Skip to content
    MRK
    Earnings call· Mar 2026(Q1 FY26)

    Merck & Co. Q1 FY26 earnings call MRK

    Apr 30, 2026 Source

    Executive summary

    Merck & Co., Inc. Q1 FY26 — Strong Oncology & Pipeline Progress

    Merck delivered a strong first quarter, driven by robust oncology performance and increasing contributions from new product launches, reinforcing confidence in its full-year outlook. The company is actively transforming its portfolio with over 20 new products, accelerating its pipeline through strategic business development like the Terns acquisition, and evolving its operating structure to maximize commercial opportunities. Significant advancements in AI partnerships are also set to enhance productivity and innovation across the organization.

    Highlights

    5

    • Total company revenues grew 5% (3% ex-FX) to $16.3 billion.

    • KEYTRUDA family sales increased 8% to $8 billion, driven by metastatic and earlier-stage indications.

    • WELIREG sales surged 43% to $199 million, with continued international uptake and increased U.S. use in RCC.

    • Animal Health business delivered strong growth of 6%.

    • FDA approved IDVYNSO for HIV-1 and granted priority review for I-DXd in SCLC, alongside new Phase IIb/III studies for MK-8748 in nAMD.

    Concerns

    3

    • GARDASIL sales decreased 22% ex-FX to $1.1 billion, primarily due to lower demand in China and Japan.

    • OHTUVAYRE sales were adversely impacted by CMS reimbursement changes and Medicare deductible resets, totaling $131 million.

    • The LITESPARK-012 study for WELIREG in combination with Lenvima and KEYTRUDA did not meet its dual primary endpoints in first-line RCC.

    Guidance & targets

    14
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $65.8 billion and $67 billion
    high materiality
    High
    Full-year 2026 Revenue Growth (ex-FX)
    1% to 3%
    high materiality
    High
    Full-year 2026 Gross Margin
    approximately 82%
    medium materiality
    High
    Full-year 2026 Operating Expenses
    $36 billion and $36.8 billion
    medium materiality
    High
    Full-year 2026 Other Expense
    approximately $1.3 billion
    medium materiality
    High
    Full-year 2026 Tax Rate
    23.5% and 24.5%
    medium materiality
    High
    Full-year 2026 Shares Outstanding
    approximately 2.48 billion
    low materiality
    High
    Full-year 2026 EPS
    $5.04 to $5.16
    high materiality
    High
    Terns Acquisition One-time R&D Expense Charge
    approximately $5.8 billion
    high materiality
    High
    Terns Acquisition EPS Impact (One-time charge)
    approximately -$2.35 per share
    high materiality
    High
    Terns Acquisition Ongoing EPS Impact
    approximately -$0.12 per share
    medium materiality
    High
    Full-year 2026 Share Repurchases
    approximately $3 billion
    medium materiality
    High
    Commercial Opportunity from New Growth Drivers
    over $70 billion
    high materiality
    High
    Enlicitide Approval
    second half of this year
    high materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Oncology - KEYTRUDA Family
    Global growth driven by continued strong demand from metastatic indications and robust uptake in earlier-stage cancers, particularly in breast and cervical cancer. Increased use of KEYTRUDA in combination with Padcev in urothelial cancer. U.S. growth benefited by approximately $250 million from timing of purchases.
    		$8 billion+8%——
    Oncology - WELIREG
    Driven by continued uptake from ongoing launches in international markets and increased use in certain patients with previously treated advanced renal cell carcinoma in the U.S.
    		$199 million+43%——
    Vaccines and Infectious Diseases - GARDASIL
    Decrease driven by lower demand in China and Japan, consistent with expectations. U.S. sales declined 10% primarily due to timing of CDC purchases, partially offset by price.
    		$1.1 billion-22%——
    Vaccines and Infectious Diseases - CAPVAXIVE
    Outside of the U.S., sales were driven by uptake from ongoing launches in certain markets. In the U.S., growth was driven by increased demand from both retail pharmacies and nonretail customers, partially offset by a reduction in wholesaler inventory.
    		$142 million+31%——
    Cardiometabolic and Respiratory - WINREVAIR
    Reflection of continued strong demand. In the U.S., steady progress with more than 1,600 new patients and increased usage by patients with background therapies not including a prostacyclin. Outside the U.S., progress with securing reimbursement and ongoing launches.
    New U.S. patients: >1,600
    		$525 million———
    Cardiometabolic and Respiratory - OHTUVAYRE
    Sales adversely impacted by the CMS reimbursement change as well as Medicare deductible resets. Prescription trends began to recover in March.
    		$131 million———
    Animal Health - Total
    Delivered another quarter of strong growth.
    		—+6%——
    Animal Health - Livestock
    Driven primarily by higher demand for ruminants and poultry products as well as price.
    		—+8%——
    Animal Health - Companion Animal
    Due to new product launches and price, partially offset by a reduction in vet visits.
    		—+4%——

    Operational metrics

    9
    Non-GAAP Gross Margin
    81.9%-0.3 percentage points
    Q1 FY26

    Non-GAAP gross margin for the quarter.

    Non-GAAP Operating Expenses
    $15.2 billion+2%
    Q1 FY26

    Reflects increased investments in key growth drivers, partially offset by multiyear optimization efforts and external funding for sac-TMT.

