Merck Announces First-Quarter 2021 Financial Results
Merck (NYSE: MRK) reported its Q1 2021 financial results, showing total sales of $12.08 billion, a marginal increase from $12.057 billion in Q1 2020. GAAP net income fell by 1% to $3.179 billion, with GAAP EPS at $1.25. Non-GAAP EPS declined 7% to $1.40. Oncology sales were strong, led by KEYTRUDA, which grew 19% to $3.9 billion. However, the pandemic negatively impacted vaccine sales, particularly for GARDASIL, by approximately $230 million. Merck anticipates 2021 revenue growth of 8%-12%, with a GAAP EPS outlook of $5.05-$5.25.
- KEYTRUDA sales increased by 19% to $3.9 billion.
- Full-year 2021 revenue growth expected between $51.8 billion and $53.8 billion.
- Non-GAAP EPS projected to be between $6.48 and $6.68.
- GAAP net income declined 1% to $3.179 billion.
- Non-GAAP net income decreased by 8% to $3.556 billion.
- Sales of GARDASIL declined, negatively affected by approximately $230 million.
Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the first quarter of 2021.
“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 Kenneth C. Frazier, chairman and CEO, Merck. “We are also taking the right steps to evolve Merck’s operating model to continue to create value for patients, shareholders and society.”
“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,” said Robert M. Davis, president, Merck. “Our company is well positioned for strong long-term performance, with scientific innovation remaining the source of our company’s energy and value creation.”
Financial Summary
$ in millions, except EPS amounts |
First Quarter |
||||||||||||
2021 |
2020 |
Change |
Change
|
||||||||||
Sales |
|
|
|
- |
|||||||||
GAAP net income1 |
3,179 |
3,219 |
- |
- |
|||||||||
Non-GAAP net income that excludes certain items1,2* |
3,556 |
3,851 |
- |
- |
|||||||||
GAAP EPS |
1.25 |
1.26 |
- |
- |
|||||||||
Non-GAAP EPS that excludes certain items2* |
1.40 |
1.51 |
- |
- |
|||||||||
*Refer to table on page 11. |
|||||||||||||
GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) was
Oncology Pipeline Highlights
Merck continued to advance the development programs for KEYTRUDA (pembrolizumab), the company’s anti-PD-1 therapy; Lynparza (olaparib), a PARP inhibitor being co-developed and co-commercialized with AstraZeneca; and Lenvima (lenvatinib mesylate), an orally available tyrosine kinase inhibitor being co-developed and co-commercialized with Eisai Co., Ltd. (Eisai), in addition to other notable developments as follows:
-
Merck announced the following regulatory actions for KEYTRUDA:
- Approval by the U.S. Food and Drug Administration (FDA) in combination with platinum- and fluropyrimidine-based chemotherapy for the first-line treatment of patients with locally advanced or metastatic esophageal or gastroesophageal junction (GEJ) (tumors with epicenter 1 to 5 centimeters above the GEJ) carcinoma that is not amenable to surgical resection or definitive chemoradiation, based on results from the Phase 3 KEYNOTE-590 trial.
- Approval by the European Commission (EC) for the treatment of adult and pediatric patients aged 3 years and older with relapsed or refractory classical Hodgkin lymphoma (cHL) who have failed autologous stem cell transplant (ASCT) or following at least two prior therapies when ASCT is not a treatment option, based on results from the Phase 3 KEYNOTE-204 trial.
- Approval by the EC for the first-line treatment of adult patients with metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient colorectal cancer based on results from the Phase 3 KEYNOTE-177 trial.
- A Complete Response Letter was received from the FDA regarding Merck’s supplemental Biologics License Application for the treatment of patients with high-risk early-stage triple-negative breast cancer (TNBC), in combination with chemotherapy as neoadjuvant (pre-operative) treatment, then continuing as a single agent as adjuvant (post-operative) treatment after surgery.
- A voluntary withdrawal in the United States for the treatment of patients with metastatic small cell lung cancer with disease progression on or after platinum-based chemotherapy and at least one other prior line of therapy. This withdrawal does not affect other indications for KEYTRUDA.
- Merck announced that an interim analysis from the pivotal Phase 3 KEYNOTE-564 trial evaluating KEYTRUDA met its primary endpoint of disease-free survival for the potential adjuvant treatment of patients with renal cell carcinoma (RCC) following nephrectomy or following nephrectomy and resection of metastatic lesions. Data will be presented at the 2021 American Society for Clinical Oncology (ASCO) Annual Meeting.
