Merck tops Wall Street Q3 estimates, lifts full-year guidance

Keytruda brings in $8.6 billion, nearly half of Merck’s quarterly sales

Merck & Co. reported third-quarter revenue of $18.09 billion, a 5% increase from a year earlier that beat the $17.35 billion analysts expected, according to FactSet, and prompted the company to raise both its profit and sales forecasts for the year.

Third-quarter profit came in at $5.07 billion, or $2.04 a share, compared with $5.79 billion, or $2.32 a share, a year earlier. Adjusted earnings per share were $2.49, above the $2.09 analysts expected, according to FactSet. Merck said both its earnings and adjusted earnings figures include a one-time charge of 12 cents a share tied to a global license agreement with SciBrunch.

For the full year, Merck now projects adjusted earnings of $2.77 to $2.82 per share, up from its prior forecast of $2.66 to $2.76. The updated outlook factors in the charge related to SciBrunch. The company also raised the midpoint of its full-year sales forecast, now guiding for a range of $66.8 billion to $67.3 billion, compared with $66.3 billion to $67.3 billion previously. Analysts polled by FactSet expect adjusted earnings of $2.64 per share on sales of $67 billion for the year.

In August, Merck had slashed its prior full-year profit outlook to factor in charges tied to its acquisition of cancer biotech company Terns Pharmaceuticals, while also bumping up its full-year sales outlook at the time.

Keytruda, Merck’s top-selling cancer drug, generated $8.6 billion in third-quarter sales, up 6% from a year earlier, the company said. The drug accounted for nearly half of Merck’s total worldwide sales in the quarter, with growth driven by uptake in earlier-stage indications such as triple-negative breast cancer and cervical cancer.

A new form of Keytruda called Qlex, approved by the Food and Drug Administration last year, also boosted the drug’s performance. Qlex, which is administered by injection rather than intravenously, brought in $830 million in sales in the quarter.

Winrevair, a treatment for pulmonary arterial hypertension, contributed to Merck’s topline growth with sales up 93% year over year at $694 million. The company also pointed to strength in its animal health business, where sales rose 4% to $1.7 billion.

Chief Executive Robert Davis highlighted momentum across multiple therapeutic areas, which he said is bolstering his confidence in the company’s future as it braces for Keytruda to lose its main U.S. patent protection in 2028.

“The opportunity we have to drive strong long-term growth beyond the Keytruda low period is becoming increasingly clear,” Davis said during a call with analysts.

Merck’s shares gained 4.5% to $147.27 on Thursday and are up 40% year to date.