Merck & Co., Inc., Rahway, N.J., USA Announces Third-Quarter 2026 Financial Results; Highlights Multiple Milestones Advancing Broad, Diverse Pipeline
Merck & Co., Inc. (MRK) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 - 1 - News Release Merck & Co., Inc., Rahway, N.J., USA Announces Third-Quarter 2026 Financial Results; Highlights Multiple Milestones Advancing Broad, Diverse Pipeline Sales Growth Reflects Continued Strength in Oncology and Animal Health, Plus Contributions From Ot
How this was made
The 30-second read
Why it matters
The updated guidance signals continued growth in key oncology products, potentially boosting investor confidence.
Market read
Large‑cap pharma earnings with updated guidance can move the sector and influence related stocks.
What to watch
One‑time charge of $0.12 per share and competitive pressures on Januvia may temper enthusiasm.
Third-quarter sales rose 5% to $18,085 million, led by oncology, WINREVAIR and Animal Health, while GAAP EPS declined 12% to $2.04 and the company narrowed and raised the midpoint of its full-year sales and non-GAAP EPS outlook.
Sales grew 5%, supported by KEYTRUDA/KEYTRUDA QLEX, WINREVAIR, vaccines and Animal Health, and the company raised the midpoint of sales and non-GAAP EPS guidance. However, GAAP net income declined 12%, non-GAAP EPS declined 3%, and gross margins contracted as expenses increased.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third Quarter SalesGAAP | $18.09B | – | 5% |
| Third Quarter Cost of salesGAAP | $4.89B | – | 27% |
| Third Quarter Gross marginGAAP | 72.9% | – | – |
| Third Quarter Selling, general and administrativeGAAP | $2.89B | – | 10% |
| Third Quarter Research and developmentGAAP | $4.54B | – | 7% |
| Third Quarter Restructuring costsGAAP | $184M | – | – |
| Third Quarter Other (income) expense, netGAAP | $27M | – | – |
| Third Quarter Income Before TaxesGAAP | $5.56B | – | -18% |
| Third Quarter Income Tax ProvisionGAAP | $492M | – | – |
| Third Quarter Net Income Attributable to Merck & Co., Inc., Rahway, N.J., USAGAAP | $5.07B | – | -12% |
| Third Quarter GAAP EPS assuming dilutionGAAP | $2.04 | – | -12% |
| Third Quarter Average Shares Outstanding Assuming DilutionGAAP | 2.48B | – | – |
| Third Quarter Effective Income Tax RateGAAP | 8.9% | – | – |
| Third Quarter Non-GAAP Cost of salesnon-GAAP | $3.36B | – | – |
| Third Quarter Non-GAAP Gross marginnon-GAAP | 81.4% | – | – |
| Third Quarter Non-GAAP Selling, general and administrativenon-GAAP | $2.86B | – | 10% |
| Third Quarter Non-GAAP Research and developmentnon-GAAP | $4.53B | – | 13% |
| Third Quarter Non-GAAP Other (income) expense, netnon-GAAP | $420M | – | – |
| Third Quarter Non-GAAP Income Before Taxesnon-GAAP | $6.91B | – | – |
| Third Quarter Non-GAAP Income Tax Provisionnon-GAAP | $753M | – | – |
| Third Quarter Non-GAAP Net Income Attributable to Merck & Co., Inc., Rahway, N.J., USAnon-GAAP | $6.16B | – | -4% |
| Third Quarter Non-GAAP EPSnon-GAAP | $2.49 | – | -3% |
| Third Quarter Non-GAAP Effective Income Tax Ratenon-GAAP | 10.9% | – | – |
| September YTD SalesGAAP | $50.98B | – | 5% |
| September YTD Cost of salesGAAP | $13.48B | – | 24% |
| September YTD Selling, general and administrativeGAAP | $8.49B | – | 8% |
| September YTD Research and developmentGAAP | $26.87B | – | – |
| September YTD Restructuring costsGAAP | $530M | – | -22% |
| September YTD Other (income) expense, netGAAP | $262M | – | – |
| September YTD Income Before TaxesGAAP | $1.34B | – | -92% |
| September YTD Net Income (Loss) Attributable to Merck & Co., Inc., Rahway, N.J., USAGAAP | −$510M | – | – |