- Merck announced that the FDA has accepted and granted priority review for a New Drug Application (NDA) for the hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor, belzutifan, a novel investigational candidate in Merck’s oncology pipeline, for the potential treatment of certain patients with von Hippel-Lindau (VHL) disease-associated RCC, not requiring immediate surgery. The FDA has set a PDUFA date of Sept. 15, 2021.
- Merck and Eisai announced the first presentation of new investigational data from the pivotal Phase 3 CLEAR study (KEYNOTE-581/Study 307) at the 2021 Genitourinary Cancers Symposium (ASCO GU) and simultaneously published in the New England Journal of Medicine. The combination of KEYTRUDA plus Lenvima significantly improved the primary endpoint of progression-free survival (PFS) and key secondary endpoint of overall survival (OS) versus sunitinib in first-line treatment of patients with advanced RCC.
- Merck and Eisai announced the first presentation of investigational data from the pivotal Phase 3 KEYNOTE-775/Study 309 trial at the Society of Gynecologic Oncology (SGO) 2021 Annual Meeting. The combination of KEYTRUDA plus Lenvima significantly improved the dual primary endpoints of PFS and OS versus chemotherapy for the treatment of patients with advanced endometrial cancer following one prior platinum-based regimen in any setting.
- Merck and AstraZeneca announced that the Phase 3 OlympiA trial for Lynparza will move to early primary analysis and reporting following a recommendation from the Independent Data Monitoring Committee (IDMC). Based on the planned interim analysis, the IDMC concluded that the trial crossed the superiority boundary for its primary endpoint of invasive disease-free survival versus placebo in the adjuvant treatment of germline BRCA-mutated (gBRCAm), high-risk human epidermal growth factor receptor 2 (HER2)-negative early-stage breast cancer following definitive local treatment and neoadjuvant or adjuvant chemotherapy. The trial will continue to evaluate the key secondary endpoints of OS and distant disease-free survival. Data will be presented at the 2021 ASCO Annual Meeting.
- Merck began enrollment for the Phase 3 study evaluating vibostolimab, its investigational anti-TIGIT antibody, in combination with KEYTRUDA in non-small cell lung cancer patients whose tumors express PD-L1.
Business Development and Other Pipeline Highlights
- Merck and Gilead Sciences, Inc. (Gilead) announced that they have entered into an agreement to co-develop and co-commercialize long-acting treatments in HIV that combine Gilead’s investigational capsid inhibitor, lenacapavir, and Merck’s investigational nucleoside reverse transcriptase translocation inhibitor (NRTTI), islatravir, into a two-drug regimen in oral and injectable formulations with the potential to provide new, meaningful treatment options for people living with HIV.
- Merck acquired Pandion Therapeutics, Inc. (Pandion), a clinical-stage biotechnology company developing novel therapeutics designed to address the unmet needs of patients living with autoimmune diseases, on April 1, 2021.
- Merck announced that a Phase 2/3 trial of molnupiravir (EIDD-2801/MK-4482), an investigational oral antiviral agent being developed in collaboration with Ridgeback Biotherapeutics, for the treatment of outpatients diagnosed with COVID-19, will proceed to Phase 3. Interim results from Phase 2/3 studies evaluating molnupiravir in both outpatients and inpatients will be shared with the scientific community at an upcoming medical meeting.
- Merck announced results from a Phase 1 study evaluating the safety, tolerability and pharmacokinetics (PK) of the company’s investigational subdermal drug-eluting implant with potential for extended administration of islatravir, an investigational NRTTI, for pre-exposure prophylaxis (PrEP) of HIV-1 infection. Study results demonstrated that the implant achieved active drug concentrations above the pre-specified PK threshold at 12 weeks across the three doses of islatravir studied (48 mg, 52 mg and 56 mg), and is projected to provide drug concentrations likely above threshold for one year at the 56 mg dose. Based on these findings, Merck plans to initiate a Phase 2 trial to further explore the potential of a subdermal implant containing islatravir as a long-acting option for PrEP for up to 12 months.
- Merck announced that the FDA has accepted for review the company’s NDA for gefapixant, an investigational, orally administered, selective P2X3 receptor antagonist, for the treatment of refractory chronic cough or unexplained chronic cough in adults based on results from the COUGH-1 and COUGH-2 studies. This application for gefapixant will be discussed at an upcoming advisory committee meeting. The FDA has set a PDUFA date of Dec. 21, 2021.
