Merck Earnings Fell Short of Expectations. Here’s What Caused the Miss.

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reported quarterly earnings early Thursday that were below Wall Street expectations, the latest in a string of drug companies to turn in disappointing financial results this week.

Merck reported non-GAAP earnings per share of $1.40, below the FactSet consensus estimate of $1.61 per share. The company reported sales of $12.1 billion, which it said reflected a 1% decline compared with the same quarter last year, excluding the impact from foreign exchange.

The company said that it expects non-GAAP earnings per share of between $6.48 and $6.68 for the full 2021 fiscal year, the same guidance it had issued last quarter. Analysts expect earnings of $6.49 for the fiscal year, according to FactSet.

“While our results this quarter were impacted by the pandemic, the underlying demand for our innovative products remains strong and we remain confident in our future growth prospects,” said the company’s outgoing CEO,
Kenneth Frazier,
in a statement.

Merck shares were down 3% in premarket trading on Thursday.

The disappointing readout from Merck comes after similarly disappointing earnings reports from

Eli Lilly

(LLY) and


(AMGN) in recent days. Lilly missed earnings expectations and cut its guidance, while


also disappointed.

Merck said that sales of its blockbuster cancer drug Keytruda were up 16% compared to the same quarter last year, not including the impact from foreign exchange, while sales of another cancer drug, Lynparaza, were up 51%, also not including the impact from foreign exchange.

The company saw the steepest drops in sales of its vaccines. Sales of its HPV vaccine Gardasil were down 20%, its pneumococcal vaccine Pnuemovax 23 was down 36%, and its rotavirus vaccine RotateQ was down 29%, all not including the impact of foreign exchange.

“Continued reduced access to healthcare providers, combined with the prioritization of Covid-19 vaccines has negatively impacted the sales of certain products, notably vaccines in the United States,” the company said.

The company said that the drop in Gardasil sales was due to buying patterns in the U.S. and the timing of shipments to China. It said that the Covid-19 pandemic hurt Gardasil sales in the U.S. and Europe.

Merck is on the brink of a transition, with Frazier, set to retire at the end of June. His successor,
Robert M. Davis,
is currently Merck’s president.

“As I transition into the CEO role, one of my immediate priorities is to ensure that our experienced leadership team continues to build on our solid foundation,” Davis said in a statement. “Our company is well positioned for strong long-term performance, with scientific innovation remaining the source of our company’s energy and value creation.”

Merck is hosting a conference call for investors set to begin at 8 a.m. Eastern.

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