Merck & Co (MRK) Q3 2026 earnings summary

Executive summary

• Q3 sales were $18.085B, up 5% reported and 4% excluding FX, with growth in oncology, newer products and Animal Health. U.S. purchase timing benefited sales by ~$550M.

• Clinical and regulatory progress across oncology, immunology, cardiometabolic, respiratory and ophthalmology advanced the pipeline beyond the KEYTRUDA LOE period.

• Nine-month GAAP net loss was $510M, primarily reflecting $14.7B in acquired IPR&D charges for Cidara and Terns.

Financial highlights

• Q3 sales were $18.085B vs. $17.276B a year earlier; GAAP net income attributable to shareholders was $5.065B vs. $5.785B.

• Non-GAAP EPS was $2.49 vs. $2.58, down 3% reported and 5% excluding FX; it included a $0.12/share SciBrunch charge. GAAP EPS was $2.04 vs. $2.32.

• Non-GAAP gross margin was 81.4% vs. 81.9%; non-GAAP operating expenses rose 12% to $7.4B, reflecting launch and pipeline investment.

• Q3 operating income was $5.559B vs. $6.745B; higher operating costs, amortization, interest expense and restructuring weighed on GAAP results.

• Nine-month operating cash flow was $15.8B vs. $13.6B.

Outlook and guidance

• FY 2026 revenue guidance rose and narrowed to $66.8B–$67.3B, implying 3%–4% reported growth and 2%–3% excluding FX; assumptions include ~1 percentage point of FX benefit.

• FY 2026 non-GAAP EPS guidance rose and narrowed to $2.77–$2.82, including ~$0.15/share of FX benefit; non-GAAP gross margin is ~81%, operating expenses $42.4B–$42.9B and tax rate 32%–33%.

• 2027 outlook calls for moderate revenue growth; launches and Animal Health growth are expected to be partly offset by >$2B in generic and LOE headwinds, including BRIDION, JANUVIA family and ADEMPAS.

• 2027 gross margin is expected to rise as a KEYTRUDA royalty rolls off; underlying operating expenses are expected to grow at a mid-to-high single-digit rate.

• KEYTRUDA and WINREVAIR purchase-timing benefits are expected to unwind in Q4; most vaccine timing benefit, primarily GARDASIL, is expected to unwind in 2027.