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Sales Growth Reflects Continued Strength in Oncology, Including Initial Uptake of KEYTRUDA QLEX, and Animal Health, Plus Contributions From Launches Such as WINREVAIR
Financial Highlights
Pipeline & Portfolio Highlights
Full-Year 2026 Financial Outlook
RAHWAY, N.J.--(BUSINESS WIRE)--Merck & Co., Inc., Rahway, N.J., USA (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2026.
“We continued to make substantial progress across our business this quarter, driven by strong execution and growing contributions from new product launches,” said Robert M. Davis, chairman and chief executive officer. “The FDA approval of LIPFENDRA is an exciting moment for our company and for patients, marking the latest milestone in our nearly 70-year legacy in cardiovascular disease. Together with key regulatory and clinical advances across oncology, HIV and immunology, this achievement reflects the strength of our pipeline and portfolio transformation as we bring forward the next wave of innovation. I am confident in the ongoing execution of our strategy as we deliver for patients and further enhance our long-term growth trajectory.”
Financial Summary
$ in millions, except EPS amounts | Second Quarter | |||
2026 | 2025 | Change | Change Ex- Exchange | |
Sales | $16,607 | $15,806 | 5% | 4% |
GAAP net (loss) income2 | (1,335) | 4,427 | N/M | N/M |
Non-GAAP net (loss) income that excludes certain items2,3* | (330) | 5,366 | N/M | N/M |
GAAP EPS | (0.54) | 1.76 | N/M | N/M |
Non-GAAP EPS that excludes certain items3* | (0.13) | 2.13 | N/M | N/M |
*Refer to table on page 7. | ||||
N/M - Not meaningful | ||||
For the second quarter of 2026, Generally Accepted Accounting Principles (GAAP) loss / earnings per share (EPS) assuming dilution was a loss per share of $0.54 and non-GAAP loss per share was $0.13. Both the GAAP and non-GAAP loss per share were due to a charge for the acquisition of Terns Pharmaceuticals, Inc. (Terns) of $2.31 per share. Both GAAP and non-GAAP EPS in the second quarter of 2025 include a charge of $0.07 per share for an upfront payment related to a license agreement with Jiangsu Hengrui Pharmaceutical Co., Ltd. (Hengrui Pharma).
Non-GAAP EPS excludes acquisition- and divestiture-related costs and costs related to restructuring programs, as well as income and losses from investments in equity securities. Non-GAAP EPS in the second quarter of 2025 also excludes tax benefits primarily resulting from favorable audit reserve adjustments.
Year-to-date results can be found in the attached tables.
Second-Quarter Sales Performance
The following table reflects sales of the Company’s top products and significant performance drivers.
| Second Quarter | ||||
$ in millions | 2026 | 2025 | Change | Change Ex-Exchange | Commentary |
Total Sales | $16,607 | $15,806 | 5% | 4% |
|
Pharmaceutical | 14,760 | 14,050 | 5% | 4% | Increase primarily driven by growth in oncology as well as cardiometabolic and respiratory, partially offset by a decline in diabetes. |
KEYTRUDA/
| 8,366 | 7,956 | 5% | 4% | Growth primarily driven by strong global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC), cervical cancer, head and neck cancer and bladder cancer, as well as higher global demand in metastatic indications, including urothelial cancer. Sales of KEYTRUDA QLEX were $463 million. |
GARDASIL/
| 1,169 | 1,126 | 4% | 3% | Increase primarily due to higher demand in Asia Pacific and Europe, as well as favorable timing of tenders in Europe, partially offset by lower demand in certain other international markets. |
PROQUAD, M-M-R II and VARIVAX | 592 | 609 | -3% | -3% | Decrease primarily reflects lower demand in the U.S., partially offset by higher net pricing in the U.S., higher demand in Europe and favorable private-sector purchasing patterns for M-M-R II in the U.S. |
WINREVAIR | 588 | 336 | 75% | 75% | Growth primarily reflects continued uptake in the U.S. and early launch uptake in certain international markets, particularly in Japan and Europe. |
BRIDION | 497 | 461 | 8% | 8% | Growth primarily due to higher demand and net pricing in the U.S. |
JANUVIA/JANUMET | 429 | 623 | -31% | -31% | Decline primarily due to lower demand and net pricing in the U.S. due to competition, as well as lower demand in China and most other international markets due to ongoing generic competition. |
Lynparza* | 365 | 370 | -1% | -2% | Relatively flat compared with prior year. |
PREVYMIS | 295 | 228 | 29% | 28% | Increase primarily due to higher demand in the U.S. and certain European markets, reflecting in part the launch of new indications. |
Lenvima* | 283 | 265 | 7% | 6% | Growth primarily due to higher demand in the U.S., partially offset by lower net pricing. |
