 344 |
| -25 | % | ||||
| Other (income) expense, net |
| (162 | ) |
| 126 |
| * |
| (151 | ) |
| 388 |
| * | ||||||
| Income Before Taxes |
| 4,090 |
|
| 5,620 |
| -27 | % |
| 15,766 |
|
| 3,935 |
| * | |||||
| Taxes on Income |
| 929 |
|
| 870 |
|
| 2,377 |
|
| 2,332 |
| ||||||||
| Net Income |
| 3,161 |
|
| 4,750 |
| -33 | % |
| 13,389 |
|
| 1,603 |
| * | |||||
| Less: Net Income Attributable to Noncontrolling Interests |
| 4 |
|
| 5 |
|
| 15 |
|
| 12 |
| ||||||||
| Net Income Attributable to Merck & Co., Inc. | $ | 3,157 |
| $ | 4,745 |
| -33 | % | $ | 13,374 |
| $ | 1,591 |
| * | |||||
| Earnings per Common Share Assuming Dilution | $ | 1.24 |
| $ | 1.86 |
| -33 | % | $ | 5.26 |
| $ | 0.62 |
| * | |||||
| Average Shares Outstanding Assuming Dilution |
| 2,541 |
|
| 2,546 |
|
| 2,543 |
|
| 2,549 |
| ||||||||
| Tax Rate |
| 22.7 | % |
| 15.5 | % |
| 15.1 | % |
| 59.3 | % | ||||||||
| * 100% or greater | ||||||||||||||||||||
| MERCK & CO., INC. | |||||||||||||||||||||||||||
| THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 GAAP TO NON-GAAP RECONCILIATION | |||||||||||||||||||||||||||
| (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) | |||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||
| Table 2a | |||||||||||||||||||||||||||
| GAAP | Acquisition and Divestiture-Related Costs (1) | Restructuring Costs (2) | (Income) Loss from Investments in Equity Securities | Certain Other Items | Adjustment Subtotal | Non-GAAP | |||||||||||||||||||||
| Third Quarter | |||||||||||||||||||||||||||
| Cost of sales | $ | 4,080 |
| 639 |
| 192 |
| 831 |
| $ | 3,249 |
| |||||||||||||||
| Selling, general and administrative |
| 2,731 |
| 43 |
| 31 |
| 74 |
|
| 2,657 |
| |||||||||||||||
| Research and development |
| 5,862 |
| 24 |
| 24 |
|
| 5,838 |
| |||||||||||||||||
| Restructuring costs |
| 56 |
| 56 |
| 56 |
|
| – |
| |||||||||||||||||
| Other (income) expense, net |
| (162 | ) | (27 | ) | 58 |
| 31 |
|
| (193 | ) | |||||||||||||||
| Income Before Taxes |
| 4,090 |
| (679 | ) | (279 | ) | (58 | ) | (1,016 | ) |
| 5,106 |
| |||||||||||||
| Income Tax Provision (Benefit) |
| 929 |
| (129 | ) | (3 | ) | (46 | ) | (3 | ) | (13 | ) | (3 | ) | (188 | ) |
| 1,117 |
| |||||||
| Net Income |
| 3,161 |
| (550 | ) | (233 | ) | (45 | ) | (828 | ) |
| 3,989 |
| |||||||||||||
| Net Income Attributable to Merck & Co., Inc. |
| 3,157 | (550 | ) | (233 | ) | (45 | ) | (828 | ) |
| 3,985 |
| ||||||||||||||
| Earnings per Common Share Assuming Dilution | $ | 1.24 |
| (0.22 | ) | (0.09 | ) | (0.02 | ) | (0.33 | ) | $ | 1.57 |
| |||||||||||||
| Tax Rate |
| 22.7 | % |
| 21.9 | % | |||||||||||||||||||||
| Sep YTD | |||||||||||||||||||||||||||
| Cost of sales | $ | 11,365 |
| 1,708 |
| 374 |
| 2,082 |
| $ | 9,283 |
| |||||||||||||||
| Selling, general and administrative |
| 7,952 |
| 88 |
| 67 |
| 155 |
|
| 7,797 |
| |||||||||||||||
| Research and development |
| 13,354 |
| 60 |
| 2 |
| 62 |
|
| 13,292 |
| |||||||||||||||
| Restructuring costs |
| 258 |
| 258 |
| 258 |
|
| – |
| |||||||||||||||||
| Other (income) expense, net |
| (151 | ) | (48 | ) | (107 | ) | (155 | ) |
| 4 |
| |||||||||||||||
| Income Before Taxes |
| 15,766 |
| (1,808 | ) | (701 | ) | 107 |
| (2,402 | ) |
| 18,168 |
| |||||||||||||
| Income Tax Provision (Benefit) |
| 2,377 |
| (350 | ) | (3 | ) | (118 | ) | (3 | ) | 23 |
| (3 | ) | (259 | ) | (4 | ) | (704 | ) |
| 3,081 |
| |||
| Net Income |
| 13,389 |