| September YTD Earnings (Loss) per Common Share Assuming DilutionGAAP | $(0.21) | – | – |
| September YTD Non-GAAP Net Income Attributable to Merck & Co., Inc., Rahway, N.J., USAnon-GAAP | $2.67B | – | – |
| September YTD Non-GAAP EPSnon-GAAP | $1.08 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| PharmaceuticalIncrease primarily driven by growth in KEYTRUDA/KEYTRUDA QLEX, WINREVAIR, GARDASIL/GARDASIL 9, WELIREG, ENFLONSIA and the inclusion of OHTUVAYRE sales. Growth benefited from the timing of purchases by approximately $550 million. | $16.27B | – | 4% |
| KEYTRUDA/KEYTRUDA QLEXGrowth primarily driven by strong global uptake in earlier-stage indications and higher global demand in metastatic indications. Sales of KEYTRUDA QLEX were $830 million. | $8.60B | – | 6% |
| GARDASIL/GARDASIL 9Increase primarily due to higher sales in the U.S. reflecting favorable public-sector purchasing patterns and higher net pricing. | $2.00B | – | 14% |
| PROQUAD, M-M-R II and VARIVAXIncrease primarily due to higher demand in certain European markets. | $730M | – | 7% |
| WINREVAIRGrowth primarily reflects higher demand and favorable wholesaler and specialty pharmacy purchasing patterns in the U.S., as well as launch uptake in certain international markets, particularly in Europe and Japan. | $694M | – | 93% |
| JANUVIA/JANUMETDecline primarily driven by lower demand due to generic competition following loss of market exclusivity in the U.S. | $380M | – | -39% |
| LynparzaDecline primarily due to lower net pricing in the U.S. and lower demand and pricing in China. | $352M | – | -7% |
| PREVYMISIncrease primarily due to higher demand globally. | $347M | – | 30% |
| WELIREGGrowth primarily driven by higher demand in the U.S. and continued launch uptake in international markets, particularly in Japan. | $307M | – | 56% |
| LenvimaGrowth primarily due to higher demand in the U.S. | $287M | – | 11% |
| CAPVAXIVEIncrease primarily driven by launch uptake in several international markets, partially offset by lower sales in the U.S. reflecting lower adult pneumococcal vaccination rates and lower net pricing. | $263M | – | 8% |
| ENFLONSIAIncrease primarily driven by seasonal demand and associated inventory build in the U.S. and certain international markets. | $187M | – | 138% |
| OHTUVAYREProduct obtained as part of the Company's October 2025 acquisition of Verona Pharma plc. | $184M | – | – |
| BRIDIONDecline primarily driven by lower demand in the U.S. due to generic competition following loss of market exclusivity. | $144M | – | -67% |
| LAGEVRIODecline largely due to lower demand in Japan. | $17M | – | -88% |
| Animal HealthGrowth attributable to both Livestock and Companion Animal product portfolios. | $1.68B | – | 4% |
| LivestockGrowth primarily driven by higher demand for poultry products. | $1.05B | – | 2% |
| Companion AnimalGrowth largely driven by new product launches. | $628M | – | 6% |
| BRAVECTO line of productsSales were flat excluding impact of foreign exchange. | $264M | – | 1% |
| Other RevenuesIncrease primarily due to favorable impact of revenue-hedging activities, partially offset by lower revenue from third-party manufacturing arrangements. | $141M | – | 185% |
| Alliance Revenue – ReblozylAlliance Revenue represents royalties. | $177M | – | 31% |
| VaxneuvanceNot provided. | $195M | – | -14% |
| RotaTeqNot provided. | $196M | – | -4% |
| ZerbaxaNot provided. | $90M | – | 11% |
| DelstrigoNot provided. | $67M | – | -13% |
| Isentress/Isentress HDNot provided. | $52M | – | -36% |
| DificidNot provided. | $14M | – | -68% |
| JanuviaNot provided. | $186M | – | -51% |
