Third Quarter 2026
Filed Oct 29, 2026Third-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.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.