Merck & Co (MRK) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $16.3 billion, up 5% year-over-year (3% ex-FX), driven by oncology, animal health, and new product launches.

• Oncology sales, led by KEYTRUDA, reached $8.0 billion (up 8–12%), with strong growth in metastatic and earlier-stage cancers; WINREVAIR sales up 88% to $525 million.

• Animal Health sales rose 13% to $1.8 billion, with strong performance in both livestock and companion animal segments.

• Major acquisitions included Cidara Therapeutics ($9.0B charge) and the pending Terns Pharmaceuticals deal, expanding the hematology pipeline.

• Achieved significant regulatory milestones, including FDA approval for IDVYNSO (HIV-1), NUMELVI (canine dermatitis), and priority review for I-DXd in lung cancer.

Financial highlights

• Q1 2026 sales: $16.3B, up 5% year-over-year; GAAP net loss: $(4.2)B, or $(1.72) per share, due to a $9.0B R&D charge for the Cidara acquisition.

• Non-GAAP loss per share: $(1.28), both GAAP and non-GAAP reflecting a $3.62 per share Cidara charge.

• Gross margin: 74.2% (GAAP), 81.9% (non-GAAP), both down year-over-year due to acquisition-related costs.

• Operating expenses: $15.2B, including the $9.0B Cidara charge; operating cash flow was $3.9B.

• Effective tax rate: (20.1)% (GAAP), (43.5)% (non-GAAP), both impacted by the Cidara charge.

Outlook and guidance

• 2026 revenue guidance raised to $65.8–$67.0B (1–3% growth, ~1% FX tailwind); non-GAAP EPS guidance: $5.04–$5.16, including a $3.62 per share Cidara charge.

• Guidance excludes the impact of the pending Terns acquisition, which is expected to result in a $5.8B one-time charge ($2.35/share) and $0.12/share ongoing EPS headwind in 2026.

• SG&A expenses expected to rise as investments in launches increase through the year.

• Key products like Januvia and Janumet will lose U.S. exclusivity in May 2026, with significant sales declines expected.

• Anticipates continued pricing and volume pressures from U.S. and international healthcare reforms.