- Merck announced that supply for VAXELIS (Diphtheria and Tetanus Toxoids and Acellular Pertussis, Inactivated Poliovirus, Haemophilus b Conjugate and Hepatitis B Vaccine) in the United States will be available in June 2021. Developed as part of a joint-partnership between Sanofi and Merck, VAXELIS is the first and only hexavalent combination vaccine approved in the United States to help protect infants and children 6 weeks through 4 years of age against diseases caused by six infectious agents: diphtheria, tetanus, pertussis (whooping cough), poliomyelitis, hepatitis B and invasive disease due to Haemophilus influenzae type b.
Organon Highlights
- Merck filed a Form 10 registration statement with the United States Securities and Exchange Commission (SEC) in connection with the intended spinoff of its women’s health, biosimilars and established brands businesses into a standalone, publicly-traded company, Organon & Co. (Organon).
-
In April 2021, Organon Finance 1 LLC issued senior secured notes of
€1.25 billion aggregate principal amount of2.875% senior secured notes due 2028,$2.1 billion aggregate principal amount of4.125% senior secured notes due 2028 and$2.0 b illon aggregate principal amount of5.125% senior unsecured notes due 2031, in connection with the intended spinoff of Organon from Merck. - Merck announced a definitive agreement pursuant to which, after the intended spinoff of Organon, Organon will acquire Alydia Health. Alydia Health is a commercial-stage medical device company focused on preventing maternal morbidity and mortality caused by postpartum hemorrhage or abnormal postpartum uterine bleeding.
- Merck will host an investor event featuring Organon on May 3. The Organon spinoff is expected to be completed on June 2, with first day of trading scheduled for June 3.
Corporate Developments
-
Merck announced goals to achieve carbon neutrality in its operations (Scopes 1 & 2 emissions) by 2025 through ongoing innovation to increase efficiency and reduce carbon emissions, applying sustainable building standards and continuing to transition away from fossil fuel use. Remaining Scope 1 emissions will be offset each year with a portfolio of high-quality carbon credits, including carbon removals. Merck has also set a goal of achieving a
30% reduction in its value chain emissions by 2030 (Scope 3 emissions).
First-Quarter Revenue Performance
The following table reflects sales of the company’s top pharmaceutical products, as well as sales of animal health products.
$ in millions |
First Quarter |
|||||
|
2021 |
2020 |
Change |
Change Ex-Exchange |
||
Total Sales |
|
|
|
- |
||
Pharmaceutical |
10,675 |
10,655 |
|
- |
||
KEYTRUDA |
3,899 |
3,284 |
|
|
||
JANUVIA / JANUMET |
1,295 |
1,277 |
|
- |
||
GARDASIL / GARDASIL 9 |
917 |
1,097 |
- |
- |
||
PROQUAD, M-M-R II and VARIVAX |
449 |
435 |
|
|
||
BRIDION |
340 |
299 |
|
|
||
Lynparza* SIMPONI |
228 214 |
145 215 |
|
- |
||
ISENTRESS / ISENTRESS HD |
209 |
245 |
- |
- |
||
PNEUMOVAX 23 ROTATEQ |
171 158 |
256 222 |
-
- |
-
- |
||
Animal Health |
1,418 |
1,214 |
|
|
||
Livestock |
819 |
739 |
|
|
||
Companion Animals |
599 |
475 |
|
|
||
Other Revenues** |
(13) |
188 |
- |
- |
||
*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. |
||||||
**Other revenues are comprised primarily of third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. The revenue hedging activities resulted in negative revenue in the first quarter of 2021. |
||||||
Pharmaceutical Revenue
First-quarter pharmaceutical sales of
Pharmaceutical revenue reflects growth in oncology, largely driven by higher sales of KEYTRUDA, which rose
The decline in vaccine sales was primarily driven by GARDASIL (Human Papillomavirus Quadrivalent [Types 6,11,16 and 18] Vaccine, Recombinant)/GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), vaccines to prevent certain cancers and other diseases caused by HPV, primarily attributable to buying patterns in the United States and the timing of shipments in China, which in total negatively affected the year over year GARDASIL/GARDASIL 9 sales comparison by approximately
Also contributing to the decline in vaccine sales were lower sales of PNEUMOVAX 23 (pneumococcal vaccine polyvalent), a vaccine to help prevent pneumococcal disease, primarily reflecting the impact of the COVID-19 pandemic on demand in the United States, partially offset by higher volumes in international markets.
Vaccines sales were also negatively affected by lower sales of ROTATEQ (Rotavirus Vaccine, Live Oral, Pentavalent), a vaccine to help protect against rotavirus gastroenteritis in infants and children, largely due to the timing of shipments in China and lower demand in the United States.
Pharmaceutical sales in the quarter were negatively affected by the ongoing impacts from the loss of market exclusivity, including for ZETIA (ezetimibe) and NOXAFIL (posaconazole), as well as certain products in diversified brands.
