Merck & Co. Inc.

08/04/2026 | Press release | Distributed by Public on 08/04/2026 04:33

Merck & Co., Inc., Rahway, N.J., USA Announces Second-Quarter 2026 Financial Results; Highlights Key Regulatory and Clinical Milestones Across Broad, Diverse Pipeline

Sales Growth Reflects Continued Strength in Oncology, Including Initial Uptake of KEYTRUDA QLEX, and Animal Health, Plus Contributions From Launches Such as WINREVAIR

Financial Highlights

  • Total Worldwide Sales Were $16.6 Billion (5% Growth; 4% Growth ex-FX)
    • KEYTRUDA/KEYTRUDA QLEX1 Sales Were $8.4 Billion (5% Growth; 4% Growth ex-FX); Includes KEYTRUDA QLEX Sales of $463 Million
    • WINREVAIR Sales Were $588 Million (75% Growth; 75% Growth ex-FX)
    • Animal Health Sales Were $1.8 Billion (8% Growth; 5% Growth ex-FX)
  • GAAP Loss per Share Was $0.54; Non-GAAP Loss per Share Was $0.13; GAAP and Non-GAAP Loss per Share Include a Charge of $2.31 per Share for the Acquisition of Terns

Pipeline & Portfolio Highlights

  • Received U.S. FDA Approval for LIPFENDRA (enlicitide), the First and Only Once-Daily Oral PCSK9 Inhibitor To Reduce LDL-C in Adults With Hypercholesterolemia
  • Announced Positive Data From TroFuse-005 Trial Evaluating Sacituzumab Tirumotecan (sac-TMT) in Certain Patients With Advanced or Recurrent Endometrial Cancer
  • Announced Positive Phase 3 Results From Once-Weekly Investigational Oral HIV Treatment Regimen of Islatravir and Lenacapavir, in Collaboration With Gilead

Full-Year 2026 Financial Outlook

  • Narrows and Raises Expected Worldwide Sales Range To Be Between $66.3 Billion and $67.3 Billion
  • Now Expects Non-GAAP EPS To Be Between $2.66 and $2.76; Outlook Includes Charges of $2.43 per Share for the Acquisition of Terns, Comprised of a One-Time Charge of $2.31 per Share as Well as Costs of Approximately $0.12 per Share To Finance the Acquisition and Advance MK-4208 (Formerly TERN-701)

RAHWAY, N.J.--(BUSINESS WIRE)-- Merck & Co., Inc., Rahway, N.J., USA (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2026.

"We continued to make substantial progress across our business this quarter, driven by strong execution and growing contributions from new product launches," said Robert M. Davis, chairman and chief executive officer. "The FDA approval of LIPFENDRA is an exciting moment for our company and for patients, marking the latest milestone in our nearly 70-year legacy in cardiovascular disease. Together with key regulatory and clinical advances across oncology, HIV and immunology, this achievement reflects the strength of our pipeline and portfolio transformation as we bring forward the next wave of innovation. I am confident in the ongoing execution of our strategy as we deliver for patients and further enhance our long-term growth trajectory."

Financial Summary

$ in millions, except EPS amounts

Second Quarter

2026

2025

Change

Change Ex-

Exchange

Sales

$16,607

$15,806

5%

4%

GAAP net (loss) income2

(1,335)

4,427

N/M

N/M

Non-GAAP net (loss) income that excludes certain items2,3*

(330)

5,366

N/M

N/M

GAAP EPS

(0.54)

1.76

N/M

N/M

Non-GAAP EPS that excludes certain items3*

(0.13)

2.13

N/M

N/M

*Refer to table on page 7.

N/M - Not meaningful

For the second quarter of 2026, Generally Accepted Accounting Principles (GAAP) loss / earnings per share (EPS) assuming dilution was a loss per share of $0.54 and non-GAAP loss per share was $0.13. Both the GAAP and non-GAAP loss per share were due to a charge for the acquisition of Terns Pharmaceuticals, Inc. (Terns) of $2.31 per share. Both GAAP and non-GAAP EPS in the second quarter of 2025 include a charge of $0.07 per share for an upfront payment related to a license agreement with Jiangsu Hengrui Pharmaceutical Co., Ltd. (Hengrui Pharma).

Non-GAAP EPS excludes acquisition- and divestiture-related costs and costs related to restructuring programs, as well as income and losses from investments in equity securities. Non-GAAP EPS in the second quarter of 2025 also excludes tax benefits primarily resulting from favorable audit reserve adjustments.

Year-to-date results can be found in the attached tables.

Second-Quarter Sales Performance
 The following table reflects sales of the Company's top products and significant performance drivers.