| JanumetNot provided. | $194M | – | -20% |
| Alliance Revenue - Adempas/VerquvoAlliance Revenue represents the Company's share of profits from sales in Bayer's marketing territories. | $118M | – | 5% |
| AdempasNet product sales in the Company's marketing territories. | $78M | – | -5% |
| Other PharmaceuticalIncludes Pharmaceutical products not individually shown above and total alliance revenue for Koselugo. | $793M | – | -21% |
Full Year 2026 outlook
- Revenue$66.8 billion to $67.3 billion
- Gross marginApproximately 81%
- Operating expenses$42.4 billion to $42.9 billion
- Tax rate32.0% to 33.0%
- NoteNon-GAAP Other (income) expense, net: Approximately $1.4 billion expense
- NoteNon-GAAP EPS: $2.77 to $2.82
- NoteShare count (assuming dilution): Approximately 2.48 billion
- NoteSales include a positive impact from foreign exchange of approximately 1% at mid-October 2026 exchange rates.
- NoteNon-GAAP EPS includes a positive impact from foreign exchange of approximately $0.15 per share at mid-October 2026 exchange rates.
- NoteNon-GAAP operating expenses include one-time R&D charges of $9.0 billion for Cidara, $5.7 billion for Terns, and $400 million related to the SciBrunch global license agreement.
- NoteNon-GAAP EPS includes one-time charges of $3.62 per share for Cidara, $2.31 per share for Terns, and $0.12 per share related to SciBrunch.
What drove it
- Total sales growth benefited from the timing of purchases by approximately $550 million.
- KEYTRUDA/KEYTRUDA QLEX sales increased 6%, driven by earlier-stage uptake and metastatic demand; KEYTRUDA QLEX sales were $830 million.
- WINREVAIR sales increased 93%, reflecting demand, favorable U.S. purchasing patterns and international launch uptake.
- GARDASIL/GARDASIL 9 sales increased 14%, supported by favorable U.S. public-sector purchasing patterns and higher net pricing.
- Animal Health grew 4%, with growth in both Livestock and Companion Animal portfolios.
- The company presented Phase 3 oncology data at ESMO Congress 2026 and announced regulatory milestones for sac-TMT, ENFLONSIA and IDVYNSO.
Concerns
- GAAP gross margin declined to 72.9% from 77.7%, primarily due to higher amortization of intangible assets, restructuring costs and production costs.
- GAAP EPS declined 12% and non-GAAP EPS declined 3%, despite sales growth.
- The quarter included a $400 million charge related to the SciBrunch global license agreement, equal to $0.12 per share in both GAAP and non-GAAP EPS.
- BRIDION, JANUVIA/JANUMET and LAGEVRIO sales declined amid generic competition or lower demand.
- Other (income) expense, net shifted to $27 million of expense from $238 million of income, primarily due to higher net interest expense.
- Koselugo alliance revenue declined to $13 million from $214 million following the 2025 amendment to the AstraZeneca collaboration agreement.
What to watch
- Whether the approximately $550 million benefit from purchase timing recurs or reverses in subsequent periods.
- KEYTRUDA QLEX adoption following $830 million of third-quarter sales and continued KEYTRUDA demand in earlier-stage and metastatic indications.
- WINREVAIR demand, U.S. purchasing patterns and international launch uptake after 93% growth.
- Execution against the full-year sales outlook of $66.8 billion to $67.3 billion and non-GAAP EPS outlook of $2.77 to $2.82.
- Potential regulatory outcomes, including the June 15, 2027 PDUFA date for sac-TMT, the March 22, 2027 PDUFA date for ENFLONSIA, and the April 22, 2027 PDUFA dates for IDVYNSO sNDAs.
- Expense and margin effects from acquisitions, intangible-asset amortization, restructuring and pipeline investment.