Performance in hospital acute care primarily reflects the decline in sales of ZERBAXA (ceftolozane and tazobactam) for injection, a combination cephalosporin antibacterial and beta-lactamase inhibitor for the treatment of adults with certain bacterial infections due to the temporary suspension of sales and product recall in the fourth quarter of 2020. Hospital acute care performance also reflects higher demand globally for BRIDION (sugammadex) Injection 100 mg/mL, a medicine for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults undergoing surgery; and the continued uptake of PREVYMIS (letermovir), a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in adult CMV-seropositive recipients of an allogeneic hematopoietic stem cell transplant.
Animal Health Revenue
Animal Health sales totaled
First-Quarter Expense, EPS and Related Information
The tables below present selected expense information.
$ in millions
First-Quarter 2021 |
GAAP |
Acquisition-
|
Restructuring
|
(Income)
|
Certain
|
Non-
|
||||||||
Cost of sales |
|
|
|
$− |
|
|
||||||||
Selling, general and administrative |
2,633 |
218 |
3 |
− |
− |
2,412 |
||||||||
Research and development |
2,465 |
18 |
7 |
− |
− |
2,440 |
||||||||
Restructuring costs |
298 |
− |
298 |
− |
− |
− |
||||||||
Other (income) expense, net |
(448) |
(28) |
− |
(561) |
− |
141 |
||||||||
First-Quarter 2020 |
|
|
|
|
|
|
||||||||
Cost of sales |
|
|
|
$− |
$− |
|
||||||||
Selling, general and administrative |
2,555 |
278 |
11 |
− |
− |
2,266 |
||||||||
Research and development |
2,209 |
40 |
17 |
− |
− |
2,152 |
||||||||
Restructuring costs |
72 |
− |
72 |
− |
− |
− |
||||||||
Other (income) expense, net |
71 |
(11) |
– |
(87) |
− |
169 |
GAAP Expense, EPS and Related Information
Gross margin was
Selling, general and administrative expenses were
Research and development expenses were
Other (income) expense, net, was
The effective income tax rate of
GAAP EPS was
Non-GAAP Expense, EPS and Related Information
Non-GAAP gross margin was
Non-GAAP selling, general and administrative expenses were
Non-GAAP R&D expenses were
Non-GAAP other (income) expense, net, was
The non-GAAP effective income tax rate was
Non-GAAP EPS was
A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.
$ in millions, except EPS amounts |
First Quarter |
|||||
2021 |
2020 |
|||||
EPS |
|
|
||||
GAAP EPS |
|
|
||||
Difference |
0.15 |
0.25 |
||||
Non-GAAP EPS that excludes items listed below2 |
|
|
||||
|
|
|
||||
Net Income |
|
|
||||
GAAP net income1 |
|
|
||||
Difference |
377 |
632 |
||||
Non-GAAP net income that excludes items listed below1,2 |
|
|
||||
|
|
|
||||
Decrease (Increase) in Net Income Due to Excluded Items: |
|
|
||||
Acquisition- and divestiture-related costs3 |
|
|
||||
Restructuring costs |
335 |
168 |
||||
(Income) loss from investments in equity securities |
(561) |
(87) |
||||
Charge for the discontinuation of COVID-19 development programs |
188 |
- |
||||
Net decrease (increase) in income before taxes |
687 |
795 |
||||
Income tax (benefit) expense4 |
(310) |
(163) |
||||
Decrease (increase) in net income |
|
|
||||
Financial Outlook
The guidance provided below is based on the assumption that the Organon business will be part of Merck for all of 2021; however, the Company expects that the Organon spinoff will occur on June 2, 2021. If the spinoff occurs, these financial estimates will be updated. Initial information related to revenue from continuing operations is provided below.
Merck continues to experience strong global underlying demand across its business. Consequently, at mid-April 2021 exchange rates, Merck continues to expect sales growth of
Merck continues to believe that global health systems and patients have largely adapted to the impacts of COVID-19 disease, but that negative impacts will persist, particularly during the first half of 2021 and most notably with respect to vaccine sales in the United States, which is expected to be partially offset by the re-allocation of GARDASIL 9 doses to markets outside of the United States to address continued strong demand.
Merck now expects full-year 2021 GAAP EPS to be between
Merck continues to expect full-year 2021 non-GAAP EPS to be between
For full-year 2021, Merck expects the pandemic to have a negligible impact on operating expenses, as spending on the development of its COVID-19 antiviral programs is expected to largely offset the favorable impact of lower spending in other areas due to the COVID-19 pandemic.