WELIREG | 271 | 162 | 67% | 67% | Growth primarily driven by higher demand in the U.S. and continued launch uptake in several international markets, particularly in Japan, as well as favorable wholesaler purchasing patterns in the U.S. |
OHTUVAYRE | 204 | - | - | - | Product obtained as part of the Company’s October 2025 acquisition of Verona Pharma plc. Includes a benefit from the timing of specialty pharmacy purchases in the U.S. |
CAPVAXIVE | 184 | 129 | 42% | 40% | Increase primarily driven by launch uptake in several international markets, particularly in Asia Pacific and Europe, as well as in the U.S. |
VAXNEUVANCE | 148 | 229 | -35% | -36% | Decline primarily due to favorable prior period public-sector activity in the U.S., which increased sales in that period, as well as lower demand in the U.S. and in most international markets in the current period due to competitive pressure. |
LAGEVRIO | 5 | 83 | -95% | -95% | Decline largely due to lower demand in Japan and the U.S. |
Animal Health | 1,775 | 1,646 | 8% | 5% | Growth attributable to both Livestock and Companion Animal product portfolios. |
Livestock | 1,041 | 961 | 8% | 6% | Growth primarily driven by higher demand for ruminant and poultry products. |
Companion Animal | 734 | 685 | 7% | 5% | Growth primarily due to new product launches. Sales of BRAVECTO line of products were $359 million and $335 million in the current and prior-year quarters, respectively, which represents an increase of 7%, or 4% excluding impact of foreign exchange. |
Other Revenues** | 72 | 110 | -35% | -34% | Decline primarily due to lower revenue from third-party manufacturing arrangements. |
*Alliance revenue for this product represents the Company’s share of profits, which are product sales net of cost of sales and commercialization costs. | |||||
**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. | |||||
Second-Quarter Expense and Related Information
The table below presents selected expense information.
$ in millions | GAAP |
Acquisition-
|
Restructuring |
(Income)
|
Non- |
Second Quarter 2026 | |||||
Cost of sales | $4,395 | $1,067 | $184 | $- | $3,144 |
Selling, general and administrative | 2,904 | 17 | - | - | 2,887 |
Research and development | 9,741 | 6 | (1) | - | 9,736 |
Restructuring costs | 151 | - | 151 | - | - |
Other (income) expense, net | 99 | - | - | (191) | 290 |
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Second Quarter 2025 |
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Cost of sales | $3,557 | $576 | $165 | $- | $2,816 |
Selling, general and administrative | 2,649 | 15 | 1 | - | 2,633 |
Research and development | 4,048 | 3 | 53 | - | 3,992 |
Restructuring costs | 560 | - | 560 | - | - |
Other (income) expense, net | (7) | - | - | (61) | 54 |
GAAP Expense, EPS and Related Information
Gross margin was 73.5% for the second quarter of 2026 compared with 77.5% for the second quarter of 2025. The decrease was primarily due to higher amortization of intangible assets and inventory write-downs.
Selling, general and administrative (SG&A) expenses were $2.9 billion in the second quarter of 2026, an increase of 10% compared with the second quarter of 2025. The increase was primarily due to higher administrative costs (including investments in IT), as well as higher promotional costs in support of product launches.
Research and development (R&D) expenses were $9.7 billion in the second quarter of 2026 compared with $4.0 billion in the second quarter of 2025. The increase was largely due to a $5.7 billion charge for the acquisition of Terns and higher clinical development spending, partially offset by a $200 million reduction in R&D expenses as part of a funding agreement with Blackstone Life Sciences (Blackstone). R&D expenses in the second quarter of 2025 include a $200 million charge for an upfront payment related to a license agreement with Hengrui Pharma.
Other (income) expense, net, was $99 million of expense in the second quarter of 2026 compared with $7 million of income in the second quarter of 2025. The unfavorability was primarily due to higher net interest expense, partially offset by higher net income from investments in equity securities.
The income tax provision for the second quarter of 2026 was $654 million on a pretax loss of $683 million, resulting in an effective income tax rate of (95.9)%. This effective income tax rate includes a 108.9 percentage point unfavorable impact of the charge for the acquisition of Terns, for which no tax benefit was recorded.
GAAP loss per share was $0.54 for the second quarter of 2026 compared with earnings per share of $1.76 for the second quarter of 2025, largely due to higher charges for business development transactions, reflecting a $2.31 per share charge in the second quarter of 2026 for the acquisition of Terns compared with a $0.07 per share charge in the second quarter of 2025 related to a license agreement with Hengrui Pharma.