Analysis
Merck reported third-quarter sales of $18,085 million, up 5% from $17,276 million. Growth was 4% excluding exchange and was supported by Pharmaceutical sales of $16,268 million and Animal Health sales of $1,676 million. The company said sales growth benefited from the timing of purchases by approximately $550 million. KEYTRUDA/KEYTRUDA QLEX generated $8,601 million, up 6%, including $830 million from KEYTRUDA QLEX, while WINREVAIR increased 93% to $694 million.
The product mix reflected strong growth in newer and growth brands alongside material generic and demand headwinds. GARDASIL/GARDASIL 9 increased 14% to $1,995 million, WELIREG increased 56% to $307 million, ENFLONSIA increased 138% to $187 million, and OHTUVAYRE contributed $184 million. Offsetting factors included BRIDION sales falling 67% to $144 million, JANUVIA/JANUMET sales declining 39% to $380 million, and LAGEVRIO sales declining 88% to $17 million. Animal Health advanced 4%, with both Livestock and Companion Animal contributing growth.
Profitability declined as Merck increased investment and absorbed higher costs. GAAP gross margin fell to 72.9% from 77.7%, while non-GAAP gross margin declined to 81.4% from 81.9%. GAAP SG&A rose 10% to $2,886 million and GAAP R&D increased 7% to $4,537 million. R&D included a $400 million charge related to the SciBrunch global license agreement. GAAP net income attributable to Merck declined 12% to $5,065 million and GAAP EPS declined 12% to $2.04. Non-GAAP net income declined 4% to $6,159 million and non-GAAP EPS declined 3% to $2.49.
The company narrowed and raised the midpoint of full-year sales guidance to $66.8 billion to $67.3 billion from $66.3 billion to $67.3 billion. It also raised its non-GAAP EPS range to $2.77 to $2.82 from $2.66 to $2.76, while reducing the non-GAAP effective income tax rate outlook to 32.0% to 33.0% from 35.0% to 36.0%. The EPS outlook includes charges of $3.62 per share for Cidara, $2.31 per share for Terns and $0.12 per share for SciBrunch. The company also expanded its late-stage pipeline and regulatory activity, including the sac-TMT BLA acceptance with a June 15, 2027 PDUFA date and the ENFLONSIA sBLA acceptance with a March 22, 2027 PDUFA date.
Management, verbatim
Our science-led strategy is transforming our business.
Robert M. Davis, chairman and chief executive officer
With positive momentum across multiple therapeutic areas, I’m increasingly confident in our ability to deliver long-term value for patients and shareholders.
Robert M. Davis, chairman and chief executive officer
Not in the filing
stated, not guessed- Operating income was not reported in the filing.
- Cash balance was not reported in the filing.
- Debt balance was not reported in the filing.
- Operating cash flow was not reported in the filing.
- Free cash flow was not reported in the filing.
- Share repurchases were not reported in the filing.
- Dividends were not reported in the filing.
- A previous release outlook section was not provided for comparison with reported third-quarter actual results.
- Quarter-over-quarter percentage changes were not reported for the financial metrics or sales segments.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Merck's Q3 2026 earnings release includes detailed product performance and a revised full‑year outlook.
Ticker impact
Merck reported Q3 2026 results with updated sales outlook to $66.8‑$67.3B and lifted non‑GAAP EPS range to $2.77‑$2.82, a primary earnings disclosure.
likely upward pressure as the market prices in the updated sales and EPS guidance
The company beat prior quarter results and updated its outlook, which typically drives buying interest in large‑cap pharma stocks.
Market effects
Strengthens the broader healthcare sector outlook, especially oncology and animal health peers.
U.S. market likely sees modest gains in pharma indices.
Reinforces global demand trends for oncology therapeutics.
Counterpoint
If the raised guidance is already priced in, the stock may face limited upside.
Key entities
- companyMerck & Co., Inc.
Pharmaceutical giant reporting Q3 results and revised guidance.
