Merck Q2 2026 Earnings: Keytruda Strength Beats Estimates, Guidance Raised Despite Acquisition Charges
Merck beat quarterly profit and sales estimates on strong Keytruda demand, raised its 2026 sales outlook, but posted a GAAP net loss due to one-time charges from recent biotech acquisitions.
| Q2 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | -$0.13 | -$0.27 | +52.4% |
| Revenue | $16.61B | $16.53B | +0.5% |
Key takeaways
- Adjusted results beat Wall Street expectations, with the loss per share smaller than analysts had projected and revenue coming in above forecasts, driven by stronger-than-expected sales.
- Merck’s headline (GAAP) result was a net loss for the quarter, but that was driven by one-time accounting charges tied to recent acquisitions (Terns Pharmaceuticals and Cidara Therapeutics) rather than a decline in the underlying business.
- Keytruda, Merck’s top-selling cancer immunotherapy, grew sales about 5% to $8.37 billion, helped by faster-than-expected uptake of its new under-the-skin injectable version, Keytruda Qlex — an important sign the drug’s growth isn’t stalling ahead of patent expiration in 2028.
- Merck raised its full-year 2026 revenue outlook to $66.3–$67.3 billion (from $65.8–$67 billion previously), reflecting confidence that newer medicines are picking up momentum as older drugs face generic competition.
- Full-year adjusted earnings-per-share guidance of $2.66–$2.76 now bakes in roughly $2.31 per share of one-time acquisition-related charges from the Terns deal, plus additional charges tied to the Cidara acquisition — meaning the lower guidance reflects deal costs, not weaker core operations.
- Merck has been acquiring smaller biotech companies (including Terns and Cidara) to build up its pipeline of future medicines as it prepares for Keytruda’s patent cliff in 2028, when generic competitors are expected to erode its biggest product’s sales.
- The company’s newly approved cholesterol pill — the first oral PCSK9-inhibitor of its kind — is one of several newer products management is counting on to help offset lost Keytruda revenue later this decade.
- Looking at trailing 12-month figures, Merck’s gross margin remains high at roughly 78%, showing the core drug business still commands strong pricing power, even as reported net profit margin (about 13.6%) and earnings-per-share have declined over the past year, partly reflecting the impact of acquisition and restructuring costs on reported profitability.
Q2 2026 in context
| Metric | Jun 2026 | Jun 2025 | Change |
|---|---|---|---|
| Revenue | $16.6B | $15.8B | +5.1% |
| Net income | -$1.3B | $4.4B | -130.2% |
| Free cash flow | $4.5B | $2.5B | +77.0% |
| Diluted EPS | -$0.54 | $1.76 | -130.7% |
| Gross margin | 73.5% | 77.5% | -4.0 pts |
| Net margin | -8.0% | 28.0% | -36.0 pts |
Figures for the quarter ended Jun 2026 and the quarter ended Jun 2025, as reported to the SEC.
How the stock took it
Merck & Co Inc closed at $127.77 on Aug 3, 2026, the last session before the report, and at $128.33 on Aug 5, 2026, the first session after it — +0.4% across the report.
| Earlier report | Close before | Close after | Change |
|---|---|---|---|
| May 4, 2026 | $112.16 | $113.15 | +0.9% |
| Nov 5, 2025 | $83.86 | $85.78 | +2.3% |
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 78.1% | Trailing 12 months |
| Operating margin | 18.2% | Trailing 12 months |
| Net profit margin | 13.6% | Trailing 12 months |
| Pretax margin | 17.7% | Trailing 12 months |
| EPS | $3.55 | Trailing 12 months |
| Revenue growth (YoY) | 2.9% | Trailing 12 months |
| EPS growth (YoY) | -48.3% | Trailing 12 months |
| Return on equity | 17.9% | Trailing 12 months |
Sources: company report · earnings call · Reuters/BNN Bloomberg · Bloomberg · Seeking Alpha