Neither the sales nor the EPS guidance ranges provided above include the impact of the potential launch of Merck’s COVID-19 antiviral drug candidate.
The following table summarizes the company’s full-year 2021 financial guidance.
GAAP |
Non-GAAP2 |
|||||||||
Revenue |
|
|
||||||||
Operating expenses |
Lower than 2020 by a mid-single digit rate |
Higher than 2020 by a mid- to high-single digit rate |
||||||||
Effective tax rate |
|
|
||||||||
EPS** |
|
|
||||||||
*The company does not have any non-GAAP adjustments to revenue. |
||||||||||
**EPS guidance for 2021 assumes a share count (assuming dilution) of approximately 2.53 billion shares. |
||||||||||
A reconciliation of anticipated 2021 GAAP EPS to non-GAAP EPS and the items excluded from non-GAAP EPS are provided in the table below.
$ in millions, except EPS amounts |
Full-Year 2021 |
|||||
|
|
|||||
GAAP EPS |
|
|||||
Difference |
|
|||||
Non-GAAP EPS that excludes items listed below2 |
|
|||||
|
|
|||||
Acquisition- and divestiture-related costs |
|
|||||
Restructuring costs |
700 |
|||||
(Income) loss from investments in equity securities |
(1,000) |
|||||
Charge for the discontinuation of COVID-19 development programs |
188 |
|||||
Charge for the acquisition of Pandion |
1,800 |
|||||
Net decrease (increase) in income before taxes |
4,188 |
|||||
Income tax (benefit) expense4 |
(565) |
|||||
Decrease (increase) in net income |
|
Impact of Planned Spinoff of Organon
Merck expects the spinoff of Organon to be completed on June 2, 2021. Merck continues to expect the transaction to create two companies with enhanced strategic and operational focus, improved agility, simplified operating models, optimized capital structures and improved financial profiles. Merck believes the transaction will deliver significant benefits for both Merck and Organon and create value for Merck shareholders.
On a pro forma basis, assuming it operated as an independent company for the full year, Organon is expected to generate
For Merck, the spinoff of Organon will allow it to increase its focus on key growth pillars, achieve higher revenue and EPS growth rates and enable incremental operating efficiencies of approximately
As a result of the stronger growth Organon is expected to achieve as a standalone company and the benefit of operating efficiencies at Merck enabled by the spinoff, Merck expects combined non-GAAP EPS of the two companies to be higher within 12-24 months post-spinoff versus what would have been achieved assuming no transaction. Due to the higher relative profitability of Organon’s products, Merck’s operating margin from continuing operations is expected to initially be slightly lower in 2021 versus what it was prior to the spinoff. With the incremental operating efficiencies enabled by the spinoff, Merck’s operating margins are expected to be higher within 12-24 months versus where they would have been in the absence of the spinoff and to be greater than
Finally, assuming the completion of the Organon spinoff, Merck anticipates full-year 2021 revenue from continuing operations to be between
Earnings Conference Call
Investors, journalists and the general public may access a live audio webcast of the call today at 8:00 a.m. EDT on Merck’s website at https://investors.merck.com/events-and-presentations/default.aspx. Institutional investors and analysts can participate in the call by dialing (833) 353-0277 or (469) 886-1947 and using ID code number 7279283. Members of the media are invited to monitor the call by dialing (833) 353-0277 or (469) 886-1947 and using ID code number 7279283. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.
About Merck
For 130 years, Merck, known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the world’s most challenging diseases in pursuit of our mission to save and improve lives. We demonstrate our commitment to patients and population health by increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at the forefront of research to prevent and treat diseases that threaten people and animals – including cancer, infectious diseases such as HIV and Ebola, and emerging animal diseases – as we aspire to be the premier research-intensive biopharmaceutical company in the world. For more information, visit www.merck.com and connect with us on Twitter, Facebook, Instagram, YouTube and LinkedIn.
Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA
This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.
Risks and uncertainties include but are not limited to, general industry conditions and competition; uncertainties as to the timing of the proposed spinoff; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of the global outbreak of novel coronavirus disease (COVID-19); the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.
