Merck & Co Inc (NYSE:MRK, ETR:6MK) shares moved lower in early trade as the pharmaceutical company reported second quarter earnings that fell short of estimates.
Revenue for the quarter came in at $15.8 billion, down 2% year-over-year and below consensus expectations of approximately $15.75 billion.
Adjusted earnings per share (EPS) were $2.13, including a $0.07 charge tied to the closure of a licensing deal with China-based Hengrui Pharma. Analysts had been expecting EPS between $2.15. to $2.20.
Sales of Merck’s flagship cancer drug Keytruda grew 9% year-over-year to $8 billion, ahead of estimates of $7.9 billion.
However, Gardasil vaccine sales dropped 55% due to a suspension of shipments to China and weak demand there, which was a major factor behind the revenue miss.
Merck also narrowed its full-year 2025 adjusted EPS guidance to $8.87 to $8.97 from the previous $8.82 to $8.97.
It expects revenue between $64.3 billion and $65.3 billion, adjusted from its earlier guidance of $64.1 billion to $65.6 billion.
Further, the company announced a multiyear optimization initiative, which is expected to save $3 billion per year by the end of 2027.
Merck CEO Robert Davis highlighted the company’s recent strategic moves, including the pending acquisition of Verona Pharma and its Chronic Obstructive Pulmonary Disease treatment Ohtuvayre, expected to close in Q4, and the new $3 billion cost-optimization initiative.
“Today, we announced a multiyear optimization initiative that will redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of productive, innovation-driven growth,” Davis said.
“With these actions, I am confident that we are well-positioned to generate near- and long-term value for our shareholders and, most importantly, deliver for our patients.”
Merck’s shares fell 7% to $652 shortly after US markets opened on Tuesday.