What drove the sales growth in the second quarter of 2018?

Sales growth was primarily driven by higher sales in the oncology franchise, notably Keytruda, and increased sales of vaccines such as Gardasil/Gardasil 9. Growth in the hospital acute care franchise (Bridion, Noxafil) and animal health products also contributed positively.

What was the financial impact of the June 2017 cyber-attack on this quarter's results?

The cyber-attack continued to impact Merck, leading to an estimated $70 million in lost sales and approximately $25 million in additional manufacturing-related and remediation expenses in the second quarter of 2018. The company anticipated full-year 2018 sales to be negatively affected by approximately $200 million.

What were the key strategic moves or collaborations announced during this period?

Merck acquired Viralytics Limited, an Australian oncolytic immunotherapy company, for $378 million. Additionally, Merck entered into a strategic collaboration with Eisai Co., Ltd. for the co-development and co-commercialization of Lenvima, an orally available tyrosine kinase inhibitor.

How did R&D expenses change, and what were the main drivers?

R&D expenses increased significantly, rising 28% to $2.3 billion in the second quarter and 101% to $5.5 billion in the first six months of 2018 compared to the prior year. Key drivers included charges related to the Viralytics acquisition and the Eisai collaboration, as well as increased clinical development spending, particularly for oncology collaborations.

MRK 10-Q Quarterly Report Q2 FY2018 — Revenue, Net Income, EPS

Summary

Merck & Co., Inc. (MRK) reported a net income of $1.707 billion for the second quarter of 2018, a decrease from $1.946 billion in the same period last year, resulting in diluted EPS of $0.63. For the first six months of 2018, net income was $2.443 billion, down from $3.496 billion in the prior year, with diluted EPS of $0.90. Despite the decrease in net income, the company saw a 5% increase in worldwide sales for the quarter, reaching $10.5 billion, driven primarily by strong performance in oncology, particularly Keytruda, and growth in vaccines and animal health products. The company also highlighted the impact of the June 2017 cyber-attack, which affected sales and incurred additional expenses, though insurance recoveries were noted. Strategic collaborations and acquisitions, such as the Viralytics acquisition and the Eisai collaboration for Lenvima, were also significant developments during the period.

Financial Highlights

52 data points

Beta

Revenue

$10.46B

0.7% Gross Margin

Net Income

$1.71B

0.2% Net Margin

EPS (Diluted)

$0.63

Total Assets

$85.04B

Cash & Equivalents

$5.31B

Free Cash Flow

$3.38B

Financial Statements

Beta

Revenue	$10.46B
Cost of Revenue	$3.42B
Gross Profit	$7.05B
R&D Expenses	$2.27B
SG&A Expenses	$2.51B
Interest Expense	$194.00M
Net Income	$1.71B
EPS (Basic)	$0.64
EPS (Diluted)	$0.63
Shares Outstanding (Basic)	2.68B
Shares Outstanding (Diluted)	2.70B

Key Highlights

1Second quarter 2018 sales increased 5% year-over-year to $10.5 billion, driven by strong oncology performance (Keytruda) and vaccine sales.
2Diluted EPS for Q2 2018 was $0.63, down from $0.71 in Q2 2017.
3The company acquired Viralytics Limited for $378 million in June 2018 to bolster its oncolytic immunotherapy pipeline.
4A strategic collaboration with Eisai for Lenvima was announced in March 2018, involving significant upfront payments and potential milestone payments.
5The company incurred approximately $70 million in lost sales and $25 million in additional expenses in Q2 2018 due to the lingering effects of the June 2017 cyber-attack.
6Restructuring costs of $228 million were recognized in Q2 2018, continuing efforts to streamline operations.
7The Animal Health segment was highlighted as a separate reportable segment in Q1 2018, showing robust sales growth.

Merck & Co., Inc. Quarterly Report for Q2 Ended Jun 30, 2018

Summary

Financial Highlights

Key Highlights

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