Merck & Co (MRK) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 growth, with worldwide sales rising 7% to $16.1 billion, driven by robust demand across the innovative portfolio, especially oncology and vaccines, and successful new product launches including WINREVAIR and CAPVAXIVE.

• Closed strategic acquisitions of EyeBio and Elanco's aqua business, expanding presence in ophthalmology and animal health.

• Maintained focus on R&D, pipeline expansion, and disciplined capital allocation to drive long-term value, with significant progress in oncology, vaccines, and cardiometabolic disease.

• Net income for Q2 2024 was $5.5 billion, rebounding from a $6.0 billion loss in Q2 2023.

• Continued emphasis on sustainability, digital integration, and global reach.

Financial highlights

• Q2 2024 revenue reached $16.1 billion, up 7% year-over-year (11% ex-FX); Human Health sales grew 11% ex-FX, led by oncology; Animal Health sales increased 6%.

• KEYTRUDA sales rose 21% to $7.3 billion; GARDASIL sales increased 4% to $2.5 billion; VAXNEUVANCE up 16% to $189 million.

• Gross margin was 80.9% (non-GAAP) and 76.8% (GAAP), up 4.3 points year-over-year, driven by lower royalty rates and favorable mix.

• Q2 2024 non-GAAP EPS was $2.28; GAAP EPS was $2.14; tax rate was 14.1% (non-GAAP) and 9.1% (GAAP).

• Operating cash flow for H1 2024 was $8.7 billion, up from $5.0 billion in H1 2023.

Outlook and guidance

• Raised and narrowed 2024 revenue guidance to $63.4–$64.4 billion, reflecting 5–7% growth, including a 3% FX headwind.

• 2024 non-GAAP EPS guidance is $7.94–$8.04, including one-time charges for EyeBio and Harpoon acquisitions and FX impact.

• Gross margin expected at ~81%; effective tax rate projected at 15.5–16.5%.

• Guidance assumes less than full contracted GARDASIL doses shipped to China in 2024.

• 2024 restructuring charges expected to total ~$800 million, targeting $750 million in annual net cost savings by 2031.