Performance in fiscal 2018 and fiscal 2019 guidance
In fiscal 2018, Merck (MRK) reported GAAP EPS of $2.32, a YoY rise of 166.67%, and non-GAAP EPS of $4.34, a YoY rise of 9%. According to the company’s fourth-quarter earnings press release, Merck’s GAAP EPS included a negative impact of $1.4 billion in charges associated with the formation of an oncology collaboration with Eisai. In the fourth quarter of 2018, Merck reported GAAP EPS of $0.69 and non-GAAP EPS of $1.04, 6% higher YoY and $0.01 higher than the consensus estimate.
In its fourth-quarter conference call, Merck guided GAAP EPS of $3.97 to $4.12 for fiscal 2019. The company has also guided non-GAAP EPS of $4.57 to $4.72 for fiscal 2019, a YoY rise of 5% to 9% on a reported basis and 4% to 8% on a CC (constant currency) basis. In its fourth-quarter investor presentation, Merck also guided for total shares outstanding of 2.6 billion in fiscal 2019.
In its fourth-quarter conference call, Merck guided for a low to mid-single digit rise in operating expenses in fiscal 2019, driven by optimal selling, general, and administrative (or SG&A) expenses, which could allow for higher targeted research and development (or R&D) expenses. The company also expects its tax rate to fall in the range of 18.5% to 19.5% in fiscal 2019.
Analysts expect Merck’s non-GAAP operating expense to fall 27.53% YoY to $24.18 billion in fiscal 2019, then rise 3.45% YoY to $25.01 billion in fiscal 2020, and 3.57% YoY to $25.91 billion in fiscal 2021.
Next, we’ll look at shareholder returns, interest expenses, debt, and the company’s free cash flows in fiscal 2018.