Merck has significantly lowered its full-year profit forecast due to costs associated with acquiring cancer biotechnology firm Terns Pharmaceuticals.

However, the company raised its full-year sales outlook, as new product launches boosted second-quarter revenue, pushing sales above Wall Street expectations. For the full year, Merck now expects adjusted earnings per share between $2.66 and $2.76, down from the previous range of $5.04 to $5.16. The updated guidance includes expenses related to the Terns acquisition that were not previously factored into the outlook, such as a one-time charge of $2.31 per share. The company also anticipates costs of about $0.12 per share to finance the deal and advance Terns' drug development for chronic myeloid leukemia, a type of blood cancer.

The transaction, completed in May, is part of Merck's portfolio expansion strategy to address the impending patent expiration for its best-selling drug, Keytruda, which will eventually face competition from lower-cost versions. Merck now projects full-year sales in the range of $66.3 billion to $67.3 billion, up from the prior estimate of $65.8 billion to $67.0 billion. Analysts surveyed by FactSet forecast full-year sales of $66.86 billion and adjusted earnings per share of $2.79.

The updated guidance from the company, headquartered in Rahway, New Jersey, follows a quarter where sales grew due to contributions from new product launches. Revenue increased 5% to $16.61 billion, surpassing analyst expectations of $16.37 billion. Keytruda sales rose 5% to $8.4 billion, including $463 million from its new formulation, Qlex, which is administered via injection rather than intravenous infusion. The FDA approved Qlex last year. Other new products also contributed to growth, including Winrevair, for pulmonary arterial hypertension, which saw sales of $588 million, up 75% year-over-year.

Merck reported a second-quarter loss of $1.34 billion, or $0.54 per share, compared to a profit of $4.43 billion, or $1.76 per share, in the same period last year. The adjusted loss per share was $0.13. Analysts surveyed by FactSet had expected an adjusted loss of $0.27 per share. Merck stated that the loss was driven by the one-time $2.31 per share charge from the Terns acquisition.