Healthcare giant Merck & Co. Inc. (MRK) Monday reported a decline in the third-quarter profit, as sales fell 4 percent, reflecting unfavorable impact of divested products, patent expiration and decline in sales of hepatitis C products.
Adjusted earnings beat analysts' estimates, while revenues missed view. The company cut its reported earnings per share outlook for full-year 2014, while tightened its adjusted earnings view. The firm also lowered the upper end of its revenue guidance.
For the quarter, net Income attributable to the company declined to $895 million from $1.12 billion in the previous year. Earnings per share were $ 0.31, lower than $0.38 per share a year ago.
On an adjusted basis, earnings totaled $0.90 per share, while the firm posted $0.92 per share in the year-ago quarter.
On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.88 per share for the quarter. Analysts' estimates typically exclude special items.
Worldwide sales declined 4 percent to $10.56 billion from $11.03 billion last year, and came below sixteen analysts' estimate of $10.67 billion. The company said its recent-quarter sales included a 1 percent positive impact from foreign exchange.
The firm noted that revenue included $425 million of lower sales due to divestitures and termination of the joint venture with AstraZeneca.
Pharmaceutical sales decreased 4 percent to $9.13 billion, reflecting ongoing impact of product divestitures, as well as loss of market exclusivity for certain products, including Temodar (temozolomide) and Singulair (montelukast sodium).
The decline also reflected lower sales from hepatitis franchise of Victrelis (boceprevir) and PegIntron (peginterferon alfa-2b) as a result of increased competition, as well as of Gardasil.
Animal Health sales totaled $885 million, up 11 percent from the preceding year, helped by increases across all species. The company had voluntarily suspended sales of Zilmax in the U.S., and Canada. Excluding the impact of the Zilmax sales suspension, Animal Health sales increased 14 percent.
Sales from Consumer Care products fell 9 percent to $401 million. On October 1, Merck had completed sale of its Consumer Care business to Bayer AG.
Gross margin was 60 percent, compared to 62.8 percent last year, reflecting 14.3 and 11.2 unfavorable percentage point impacts, respectively, from acquisition- and divestiture-related costs, as well as restructuring costs.
For full year 2014, the the company now expects reported earnings per share to be in the range of $4.06 to $4.29 and adjusted earnings in the range of $3.46 to $3.50 per share.
Earlier, the company expected earnings per share in the range of $4.44 to $4.77 and non-GAAP earnings per share of $3.43 to $3.53 for fiscal 2014.
At current exchange rates, Merck now expects full-year 2014 revenues to be between $42.4 billion and $42.8 billion. Previously, the company expected revenue in the range of $42.4 billion to $43.2 billion.
Wall Street is now looking for 2014 earnings of $3.47 per share, on annual revenues of $42.55 billion.
Separately, Merck announced that the U.S. Food and Drug Administration or FDA has granted Breakthrough Therapy Designation to Keytruda (pembrolizumab), the company's anti-PD-1 therapy, for the treatment of patients with advanced non-small cell lung cancer, or NSCLC, who have progressed following platinum-containing chemotherapy.
This is the second Breakthrough Therapy Designation granted for Keytruda. The company noted that an improvement in survival or disease-related symptoms has not yet been established.
Keytruda is being studied across more than 30 types of cancers, as monotherapy and in combination.
MRK closed Friday's trading at $57.61. In the pre-market activity on Monday, the shares are down 0.10 percent.
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