Second Quarter

$ in millions

2026

2025

Change

Change Ex-Exchange

Commentary

Total Sales

$16,607

$15,806

5%

4%

Pharmaceutical

14,760

14,050

5%

4%

Increase primarily driven by growth in oncology as well as cardiometabolic and respiratory, partially offset by a decline in diabetes.

KEYTRUDA/
KEYTRUDA QLEX

8,366

7,956

5%

4%

Growth primarily driven by strong global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC), cervical cancer, head and neck cancer and bladder cancer, as well as higher global demand in metastatic indications, including urothelial cancer. Sales of KEYTRUDA QLEX were $463 million.

GARDASIL/
GARDASIL 9

1,169

1,126

4%

3%

Increase primarily due to higher demand in Asia Pacific and Europe, as well as favorable timing of tenders in Europe, partially offset by lower demand in certain other international markets.

PROQUAD, M-M-R II and VARIVAX

592

609

-3%

-3%

Decrease primarily reflects lower demand in the U.S., partially offset by higher net pricing in the U.S., higher demand in Europe and favorable private-sector purchasing patterns for M-M-R II in the U.S.

WINREVAIR

588

336

75%

75%

Growth primarily reflects continued uptake in the U.S. and early launch uptake in certain international markets, particularly in Japan and Europe.

BRIDION

497

461

8%

8%

Growth primarily due to higher demand and net pricing in the U.S.

JANUVIA/JANUMET

429

623

-31%

-31%

Decline primarily due to lower demand and net pricing in the U.S. due to competition, as well as lower demand in China and most other international markets due to ongoing generic competition.

Lynparza*

365

370

-1%

-2%

Relatively flat compared with prior year.

PREVYMIS

295

228

29%

28%

Increase primarily due to higher demand in the U.S. and certain European markets, reflecting in part the launch of new indications.

Lenvima*

283

265

7%

6%

Growth primarily due to higher demand in the U.S., partially offset by lower net pricing.

WELIREG

271

162

67%

67%

Growth primarily driven by higher demand in the U.S. and continued launch uptake in several international markets, particularly in Japan, as well as favorable wholesaler purchasing patterns in the U.S.

OHTUVAYRE

204

-

-

-

Product obtained as part of the Company's October 2025 acquisition of Verona Pharma plc. Includes a benefit from the timing of specialty pharmacy purchases in the U.S.

CAPVAXIVE

184

129

42%

40%

Increase primarily driven by launch uptake in several international markets, particularly in Asia Pacific and Europe, as well as in the U.S.

VAXNEUVANCE

148

229

-35%

-36%

Decline primarily due to favorable prior period public-sector activity in the U.S., which increased sales in that period, as well as lower demand in the U.S. and in most international markets in the current period due to competitive pressure.

LAGEVRIO

5

83

-95%

-95%

Decline largely due to lower demand in Japan and the U.S.

Animal Health

1,775

1,646

8%

5%

Growth attributable to both Livestock and Companion Animal product portfolios.

Livestock

1,041

961

8%

6%

Growth primarily driven by higher demand for ruminant and poultry products.

Companion Animal

734

685

7%

5%

Growth primarily due to new product launches. Sales of BRAVECTO line of products were $359 million and $335 million in the current and prior-year quarters, respectively, which represents an increase of 7%, or 4% excluding impact of foreign exchange.

Other Revenues**

72

110

-35%

-34%

Decline primarily due to lower revenue from third-party manufacturing arrangements.

*Alliance revenue for this product represents the Company's share of profits, which are product sales net of cost of sales and commercialization costs.

**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.

Second-Quarter Expense and Related Information
 The table below presents selected expense information.

$ in millions

GAAP

Acquisition-
and
Divestiture-
Related Costs4

Restructuring
Costs

(Income)
Loss From
Investments
in Equity
Securities

Non-
GAAP3

Second Quarter 2026

Cost of sales

$4,395

$1,067

$184

$-

$3,144

Selling, general and administrative

2,904

17

-

-

2,887

Research and development

9,741

6

(1)

-

9,736

Restructuring costs

151

-

151

-

-

Other (income) expense, net

99

-

-

(191)

290

Second Quarter 2025

Cost of sales

$3,557

$576

$165

$-

$2,816

Selling, general and administrative

2,649

15

1

-

2,633

Research and development

4,048

3

53

-

3,992

Restructuring costs

560

-

560

-

-

Other (income) expense, net

(7)

-

-

(61)

54

GAAP Expense, EPS and Related Information
 Gross margin was 73.5% for the second quarter of 2026 compared with 77.5% for the second quarter of 2025. The decrease was primarily due to higher amortization of intangible assets and inventory write-downs.

Selling, general and administrative (SG&A) expenses were $2.9 billion in the second quarter of 2026, an increase of 10% compared with the second quarter of 2025. The increase was primarily due to higher administrative costs (including investments in IT), as well as higher promotional costs in support of product launches.