The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2020 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).
| 1 | Net income attributable to Merck & Co., Inc. |
| 2 | Merck is providing certain 2021 and 2020 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results and permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. As previously disclosed, beginning in 2021, Merck changed the treatment of certain items for purposes of its non-GAAP reporting. Prior periods have been recast to conform to the current presentation. For a description of the non-GAAP adjustments, see Table 2a attached to this release. |
| 3 | Includes expenses for the amortization of intangible assets and purchase accounting adjustments to inventories recognized as a result of acquisitions, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also includes integration, transaction and certain other costs related to acquisitions and divestitures. |
| 4 |
Includes the estimated tax impact on the reconciling items. In addition, the amount for 2021 includes a |
| MERCK & CO., INC. | |||||||||
| CONSOLIDATED STATEMENT OF INCOME - GAAP | |||||||||
| (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) | |||||||||
| (UNAUDITED) | |||||||||
| Table 1 | |||||||||
| GAAP | |||||||||
|
% Change | ||||||||
| 1Q21 | 1Q20 |
|
|||||||
|
|||||||||
| Sales | $ |
12,080 |
$ | 12,057 |
|
||||
|
|||||||||
| Costs, Expenses and Other |
|
||||||||
| Cost of sales |
|
3,670 |
3,312 |
|
|||||
| Selling, general and administrative |
|
2,633 |
2,555 |
|
|||||
| Research and development |
|
2,465 |
2,209 |
|
|||||
| Restructuring costs (1) |
|
298 |
72 |
* |
|||||
| Other (income) expense, net |
|
(448) |
71 |
* |
|||||
| Income Before Taxes |
|
3,462 |
3,838 |
- |
|||||
| Taxes on Income |
|
276 |
619 |
|
|||||
| Net Income |
|
3,186 |
3,219 |
- |
|||||
| Less: Net Income Attributable to Noncontrolling Interests |
|
7 |
- |
|
|||||
| Net Income Attributable to Merck & Co., Inc. | $ |
3,179 |
$ | 3,219 |
- |
||||
| Earnings per Common Share Assuming Dilution | $ |
1.25 |
$ | 1.26 |
- |
||||
| Average Shares Outstanding Assuming Dilution |
|
2,541 |
2,547 |
||||||
| Tax Rate (2) |
|
|
|
||||||
| * |
||||||
| (1) Represents separation and other related costs associated with restructuring activities under the company's formal restructuring programs. | ||||||
| (2) The effective income tax rate for the first quarter of 2021 reflects a net tax benefit of |
| MERCK & CO., INC. | |||||||||||||||||||||||
| GAAP TO NON-GAAP RECONCILIATION | |||||||||||||||||||||||
| FIRST QUARTER 2021 | |||||||||||||||||||||||
| (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) | |||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||
| Table 2a | |||||||||||||||||||||||
| GAAP | Acquisition and Divestiture Related Costs (1) | Restructuring Costs (2) | (Income) Loss from Investments in Equity Securities | Certain Other Items | Adjustment Subtotal | Non-GAAP | |||||||||||||||||
| Cost of sales | $ |
3,670 |
|
517 |
|
27 |
|
188 |
|
(3) |
732 |
|
$ |
2,938 |
|
||||||||
| Selling, general and administrative |
|
2,633 |
|
218 |
|
3 |
|
221 |
|
|
2,412 |
|
|||||||||||
| Research and development |
|
2,465 |
|
18 |
|
7 |
|
25 |
|
|
2,440 |
|
|||||||||||
| Restructuring costs |
|
298 |
|
298 |
|
298 |
|
|
- |
|
|||||||||||||
| Other (income) expense, net |
|
(448 |
) |
(28 |
) |
(561 |
) |
(589 |
) |
|
