Moderna’s earnings fall amid charges over unused Covid-19 vaccines

Modern Inc.

Sales rose 9% in the second quarter, but costs linked to a surplus of Covid-19 vaccine doses helped drag down profits.

The Cambridge, Mass.-based biotech company’s revenue came in at $4.75 billion in the period ended June 30, beating Wall Street analysts’ expectations, driven almost entirely by sales of its messenger RNA vaccine , under the brand name Spikevax.

However, Moderna’s year-over-year sales growth slowed significantly in the second quarter. The company’s first quarter revenue was more than three times the previous year. Moderna first introduced the Covid-19 vaccine in late 2020, and it is the company’s only product.

At the same time, Moderna’s profit fell 21% to $2.2 billion due to charges linked to expired vaccine doses and changes in purchase commitments.

These included an inventory write-off of $499 million for unused installments that have exceeded or are expected to exceed their authorized lives. The company also suffered a $184 million loss from firm purchase commitments and a $131 million charge for unused external capacity.

Moderna CEO Stephane Bancel said much of the cost came from reduced orders from Covax, the international initiative to vaccinate lower-income countries led by the World Health Organization and other groups.

“This is mainly related to Covax’s reduced orders,” Mr. Bancel said in an interview. “It was very disappointing because we signed a contract with Covax. We made very big investments,” and then Covax said it didn’t need some of the installments, he added.

A representative for Gavi, the Vaccine Alliance, a nonprofit that helps manage Covax, could not immediately be reached.

Moderna also attributed some of the cost to postponing deliveries to other customers, particularly in the European Union.

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In recent months, governments, drug companies and vaccination facilities have discarded tens of millions of unused doses of Covid-19 vaccines amid reduced demand, a sharp turnaround from the early days of the mass vaccination campaign, when doses were scarce.

But Mr. Bancel said the company has upfront deals representing about $21 billion in sales for the year, which will include Covid-19 booster shots. The company said it expects sales to accelerate in the final quarter of the year from the current quarter, due to the timing of approval of Moderna’s updated Covid-19 vaccines and the associated production ramp-up.

Moderna shares rose 4.3% in premarket trading. As of Tuesday, the stock is down nearly 37% so far this year.

Moderna is the latest drug company to report quarterly sales gains on continued demand for its Covid-19 products, following similar positives from Pfizer Inc.

and Abbott Laboratories.

Eli Lilly & Co. is expected to provide the quarterly update on Thursday.

Overall for the second quarter, Moderna reported net income of $2.2 billion, or $5.24 per share, up from $2.78 billion, or $6.46 per share, in the same period a year ago. Wall Street analysts had expected earnings of $4.70 per share for the quarter, according to FactSet.

Moderna also said its board approved a new $3 billion share buyback program.

Since the start of the Covid-19 pandemic in 2020, scientific understanding of its transmission and prevention has evolved. The WSJ’s Daniela Hernandez explains which strategies have worked to limit the spread of the virus and which are outdated in 2022. Illustration: Adele Morgan

Write to Peter Loftus at peter.loftus@wsj.com and Will Feuer at will.feuer@wsj.com

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