Merck & Co (MRK) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $15.5B, down 2% year-over-year but up 1% excluding FX, driven by Oncology, Animal Health, and new launches such as WINREVAIR and CAPVAXIVE, while GARDASIL sales declined sharply in China.

• Net income rose to $5.08B, with GAAP EPS up 7% to $2.01 and non-GAAP EPS up 7% to $2.22, reflecting prior-year acquisition charges.

• Continued significant investment in U.S. manufacturing, with $12B since 2018 and over $9B more committed through 2028.

• Expanded late-phase pipeline, targeting over $50B commercial opportunity by mid-2030s, with key regulatory milestones and positive trial data in oncology, vaccines, and cardiovascular.

• Strategic focus on R&D, business development, and navigating patent expiries and regulatory changes.

Financial highlights

• Q1 2025 revenue: $15.5B, down 2% year-over-year; U.S. sales up 14%, international sales down 16%.

• Gross margin improved to 82.2% (non-GAAP) and 78.0% (GAAP), up 1 percentage point year-over-year.

• Operating expenses decreased to $6.1B; non-GAAP EPS was $2.22, GAAP EPS $2.01; net income $5.08B.

• Keytruda sales grew 6% to $7.2B; Welireg up 63% to $137M; Gardasil sales fell 40–41% to $1.3B due to China.

• Animal Health sales up 10% to $1.6B, driven by livestock and companion animal demand.

Outlook and guidance

• Full-year 2025 revenue guidance maintained at $64.1–$65.6B (1–3% growth ex-FX); non-GAAP EPS guidance $8.82–$8.97, including $0.06/share one-time charge for Hengrui Pharma license.

• Gross margin expected at ~82%, with $200M in tariff costs and $200M Hengrui upfront payment included.

• Operating expenses projected at $25.6–$26.6B; tax rate expected at 15.5–16.5%.

• Gardasil growth outside China expected to slow as Japan catch-up cohort ends; Keytruda U.S. sales to rebound in Q3 due to wholesaler timing.