141 |
|
|||||||||||
| Income Before Taxes |
|
3,462 |
|
(725 |
) |
(335 |
) |
561 |
|
(188 |
) |
(687 |
) |
|
4,149 |
|
|||||||
| Income Tax Provision (Benefit) |
|
276 |
|
(114 |
) |
(4) |
(41 |
) |
(4) |
123 |
|
(4) |
(278 |
) |
(4) |
(310 |
) |
|
586 |
|
|||
| Net Income |
|
3,186 |
|
(611 |
) |
(294 |
) |
438 |
|
90 |
|
(377 |
) |
|
3,563 |
|
|||||||
| Net Income Attributable to Merck & Co., Inc. |
|
3,179 |
|
(611 |
) |
(294 |
) |
438 |
|
90 |
|
(377 |
) |
|
3,556 |
|
|||||||
| Earnings per Common Share Assuming Dilution | $ |
1.25 |
|
(0.24 |
) |
(0.12 |
) |
0.17 |
|
0.04 |
|
(0.15 |
) |
$ |
1.40 |
|
|||||||
| Tax Rate |
|
8.0 |
% |
|
14.1 |
% |
|||||||||||||||||
| Only the line items that are affected by non-GAAP adjustments are shown. | ||||||||||||||
| Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. | ||||||||||||||
| (1) Amount included in cost of sales primarily reflects expenses for the amortization of intangible assets. Amount included in selling, general and administrative expenses reflects approximately |
||||||||||||||
| (2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs. | ||||||||||||||
| (3) Represents a charge for the discontinuation of COVID-19 development programs. | ||||||||||||||
| (4) Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Certain other items also include a |
| MERCK & CO., INC. | ||||||||||||||||||||||||||||||
| FRANCHISE / KEY PRODUCT SALES | ||||||||||||||||||||||||||||||
| (AMOUNTS IN MILLIONS) | ||||||||||||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||||||||||||
| Table 3 | ||||||||||||||||||||||||||||||
2021 |
|
2020 |
|
1Q |
||||||||||||||||||||||||||
1Q |
|
1Q |
2Q |
3Q |
4Q |
Full Year |
|
Nom % |
Ex-Exch % |
|||||||||||||||||||||
| TOTAL SALES (1) | $ |
12,080 |
|
$ |
12,057 |
$ |
10,872 |
$ |
12,551 |
$ |
12,514 |
|
$ |
47,994 |
- |
-1 |
||||||||||||||
| PHARMACEUTICAL |
|
10,675 |
|
|
10,655 |
|
9,679 |
|
11,320 |
|
11,367 |
|
|
43,021 |
- |
-3 |
||||||||||||||
| Oncology | ||||||||||||||||||||||||||||||
| Keytruda |
|
3,899 |
|
|
3,284 |
|
3,388 |
|
3,715 |
|
3,993 |
|
|
14,380 |
19 |
16 |
||||||||||||||
| Alliance Revenue – Lynparza (2) |
|
228 |
|
|
145 |
|
178 |
|
196 |
|
206 |
|
|
725 |
57 |
51 |
||||||||||||||
| Alliance Revenue – Lenvima (2) |
|
130 |
|
|
128 |
|
151 |
|
142 |
|
158 |
|
|
580 |
1 |
-1 |
||||||||||||||
| Vaccines (3) | ||||||||||||||||||||||||||||||
| Gardasil / Gardasil 9 |
|
917 |
|
|
1,097 |
|
656 |
|
1,187 |
|
998 |
|
|
3,938 |
-16 |
-20 |
||||||||||||||
| ProQuad / M-M-R II / Varivax |
|
449 |
|
|
435 |
|
378 |
|
576 |
|
488 |
|
|
1,878 |
3 |
2 |
||||||||||||||
| Pneumovax 23 |
|
171 |
|
|
256 |
|
117 |
|
375 |
|
339 |
|
|
1,087 |
-33 |
-36 |
||||||||||||||
| RotaTeq |
|
158 |
|
|
222 |
|
168 |
|
210 |
|
196 |
|
|
797 |
-29 |
-29 |
||||||||||||||
| Vaqta |
|
34 |
|
|
60 |
|
28 |
|
51 |
|
31 |
|
|
170 |
-43 |
-44 |
||||||||||||||
| Hospital Acute Care | ||||||||||||||||||||||||||||||
| Bridion |
|
340 |
|
|
299 |
|
224 |
|
320 |
|
355 |
|
|
1,198 |
14 |
11 |
||||||||||||||
| Prevymis |
|
82 |
|
|
60 |
|
63 |
|
77 |
|
80 |
|
|
281 |
37 |
31 |
||||||||||||||
| Noxafil |
|
67 |
|
|
94 |
|
73 |
|
79 |
|
82 |
|
|
329 |
-29 |
-32 |
||||||||||||||
| Primaxin |
|
65 |
|
|
51 |
|
64 |
|
74 |
|
62 |
|
|
251 |
26 |
17 |
||||||||||||||
| Cancidas |
|
57 |
|
|
55 |
|
43 |
|
50 |
|
65 |
|
|
213 |
4 |
1 |
||||||||||||||
| Invanz |
|
57 |
|
|
64 |
|
43 |
|
51 |
