Merck & Co. (MRK) reported Friday its second-quarter net income fell 51% to $752.4 million, or 24 cents a share, from $1.56 billion, or 74 cents a share, in the year-ago period on higher restructuring and merger costs. But adjusted earnings beat analysts' estimates.
Excluding items such as accounting adjustments, merger-related expenses, restructuring costs and a gain on AstraZeneca's asset option exercise, Merck's earnings rose to 86 cents a share, from 83 cents a share, on cost cuts.
Revenue jumped 92% to $11.35 billion, from $5.9 billion, as results included the addition of Schering-Plough, which Merck purchased for $49.6 billion last year. Sales were also boosted by growth in Merck's diabetes and AIDS drugs. Wall Street analysts expected earnings of 83 cents a share and revenue of $11.45 billion.
"Our strong bottom-line performance in the second quarter demonstrates Merck's continued success in executing our post-merger strategy," said Chairman and CEO Richard Clark. "We're now halfway through our first full year as a combined company. Already we're seeing positive signs of what can be achieved – despite patent expiries and a challenging economy. I'm very pleased with what our team has accomplished."
"Key brands, including Januvia, Janumet, Remicade, Isentress, and Temodar were again standouts this quarter. In addition, Animal Health and Merck Consumer Care, produced strong global sales," he added. "With our strong performance for the first half of the year, we continue to have confidence in delivering on our long-term financial targets."
Looking ahead, Merck sees 2010 earnings of $3.29 a share to $3.39 a share on revenue of $45.4 billion to $46.1 billion. Analyst average estimates are for earnings of $3.37 a share on revenue of $45.69 billion. Merck assumes it will retain full rights to anti-inflammatory Remicade and arthritis treatment Simponi in the applicable markets.
Merck continues to target a high single-digit EPS compound annual growth rate for the combined company from 2009 to 2013 when compared to Merck 2009 EPS. The longer-term targets are applicable regardless of the assumptions made for the Remicade and Simponi business.
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