WHITEHOUSE STATION, New Jersey (AP) -- Merck & Co. posts a 90 percent drop in third-quarter profit, due to large charges for its $41.1 billion acquisition of Schering-Plough Corp. and a $950 million reserve set up related to a federal investigation.
Also, Merck had a one-time gain of $2.8 billion in the year-ago quarter from selling its animal health business to win antitrust regulators' approval to buy Schering-Plough.
The world's second-biggest drugmaker by revenue had net income in the quarter of just $341.6 million, or 11 cents per share. That's down from $3.42 billion, or $1.61 per share, a year earlier.
One-time charges totaled $2.3 billion after taxes. Those include $1.54 billion in inventory-related accounting adjustments, $384 million for restructuring due to the merger, $64 million in other merger costs and the $950 million legal reserve. Merck said it's taking the reserve to cover the anticipated resolution of a previously disclosed probe by the U.S. Attorney's Office in Boston related to its practices in marketing its former painkiller Vioxx.
Excluding one-time charges worth 74 cents per share, Merck would have made 85 cents a share. That's 3 cents more than analysts expected.
The maker of Januvia for diabetes and Singulair for asthma and allergies said its revenue was $11.12 billion, up 84 percent from $6.05 billion in 2009's third-quarter, when it didn't have revenue from Schering-Plough's products such as hepatitis and fertility drugs and consumer products including the Dr. Scholl's foot care line.
Analysts were expecting slightly higher revenue of $11.24 billion.
Looking ahead, the company raised the lower end of its range for full-year earnings per share to $3.31 to $3.39, excluding items. Analysts expects $3.36 per share. Including one-time items, Merck expects a range of 66 cents to 97 cents a share.
"We are pleased with the third quarter as well as our overall execution during Merck's first year as a combined company following the merger," Chief Executive Richard Clark said in a statement. "Our key products are performing well, and at the same time we are launching new products, advancing our robust R&D pipeline and achieving our important merger synergies."
For the first nine months, Merck said it earned net income of $1.39 billion, or 44 cents per share, down 78 percent from $6.41 billion, or $3.03 per share, in the same time last year. Revenue totaled $33.89 billion, nearly double the $17.3 billion in the first nine months of 2009.
