Merck (MRK) earnings report Q1 2025

Merck on Thursday lowered its full-year profit guidance, citing $200 million in estimated costs for tariffs and a charge tied to a recent deal.

The company now expects its 2025 adjusted earnings to come in between $8.82 and $8.97, down slightly from a previous outlook of $8.88 to $9.03 per share.

The company said the expected tariff charge primarily reflects levies between the U.S. and China, and Canada and Mexico to a lesser degree. Merck has built a robust presence in China, which is considered one of the company’s most important markets and is home to some of its partners and manufacturing and research and development sites. 

Merck noted that the new outlook does not account for President Donald Trump‘s planned tariffs on pharmaceuticals imported into the U.S., which are prompting some drugmakers to bolster their U.S. manufacturing footprints. 

That includes Merck, which has invested $12 billion in U.S. manufacturing and research and development and expects to put more than $9 billion more into the country by the end of 2028.

On an earnings call on Thursday, Merck CEO Rob Davis said that “as you look at 2025, we’re well positioned with inventory to be able to mitigate anything we could see in the short term.” He added that in the medium to long term, “we’ve already started to identify where we can either reposition our own manufacturing,” which could look like changing the priorities of existing plants, or bring on external manufacturing to “bridge gaps” and build internal production further.

“In many ways, we are aligned with what the administration is wanting to do, and feel that we’re in position to be able to do that quite effectively,” he said.

The new guidance does include a one-time charge of roughly 6 cents per share related to the company’s license agreement with Hengrui Pharma, which it announced in March.

Merck reiterated its full-year sales forecast of between $64.1 billion and $65.6 billion. 

Also on Thursday, the drugmaker reported first-quarter revenue and profit that beat expectations, as it said it saw strength in its oncology portfolio and animal health products. 

Merck also cited “increasingly meaningful” sales contributions from two recently launched drugs. They are Winrevair, which is used to treat a rare, deadly lung condition, and Capvaxive, a vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and lung infection. 

Sales of those drugs will likely be critical to Merck’s efforts to offset losses from its top-selling cancer therapy Keytruda, which will lose exclusivity in 2028. 

Here’s what Merck reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

• Earnings per share: $2.22 adjusted vs. $2.14 expected
• Revenue: $15.53 billion vs. $15.31 billion expected

The company posted net income of $5.08 billion, or $2.01 per share, for the quarter. That compares with net income of $4.76 billion, or $1.87 per share, during the year-earlier period. 

Excluding acquisition and restructuring costs, Merck earned $2.22 per share for the first quarter. 

Merck raked in $15.53 billion in revenue for the quarter, down 2% from the same period a year ago.

Notably, Merck continued to see trouble with China sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S. 

In February, Merck announced a decision to halt shipments of Gardasil into China beginning that month and going through at least mid-2025. Investors will likely be looking for updates on that effort during the earnings call on Thursday. 

The Chinese market makes up the majority of the blockbuster shot’s international revenue. Merck is hoping that Gardasil’s expanded approval for men ages 9 to 26 in China will help boost uptake of the vaccine.

Gardasil raked in $1.33 billion in sales, down 41% from the first quarter of 2024 primarily due to lower demand in China. That’s below the $1.45 billion that analysts were expecting, according to StreetAccount estimates. 

China has retaliated with tariffs of 125% on goods from the U.S. Some experts said China’s tariffs on U.S. products could lead to increased prices or limited supply of some popular Western medicines for Chinese patients, Reuters reported.

Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted nearly $1.59 billion in sales, up 5% from the same period a year ago. The company said higher demand for livestock products and sales from Elanco’s aqua business, which it acquired last year, drove that growth.