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Merck (NYSE: MRK) reported robust financial results for the third quarter of 2024, with total worldwide sales reaching $16.7 billion, reflecting a 4% increase from the same quarter last year. Excluding the impact of foreign exchange, the growth was even more impressive at 7%. This performance was driven by strong sales of KEYTRUDA, which grew 17% to $7.4 billion, and the successful U.S. launch of WINREV AIR, which gained momentum with $149 million in sales and received approval in the EU. Additionally, Merck’s Animal Health division showed promising growth, with sales increasing by 6% to $1.5 billion.

Despite the overall growth, Merck faced some challenges, including a decline in sales for JANUVIA and JANUMET, as well as reduced demand for GARDASIL/GARDASIL 9 in China. However, outside of China, GARDASIL/GARDASIL 9 achieved double-digit sales growth in most major regions. The company’s GAAP EPS for the third quarter of 2024 was $1.24, while non-GAAP EPS was $1.57. The declines in EPS were largely due to a net charge of $0.79 per share related to acquisitions and business development transactions, including the acquisition of CN201 from Curon Biopharmaceuticals.

Merck’s financial summary reveals a mixed performance, with GAAP net income decreasing by 33% to $3.157 billion, while non-GAAP net income, which excludes certain items, decreased by 27% to $3.985 billion. The company’s gross margin improved to 75.5% from 73.3% in the same quarter last year, primarily due to a favorable product mix and lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9.

Merck Reports Better than Expected Third Quarter

Merck’s third-quarter performance exceeded market expectations in terms of revenue but fell short in terms of earnings per share (EPS). The company reported total worldwide sales of $16.7 billion, surpassing the expected revenue of $16.45 billion. This positive revenue performance was supported by strong growth in key products like KEYTRUDA and the successful launch of new products such as WINREV AIR.

However, Merck’s EPS did not meet market expectations. The non-GAAP EPS for the quarter was $1.57, which was above the expected EPS of $1.48, indicating better-than-expected operational performance. On the other hand, the GAAP EPS was $1.24, reflecting a significant decline from the previous year’s $1.86, primarily due to the impact of acquisition-related charges and business development transactions.

The company’s ability to surpass revenue expectations highlights its strong product portfolio and successful execution of new product launches. However, the decline in EPS, despite being above expectations, underscores the financial impact of strategic acquisitions and business development activities aimed at strengthening Merck’s pipeline and future growth prospects.

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Merk Revises Outlook for Full Year 2024

Looking ahead, Merck has provided updated guidance for the full year 2024, reflecting its confidence in continued growth and strategic advancements. The company has narrowed its expected worldwide sales range to be between $63.6 billion and $64.1 billion. This revised outlook factors in a negative impact from foreign exchange, primarily due to the devaluation of the Argentine peso, which is being largely offset by inflation-related price increases.

Merck has also updated its non-GAAP EPS guidance for 2024, now expecting it to be between $7.72 and $7.77. This revised outlook includes a net negative impact of $0.24 per share related to business development transactions with Curon Biopharmaceutical and Daiichi Sankyo. The company anticipates a non-GAAP effective income tax rate of 16.0% to 17.0%, reflecting the impact of recent acquisitions.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.