Research and development (R&D) expenses were $9.7 billion in the second quarter of 2026 compared with $4.0 billion in the second quarter of 2025. The increase was largely due to a $5.7 billion charge for the acquisition of Terns and higher clinical development spending, partially offset by a $200 million reduction in R&D expenses as part of a funding agreement with Blackstone Life Sciences (Blackstone). R&D expenses in the second quarter of 2025 include a $200 million charge for an upfront payment related to a license agreement with Hengrui Pharma.

Other (income) expense, net, was $99 million of expense in the second quarter of 2026 compared with $7 million of income in the second quarter of 2025. The unfavorability was primarily due to higher net interest expense, partially offset by higher net income from investments in equity securities.

The income tax provision for the second quarter of 2026 was $654 million on a pretax loss of $683 million, resulting in an effective income tax rate of (95.9)%. This effective income tax rate includes a 108.9 percentage point unfavorable impact of the charge for the acquisition of Terns, for which no tax benefit was recorded.

GAAP loss per share was $0.54 for the second quarter of 2026 compared with earnings per share of $1.76 for the second quarter of 2025, largely due to higher charges for business development transactions, reflecting a $2.31 per share charge in the second quarter of 2026 for the acquisition of Terns compared with a $0.07 per share charge in the second quarter of 2025 related to a license agreement with Hengrui Pharma.

Non-GAAP Expense, EPS and Related Information
 Non-GAAP gross margin was 81.1% for the second quarter of 2026 compared with 82.2% for the second quarter of 2025. The decrease was primarily due to higher inventory write-downs.

Non-GAAP SG&A expenses were $2.9 billion in the second quarter of 2026, an increase of 10% compared with the second quarter of 2025. The increase was primarily due to higher administrative costs (including investments in IT), as well as higher promotional costs in support of product launches.

Non-GAAP R&D expenses were $9.7 billion in the second quarter of 2026 compared with $4.0 billion in the second quarter of 2025. The increase was largely due to a $5.7 billion charge for the acquisition of Terns and higher clinical development spending, partially offset by a $200 million reduction in R&D expenses as part of a funding agreement with Blackstone. R&D expenses in the second quarter of 2025 include a $200 million charge for an upfront payment related to a license agreement with Hengrui Pharma.

Non-GAAP other (income) expense, net, was $290 million of expense in the second quarter of 2026 compared with $54 million of expense in the second quarter of 2025. The unfavorability was primarily due to higher net interest expense.

The non-GAAP income tax provision for the second quarter of 2026 was $882 million on pretax income of $550 million, resulting in a non-GAAP effective income tax rate of 160.3%. This effective income tax rate includes a 146.2 percentage point unfavorable impact of the charge for the acquisition of Terns, for which no tax benefit was recorded.

Non-GAAP loss per share was $0.13 for the second quarter of 2026 compared with earnings per share of $2.13 for the second quarter of 2025, largely due to higher charges for business development transactions, reflecting a $2.31 per share charge in the second quarter of 2026 for the acquisition of Terns compared with a $0.07 per share charge in the second quarter of 2025 related to a license agreement with Hengrui Pharma.

A reconciliation of GAAP to non-GAAP net (loss) income and EPS is provided in the table that follows.

Second Quarter

$ in millions, except EPS amounts

2026

2025

EPS

GAAP EPS

$(0.54)

$1.76

Difference

0.41

0.37

Non-GAAP EPS that excludes items listed below3

$(0.13)

$2.13

Net (Loss) Income

GAAP net (loss) income2

$(1,335)

$4,427

Difference

1,005

939

Non-GAAP net (loss) income that excludes items listed below2,3

$(330)

$5,366

Excluded Items:

Acquisition- and divestiture-related costs4

$1,090

$594

Restructuring costs

334

779

Income from investments in equity securities

(191)

(61)

Increase to net loss / decrease to net income before taxes

1,233

1,312

Estimated income tax benefit5

(228)

(373)

Increase to net loss / decrease to net income

$1,005

$939

Pipeline and Portfolio Highlights

In the second quarter, the Company achieved key regulatory milestones across the portfolio while continuing to advance its broad and diverse pipeline.

