10-QPeriod: Q3 FY2021

Merck & Co., Inc. Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:MRK

Summary

Merck & Co., Inc. reported strong financial performance for the third quarter and nine months ended September 30, 2021. Total sales increased by 20% year-over-year to $13.2 billion in the third quarter and by 15% to $35.2 billion for the nine-month period, driven by significant growth in the oncology and vaccines segments, particularly Keytruda and Gardasil/Gardasil 9. The company also saw increased alliance revenue from key collaborations, contributing to robust sales growth. Net income attributable to Merck & Co., Inc. for the third quarter was $4.6 billion, or $1.80 per diluted share, a substantial increase compared to the prior year, reflecting improved profitability and effective cost management. The company announced its definitive agreement to acquire Acceleron Pharma Inc. for approximately $11.5 billion, a strategic move to enhance its pipeline, particularly in pulmonary arterial hypertension. Additionally, Merck completed the spin-off of its Organon & Co. business, strengthening its focus on core growth areas. The company also made progress in its COVID-19 response, with the submission of an Emergency Use Authorization application for its oral antiviral molnupiravir, demonstrating its commitment to addressing global health challenges.

Financial Highlights

52 data points
Beta

Revenue

$13.15B

73.8% Gross Margin

Net Income

$4.57B

34.7% Net Margin

EPS (Diluted)

$1.80

Total Assets

$93.49B

Cash & Equivalents

$10.05B

Free Cash Flow

$4.80B

Financial Statements
Beta
Revenue$13.15B
Cost of Revenue$3.45B
Gross Profit$9.70B
R&D Expenses$2.44B
SG&A Expenses$2.34B
Operating Income$8.53B
Interest Expense$196.00M
Net Income$4.57B
EPS (Basic)$1.81
EPS (Diluted)$1.80
Shares Outstanding (Basic)2.53B
Shares Outstanding (Diluted)2.54B

Key Highlights

  • 1Merck reported a 20% increase in third-quarter sales to $13.2 billion, driven by strong performance in oncology (Keytruda) and vaccines (Gardasil).
  • 2Net income attributable to Merck & Co., Inc. for the third quarter was $4.6 billion, a significant increase from the prior year.
  • 3The company announced a definitive agreement to acquire Acceleron Pharma Inc. for approximately $11.5 billion, bolstering its pipeline in rare diseases.
  • 4Merck completed the spin-off of its Organon & Co. business, allowing for a more focused strategy.
  • 5The company submitted an Emergency Use Authorization application to the FDA for its oral antiviral molnupiravir for the treatment of COVID-19.
  • 6Research and development expenses increased by 21% for the first nine months of 2021, reflecting continued investment in pipeline development.
  • 7The company's Animal Health segment showed strong growth, with sales increasing by 14% in the third quarter.

Frequently Asked Questions

Sales growth was primarily driven by strong performance in the oncology franchise, particularly Keytruda, and the vaccines franchise, led by Gardasil/Gardasil 9. Increased alliance revenue from collaborations with AstraZeneca (Lynparza) and Eisai (Lenvima) also contributed significantly to the sales increase. Higher sales of hospital acute care products like Bridion and Prevymis, as well as Animal Health products, also bolstered revenue.

Merck completed the spin-off of its Organon & Co. business on June 2, 2021. In September 2021, Merck announced a definitive agreement to acquire Acceleron Pharma Inc. for approximately $11.5 billion. Acceleron's pipeline focuses on rare diseases, including pulmonary arterial hypertension.

Merck submitted an Emergency Use Authorization (EUA) application to the U.S. FDA for molnupiravir in October 2021. The UK regulatory agency also granted authorization for the drug. The company is working with other regulatory agencies worldwide and has entered into supply agreements with governments, anticipating significant production of treatment courses by the end of 2021 and into 2022.

The historical results of the businesses contributed to Organon have been reflected as discontinued operations in Merck's consolidated financial statements up to the date of the spin-off. The spin-off also resulted in significant financial adjustments, including the distribution of cash to Merck and the transfer of net liabilities and assets associated with the divested businesses.