Merck MRK reported an adjusted loss of $1.28 per share for the first quarter of 2026, which was narrower than the Zacks Consensus Estimate of a loss of $1.51. In the year-ago quarter, the company reported adjusted earnings of $2.22 per share
The year-over-year decline in earnings can be attributed to a charge of $3.62 per share recorded in the first quarter of 2026 related to the acquisition of San Diego-based biotech, Cidara Therapeutics, which closed earlier this year.
Revenues in the first quarter increased 5% year over year on a reported basis and 3% excluding foreign exchange (Fx) to $16.29 billion. Sales beat the Zacks Consensus Estimate of $15.90 billion.
All sales growth numbers discussed below are on a year-over-year basis and exclude Fx impact.
Keytruda & Other Oncology Drugs Drive MRK’s Q1 Sales
Merck’s flagship product, Keytruda, generated sales of $8.03 billion in the quarter, up 8%. Sales of the drug benefited from rapid uptake across earlier-stage indications and continued strong momentum in metastatic indications. Sales also benefited from the favorable timing of wholesaler purchases in the quarter. Keytruda sales in the first quarter included $128 million in sales of Keytruda Qlex, the subcutaneous formulation of Keytruda.
Keytruda sales beat the Zacks Consensus Estimate of $7.73 billion.
Alliance revenues from Lynparza aided oncology sales in the first quarter. Merck has a deal with British pharma giant AstraZeneca AZN to co-develop and commercialize PARP inhibitor Lynparza and a similar one with Japan’s Eisai for its tyrosine kinase inhibitor, Lenvima.
Alliance revenues from AZN-partnered Lynparza increased 6% to $341 million in the quarter, driven by higher demand globally. However, Lenvima alliance revenues declined 2% to $256 million.
Welireg recorded sales of $199 million, up 43%. The drug’s sales benefited from higher demand in the United States as well as continued launch uptake in certain European markets and Japan.
MRK's Other Key Products Sales Performance
In vaccines, sales of HPV vaccines — Gardasil and Gardasil 9 — plunged 22% to $1.07 billion due to lower demand in China as well as lower sales in Japan. Gardasil/Gardasil 9 sales missed the Zacks Consensus Estimate of $1.18 billion.
Proquad, M-M-R II and Varivax vaccines recorded combined sales of $538 million, down 2%.
Merck’s newly launched pneumococcal 21-valent conjugate vaccine, Capvaxive, generated sales worth $142 million, up 31%, driven by continued launch uptake in the United States and in certain European markets. Sales growth in the United States was partially offset by lower wholesaler inventory.
In the hospital specialty portfolio, neuromuscular blockade medicine, Bridion injection, generated sales of $472 million in the quarter, up 7%. While the drug’s sales benefited from higher demand in the United States, the gains were offset by generic competition in certain international markets.
In Diabetes, Januvia/Janumet franchise sales fell 29% year over year to $574 million. Sales of the drug declined due to lower demand and net pricing in the United States, as well as lower demand in China and generic competition in most international markets.
New PAH drug Winrevair generated sales of $525 million, up 87% on a year-over-year basis and 12.4% on a sequential basis, reflecting continued strong uptake in the United States and early launch uptake in certain international markets.
MRK's Animal Health Segment
The segment generated revenues of $1.79 billion, up 13% year over year on a reported basis and 6% excluding Fx. This growth was driven by higher demand for livestock and companion animal products. Sales from this segment beat the Zacks Consensus Estimate of $1.67 billion.
MRK's Cost and Margin Discussion
Adjusted gross margin was 81.9%, down 30 basis points year over year, due to the unfavorable impact of Fx.
Adjusted selling, general and administrative expenses were $2.67 billion in the first quarter, up 5% year over year, owing to higher administrative costs and the unfavorable impact of Fx.
Adjusted research and development spending was $12.56 billion, significantly up from the year-ago quarter levels. The increase was due to the costs associated with Cidara acquisition and clinical development activities, as well as the unfavorable impact of Fx.
MRK’s 2026 Guidance Tightened
Merck slightly raised the lower end of its sales guidance for 2026 while also increasing its adjusted EPS range.
The company now expects revenues to be in the range of $65.8-$67.0 billion, compared with the previous expectation of $65.5-$67.0 billion. The Zacks Consensus Estimate for the metric stands at $66.52 billion.
The company now expects adjusted EPS to be between $5.04 and $5.16 versus the prior estimated range of $5.00 and $5.15. The guided range includes a one-time charge of $9 billion or $3.65 per share related to the acquisition of Cidara.
The guidance includes a positive impact from Fx of approximately 1% on sales and around 10 cents on EPS.
Adjusted operating expenses are now expected to be in the range of $36.0 billion to $36.8 billion compared with the earlier projection of $35.9 billion to $36.9 billion.
The adjusted tax rate guidance was maintained at approximately 23.5% to 24.5%.
Merck’s latest guidance does not reflect the impact of its proposed acquisition of California-based cancer biotech Terns Pharmaceuticals TERN. Last month, Merck announced a definitive agreement to acquire Terns for $6.7 billion. The deal, likely to be closed in May, will add Terns’ lead candidate, TERN-701, which is in early-stage development for treating certain patients with chronic myeloid leukemia to Merck’s hematology/cancer pipeline.
Our Take on MRK's Results
Merck delivered better-than-expected first-quarter results, beating estimates for both earnings and sales. The performance was driven by higher sales of oncology drugs such as Keytruda, strong demand in the Animal Health segment, and added contributions from recently launched products like Winrevair and other products.
Reflecting the encouraging results, Merck increased the lower end of its sales guidance for 2026, while also increasing its EPS outlook. However, despite the better-than-expected results, shares of Merck were down in pre-market trading on Thursday.
The stock has risen 5.4% in the year-to-date period against the industry’s decline of 7.2%.
Image Source: Zacks Investment Research
Keytruda sales were better than expected in the first quarter and drove the majority of Merck’s Pharmaceutical revenues. However, the drug’s core U.S. patent is set to expire in 2028, which is a concern, given the company’s heavy reliance on it. Declining sales of Gardasil also remain an overhang.
Merck’s new products, Winrevair, Welireg and Capvaxive, key pipeline progress and expansion of its respiratory and infectious disease portfolios through recent acquisitions have improved its long-term growth prospects.
Merck & Co., Inc. Price, Consensus and EPS Surprise
Merck & Co., Inc. price-consensus-eps-surprise-chart | Merck & Co., Inc. Quote
MRK’s Zacks Rank
Merck currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AstraZeneca PLC (AZN): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Stock Analysis Report
Terns Pharmaceuticals, Inc. (TERN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).