  • Oncology:
    • U.S. Food and Drug Administration (FDA) approved KEYTRUDA and KEYTRUDA QLEX, each with WELIREG, for the adjuvant treatment of certain patients with clear cell renal cell carcinoma (ccRCC), based on Phase 3 LITESPARK-022 trial.
      • Approvals represent first approved combination of a PD-1 and hypoxia-inducible factor-2 alpha inhibitor for these patients.
    • In July, FDA approved expanded use of KEYTRUDA and KEYTRUDA QLEX, each with Padcev, as treatment before and after surgery for adult patients with muscle-invasive bladder cancer (MIBC), including cisplatin eligible patients based on Phase 3 KEYNOTE-B15 trial; the expansion builds upon prior approval of this regimen for cisplatin ineligible patients based on Phase 3 KEYNOTE-905 trial.
    • FDA approved KEYTRUDA and KEYTRUDA QLEX, each with Trodelvy, for the first-line treatment of PD-L1 positive (Combined Positive Score [CPS] ≥10) advanced TNBC, based on Phase 3 KEYNOTE-D19/ASCENT-04 trial.
    • FDA granted Breakthrough Therapy designation (BTD) for calderasib (MK-1084), an investigational oral specific KRAS G12C inhibitor, in combination with KEYTRUDA, for the first-line treatment of patients with advanced or metastatic non-small cell lung cancer (NSCLC) with KRAS G12C-mutation and expressing PD-L1 (tumor proportion score [TPS] ≥1%).
    • Announced that Phase 3 TroFuse-005 trial evaluating sac-TMT, an investigational anti-TROP2 antibody-drug conjugate (ADC) being developed in collaboration with Kelun-Biotech, met its primary endpoints of overall survival (OS) and progression-free survival (PFS) in patients with advanced or recurrent endometrial cancer who have progressed after platinum-based chemotherapy and anti-PD-1/L1 immunotherapy.
      • First Phase 3 results from the Company's broad sac-TMT clinical development program, which includes 17 ongoing global Phase 3 trials across multiple tumor types.
    • At the 2026 American Society of Clinical Oncology (ASCO) Annual Meeting, new research was presented across over 25 types of cancer, reinforcing long-term impact of KEYTRUDA and momentum in the Company's rapidly advancing oncology pipeline, including:
      • Five-year follow-up data from Phase 2b KEYNOTE-942 trial, in collaboration with Moderna, underscoring continued potential of intismeran autogene (mRNA-4157/V940) in combination with KEYTRUDA for patients with stage III/IV melanoma following complete resection.
      • Data from Phase 3 OptiTROP-Lung05 trial, led by Kelun-Biotech, evaluating sac-TMT plus KEYTRUDA in China, adding to ongoing research of novel treatment approaches for patients with NSCLC.
      • Results from final analysis of KEYNOTE-522 evaluating KEYTRUDA in combination with chemotherapy, reporting a continued survival benefit for patients with high-risk early-stage TNBC.
  • Vaccines and Infectious Diseases:
    • In July, presented new data for daily and weekly options across HIV treatment and prevention pipeline at 26 th International AIDS Conference (AIDS 2026). Hosted HIV investor event to highlight these data.
      • In collaboration with Gilead, presented first Phase 3 results for islatravir/lenacapavir (ISL/LEN), an investigational oral once-weekly single-tablet HIV treatment regimen, which maintained virological suppression in adults with HIV who switched antiretroviral therapy. ISL/LEN has the potential to be the first approved oral, once-weekly HIV treatment.
      • Presented first results from a Phase 2b study evaluating switch to investigational once-weekly oral islatravir and ulonivirine (ISL/ULO) in adults with virologically suppressed HIV-1.
    • Received regulatory approvals in Japan and China for ENFLONSIA for the prevention of RSV lower respiratory tract disease in newborns and infants who are born during or entering their first RSV season.
  • Cardiometabolic and Respiratory:
    • In July, FDA approved LIPFENDRA (enlicitide), the first and only once-daily oral PCSK9 inhibitor, as an adjunct to diet and exercise, to reduce LDL-C in adults with hypercholesterolemia, based on two Phase 3 trials from the CORALreef clinical program: CORALreef Lipids and CORALreef HeFH.
      • At week 24, LIPFENDRA significantly reduced LDL-C by a placebo-adjusted 56% and 59%, respectively.
  • Immunology:
    • Announced positive topline results from Phase 3 ATLAS-UC induction-only study (Study 2) evaluating tulisokibart (MK-7240), an investigational humanized monoclonal antibody targeting tumor necrosis factor-like cytokine 1A (TL1A), in patients with moderately to severely active ulcerative colitis (UC).
    • Initial topline results from primary analyses of two Phase 2 studies evaluating tulisokibart:
      • In hidradenitis suppurativa (HS), the study met its primary and key secondary endpoints. Full results will be shared at an upcoming medical meeting.
      • In systemic sclerosis-associated interstitial lung disease (SSc-ILD), the study did not meet its primary endpoint and will be discontinued. No new safety concerns were identified.
  • Business Development:
    • Completed acquisition of Terns for $6.8 billion.
      • Added MK-4208, a novel investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor recently granted BTD by the FDA for the treatment of certain adults with Philadelphia chromosome-positive chronic myeloid leukemia.

