Merck stock declined Tuesday after the Dow Jones drugmaker reported another quarter of declining sales for its human papillomavirus vaccine, Gardasil. The firm also announced layoffs as part of a cost-saving plan ahead of its $10 billion acquisition of Verona Pharma.
Merck reported a 6% decline in earnings to $2.13 per share adjusted, but managed to beat FactSet views for $2.02 per share.
Total sales slid 2% to $15.8 billion, missing expectations for $15.89 billion.
Gardasil sales tumbled 55% to $1.1 billion, also missing Wall Street views for $1.38 billion. It marks the fourth consecutive quarter of decelerating sales for Gardasil, primarily due to lower demand in China. Excluding China, Gardasil sales were down 3% for the quarter.
Keytruda, Merck's immunotherapy cancer drug and biggest moneymaker, saw a 9% increase in sales to $7.96 billion. Analysts expected $7.91 billion in Keytruda sales. Merck noted the growth was driven by "strong" global demand from metastatic indications, where cancer has spread to new locations.
Merck said that it expects to complete its $10 billion takeover of Verona Pharma in Q4, after first announcing the acquisition on July 9.
The drugmaker also announced an "optimization initiative," which aims to generate $3 billion in annual cost savings by the end of 2027. The initiative includes a restructuring program, which will eliminate certain administrative, sales and R&D positions. Merck did not specify how many positions would be eliminated, but said it would continue to hire employees into new roles across strategic growth areas. In addition, the company plans to reduce its global real estate footprint and optimize its manufacturing network.
Merck recorded $649 million in charges during Q2 related to the restructuring program. It plans to fully reinvest the eventual cost savings to support its pipeline and new product launches.
The Dow drugmaker narrowed its 2025 sales outlook to range from $64.3 billion to $65.3 billion, compared it its prior forecast for $64.1 billion to $65.6 billion.
Merck lifted the lower end of its earnings forecast. It now expects earnings to range from $8.87 per share adjusted to $8.97 per share. Previously, Merck expected $8.82 per share at the lower end of its earnings forecast. The outlook does not include anticipated impacts from the Verona acquisition.
FactSet analysts expect 2025 earnings of $8.86 per share adjusted on $64.95 billion in revenue.
Merck Stock Falls On The Report
MRK shares pared their decline to 1.6% Tuesday after falling more than 7% in early trade.
Merck stock is down nearly 17% in 2025, making it the third worst-performing stock in the Dow Jones Industrial Average.
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