Merck & Co. (MRK – Analyst Report) reported second quarter 2015 earnings of 86 cents per share, surpassing the Zacks Consensus Estimate of 80 cents and increasing 1.2% from the year-ago period.

Merck & Company Inc. – Earnings Surprise | FindTheBest

Revenues for the quarter declined 10.5% to $9.785 billion but were above the Zacks Consensus Estimate of $9.709 billion. While currency movement negatively impacted revenues by 7%, the divestiture of the Consumer Care business and other products impacted revenues by net 7%. This was partially offset by the Cubist acquisition.

The Quarter in Detail

Merck's Pharmaceutical segment posted revenues of $8.6 billion, down 6%. Currency movement negatively impacted revenues by 9%. Products like Janumet, Januvia and Gardasil performed well. However, this was offset by lower revenues of Remicade (loss of exclusivity in Europe), Zetia/Vytorin (Zetia loss of exclusivity in Canada and lower volume for both products in the U.S.), and Isentress (timing of tender purchases in emerging markets and volume declines in the U.S.) among others.

New product, Keytruda, brought in sales of $110 million in the second quarter of 2015, up from $83 million in the first quarter of 2015. Cubicin sales came in at $293 million.

Merck's animal health segment posted revenues of $840 million, down 4% including a 14% negative impact of currency movement.

Marketing and administrative expenses declined 14.7% to $2.5 billion in the second quarter of 2015. R&D spend decreased 2.3% to $1.6 billion in the second quarter of 2015.

Revises Outlook

Merck narrowed and raised its 2015 earnings guidance to $3.45 and $3.55 per share on revenues of $38.6 billion and $39.8 billion. Earlier at the time of presenting first quarter results, the company had guided towards earnings of $3.35 – $3.48 per share on revenues of $38.3 billion – $39.8 billion. In addition to the impact of currency movement, revenues will also be impacted by about $1 billion due to net lost sales from acquisitions and divestitures.