Non-GAAP Expense, EPS and Related Information
Non-GAAP gross margin was 81.1% for the second quarter of 2026 compared with 82.2% for the second quarter of 2025. The decrease was primarily due to higher inventory write-downs.
Non-GAAP SG&A expenses were $2.9 billion in the second quarter of 2026, an increase of 10% compared with the second quarter of 2025. The increase was primarily due to higher administrative costs (including investments in IT), as well as higher promotional costs in support of product launches.
Non-GAAP R&D expenses were $9.7 billion in the second quarter of 2026 compared with $4.0 billion in the second quarter of 2025. The increase was largely due to a $5.7 billion charge for the acquisition of Terns and higher clinical development spending, partially offset by a $200 million reduction in R&D expenses as part of a funding agreement with Blackstone. R&D expenses in the second quarter of 2025 include a $200 million charge for an upfront payment related to a license agreement with Hengrui Pharma.
Non-GAAP other (income) expense, net, was $290 million of expense in the second quarter of 2026 compared with $54 million of expense in the second quarter of 2025. The unfavorability was primarily due to higher net interest expense.
The non-GAAP income tax provision for the second quarter of 2026 was $882 million on pretax income of $550 million, resulting in a non-GAAP effective income tax rate of 160.3%. This effective income tax rate includes a 146.2 percentage point unfavorable impact of the charge for the acquisition of Terns, for which no tax benefit was recorded.
Non-GAAP loss per share was $0.13 for the second quarter of 2026 compared with earnings per share of $2.13 for the second quarter of 2025, largely due to higher charges for business development transactions, reflecting a $2.31 per share charge in the second quarter of 2026 for the acquisition of Terns compared with a $0.07 per share charge in the second quarter of 2025 related to a license agreement with Hengrui Pharma.
A reconciliation of GAAP to non-GAAP net (loss) income and EPS is provided in the table that follows.
Second Quarter | ||
$ in millions, except EPS amounts | 2026 | 2025 |
EPS |
| |
GAAP EPS | $(0.54) | $1.76 |
Difference | 0.41 | 0.37 |
Non-GAAP EPS that excludes items listed below3 | $(0.13) | $2.13 |
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Net (Loss) Income |
| |
GAAP net (loss) income2 | $(1,335) | $4,427 |
Difference | 1,005 | 939 |
Non-GAAP net (loss) income that excludes items listed below2,3 | $(330) | $5,366 |
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Excluded Items: |
| |
Acquisition- and divestiture-related costs4 | $1,090 | $594 |
Restructuring costs | 334 | 779 |
Income from investments in equity securities | (191) | (61) |
Increase to net loss / decrease to net income before taxes | 1,233 | 1,312 |
Estimated income tax benefit5 | (228) | (373) |
Increase to net loss / decrease to net income | $1,005 | $939 |
Pipeline and Portfolio Highlights
In the second quarter, the Company achieved key regulatory milestones across the portfolio while continuing to advance its broad and diverse pipeline.
Notable recent news releases on the Company’s pipeline and portfolio are provided in the table that follows. Visit the News Releases section of the Company’s website to read the releases.*
Oncology | FDA Approved KEYTRUDA and KEYTRUDA QLEX, Each With WELIREG, for Adjuvant Treatment of Certain Patients With ccRCC; Based on Results From Phase 3 LITESPARK-022 Trial |
FDA Approved KEYTRUDA and KEYTRUDA QLEX, Each With Padcev, as Treatment Before and After Surgery for Adults With MIBC; Based on Results From Phase 3 KEYNOTE-B15 Trial, Combined With Previous Approvals Based on Phase 3 KEYNOTE-905 Trial | |
FDA Approved KEYTRUDA and KEYTRUDA QLEX, Each With Trodelvy, as First-Line Treatment of PD-L1+ Advanced TNBC; Based on Results From Phase 3 KEYNOTE-D19/ASCENT-04 Trial | |
European Commission Approved KEYTRUDA Plus Padcev as First PD-1 Inhibitor Plus ADC Regimen for Adults With Cisplatin-Ineligible Resectable MIBC; Based on Results From Phase 3 KEYNOTE-905 Trial | |
FDA Granted BTD for Calderasib (MK-1084), an Investigational KRAS G12C Inhibitor, for Certain Patients With Newly Diagnosed Metastatic KRAS G12C-Mutant NSCLC | |
