There was some pretty good news for investors the last time Merck & Co. (NYSE:MRK) reported its quarterly results. In February, the company announced that its fourth-quarter revenue rose 5% from the prior-year period while its adjusted earnings per share (EPS) increased by 6%.
Investors learned how Merck performed in the first quarter on Tuesday with the company providing a quarterly update before the market opened. How did Merck fare? Here's what you need to know about the company's Q1 results.
By the numbers
Merck reported revenue of $10.8 billion in the first quarter. This reflected an 8% increase from the prior-year period revenue total of $10.04 billion. The consensus among Wall Street analysts projected Q1 revenue of $10.48 billion.
The company announced GAAP net income of $2.9 billion, or $1.12 per share, in the first quarter. This represented a whopping 296% increase from GAAP earnings of $736 million, or $0.27 per share, reported in the same quarter of 2018.
How did Merck's adjusted non-GAAP bottom line look in the first quarter? The company reported adjusted net income of $3.2 billion, or $1.22 per share, compared to $2.8 billion, or $1.05 per share, in the same period in 2018. This handily beat analysts' average earnings estimate of $1.05 per share.
Behind the numbers
Merck's revenue increase was driven mainly by its pharmaceutical segment. Pharmaceutical sales rose to $9.7 billion -- 8% higher than the prior-year period total of $8.9 billion. What's behind this solid pharmaceutical sales growth? Two factors -- growth in oncology sales and vaccine sales.
The company's increase in oncology sales was primarily due to cancer drug Keytruda, with sales soaring 55% to $2.3 billion. Keytruda continued to enjoy strong momentum in treating patients with non-small cell lung cancer (NSCLC). Merck's vaccine sales growth was fueled by its HPV vaccine Gardasil, with sales for the vaccine jumping 27% to $838 million. Gardasil's great Q1 performance was largely due to the drug's ongoing commercial launch in China.
Other key highlights for Merck in the company's first-quarter update included:
- Gained additional regulatory approvals for Keytruda in advanced renal cell carcinoma, melanoma, and first-line NSCLC
- Won FDA acceptance for priority review of gram-negative bacteria infection drug relebactam and nosocomial (hospital-acquired) pneumonia drug Zerbaxa
- Extended the research phase of the collaboration with NGM Biopharmaceuticals to March 2020
- Received European Medicines Agency (EMA) acceptance of the Marketing Authorization Application for Ebola Zaire vaccine V920
Merck now anticipates revenue of $43.9 billion to $45.1 billion in full-year 2019, up from its previous guidance of $43.2 billion to $44.7 billion. The company also projected 2019 earnings per share (EPS) to be between $4.02 and $4.14, compared to a range of $3.97 to $4.12 provided in its previous outlook.
There are two important FDA approval decisions for Keytruda coming up in the near future. A decision on the blockbuster drug in treating recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) as a monotherapy or in combination with chemotherapy is expected by June 10, 2019. Also, the FDA is scheduled to announce its decision on approval for Keytruda in treating advanced small cell lung cancer by June 17, 2019.