MRK Q2 Earnings & Sales Beat Estimates, '26 Sales View Raised

Revenues in the second quarter increased 5% year over year on a reported basis and 4% excluding foreign exchange (Fx) to $16.61 billion. Sales beat the Zacks Consensus Estimate of $16.33 billion, driven by strong oncology sales and newer product launches.

All sales growth numbers discussed below are on a year-over-year basis and exclude Fx impact.

MRK's Keytruda Sales Beat Estimates

Combined Keytruda and Keytruda Qlex sales increased 4% to $8.37 billion. The reported figure topped the Zacks Consensus Estimate of $8.06 billion. Keytruda Qlex, the subcutaneous formulation of Keytruda, contributed $463 million during the reported quarter.

Growth was driven by strong global uptake across earlier-stage indications, including triple-negative breast, cervical, head and neck, and bladder cancers. Higher global demand in metastatic indications, including urothelial cancer, also supported sales.

Merck's Other Oncology Drugs Show Growth

Welireg sales surged 67% to $271 million, reflecting higher demand in the United States and continued launch uptake across international markets, particularly Japan. Favorable wholesaler purchasing patterns in the United States also aided performance.

Alliance revenues from Eisai-partnered Lenvima increased 6% to $283 million, driven by higher U.S. demand, partly offset by lower net pricing.

Alliance revenues from AstraZeneca AZN-partnered Lynparza declined 2% to $365 million.

MRK's Vaccines Deliver Mixed Performance

HPV vaccines — Gardasil and Gardasil 9 — generated sales of $1.17 billion, up 3%. The figure was slightly below the Zacks Consensus Estimate of $1.18 billion.

Higher demand in the Asia Pacific and Europe, along with favorable tender timing in Europe, supported the franchise. These gains were partly offset by lower demand in certain other international markets.

Combined sales of ProQuad, M-M-R II and Varivax declined 3% to $592 million, mainly due to lower demand in the United States.

Merck's Newer Products Add Momentum

Winrevair sales jumped 75% to $588 million, reflecting continued uptake in the United States and early launch momentum across international markets, particularly Japan and Europe.

Ohtuvayre, added through the October 2025 acquisition of Verona Pharma, contributed $204 million, including a benefit from the timing of specialty pharmacy purchases.

Capvaxive sales increased 40% to $184 million, driven by launch uptake in the United States and several international markets.

Merck's Established Drugs Post Mixed Results

In Diabetes, the Januvia/Janumet franchise recorded sales of $429 million, which declined 31%. The decrease reflected lower U.S. demand and net pricing due to competition, along with lower demand in China and most other international markets amid ongoing generic competition.

However, Bridion sales rose 8% to $497 million, primarily due to higher demand and net pricing in the United States. Prevymis sales increased 28% to $295 million, driven by higher demand in the United States and certain European markets.

MRK's Animal Health Sales Top Estimate

Animal Health revenues rose 5% to $1.78 billion, marginally surpassing the Zacks Consensus Estimate of $1.77 billion. Growth was supported by both the Livestock and Companion Animal product portfolios.

Livestock sales increased 6% to $1.04 billion, mainly driven by higher demand for ruminant and poultry products. Companion Animal sales rose 5% to $734 million, supported by new product launches.

Discussion on MRK's Operating Expenses

Adjusted selling, general and administrative expenses rose 10% to $2.89 billion, reflecting higher administrative costs, including investments in information technology, and increased promotional spending to support product launches.

Adjusted research and development expenses increased to $9.74 billion from $3.99 billion in the year-ago quarter. The rise primarily resulted from a $5.7 billion charge related to the Terns acquisition and higher clinical development spending, partly offset by a $200 million reduction under a funding agreement with Blackstone Life Sciences.

MRK Updates 2026 Outlook

Merck raised and narrowed its 2026 sales guidance to $66.3-$67.3 billion from $65.8-$67.0 billion. The outlook includes an expected positive Fx impact of approximately 1% based on mid-July exchange rates.

The company now expects adjusted earnings of $2.66-$2.76 per share, down from its previous guidance of $5.04-$5.16. The revised range includes a one-time charge of $2.31 per share related to the Terns acquisition and approximately 12 cents per share in financing and development costs.

Adjusted operating expenses are now expected to be in the range of $42.0-$42.7 billion compared with the earlier projection of $36.0 billion to $36.8 billion.

The adjusted tax rate guidance was raised to 35-36% compared to the previous guidance of 23.5-24.5%.

Our Take on MRK’s Results

Merck delivered better-than-expected second-quarter results, with both adjusted earnings and revenues surpassing estimates. Keytruda remained the company’s principal growth driver, while Winrevair, Welireg, Capvaxive and Ohtuvayre broadened contributions from newer products. Animal Health also maintained steady momentum. However, Gardasil sales were slightly below expectations, while continued erosion in the Januvia/Janumet franchise remained a headwind.

The raised sales outlook reflects solid commercial execution across oncology, cardiometabolic and respiratory products. Shares of Merck rose in premarket trading today following the results, likely reflecting investor optimism over the increased sales guidance. The downward revision to EPS was largely expected, as it incorporated charges and financing costs related to the completed Terns acquisition.

Year to date, the stock has risen 21% compared with the industry’s 8% growth.

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Recent pipeline progress has also been encouraging. The FDA approved Lipfendra, a once-daily oral PCSK9 inhibitor, while Merck announced positive phase III results for sacituzumab tirumotecan in certain patients with advanced or recurrent endometrial cancer. The company also reported positive late-stage data on a once-weekly oral HIV regimen developed in collaboration with Gilead Sciences GILD.

MRK’s Zacks Rank

Merck currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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