GSK ($GSK) shares fell 4% on Wednesday morning as its third-quarter turnover and earnings fell short of consensus expectations due to reduced vaccine demand and a significant 1.8 billion-pound charge linked to the Zantac settlement. The constraints imposed by regulatory guidelines and the prioritization of COVID vaccinations in the US negatively impacted sales of Arexvy and Shingrix, the vaccines for RSV and shingles, leading to disappointing results.
In the three months ending September 30, the British drugmaker's turnover declined to 8.01 billion pounds, down from 8.15 billion pounds the previous year. Analysts surveyed by Visible Alpha had forecasted total revenue to be around 8.1 billion pounds. At consistent exchange rates, the turnover edged up by 2%.
Notably, new launches in oncology and long-acting HIV medications bolstered a 19% increase in sales of specialty medicines, which mitigated the impact of a 15% decline in vaccine sales. Sales of general medicine also contributed positively with a 7% gain. The sizeable charge related to the Zantac settlement—notably associated with a majority of the legal proceedings concerning the heartburn medication—resulted in GSK recording a loss.
Analysts predicted a net income of 1.78 billion pounds for common stockholders; however, the loss attributable to shareholders amounted to 58 million pounds for the quarter, a significant drop from an attributable profit of 1.46 billion pounds in the same period last year. In a show of resilience, the board declared an increased third interim dividend of 0.15 pound per share, compared to 0.14 pound per share in the previous year.
The company reaffirmed its guidance for 2024, anticipating turnover growth of 7% to 9% and core EPS growth of 10% to 12% at constant exchange rates, aiming for the middle of these projections, excluding any potential contributions from COVID-19 solutions. "We have delivered another quarter of sales and core operating profit growth, and further good progress in R&D," remarked Chief Executive Officer Emma Walmsley, expressing increased confidence in the company's outlook for 2026 and 2031.
Barclays commented, "Although GSK delivered a quarter that met or exceeded expectations at a Group level, with double-digit percentage misses for Arexvy and Shingrix against our expectations and consensus (with adjustment being drastic leading up to the report), we anticipate vaccines will be the main topic of discussion today.
We spoke with the company this morning, who indicated no major stocking effects in the quarter for both vaccines, and that the misses were primarily volume-driven.".