Notable recent news releases on the Company's pipeline and portfolio are provided in the table that follows. Visit the News Releases section of the Company's website to read the releases.*

Oncology

FDA Approved KEYTRUDA and KEYTRUDA QLEX, Each With WELIREG, for Adjuvant Treatment of Certain Patients With ccRCC; Based on Results From Phase 3 LITESPARK-022 Trial

FDA Approved KEYTRUDA and KEYTRUDA QLEX, Each With Padcev, as Treatment Before and After Surgery for Adults With MIBC; Based on Results From Phase 3 KEYNOTE-B15 Trial, Combined With Previous Approvals Based on Phase 3 KEYNOTE-905 Trial

FDA Approved KEYTRUDA and KEYTRUDA QLEX, Each With Trodelvy, as First-Line Treatment of PD-L1+ Advanced TNBC; Based on Results From Phase 3 KEYNOTE-D19/ASCENT-04 Trial

European Commission Approved KEYTRUDA Plus Padcev as First PD-1 Inhibitor Plus ADC Regimen for Adults With Cisplatin-Ineligible Resectable MIBC; Based on Results From Phase 3 KEYNOTE-905 Trial

FDA Granted BTD for Calderasib (MK-1084), an Investigational KRAS G12C Inhibitor, for Certain Patients With Newly Diagnosed Metastatic KRAS G12C-Mutant NSCLC

The Company Announced TroFuse-005 Trial Evaluating Sac-TMT Met Primary Endpoints of OS and PFS in Certain Patients With Advanced or Recurrent Endometrial Cancer

The Company and Moderna Presented 5-Year Data for Intismeran Autogene in Combination With KEYTRUDA in Patients With High-Risk Stage III/IV Melanoma Following Complete Resection at ASCO 2026

KEYTRUDA as Monotherapy Significantly Improved PFS in Certain Patients With Advanced or Recurrent Endometrial Cancer With Mismatch Repair Deficient Tumors Compared to Chemotherapy; Results From Phase 3 KEYNOTE-C93 Trial

The Company Highlighted New Long-Term Data and Advancements Across Broad Oncology Portfolio and Pipeline Research at ASCO 2026

The Company Completed Acquisition of Terns

Vaccines and
Infectious Diseases

The Company, in Collaboration With Gilead, Announced That the Once-Weekly Investigational Oral HIV Treatment Regimen of Islatravir and Lenacapavir (ISL/LEN) Maintained Virological Suppression in People With HIV Who Switched Antiretroviral Therapy

The Company Presented New Data on Daily, Weekly and Monthly Options Across its HIV Treatment and Prevention Pipeline at AIDS 2026

The Company Announced Initial Access Plans for Alimatravir (MK-8527), Its Investigational Once-Monthly Oral Pre-Exposure Prophylaxis in Phase 3 Development; Multi-Faceted Strategy Aims To Enable Rapid, Broad and Sustainable Access to Alimatravir, if Approved, in Low- And Middle-Income Countries

The Company Announced New Agreement With AIDS Drug Assistance Program Crisis Task Force To Improve Access and Care for People Living With HIV

FDA Approved an Additional Indication for CAPVAXIVE in Children and Adolescents Aged 2 Through 17 at Increased Risk for Pneumococcal Disease; Based on Results From Phase 3 STRIDE-13 Trial

Cardiometabolic and Respiratory

FDA Approved LIPFENDRA, the First and Only Once-Daily Oral PCSK9 Inhibitor To Reduce LDL-C in Adults With Hypercholesterolemia; Based on Results From CORALreef Lipids and CORALreef HeFH Trials

Immunology

Tulisokibart Met Primary and Key Secondary Endpoints in the Phase 3 ATLAS-UC Induction-only Study in Patients With Moderately to Severely Active UC

Animal Health

The Company's Animal Health Business Completed Acquisition of TARGAN, Broadening Its Commercial Poultry Portfolio Through TARGAN's Innovative High-Speed Biodevice Technology

*References in the above news release titles have been modified for the purpose of this announcement.

Upcoming Investor Event
 The Company will hold an Oncology Investor Event to coincide with the European Society for Medical Oncology Congress 2026 on Monday, Oct. 26, 2026, at 6 p.m. CET / 1 p.m. EDT, during which senior management will provide an update on the Company's oncology strategy and program. The event will take place in Madrid, Spain, and will be accessible via live audio webcast at this weblink.

Full-Year 2026 Financial Outlook
 The following table summarizes the Company's full-year financial outlook.

