Merck & Co (MRK) Q3 2024 earnings summary

Executive summary

• Achieved strong Q3 2024 performance with revenues of $16.7 billion, up 4% year-over-year (7% ex-FX), driven by oncology, new product launches, and animal health.

• KEYTRUDA sales grew 21% to $7.4 billion, maintaining leadership in oncology with expanded indications and robust global demand.

• GARDASIL sales declined 10% to $2.3 billion due to lower shipments in China, but saw double-digit growth in most other regions; long-term global opportunity remains significant.

• New launches, including WINREVAIR and CAPVAXIVE, contributed to growth; WINREVAIR showed strong initial uptake in pulmonary arterial hypertension.

• Continued pipeline expansion with multiple late-stage assets, strategic acquisitions (EyeBio, Elanco aqua, Curon), and clinical collaborations, reinforcing long-term growth prospects.

Financial highlights

• Q3 revenues: $16.7 billion (+4% reported, +7% ex-FX); human health sales +8%, animal health +11%.

• KEYTRUDA sales: $7.4 billion (+21%); GARDASIL: $2.3 billion (-10%).

• Gross margin: 80.5% (up 3.5 pts), driven by lower royalty rates and favorable mix.

• Operating expenses: $8.5 billion, including $2.2 billion in acquisition-related charges.

• EPS: $1.57 (Non-GAAP); GAAP EPS: $1.24, both impacted by $0.79 per share in business development charges.

Outlook and guidance

• 2024 revenue guidance narrowed to $63.6–$64.1 billion (+6–7% YoY, including ~3 pts FX headwind).

• Gross margin expected at ~81%; operating expenses $27.8–$28.3 billion (includes $750 million one-time charge).

• Full-year EPS guidance: $7.72–$7.77 (Non-GAAP), reflecting FX and one-time items; midpoint unchanged from prior guidance.

• Full-year tax rate: 16–17%; Q3 tax rate: 21.9%, impacted by acquisition-related items.

• 2025 expected to deliver solid growth, driven by KEYTRUDA, new launches, and animal health, offset by GARDASIL China headwinds and immunology product expirations.