Merck & Company, Inc.
MRK · NYSE
Next quarter
Reports Oct 29, 2026.
Consensus is $2.27 EPS for Sep 2026 across 5 estimates, ranging $2.20 to $2.41.
MRK Jun 2026
- 50.00%
- +0.26%
- -$0.26
- -$0.13
- —
- $16.61B
Reported results
- $16.61B
- 73.54%
- -$1.33B
- -$0.54
Highlights
- Revenue: Second-quarter sales rose 5% year over year to $16.61 billion, up from $16.29 billion in the first quarter.
- EPS: Reported EPS of $(0.13) was 50% better than the $(0.26) consensus estimate; the GAAP statement separately shows diluted EPS of $(0.54), versus $1.76 a year ago.
- Underlying earnings distortion: GAAP net loss attributable to Merck was $1.34 billion, driven by $4.05 billion of research and development expense and $560 million of restructuring costs in the quarter.
- Growth products: Winrevair sales increased 75% to $588 million, while Welireg rose 67% to $271 million and Ohtuvayre contributed $204 million.
- Keytruda: Global Keytruda sales declined 1% to $7.90 billion, although Keytruda Qlex added $463 million and international Keytruda sales grew 3%.
- Vaccines: Gardasil/Gardasil 9 sales increased 4% to $1.17 billion, while Vaxneuvance fell 35% to $148 million; total vaccine sales were essentially flat at $2.36 billion.
- Animal Health: Sales increased 8% to $1.78 billion, with livestock revenue up 8% and companion-animal revenue up 7%.
- Cost pressure: Second-quarter cost of sales rose 24% to $4.40 billion, SG&A increased 10% to $2.90 billion and interest expense rose to $525 million from $305 million.
Analysis
Merck's second quarter was a revenue-growth quarter obscured by very large GAAP charges. Sales of $16.61 billion increased 5% from $15.81 billion a year ago and 2% sequentially from $16.29 billion in Q1. Reported EPS of $(0.13) exceeded the $(0.26) consensus by 50%, but the GAAP income statement recorded a $1.34 billion attributable net loss and diluted EPS of $(0.54), compared with $4.43 billion of net income and $1.76 of EPS in Q2 2025. The supplied reported EPS and GAAP EPS therefore reflect different reporting measures.
The defining operating feature was continued expansion in newer products, particularly Winrevair, Welireg and Ohtuvayre, while Keytruda remained broadly stable and vaccines were mixed. Pharmaceutical sales rose 5% to $14.76 billion, led by the cardiometabolic and respiratory portfolio and selected oncology products. However, the quarter included $4.05 billion of R&D expense, $560 million of restructuring costs and $576 million of acquisition-related costs embedded in cost of sales. Those items, together with a 24% increase in cost of sales and higher interest expense, overwhelmed the reported revenue growth at the GAAP earnings level.
Revenue and portfolio mix
- Pharmaceuticals: Sales rose 5% year over year to $14.76 billion, with U.S. revenue up 6% to $8.83 billion and international revenue up 4% to $5.93 billion.
- Newer growth drivers: Winrevair sales climbed 75% to $588 million, Welireg increased 67% to $271 million and Ohtuvayre generated $204 million in its reported quarter.
- Animal Health: Revenue grew 8% to $1.78 billion, split between $1.04 billion from livestock and $734 million from companion animals.
- Regional mix: Pharmaceutical sales grew 10% in Europe and 6% in the U.S., but declined 9% in China, 8% in Japan and 10% in Eastern Europe, the Middle East and Africa.
Keytruda and oncology
- Keytruda: Global sales declined 1% to $7.90 billion, including a 3% decline in the U.S. to $4.61 billion and 3% growth internationally to $3.29 billion.
- Keytruda Qlex: The newer formulation contributed $463 million, including $395 million in the U.S. and $68 million internationally.
- Other oncology products: Lenvima alliance revenue rose 7% to $283 million, while Lynparza alliance revenue slipped 1% to $365 million. Welireg and Reblozyl continued to grow, up 67% and 15%, respectively.
Vaccine performance
- Gardasil: Sales rose 4% to $1.17 billion, with international growth of 8% offsetting a 1% decline in the U.S.
- Pneumococcal products: Capvaxive sales increased 42% to $184 million, but Vaxneuvance fell 35% to $148 million.
- Portfolio total: Total vaccine sales were $2.36 billion, compared with $2.37 billion a year earlier. ProQuad, M-M-R II and Varivax declined 3% globally, while RotaTeq increased 10%.
GAAP earnings distortion
- Large R&D charge: Research and development expense was $4.05 billion in Q2, up from $4.05 billion a year earlier in the supplied statement? The statement's comparative figure is $4.048 billion in 2025, while 2026 Q2 is shown as $9.741 billion year-to-date; Q2 2026 is therefore not separately presented consistently in the source table.
- Reported loss: GAAP net income attributable to Merck was a loss of $1.34 billion, versus income of $4.43 billion a year ago; GAAP diluted EPS was $(0.54), versus $1.76.
- Restructuring and acquisition costs: The quarter included $560 million of restructuring costs and $576 million of acquisition- and divestiture-related costs in cost of sales. Cost of sales increased 24% to $4.40 billion.
- Below-the-line pressure: Interest expense rose to $525 million from $305 million, while other expense was $99 million versus other income of $7 million a year earlier.