Full Year 2026

Updated

Prior

Sales*

$66.3 billion to $67.3 billion

$65.8 billion to $67.0 billion

Non-GAAP Gross margin3

Approximately 81%

Approximately 82%

Non-GAAP Operating expenses3**

$42.0 billion to $42.7 billion

$36.0 billion to $36.8 billion

Non-GAAPOther (income) expense, net3

Approximately $1.4 billion expense

Approximately $1.3 billion expense

Non-GAAPEffective income tax rate3

35.0% to 36.0%

23.5% to 24.5%

Non-GAAP EPS3***

$2.66 to $2.76

$5.04 to $5.16

Share count (assuming dilution)

Approximately 2.48 billion

Approximately 2.48 billion

*The Company does not have any non-GAAP adjustments to sales.

**Includes one-time R&D charges of $9.0 billion for the acquisition of Cidara Therapeutics, Inc. (Cidara) and $5.7 billion for the acquisition of Terns. Outlook does not assume any additional significant potential business development transactions.

***Includes one-time charges of $3.62 per share for the acquisition of Cidara and $2.31 per share for the acquisition of Terns.

The Company has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective income tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and income and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the Company's future GAAP results.

The Company is raising and narrowing the range for its full-year sales outlook and now anticipates full-year 2026 sales to be between $66.3 billion and $67.3 billion, including a positive impact from foreign exchange of approximately 1% at mid-July 2026 exchange rates.

The Company now expects the full-year non-GAAP effective income tax rate to be between 35.0% and 36.0%, including the impact of the non-tax deductible one-time charges for the acquisitions of Cidara and Terns.

The Company now expects full-year 2026 non-GAAP EPS to be between $2.66 and $2.76, including a positive impact from foreign exchange of approximately $0.15 per share at mid-July 2026 exchange rates. This range includes one-time charges of $9.0 billion, or $3.62 per share, related to the acquisition of Cidara and $5.7 billion, or $2.31 per share, related to the acquisition of Terns. This range also includes costs of approximately $0.12 per share to finance the Terns acquisition and advance MK-4208. The charges related to Terns were not previously included in the outlook. In 2025, non-GAAP EPS of $8.98 was negatively impacted by one-time charges of $0.20 per share in the aggregate related to certain business development transactions.

Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions.

Earnings Conference Call
 Investors, journalists and the general public may access a live audio webcast of the call on Tuesday, Aug. 4, at 9 a.m. EDT via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures and slides highlighting the results, will be available on the Company's website.

All participants may join the call by dialing (800) 369-3351 (U.S. and Canada Toll-Free) or (517) 308-9448 and using the access code 9818590.

About Our Company
 At Merck & Co., Inc., Rahway, N.J., USA, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world - and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities.

Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA
 This news release of Merck & Co., Inc., Rahway, N.J., USA (the "Company") includes "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the Company's ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the Company's patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 and the Company's other filings with the Securities and Exchange Commission (SEC) available at the SEC's Internet site (www.sec.gov).

Appendix
 Generic product names are provided below.

Pharmaceutical
 BRIDION (sugammadex)
 CAPVAXIVE (Pneumococcal 21-valent Conjugate Vaccine)
 ENFLONSIA (clesrovimab-cfor)
 G ARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)
GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant)
 JANUMET(sitagliptin and metformin HCl)
 JANUVIA(sitagliptin)
 KEYTRUDA (pembrolizumab)
 KEYTRUDA QLEX (pembrolizumab and berahyaluronidase alfa-pmph)
 LAGEVRIO(molnupiravir)
 Lenvima(lenvatinib)
 LIPFENDRA(enlicitide)
 Lynparza(olaparib)
 M-M-R II(Measles, Mumps and Rubella Virus Vaccine Live)
 OHTUVAYRE (ensifentrine)
 PREVYMIS (letermovir)
PROQUAD(Measles, Mumps, Rubella and Varicella Virus Vaccine Live)
 VARIVAX(Varicella Virus Vaccine Live)
 VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine)
 WELIREG (belzutifan)
WINREVAIR (sotatercept-csrk)

Animal Health
 BRAVECTO (fluralaner)

_______________________________

1 Available in some markets as KEYTRUDA SC.

2 Net (loss) income attributable to the Company.

3 The Company is providing certain 2026 and 2025 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the Company's results because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the Company along with other metrics. In addition, annual employee compensation, including senior management's compensation, is derived in part using a non-GAAP pretax income metric. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. For a description of the non-GAAP adjustments, see Table 2a attached to this release.

4 Reflects expenses related to business combinations, including the amortization of intangible assets, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations, licensing arrangements and asset acquisitions, and recognition of fair value step-up to inventories for asset acquisitions.

5 Includes the estimated income tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments for all periods presented. Amount in the second quarter of 2025 also includes a $146 million benefit primarily resulting from favorable audit reserve adjustments.

