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Dec 31, 2020
Merck Q4 2020 Earnings Report
Merck reported solid growth and pipeline progress despite COVID-19 challenges.
Key Takeaways
Merck's Q4 2020 results showed an 8% increase in pharmaceutical sales, driven by oncology and vaccine growth, despite a $400 million negative impact from COVID-19. GAAP EPS was $(0.83), including charges for acquisitions and impairments, while non-GAAP EPS was $1.32. The company anticipates full-year 2021 revenue to be between $51.8 billion and $53.8 billion.
Pharmaceutical sales increased by 8%, reaching $11.4 billion, driven by oncology and vaccines.
The COVID-19 pandemic negatively impacted pharmaceutical revenue by approximately $400 million.
GAAP EPS was $(0.83), which included a $2.7 billion charge for the acquisition of VelosBio Inc. and a $1.6 billion pretax intangible asset impairment charge related to ZERBAXA.
Non-GAAP EPS was $1.32, excluding acquisition-related costs, restructuring costs, and other items.
Merck
Merck
Merck Revenue by Segment
Revenue by Segment
Pharmaceutical Revenue
CapyFin.comAnimal Health Revenue
CapyFin.com Forward Guidance
Merck anticipates full-year 2021 revenue to be between $51.8 billion and $53.8 billion and non-GAAP EPS to be between $6.48 and $6.68.
Positive Outlook
- Strong underlying business growth projected for 2021.
- Positive impact from foreign exchange expected to boost revenue by approximately 2%.
- Spinoff of Organon expected to enhance strategic and operational focus.
- Incremental operating efficiencies of approximately $1.5 billion expected over three years post-spinoff.
- Combined non-GAAP EPS of Merck and Organon expected to be higher within 12-24 months post-spinoff.
Challenges Ahead
- Anticipated continuing impacts of the COVID-19 pandemic into 2021.
- Unfavorable impact to revenue of approximately 2% due to the COVID-19 pandemic.
- Net negative impact on operating expenses due to COVID-19 antiviral program spending.
- Ongoing residual negative impacts expected, particularly during the first half of 2021.
- Vaccine sales expected to be more acutely affected in the United States.
Revenue & Expenses
Visualization of income flow from segment revenue to net income