Moderna (MRNA 4.95%), the biotech company known for its Spikevax COVID-19 vaccine, released its fourth-quarter earnings on Feb. 14. The results revealed significant financial challenges as the market for COVID vaccines shifts from government contracts to a seasonal commercial market. Revenue fell 65.6% year over year to $966 million, but that surpassed analysts' consensus expectations of $942 million. The company delivered a loss of $2.91 per share, worse than the expected loss of $2.68 per share.
| Metric | Q4 2024 | Q4 2024 Analysts' Estimate | Q4 2023 | % Change |
|---|---|---|---|---|
| EPS | ($2.91) | ($2.68) | $0.55 | N/A |
| Revenue | $966 million | $942 million | $2.81 billion | (65.6%) |
| Cost of sales (% of revenue) | 79% | N/A | 33% | 4,600 basis points |
| Net income | ($1.12 billion) | N/A | $217 million | N/A |
Source: Analysts' estimates for the quarter provided by FactSet.
The Business of Moderna
Moderna is a biotechnology company primarily engaged in the development and manufacturing of messenger RNA (mRNA) medicines and vaccines. It spearheads innovation using mRNA technology to pursue vaccines and therapeutics for a range of diseases, including COVID-19, cancer, and rare disorders. Its COVID-19 vaccine, Spikevax, was its first approved product, and was a key part of the public health response to the pandemic.
Currently, it's focusing on expanding its product range beyond Spikevax to mitigate its dependency on a single offering. It earned FDA approval for its respiratory syncytial virus (RSV) vaccine in 2024, and its pipeline includes new vaccines and treatments for rare diseases. Success in this area will be critical, as will achieving cost efficiencies as it deals with declining revenues from sharply reduced demand for COVID vaccines.
Quarterly Developments and Challenges
The quarter saw Moderna begin transitioning its revenue base as COVID-19 vaccine sales tapered due to changing market dynamics. Spikevax sales alone contributed $923 million in the quarter, but this marked a sharp decline year over year. This revenue slide was due in part to the end of advance purchase agreements.
Notably, it booked $15 million in sales for its RSV vaccine, mRESVIA, though its performance was tempered by competition and market timing issues. The company has also submitted a next-generation COVID vaccine for FDA approval.
Cost-cutting measures were significant. Moderna trimmed its operating expenses by 27% year over year. However, its cost of sales soared to 79% of revenues from 33% a year prior, largely due to lower sales and wind-down expenses. The financial results were also influenced by $259 million in wind-down costs related to contract terminations.
Financially, Moderna's cash reserves dwindled to $9.5 billion by year-end from $13.3 billion a year prior. This decrease reflects operational outflows amid continued investment in research and development (R&D).
Looking Ahead
For the upcoming year, Moderna is guiding for revenue in the $1.5 to $2.5 billion range, indicating that it anticipates further declines in COVID-19 vaccine demand. Based on the now-seasonal nature of those vaccine sales, management notes that it expects only about $200 million of those sales in the first half of the year. It expects its cash position to decline to around $6 billion by the end of 2025, despite its cost management efforts.
Continued investment in R&D remains high, with outlays of $4.1 billion planned for 2025, underscoring its commitment to diversifying its product lineup. Investors should keep an eye on the uptake of its new products and strategic efforts to manage costs, as these will be pivotal in Moderna’s ongoing transformation.
