The third-quarter earnings season has picked up pace with 116 S&P 500 members (as of Oct 21), accounting for 23.2% of the index’s total market capitalization, having reported results, according to the Earnings Preview report.

While total earnings for these 116 index members were up 3.3% from the year-ago quarter, revenues were up 1.8% year over year. The beat ratio was 80.2% for earnings and 62.9% for revenues.

Notably, the third quarter is on track to be the first quarter to show positive earnings growth after five consecutive quarters of earnings decline for the S&P 500 index. The picture is expected to steadily improve hereafter.

In the healthcare sector, Johnson & Johnson JNJ was the first major company to report this season. Third-quarter results were strong with the company beating on all fronts and raising the lower end of the earnings outlook for the year. J&J’s Pharma segment continued to perform well despite challenges like generic competition for a few products, potential biosimilar competition and lower HCV revenues. Abbott Laboratories ABT, which also reported last week, beat the Zacks Consensus Estimate for earnings while delivering in-line earnings.

Four more companies from the healthcare sector are set to report their third-quarter results on Oct 25. Let's see how things are shaping up for their respective announcements.

Merck & Co., Inc. MRK

Merck posted a positive surprise of 1.09% in the last reported quarter. The company surpassed estimates in all the past four quarters, resulting in an average positive surprise of 3.37%.

The company has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the quarter is pegged at 98 cents.

MERCK & CO INC Price and EPS Surprise

MERCK & CO INC Price and EPS Surprise | MERCK & CO INC Quote

Merck’s new products, especially Keytruda (cancer) and Zepatier (HCV) have been doing well with the trend expected to continue. However, the company will continue to face headwinds in the form of genericization as well as heightened competition. (Read More: Can Merck Keep the Earnings Streak Alive in Q3?).

Eli Lilly and Company LLY

Last quarter, Lilly delivered a positive earnings surprise of 1.18%. The company surpassed estimates in three of the trailing four quarters, with an average positive surprise of 4.31%.

LILLY ELI & CO Price and EPS Surprise

LILLY ELI & CO Price and EPS Surprise | LILLY ELI & CO Quote

The Zacks Consensus Estimate for the quarter is pegged at 96 cents per share. The company has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

New products like Trulicity and Cyramza as well as strong performance by the company’s older products like Trajenta, Cialis, Forteo, Humalog Strattera and Erbitux drove significant top-line growth in the second quarter of 2016. Also, the animal health business and the diabetes franchise did reasonably well in the quarter. We expect the trend to continue in the third quarter as well. However, sales of Alimta, Cymbalta and Zyprexa are likely to decline further. (Read More: Can Eli Lilly Pull a Surprise this Earnings Season?).

Novartis AG NVS

In the last reported quarter, Novartis recorded a positive earnings surprise of 3.39%. Overall, Novartis posted an average negative earnings surprise of 2.38% in the four trailing quarters.

NOVARTIS AG-ADR Price and EPS Surprise

NOVARTIS AG-ADR Price and EPS Surprise | NOVARTIS AG-ADR Quote

The Swiss drugmaker has an Earnings ESP of +2.54% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at $1.18 per share.

Innovative Medicines is expected to continue being impacted by generic competition due to the genericization of Gleevec/Glivec in the U.S. The company’s ophthalmologic division, Alcon, continues to face challenges due to a slowdown in cataract equipment placements and weak sales of intraocular lenses. Going forward, we expect these factors to dampen sales at the segment. On the other hand, Novartis’ generic arm, Sandoz, in its efforts to strengthen the biosimilars portfolio and pipeline, should offset weakness in Alcon. (Read More: Novartis Q3 Earnings: Stock to Beat Estimates Again?).

Vertex Pharmaceuticals Incorporated VRTX

Vertex’s track record is mixed with the company delivering positive surprises in three of the last four quarters and missing the expectation in one. The average earnings surprise over the last four quarters is a negative 63.54%. In the last reported quarter, Vertex recorded a positive earnings surprise of 50.0%.

VERTEX PHARM Price and EPS Surprise

VERTEX PHARM Price and EPS Surprise | VERTEX PHARM Quote

The company has an Earnings ESP of -66.67% and a Zacks Rank #5. The Zacks Consensus Estimate for the quarter is pegged at a loss of 6 cents per share.

Kalydeco’s revenues should continue growing reflecting the continued increase in the number of patients initiating treatment with Kalydeco globally. However, Orkambi sales growth has been slower than expected. (Read More: Vertex Q3 Earnings: What's in Store for the Stock?)

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