| (1,458 | ) | (583 | ) | 84 |
| 259 |
| (1,698 | ) |
| 15,087 |
| |||||||||||
| Net Income Attributable to Merck & Co., Inc. |
| 13,374 | (1,458 | ) | (583 | ) | 84 |
| 259 |
| (1,698 | ) |
| 15,072 |
| ||||||||||||
| Earnings per Common Share Assuming Dilution | $ | 5.26 |
| (0.57 | ) | (0.23 | ) | 0.03 |
| 0.10 |
| (0.67 | ) | $ | 5.93 |
| |||||||||||
| Tax Rate |
| 15.1 | % |
| 17.0 | % | |||||||||||||||||||||
| Only the line items that are affected by non-GAAP adjustments are shown. | |||||||||||||||||||||||||||
| Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, annual employee compensation, including senior management’s compensation, is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. | |||||||||||||||||||||||||||
| (1) Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses primarily reflect the amortization of intangible assets and Animal Health intangible asset impairment charges. Amounts included in other (income) expense, net, primarily reflect royalty income related to the prior termination of the Sanofi-Pasteur MSD joint venture. | |||||||||||||||||||||||||||
| (2) Amounts primarily include employee separation costs, accelerated depreciation and asset impairments associated with facilities to be closed or divested related to activities under the company's formal restructuring programs. | |||||||||||||||||||||||||||
| (3) Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. | |||||||||||||||||||||||||||
| (4) Represents a benefit due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year. | |||||||||||||||||||||||||||
| MERCK & CO., INC. | |||||||||||||||
| FRANCHISE / KEY PRODUCT SALES | |||||||||||||||
| (AMOUNTS IN MILLIONS) | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| Table 3 | |||||||||||||||
2024 | 2023 | 3Q | Sep YTD | ||||||||||||
| 1Q | 2Q | 3Q | Sep YTD | 1Q | 2Q | 3Q | Sep YTD | Nom % | Ex-Exch % | Nom % | Ex-Exch % | ||||
| TOTAL SALES (1) | $15,775 | $16,112 | $16,657 | $48,544 | $14,487 | $15,035 | $15,962 | $45,485 | 4 | 7 | 7 | 10 | |||
| PHARMACEUTICAL | 14,006 | 14,408 | 14,943 | 43,358 | 12,721 | 13,457 | 14,263 | 40,442 | 5 | 8 | 7 | 10 | |||
| Oncology | |||||||||||||||
| Keytruda | 6,947 | 7,270 | 7,429 | 21,646 | 5,795 | 6,271 | 6,338 | 18,403 | 17 | 21 | 18 | 22 | |||
| Alliance Revenue – Lynparza (2) | 292 | 317 | 337 | 947 | 275 | 310 | 299 | 884 | 13 | 13 | 7 | 8 | |||
| Alliance Revenue – Lenvima (2) | 255 | 249 | 251 | 755 | 232 | 242 | 260 | 734 | -3 | -4 | 3 | 3 | |||
| Welireg | 85 | 126 | 139 | 349 | 42 | 50 | 54 | 146 | 156 | 157 | 138 | 139 | |||
| Alliance Revenue – Reblozyl (3) | 71 | 90 | 100 | 261 | 43 | 47 | 52 | 142 | 91 | 91 | 84 | 84 | |||
| Vaccines (4) | |||||||||||||||
| Gardasil/Gardasil 9 | 2,249 | 2,478 | 2,306 | 7,032 | 1,972 | 2,458 | 2,585 | 7,015 | -11 | -10 | - | 3 | |||
| ProQuad/M-M-R II/Varivax | 570 | 617 | 703 | 1,891 | 528 | 582 | 713 | 1,823 | -1 | -1 | 4 | 4 | |||
| Vaxneuvance | 219 | 189 | 239 | 647 | 106 | 168 | 214 | 488 | 12 | 13 | 33 | 34 | |||
| RotaTeq | 216 | 163 | 193 | 572 | 297 | 131 | 156 | 584 | 24 | 25 | -2 | -1 | |||
| Pneumovax 23 | 61 | 59 | 68 | 188 | 96 | 92 | 140 | 327 | -51 | -51 | -42 | -40 | |||
| Hospital Acute Care | |||||||||||||||
| Bridion | 440 | 455 | 420 | 1,315 | 487 | 502 | 424 | 1,413 | -1 | - | -7 | -6 | |||
| Prevymis | 174 | 188 | 208 | 570 | 129 | 143 | 157 | 430 | 32 | 36 | 33 | 36 | |||
| Dificid | 73 | 92 | 96 | 261 | 65 | 76 | 74 | 215 | 31 | 31 | 21 | 21 | |||
