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.

• Advanced over 20 new products with a projected $70 billion commercial opportunity, with several clinical milestones reached ahead of schedule.

• Completed acquisition of Terns Pharmaceuticals, strengthening the hematology pipeline and adding MK-4208.

• 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.

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

Financial highlights

• Q2 2026 revenue: $16.6 billion, up 5% year-over-year; human health $14.8 billion (+5%), animal health $1.8 billion (+8%).

• Oncology sales: KEYTRUDA/KEYTRUDA QLEX up 4–5% to $8.4 billion; WELIREG up 67% to $271 million; WINREVAIR up 75% to $588 million.

• Vaccines: GARDASIL sales $1.2 billion (+3–4%), CAPVAXIVE $184 million (+40%).

• Gross margin: 81.1% (non-GAAP, down 1.1 pts YoY); GAAP gross margin: 73.5% (down from 77.5%).

• Operating expenses: $12.6 billion, including $5.7 billion Terns charge; R&D expenses rose to $9.7 billion.

• Reported loss per share: GAAP $(0.54), non-GAAP $(0.13), both impacted by Terns acquisition charge.

Outlook and guidance

• Raised and narrowed 2026 revenue guidance to $66.3–$67.3 billion (+2–4% YoY), including ~1% FX benefit.

• Full-year non-GAAP EPS expected at $2.66–$2.76, including $2.31/share Terns charge; GAAP EPS guidance reflects additional Cidara charge.

• Gross margin expected at ~81%; operating expenses $42–$42.7 billion, including Terns charges.

• Tax rate guidance: 35–36% (non-GAAP); GAAP effective tax rate (95.9)% due to non-deductible charges.

• U.S. KEYTRUDA growth to moderate as peak penetration nears; OHTUVAYRE Q3 sales to be impacted by specialty pharmacy inventory unwind.