MERCK & CO., INC., RAHWAY, N.J., USA
CONSOLIDATED STATEMENT OF OPERATIONS - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1

GAAP

% Change GAAP % Change

2Q26

2Q25

June YTD 2026 June YTD 2025
Sales

$

16,607

$

15,806

5%

$

32,893

$

31,335

5%

Costs, Expenses and Other
Cost of sales

4,395

3,557

24%

8,590

6,976

23%

Selling, general and administrative

2,904

2,649

10%

5,604

5,202

8%

Research and development

9,741

4,048

*

22,333

7,669

*

Restructuring costs

151

560

-73%

346

629

-45%

Other (income) expense, net

99

(7

)

*

237

(43

)

*

(Loss) Income Before Taxes

(683

)

4,999

*

(4,217

)

10,902

*

Income Tax Provision

654

571

1,363

1,388

Net (Loss) Income

(1,337

)

4,428

*

(5,580

)

9,514

*

Less: Net (Loss) Income Attributable to Noncontrolling Interests

(2

)

1

(5

)

8

Net (Loss) Income Attributable to Merck & Co., Inc., Rahway, N.J., USA

$

(1,335

)

$

4,427

*

$

(5,575

)

$

9,506

*

(Loss) Earnings per Common Share Assuming Dilution(1)

$

(0.54

)

$

1.76

*

$

(2.26

)

$

3.77

*

Average Shares Outstanding Assuming Dilution(1)

2,470

2,513

2,471

2,522

Tax Rate

-95.9

%

11.4

%

-32.3

%

12.7

%

* 100% or greater
(1)Because the Company recorded a net loss in both the second quarter and first six months of 2026, no potential dilutive common shares were used in the computations of loss per common share assuming dilution as the effects would have been anti-dilutive.
MERCK & CO., INC., RAHWAY, N.J., USA
THREE AND SIX MONTHS ENDED JUNE 30, 2026 GAAP TO NON-GAAP RECONCILIATION
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2a
GAAP Acquisition- and
Divestiture-Related
Costs(1) 		Restructuring Costs(2) (Income) Loss from
Investments in
Equity Securities 		Adjustment
Subtotal 		Non-GAAP
Second Quarter
Cost of sales

$

4,395

1,067

184

1,251

$

3,144

Selling, general and administrative

2,904

17

17

2,887

Research and development

9,741

6

(1

)

5

9,736

Restructuring costs

151

151

151

-

Other (income) expense, net

99

(191

)

(191

)

290

Loss Before Taxes

(683

)

(1,090

)

(334

)

191

(1,233

)

550

Income Tax Provision (Benefit)

654

(219

)

(3)

(50

)

(3)

41

(3)

(228

)

882

Net Loss

(1,337

)

(871

)

(284

)

150

(1,005

)

(332

)

Net Loss Attributable to Merck & Co., Inc., Rahway, N.J., USA

(1,335

)

(871

)

(284

)

150

(1,005

)

(330

)

Loss per Common Share Assuming Dilution(4)

$

(0.54

)

(0.35

)

(0.12

)

0.06

(0.41

)

$

(0.13

)

Tax Rate

-95.9

%

160.3

%

June YTD
Cost of sales

$

8,590

2,081

421

2,502

$

6,088

Selling, general and administrative

5,604

49

49

5,555

Research and development

22,333

6

33

39

22,294

Restructuring costs

346

346

346

-

Other (income) expense, net

237

(371

)

(371

)

608

Loss Before Taxes

(4,217

)

(2,136

)

(800

)

371

(2,565

)

(1,652

)

Income Tax Provision (Benefit)

1,363

(421

)

(3)

(135

)

(3)

80

(3)

(476

)

1,839

Net Loss

(5,580

)

(1,715

)

(665

)

291

(2,089

)

(3,491

)

Net Loss Attributable to Merck & Co., Inc., Rahway, N.J., USA

(5,575

)

(1,715

)

(665

)

291

(2,089

)

(3,486

)

Loss per Common Share Assuming Dilution(4)

$

(2.26

)

(0.70

)

(0.27

)

0.12

(0.85

)

$

(1.41

)

Tax Rate

-32.3

%

-111.3

%

Only the line items that are affected by non-GAAP adjustments are shown.
The Company is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors' understanding of the Company's results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the Company along with other metrics. In addition, annual employee compensation, including senior management's compensation, is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.
(1) Amounts included in cost of sales reflect expenses for the amortization of intangible assets, as well as the recognition of fair value step-up of inventories related to the 2025 Verona Pharma plc acquisition. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures.
(2) Amounts primarily include employee separation costs, accelerated depreciation and asset impairment charges associated with facilities to be closed or divested, as well as contractual termination costs, associated with activities under the Company's formal restructuring programs.
(3)Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.
(4)Because the Company recorded a net loss in both the second quarter and first six months of 2026, no potential dilutive common shares were used in the computations of loss per common share assuming dilution as the effects would have been anti-dilutive.
MERCK & CO., INC., RAHWAY, N.J., USA
FRANCHISE / KEY PRODUCT SALES
(AMOUNTS IN MILLIONS)
(UNAUDITED)
Table 3

