Summary
Merck & Co., Inc. reported strong financial results for the first quarter of 2019, with worldwide sales increasing by 8% year-over-year to $10.8 billion, driven by robust growth in its oncology franchise, particularly Keytruda, and a significant rise in vaccine sales. Net income attributable to Merck & Co., Inc. surged to $2.9 billion ($1.12 per diluted share) from $736 million ($0.27 per diluted share) in the prior year's quarter. This substantial increase in profitability was bolstered by a significant reduction in R&D expenses compared to the previous year, largely due to a one-time charge related to a prior-period collaboration, and a favorable tax adjustment from the settlement of federal income tax matters. Strategic acquisitions in animal health and immunotherapy were completed in April 2019, indicating continued investment in growth areas. The company also announced a new global restructuring program aimed at optimizing its manufacturing and supply network, which is expected to incur costs but ultimately lead to significant annual cost savings. Despite pricing pressures in some markets, Merck demonstrated strong operational execution and continued investment in its pipeline, particularly with Keytruda, which received several new approvals and expanded indications during the quarter.
Financial Highlights
52 data points| Revenue | $10.82B |
| Cost of Revenue | $3.05B |
| Gross Profit | $7.76B |
| R&D Expenses | $1.93B |
| SG&A Expenses | $2.42B |
| Interest Expense | $209.00M |
| Net Income | $2.92B |
| EPS (Basic) | $1.13 |
| EPS (Diluted) | $1.12 |
| Shares Outstanding (Basic) | 2.58B |
| Shares Outstanding (Diluted) | 2.60B |
Key Highlights
- 1Worldwide sales grew 8% to $10.8 billion, driven by Keytruda (oncology) and vaccines.
- 2Net income attributable to Merck & Co., Inc. increased significantly to $2.9 billion, or $1.12 per diluted share, from $736 million, or $0.27 per diluted share, in Q1 2018.
- 3Research and Development expenses decreased substantially to $1.9 billion from $3.2 billion, primarily due to a large one-time charge in Q1 2018 for an Eisai collaboration.
- 4Keytruda sales reached $2.3 billion, up from $1.5 billion in the prior year, fueled by new indications and global launches.
- 5Acquisitions of Antelliq ($2.3 billion + debt repayment) and Immune Design ($301 million) were completed in April 2019.
- 6A new global restructuring program was announced, with estimated pretax costs of $800 million to $1.2 billion by 2023, aiming for annual net cost savings of $500 million.
- 7Effective income tax rate improved significantly to 6.7% from 44.9%, aided by a $360 million net tax benefit from settling federal income tax matters.