Merck (NYSE: MRK) surpassed analysts’ expectations for revenue and earnings in the third quarter of 2019, sending the shares climbing 2.5% in premarket hours on Tuesday.

Worldwide sales rose 15% year-over-year to $12.4 billion, beating estimates of $11.6 billion. Excluding foreign exchange impacts, sales grew 16%. Sales growth was driven by strength in oncology and human health vaccines. 

Merck beats Q3 2019 revenue and earnings estimates

On a GAAP basis, net income fell 3% to $1.9 billion while EPS rose 1% to $0.74. Adjusted net income grew 22% to $3.8 billion. Adjusted EPS increased 27% to $1.51, topping forecasts of $1.24.

Pharmaceutical sales increased 15% year-over-year to $11.1 billion, driven by oncology and vaccines. During the quarter, KEYTRUDA sales grew 62% to $3.1 billion and human health vaccines increased 17% to $2.5 billion. Pharma sales were negatively impacted by the loss of market exclusivity for some products as well as lower sales in JANUVIA and JANUMET.

Animal Health sales grew 10% to $1.1 billion, mainly driven by livestock as well as growth in companion animal products.

Also read: Pfizer Q3 2019 Earnings Report

R&D expenses, on a GAAP basis, increased 55% to $3.2 billion versus the prior-year period, driven mainly by a $982 million charge related to the Peloton acquisition and higher clinical development expenses.

For the full year of 2019, Merck narrowed and raised its revenue guidance to a range of $46.5 billion to $47 billion. This compares to the previous range of $45.2 billion to $46.2 billion. The company narrowed and reduced its GAAP EPS outlook to a range of $3.75-3.80, versus the prior outlook of $3.78-3.88. Merck narrowed and raised its adjusted EPS guidance to a range of $5.12-5.17, which compares to the previous range of $4.84-4.94.   

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