Here's our initial take on Vertex Pharmaceuticals' (VRTX 3.11%) first-quarter financial report.
Key Metrics
| Metric | Q1 2024 | Q1 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $2.69 billion | $2.77 billion | +3% | Missed |
| Adjusted earnings per share | $4.76 | $4.06 | -15% | Missed |
| Trikafta/Kaftrio revenue | $2.48 billion | $2.54 billion | +2% | n/a |
| Other revenue | $207 million | $225 million | +9% | n/a |
Vertex Hits a Speed Bump
Vertex's first-quarter financial results didn't keep up with what investors have gotten used to seeing in recent quarters. Revenue in Q1 rose just 3% year over year, partly because Vertex suffered a drop in sales in Russia due to intellectual property infringement. U.S. revenue was up 9% on strong pricing and the earliest stages of the launch of its new Alyftrek cystic fibrosis treatment. Except for Russia, Vertex saw strong demand in both established and newer markets.
On the earnings front, several headwinds emerged. Adjusted earnings took a 15% hit as research and development expenses soared by roughly $190 million from year-ago levels. A 16% jump in overhead costs also weighed on the bottom line. Even worse was the fact that adjusted earnings excluded a $379 million asset impairment charge that stemmed from the decision not to advance Vertex's VX-264 program for patients with type 1 diabetes.
Even with the lackluster news, CEO Dr. Reshma Kewalramani said she was upbeat about the state of the business. The launch of the new Journavx treatment for acute pain as well as ongoing success in cystic fibrosis and the Casgevy treatment for sickle cell disease and transfusion-dependent beta thalassemia has Kewalramani optimistic about where Vertex is headed.
Immediate Market Reaction
Shares of Vertex were down about 3% half an hour into Monday's after-hours trading session following the release of its first-quarter financial results. Investors had anticipated faster growth in revenue and a less extreme drop in earnings compared to what the company actually posted. In addition, the stock had jumped about 25% from its late December lows, and so anything short of an extremely strong report left shareholders ready to see a pullback.
What to Watch
One positive sign was that Vertex raised the lower end of its forecast for full-year 2025 revenue by $100 million. The current range is now $11.85 billion to $12 billion, and that's reasonably consistent with what most analysts following the stock are hoping to see by the end of the year.
One thing investors will want to keep an eye on is to what extent tariffs or other trade barriers might have an influence on Vertex's results. Currently, the guidance incorporates no material cost impact from anticipated tariffs. As a result, any negative surprise could leave investors facing additional challenges.
