Merck’s 1Q18 performance
Merck (MRK), one of the largest pharmaceutical companies worldwide, is classified into four business segments: Human Pharmaceutical, Animal Health, Healthcare Services, and Alliances. The company reported its 1Q18 results on May 1. During the quarter, Merck surpassed analysts’ EPS (earnings per share) estimate of $1, but missed their revenue estimate of $10.1 billion, reporting EPS of $1.05 on revenue of $10.0 billion.
Revenue in 1Q18
The above chart shows Merck’s revenue and EPS since 1Q17. In 1Q18, Merck’s revenue grew 6% YoY (year-over-year) to ~$10.0 billion from $9.4 billion, including 3% operating revenue growth and a 3% boost by foreign exchange. The growth was driven by strong Keytruda, Gardasil, ProQuad/Varivax, Pneumovax 23, Bridion, Noxafil, Invanz, Simponi, Januvia, Janumet, NuvaRing, Implanon, and Cozaar sales, as well as sales of livestock and companion animal products. However, lower sales of Emend, Temodar, Zostavax, RotaTeq, Cancidas, Remicade, Zetia, Vytorin, Zepatier, Isentress, Adempas, and others partially offset growth in 1Q18.
In 1Q18, Merck’s gross margin narrowed YoY to ~76.2% from ~77.8%, and its net profit margin widened 2.5% YoY to 28.3% from 25.8%, driven by lower operating expenses. The Health Care Select Sector SPDR ETF (XLV) holds 5.0% of its total investments in Merck, 6.6% in Pfizer (PFE), 10.6% in Johnson & Johnson (JNJ), and 2.7% in Bristol-Myers Squibb (BMY).
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