The Company Announced TroFuse-005 Trial Evaluating Sac-TMT Met Primary Endpoints of OS and PFS in Certain Patients With Advanced or Recurrent Endometrial Cancer | |
The Company and Moderna Presented 5-Year Data for Intismeran Autogene in Combination With KEYTRUDA in Patients With High-Risk Stage III/IV Melanoma Following Complete Resection at ASCO 2026 | |
KEYTRUDA as Monotherapy Significantly Improved PFS in Certain Patients With Advanced or Recurrent Endometrial Cancer With Mismatch Repair Deficient Tumors Compared to Chemotherapy; Results From Phase 3 KEYNOTE-C93 Trial | |
The Company Highlighted New Long-Term Data and Advancements Across Broad Oncology Portfolio and Pipeline Research at ASCO 2026 | |
The Company Completed Acquisition of Terns | |
Vaccines and
| The Company, in Collaboration With Gilead, Announced That the Once-Weekly Investigational Oral HIV Treatment Regimen of Islatravir and Lenacapavir (ISL/LEN) Maintained Virological Suppression in People With HIV Who Switched Antiretroviral Therapy |
The Company Presented New Data on Daily, Weekly and Monthly Options Across its HIV Treatment and Prevention Pipeline at AIDS 2026 | |
The Company Announced Initial Access Plans for Alimatravir (MK-8527), Its Investigational Once-Monthly Oral Pre-Exposure Prophylaxis in Phase 3 Development; Multi-Faceted Strategy Aims To Enable Rapid, Broad and Sustainable Access to Alimatravir, if Approved, in Low- And Middle-Income Countries | |
The Company Announced New Agreement With AIDS Drug Assistance Program Crisis Task Force To Improve Access and Care for People Living With HIV | |
FDA Approved an Additional Indication for CAPVAXIVE in Children and Adolescents Aged 2 Through 17 at Increased Risk for Pneumococcal Disease; Based on Results From Phase 3 STRIDE-13 Trial | |
Cardiometabolic and Respiratory | FDA Approved LIPFENDRA, the First and Only Once-Daily Oral PCSK9 Inhibitor To Reduce LDL-C in Adults With Hypercholesterolemia; Based on Results From CORALreef Lipids and CORALreef HeFH Trials |
Immunology | Tulisokibart Met Primary and Key Secondary Endpoints in the Phase 3 ATLAS-UC Induction-only Study in Patients With Moderately to Severely Active UC |
Animal Health | The Company’s Animal Health Business Completed Acquisition of TARGAN, Broadening Its Commercial Poultry Portfolio Through TARGAN’s Innovative High-Speed Biodevice Technology |
*References in the above news release titles have been modified for the purpose of this announcement. | |
Upcoming Investor Event
The Company will hold an Oncology Investor Event to coincide with the European Society for Medical Oncology Congress 2026 on Monday, Oct. 26, 2026, at 6 p.m. CET / 1 p.m. EDT, during which senior management will provide an update on the Company’s oncology strategy and program. The event will take place in Madrid, Spain, and will be accessible via live audio webcast at this weblink.
Full-Year 2026 Financial Outlook
The following table summarizes the Company’s full-year financial outlook.
| Full Year 2026 | |
| Updated | Prior |
Sales* | $66.3 billion to $67.3 billion | $65.8 billion to $67.0 billion |
Non-GAAP Gross margin3 | Approximately 81% | Approximately 82% |
Non-GAAP Operating expenses3** | $42.0 billion to $42.7 billion | $36.0 billion to $36.8 billion |
Non-GAAP Other (income) expense, net3 | Approximately $1.4 billion expense | Approximately $1.3 billion expense |
Non-GAAP Effective income tax rate3 | 35.0% to 36.0% | 23.5% to 24.5% |
Non-GAAP EPS3*** | $2.66 to $2.76 | $5.04 to $5.16 |
Share count (assuming dilution) | Approximately 2.48 billion | Approximately 2.48 billion |
*The Company does not have any non-GAAP adjustments to sales. | ||
**Includes one-time R&D charges of $9.0 billion for the acquisition of Cidara Therapeutics, Inc. (Cidara) and $5.7 billion for the acquisition of Terns. Outlook does not assume any additional significant potential business development transactions. | ||
***Includes one-time charges of $3.62 per share for the acquisition of Cidara and $2.31 per share for the acquisition of Terns. | ||
Media Contacts:
Michael Levey
michael.levey@msd.com
John Cummins
john.cummins2@msd.com
Investor Contacts:
Peter Dannenbaum
(732) 594-1579
Steven Graziano
(732) 594-1583
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