Merck Q1 2021 Earnings Report
Key Takeaways
Merck's first-quarter 2021 results were impacted by the COVID-19 pandemic, with pharmaceutical sales of $10.7 billion. Despite these challenges, Keytruda sales rose 19% to $3.9 billion, and Animal Health sales increased by 17% to $1.4 billion. The company's GAAP EPS was $1.25, and non-GAAP EPS was $1.40.
First-quarter pharmaceutical sales were $10.7 billion, in line with the first quarter of 2020, but declined by 3% excluding the favorable effect of foreign exchange.
KEYTRUDA sales increased by 19% to $3.9 billion, driven by strong momentum in non-small-cell lung cancer indications and uptake in other indications.
Animal Health sales grew by 17% to $1.4 billion, reflecting higher demand for companion animal products and livestock products.
The company expects sales growth of 8% to 12% in 2021, with full-year revenue estimated to be between $51.8 billion and $53.8 billion.
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Forward Guidance
Merck anticipates full-year 2021 revenue from continuing operations to be between $45.8 billion and $47.8 billion, and expects full-year 2021 non-GAAP EPS to be between $6.48 and $6.68.
Positive Outlook
- Merck expects sales growth of 8% to 12% in 2021.
- Full-year 2021 revenue is estimated to be between $51.8 billion and $53.8 billion.
- Full-year 2021 GAAP EPS is expected to be between $5.05 and $5.25.
- The company anticipates incremental operating efficiencies of approximately $1.5 billion over three years following the Organon spinoff.
- Merck expects combined non-GAAP EPS of Merck and Organon to be higher within 12-24 months post-spinoff.
Challenges Ahead
- The pandemic is expected to have a net unfavorable impact to 2021 revenues of approximately 3%, all of which relates to the pharmaceutical segment.
- Negative impacts from the COVID-19 pandemic are expected to persist, particularly during the first half of 2021, most notably with respect to vaccine sales in the United States.
- Merck will continue to incur overhead costs previously allocated to the Organon products, estimated to be approximately $400 million on a full-year basis.
- Merck’s operating margin from continuing operations is expected to initially be slightly lower in 2021 due to the higher relative profitability of Organon’s products.
- The sales guidance does not include the impact of the potential launch of Merck’s COVID-19 antiviral drug candidate.
Revenue & Expenses
Visualization of income flow from segment revenue to net income