|
53 |
|
|
211 |
-12 |
-11 |
||||||||||||||
| Zerbaxa |
|
(8 |
) |
|
37 |
|
32 |
|
43 |
|
19 |
|
|
130 |
-121 |
-120 |
||||||||||||||
| Immunology | ||||||||||||||||||||||||||||||
| Simponi |
|
214 |
|
|
215 |
|
191 |
|
209 |
|
223 |
|
|
838 |
- |
-8 |
||||||||||||||
| Remicade |
|
85 |
|
|
88 |
|
73 |
|
82 |
|
88 |
|
|
330 |
-3 |
-9 |
||||||||||||||
| Neuroscience | ||||||||||||||||||||||||||||||
| Belsomra |
|
79 |
|
|
79 |
|
84 |
|
81 |
|
83 |
|
|
327 |
- |
-4 |
||||||||||||||
| Virology | ||||||||||||||||||||||||||||||
| Isentress / Isentress HD |
|
209 |
|
|
245 |
|
196 |
|
205 |
|
211 |
|
|
857 |
-15 |
-15 |
||||||||||||||
| Cardiovascular | ||||||||||||||||||||||||||||||
| Zetia |
|
92 |
|
|
145 |
|
137 |
|
103 |
|
98 |
|
|
482 |
-37 |
-41 |
||||||||||||||
| Vytorin |
|
41 |
|
|
53 |
|
39 |
|
47 |
|
43 |
|
|
182 |
-23 |
-27 |
||||||||||||||
| Atozet |
|
112 |
|
|
122 |
|
115 |
|
111 |
|
105 |
|
|
453 |
-9 |
-16 |
||||||||||||||
| Alliance Revenue - Adempas (4) |
|
74 |
|
|
53 |
|
79 |
|
83 |
|
65 |
|
|
281 |
38 |
38 |
||||||||||||||
| Adempas (5) |
|
55 |
|
|
56 |
|
57 |
|
55 |
|
53 |
|
|
220 |
-2 |
-10 |
||||||||||||||
| Diabetes (6) | ||||||||||||||||||||||||||||||
| Januvia |
|
809 |
|
|
774 |
|
854 |
|
821 |
|
857 |
|
|
3,306 |
5 |
2 |
||||||||||||||
| Janumet |
|
486 |
|
|
503 |
|
490 |
|
506 |
|
472 |
|
|
1,971 |
-3 |
-6 |
||||||||||||||
| Women's Health | ||||||||||||||||||||||||||||||
| Implanon / Nexplanon |
|
183 |
|
|
195 |
|
132 |
|
189 |
|
165 |
|
|
680 |
-6 |
-7 |
||||||||||||||
| NuvaRing |
|
45 |
|
|
63 |
|
63 |
|
58 |
|
53 |
|
|
236 |
-28 |
-30 |
||||||||||||||
| Diversified Brands | ||||||||||||||||||||||||||||||
| Singulair |
|
107 |
|
|
155 |
|
100 |
|
82 |
|
124 |
|
|
462 |
-31 |
-35 |
||||||||||||||
| Cozaar / Hyzaar |
|
90 |
|
|
102 |
|
98 |
|
91 |
|
94 |
|
|
386 |
-12 |
-16 |
||||||||||||||
| Arcoxia |
|
56 |
|
|
70 |
|
65 |
|
68 |
|
54 |
|
|
258 |
-20 |
-22 |
||||||||||||||
| Follistim AQ |
|
52 |
|
|
41 |
|
44 |
|
50 |
|
57 |
|
|
193 |
25 |
21 |
||||||||||||||
| Nasonex |
|
43 |
|
|
71 |
|
49 |
|
41 |
|
57 |
|
|
218 |
-39 |
-40 |
||||||||||||||
| Other Pharmaceutical (7) |
|
1,197 |
|
|
1,338 |
|
1,207 |
|
1,292 |
|
1,340 |
|
|
5,173 |
-11 |
-13 |
||||||||||||||
| ANIMAL HEALTH |
|
1,418 |
|
|
1,214 |
|
1,101 |
|
1,220 |
|
1,168 |
|
|
4,703 |
17 |
15 |
||||||||||||||
| Livestock |
|
819 |
|
|
739 |
|
648 |
|
758 |
|
794 |
|
|
2,939 |
11 |
9 |
||||||||||||||
| Companion Animals |
|
599 |
|
|
475 |
|
453 |
|
462 |
|
374 |
|
|
1,764 |
26 |
24 |
||||||||||||||
| Other Revenues (8) |
|
(13 |
) |
|
188 |
|
92 |
|
11 |
|
(21 |
) |
|
270 |
-107 |
-21 |
||||||||||||||
| Sum of quarterly amounts may not equal year-to-date amounts due to rounding. | |||||||
| (1) Only select products are shown. | |||||||
| (2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. | |||||||
| (3) Total Vaccines sales were |
|||||||
| (4) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs. | |||||||
| (5) Net product sales in Merck's marketing territories. | |||||||
| (6) Total Diabetes sales were |
|||||||
| (7) Includes Pharmaceutical products not individually shown above. | |||||||
| (8) Other Revenues are comprised primarily of third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005381/en/
FAQ
What were Merck's Q1 2021 earnings results?
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How did KEYTRUDA perform in Q1 2021?