| Zerbaxa | 56 | 62 | 64 | 182 | 50 | 54 | 53 | 157 | 22 | 25 | 16 | 19 | |||
| Noxafil | 56 | 45 | 41 | 141 | 60 | 55 | 51 | 167 | -20 | -13 | -15 | -5 | |||
| Cardiovascular | |||||||||||||||
| Alliance Revenue - Adempas/Verquvo (5) | 98 | 106 | 102 | 306 | 99 | 68 | 92 | 259 | 11 | 11 | 18 | 18 | |||
| Winrevair | 70 | 149 | 219 | - | - | - | - | ||||||||
| Adempas (6) | 70 | 72 | 72 | 214 | 59 | 65 | 65 | 189 | 11 | 13 | 13 | 15 | |||
| Virology | |||||||||||||||
| Lagevrio | 350 | 110 | 383 | 843 | 392 | 203 | 640 | 1,236 | -40 | -36 | -32 | -27 | |||
| Isentress/Isentress HD | 111 | 89 | 102 | 302 | 123 | 136 | 119 | 377 | -14 | -10 | -20 | -16 | |||
| Delstrigo | 56 | 60 | 65 | 180 | 44 | 50 | 54 | 148 | 21 | 25 | 22 | 26 | |||
| Pifeltro | 42 | 39 | 42 | 123 | 34 | 38 | 37 | 109 | 14 | 15 | 13 | 14 | |||
| Neuroscience | |||||||||||||||
| Belsomra | 46 | 53 | 78 | 177 | 56 | 63 | 58 | 176 | 35 | 40 | - | 7 | |||
| Immunology | |||||||||||||||
| Simponi | 184 | 172 | 189 | 545 | 180 | 180 | 179 | 539 | 5 | 7 | 1 | 2 | |||
| Remicade | 39 | 35 | 41 | 115 | 51 | 48 | 45 | 144 | -9 | -5 | -20 | -16 | |||
| Diabetes (7) | |||||||||||||||
| Januvia | 419 | 405 | 278 | 1,102 | 551 | 511 | 581 | 1,642 | -52 | -49 | -33 | -30 | |||
| Janumet | 251 | 224 | 204 | 679 | 329 | 354 | 255 | 937 | -20 | -13 | -28 | -23 | |||
| Other Pharmaceutical (8) | 576 | 573 | 644 | 1,796 | 626 | 560 | 568 | 1,758 | 13 | 15 | 2 | 5 | |||
| ANIMAL HEALTH | 1,511 | 1,482 | 1,487 | 4,480 | 1,491 | 1,456 | 1,400 | 4,347 | 6 | 11 | 3 | 7 | |||
| Livestock | 850 | 837 | 886 | 2,573 | 849 | 807 | 874 | 2,530 | 1 | 7 | 2 | 7 | |||
| Companion Animal | 661 | 645 | 601 | 1,907 | 642 | 649 | 526 | 1,817 | 14 | 17 | 5 | 7 | |||
| Other Revenues (9) | 258 | 222 | 227 | 706 | 275 | 122 | 299 | 696 | -24 | -22 | 2 | 4 | |||
| Sum of quarterly amounts may not equal year-to-date amounts due to rounding. | |||||||||||||||
| (1) Only select products are shown. | |||||||||||||||
| (2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. | |||||||||||||||
| (3) Alliance Revenue represents royalties. | |||||||||||||||
| (4) Total Vaccines sales were $3,424 million, $3,656 million and $3,675 million in the first, second and third quarter of 2024, respectively, and $3,133 million, $3,557 million and $4,002 million in the first, second and third quarter of 2023, respectively. | |||||||||||||||
| (5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs. | |||||||||||||||
| (6) Net product sales in Merck's marketing territories. | |||||||||||||||
| (7) Total Diabetes sales were $745 million, $715 million and $592 million in the first, second and third quarter of 2024, respectively, and $950 million, $951 million and $924 million in the first, second and third quarter of 2023, respectively. | |||||||||||||||
| (8) Includes Pharmaceutical products not individually shown above. | |||||||||||||||
| (9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $61 million, $15 million and $15 million in the first, second and third quarter of 2024, respectively, and $51 million, $3 million and $65 million in the first, second and third quarter of 2023, respectively. | |||||||||||||||
| Last Trade: | US$99.86 |
| Daily Change: | 2.42 2.48 |
| Daily Volume: | 14,000,300 |
| Market Cap: | US$252.650B |
November 21, 2024 November 14, 2024 | |
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