Merck & Co (MRK) Q2 2026 earnings summary

Executive summary

• Achieved Q2 2026 revenue of $16.6 billion, up 5% year-over-year, driven by oncology, animal health, and new product launches.

• Reported a GAAP net loss of $1.3 billion and a non-GAAP net loss of $330 million, both reflecting a $2.31 per share charge for the Terns acquisition.

• Strategic acquisitions, including Terns Pharmaceuticals, strengthened the hematology pipeline and added MK-4208.

• Key regulatory milestones included FDA approvals for LIPFENDRA and expanded indications for KEYTRUDA and KEYTRUDA QLEX.

• Continued pipeline progress with positive clinical results in oncology, cardiometabolic, immunology, and infectious diseases.

Financial highlights

• Q2 2026 sales reached $16.6 billion, a 5% increase year-over-year; human health sales were $14.8 billion (+5%), animal health $1.8 billion (+8%).

• Oncology sales, led by KEYTRUDA/KEYTRUDA QLEX, reached $8.4 billion (+5%), with KEYTRUDA QLEX contributing $463 million.

• WINREVAIR sales surged 75% to $588 million; Animal Health sales grew 8% to $1.8 billion.

• GAAP loss per share was $0.54; non-GAAP loss per share was $0.13, both impacted by the Terns acquisition charge.

• Gross margin declined to 73.5% (GAAP) and 81.1% (non-GAAP) due to higher amortization and inventory write-downs.

Outlook and guidance

• Full-year 2026 sales outlook raised to $66.3–$67.3 billion, reflecting strong product performance and FX tailwinds.

• Non-GAAP EPS guidance narrowed to $2.66–$2.76, including one-time charges for Terns and Cidara acquisitions.

• Gross margin guidance revised to ~81.0%; operating expenses expected at $42.0–$42.7 billion.

• Non-GAAP effective tax rate expected at 35.0–36.0%, reflecting non-deductible acquisition charges.

• Ongoing pricing pressures from U.S. and international healthcare reforms expected to impact future sales and profits.