Merck Earnings Plunge, but Top Estimates
Pharmaceutical giant Merck (MRK) announced mixed third-quarter results Friday, but lifted the lower end of its 2010 earnings guidance. Net income for the third quarter was $342 million, or 11 cents per share, as earnings were impacted by a large charge. On an adjusted basis, Merck earned 85 cents per share, topping Wall Street estimates by 3 cents. The company reported worldwide sales were $11.1 billion, below estimates of $11.24 billion.
"We are pleased with the third quarter as well as our overall execution during Merck's first year as a combined company following the merger," said Chairman and CEO Richard Clark. "Our key products are performing well, and at the same time we are launching new products, advancing our robust R&D pipeline and achieving our important merger synergies."
Third-quarter results reflect the fully combined operation of Merck and Schering-Plough. Many of the results were impacted by the $41.1 billion acquisition. Further affecting the comparable results was the sale of Merck's Merial unit last year.
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For example, Merck's sales surged 84%, reflecting the addition of Schering-Plough revenues, but its earnings dropped 90% due to a large charge related to that acquisition. Similarly, gross margin was lower because of the acquisition.
Merck lifted the lower end of its 2010 EPS guidance to $3.31 to $3.39, excluding certain items. Merck said it expects full-year 2010 revenue to be between $45.4 billion and $46.1 billion, including the impact of U.S. health care reform legislation.
Merck also said it continues to target a high single-digit EPS compound annual growth rate for the combined company from 2009 to 2013 when compared to Merck's 2009 EPS.
The company, which said it is making progress growing its business in emerging markets, also highlighted its progress with odanacatib, its potential osteoporosis treatment in post-menopausal women, as well as its hepatitis C drug boceprevir.
In the quarter, Merck also launched three new medicines: the intravenous formulation of Brinavess for the treatment of atrial fibrillation in adults in the European Union, Iceland and Norway; Dulrea for the treatment of asthma in the U.S.; and Daxas for the treatment of symptomatic COPD in Canada and certain European markets, through a partnership.
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