2026

2025

2Q

June YTD

1Q

2Q

June YTD

1Q

2Q

June YTD

3Q

4Q

Full Year

Nom %

Ex-Exch %

Nom %

Ex-Exch %

TOTAL SALES(1)

$16,286

$16,607

$32,893

$15,529

$15,806

$31,335

$17,276

$16,400

$65,011

5

4

5

3

PHARMACEUTICAL

14,349

14,760

29,109

13,638

14,050

27,688

15,611

14,843

58,142

5

4

5

3

Oncology
Keytruda

7,906

7,904

15,810

7,205

7,956

15,161

8,142

8,337

31,641

-1

-2

4

2

Keytruda Qlex

128

463

590

5

35

40

-

-

-

-

Alliance Revenue - Lynparza (2)

341

365

706

312

370

682

379

389

1,450

-1

-2

4

2

Alliance Revenue - Lenvima(2)

256

283

539

258

265

523

258

272

1,053

7

6

3

2

Welireg

199

271

470

137

162

300

196

220

716

67

67

57

56

Alliance Revenue - Reblozyl(3)

148

122

270

119

107

226

136

164

525

15

15

20

20

Vaccines(4)
Gardasil/Gardasil 9

1,069

1,169

2,238

1,327

1,126

2,453

1,749

1,031

5,233

4

3

-9

-10

ProQuad/M-M-R II/Varivax

538

592

1,130

539

609

1,148

684

619

2,451

-3

-3

-2

-3

Vaxneuvance

202

148

350

230

229

459

226

140

825

-35

-36

-24

-26

RotaTeq

206

134

340

228

121

349

204

119

673

10

9

-3

-4

Capvaxive

142

184

325

107

129

236

244

279

759

42

40

38

36

Enflonsia

1

2

3

79

21

100

-

-

-

-

Cardiometabolic & Respiratory
Winrevair

525

588

1,114

280

336

615

360

467

1,443

75

75

81

81

Ohtuvayre

131

204

335

178

178

-

-

-

-

Alliance Revenue - Adempas/Verquvo(5)

109

126

235

106

123

229

112

129

470

3

3

3

3

Adempas(6)

78

78

156

68

80

147

82

83

312

-2

-4

6

1

Infectious Diseases
Bridion

472

497

969

441

461

902

439

499

1,841

8

8

7

7

Prevymis

272

295

568

208

228

436

266

275

978

29

28

30

27

Delstrigo

75

101

176

67

83

150

77

79

306

21

17

17

10

Zerbaxa

82

77

159

70

74

145

81

87

312

4

2

10

8

Isentress/Isentress HD

59

60

119

90

86

176

82

67

325

-30

-31

-32

-33

Dificid

34

22

56

83

96

179

43

25

247

-77

-77

-69

-69

Lagevrio

28

5

32

102

83

185

138

57

380

-95

-95

-82

-83

Diabetes
Januvia

367

258

625

549

372

921

382

302

1,604

-31

-30

-32

-32

Janumet

207

171

378

247

251

498

243

199

940

-32

-33

-24

-25

Other Pharmaceutical(7)

774

641

1,416

865

703

1,568

1,004

770

3,340

-9

-9

-10

-11

ANIMAL HEALTH

1,791

1,775

3,566

1,588

1,646

3,234

1,615

1,505

6,354

8

5

10

6

Livestock

1,064

1,041

2,105

924

961

1,885

1,023

987

3,896

8

6

12

7

Companion Animal

727

734

1,461

664

685

1,349

592

518

2,458

7

5

8

4

Other Revenues(8)

146

72

218

303

110

413

50

52

515

-35

-34

-47

-6

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.
(1)Only select products are shown.
(2)Alliance Revenue represents the Company's share of profits, which are product sales net of cost of sales and commercialization costs.
(3)Alliance Revenue represents royalties.
(4)Total Vaccines sales were $2,314 million and $2,361 million in the first and second quarter of 2026, respectively, and $2,607 million and $2,370 million in the first and second quarter of 2025, respectively.
(5)Alliance Revenue represents the Company's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.
(6)Net product sales in the Company's marketing territories.
(7)Includes Pharmaceutical products not individually shown above. Also reflects total alliance revenue for Koselugo of $161 million and $10 million in the first and second quarter of 2026, respectively, and $44 million and $43 million in the first and second quarter of 2025, respectively.
(8)Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of milestone payments for out-licensed products were $132 million and $0 million in the first and second quarter of 2026, respectively, and $95 million and $5 million in the first and second quarter of 2025, respectively.

Source: Merck & Co., Inc., Rahway, NJ, USA
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