Merck posts Q3 beat as Keytruda offsets sales impact on COVID-19 pill

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Merck (NYSE:MRK) traded higher pre-market Thursday after announcing better than expected financials for Q3 2022 as the company’s oncology franchise led by blockbuster cancer therapy Keytruda negated the sales impact on COVID-19 pill Lagevrio amid COVID-19 recovery.

Revenue for the quarter rose ~14% YoY to $15.0B as Keytruda sales exceeded Street forecasts to reach $5.3B with ~20% YoY growth.

However, sales for Lagevrio, the COVID-19 pill Merck (MRK) co-developed with Ridgeback Biotherapeutics, fell to $436M after exceeding $3B and $1B in Q2 and Q1, respectively. Growth excluding Lagevrio and forex impact stood at 14% YoY.

Meanwhile, Human Papillomavirus vaccines GARDASIL/GARDASIL 9 and diabetic medications Januvia/Janumet brought $2.3B and $1.1B with ~15% YoY growth and ~15% YoY decline, respectively while sales from Animal Health segment dropped ~3% YoY to $1.4B.

Gross margin for the quarter dropped to 73.7% from 73.8% in the prior year quarter, and net income fell ~29% YoY to $3.2B as R&D expenses climbed ~80% YoY to $4.4B mainly due to $887M intangible asset impairment charges related to ArQule, Inc. acquisition.

Merck (MRK) narrowed and raised its full-year outlook for revenue and adj. earnings per share to indicate $58.5B – $59.0B and $7.32 –$7.37, in line with the $58.4B and $7.35 in the consensus, respectively.

The company also narrowed its full-year guidance for Lagevrio sales to $5.2B – $5.4B from $5B - $6B, estimated three months ago.