Merck, a leading pharmaceutical company, has revised its earnings guidance for the fiscal year 2024 in response to anticipated costs associated with its recent acquisition of Eyebiotech. This adjustment comes amidst a slight increase in the company's revenue forecast midpoint and the release of its second-quarter financial results, which exceeded market expectations. The pharmaceutical giant now projects its full-year adjusted earnings per share to fall within the range of $7.94 to $8.04.
This adjustment reflects a downgrade from the previous forecast, which estimated earnings between $8.53 and $8.65. Analysts surveyed by Capital IQ had anticipated normalized earnings per share of $8.14 for the current year, suggesting that despite the downward revision, Merck's performance remains within the analysts' expectations. The reduction in the non-GAAP earnings forecast can be traced back to a one-time charge amounting to $1.3 billion, which translates to an impact of approximately $0.51 per share for the Eyebiotech acquisition.
Additionally, the revised earnings guidance takes into account an estimated expense of $0.09 per share linked to financing the Eyebiotech and Elanco Animal Health's aqua business acquisitions, both of which were finalized earlier this month. Following this announcement, Merck's share price experienced a notable decline, dropping 10% during Tuesday's trading session. Chief Executive Robert Davis addressed analysts during Merck's second-quarter earnings conference call, emphasizing the strategic significance of the Eyebiotech acquisition.
He stated, "Eyebiotech expands our effort in ophthalmology and brings to Merck a novel late-phase candidate for the treatment of retinal diseases. This promising new mechanism adds another substantial potential commercial opportunity to our expanding pipeline in an area of significant unmet medical need." Regarding sales outlook, Merck is now forecasting total sales to range from $63.4 billion to $64.4 billion, a slight increase from the previously estimated range of $63.1 billion to $64.3 billion.
The consensus forecast from Capital IQ had projected revenues around $64.28 billion. In terms of financial performance for the second quarter, Merck reported revenue of $16.11 billion, up from $15.04 billion in the same quarter last year and surpassing market predictions which estimated revenue at $15.84 billion.
The company's adjusted earnings per share rebounded to $2.28 for the three-month period ending on June 30, recovering from a loss of $2.06 per share in the comparable period last year and exceeding the Street's EPS estimate of $2.14. Davis further remarked, "Our business is demonstrating strong momentum as we exit the first half of the year." Notably, the company's product Winrevair generated $70 million in US sales during the June quarter, following its approval in March, which was considerably higher than the expected $56 million, according to Truist Securities.
Additionally, Merck's flagship product, Keytruda, witnessed a remarkable 16% increase in sales, reaching $7.27 billion – slightly exceeding consensus expectations. This growth was driven by escalating global demand, particularly for earlier-stage cancer treatments as well as continuous strong consumption from metastatic indications, as noted by Truist Vice President Srikripa Devarakonda.
The revised full-year revenue guidance is indicative of the momentum behind Keytruda's growth trajectory, as highlighted by the executive. Currently, Merck's share price stands at $116.01, reflecting a change of -11.77, which corresponds to a percentage change of -9.21, prompting investors to reassess their positions in light of the recent financial disclosures..