    Non-GAAP Other Expense
    $318 million
    Q1 FY26

    Primarily reflects financing related to recent business development transactions.

    Non-GAAP Tax Provision
    $957 million
    Q1 FY26

    Tax provision for the quarter.

    Non-GAAP Tax Rate
    -43.5%
    Q1 FY26

    Resulted from a pretax loss due to the non-tax deductible one-time charge for Cidara.

    KEYTRUDA US Sales Benefit from Timing
    $250 million
    Q1 FY26

    Benefit from timing of wholesaler purchases in the U.S., expected to be a corresponding headwind in Q3.

    KEYTRUDA QLEX Sales
    $128 million
    Q1 FY26

    Sales in the first quarter, with permanent J code received on April 1st.

    WINREVAIR New Patients (US)
    >1,600
    Q1 FY26

    Number of new patients in the U.S. who received a prescription for WINREVAIR.

    Share Repurchases Pace
    approximately $3 billion
    FY26

    On pace for this amount of share repurchases for the full year.

    Industry KPIs

    7
    MetricValueDetails
    Prescription volume>1,600patients
    EPS revenue guidanceRevenue: $65.8B-$67B; EPS: $5.04-$5.16USD
    Pricing policy impactOHTUVAYRE sales adversely impacted
    Product franchise net salesKEYTRUDA family: $8B; WELIREG: $199M; GARDASIL: $1.1B; CAPVAXIVE: $142M; WINREVAIR: $525M; OHTUVAYRE: $131MUSD
    Geographic regional revenue growthGARDASIL: China/Japan lower demand, US -10%; CAPVAXIVE: ex-US uptake from launches, US increased demand; WINREVAIR: US steady progress, ex-US progressing with reimbursement/launches
    Clinical trial efficacy safety dataEnlicitide: statistically significant and clinically meaningful greater reductions; WINREVAIR (CADENCE): met primary endpoint; KEYTRUDA + paclitaxel (KEYNOTE-B96): statistically significant improvement; KEYTRUDA + Padcev (KEYNOTE-B15): reduced risk by 47%; WELIREG + KEYTRUDA (LITESPARK-022): 28% reduction; WELIREG + Lenvima (LITESPARK-011): 30% reduction; TERN-701: encouraging activity; IDVYNSO (SWITCH studies): noninferiority and similar safety profile; ENFLONSIA (SMART study): positive new data%
    Business development capacity deal size appetite$1 billion to $15 billionUSD

    Product announcements

    1
    ProductTypeDetails
    NUMELVIlaunch

    Deals & partnerships

    4
    Terns Pharmaceuticalsacquisition

    Planned acquisition of Terns Pharmaceuticals for TERN-701, a novel oral allosteric inhibitor of the BCR::ABL oncogene for chronic myeloid leukemia. TERN-701 has multibillion-dollar commercial potential and is expected to be a significant growth driver.

    Google Cloudpartnershipmultiyear

    Multiyear partnership to scale advanced AI, data, and agentic capabilities across Merck.

    Tempus AIcollaboration

    Expanded collaboration designed to advance Merck's precision oncology strategy.

    Mayo Clinicagreement

    Agreement that will allow Merck to leverage Mayo's clinical insights and genomic data sets at scale.

    Risks & headwinds

    5
    GARDASIL demand reductionQ1 FY26

    -22% ex-FX

    OHTUVAYRE sales impact from reimbursement changesQ1 FY26

    Sales of $131 million adversely impacted

    Mitigation: Making investments to reach more patients and physicians, expecting growth acceleration in the second half of the year and beyond.

    LITESPARK-012 study failureQ1 FY26

    Did not meet the dual primary endpoint of progression-free survival and overall survival

    Mitigation: Data provides learnings to the broader program; other LITESPARK studies (LITESPARK-033 and 034) are ongoing.

    KEYTRUDA sales timing headwindQ3 FY26

    Corresponding headwind in the third quarter

    Mitigation: Anticipated due to Q1 benefit from timing of wholesaler purchases.

    ENFLONSIA minimal Q2 salesQ2 FY26

    Minimal sales expected in the second quarter

    Mitigation: Actively engaging customers in advance of the RSV season and remaining focused on educating health care professionals and parents; expect shipments to increase in the second half of the year.

    Q&A highlights

    7

    How is Merck thinking about MK-3000 dosing frequency, given the 1-year BRUNELLO data and Lucentis comparison? Are other dosing intervals being considered beyond every 4 weeks?

    Dean Li stated that while the initial focus for MK-3000 is on every 4-week dosing to secure it in the label, other frequencies are absolutely being considered. He also highlighted the excitement around MK-8748, another novel bispecific in Phase IIb/III for retinal vascular disease.

    “So we believe that one should focus on Q4 weeks, but one should not only focus on Q4 weeks. So your question, which I think alludes to, are we considering other frequencies, the answer is absolutely yes.”

    asked by Carter Gould · answered by Dean Li

    2 min read7 chapters

    Detailed Narrative

    01

    Portfolio Transformation and Growth Drivers

    Merck is undergoing a significant portfolio transformation, with over 20 new products recently launched or in initial launch phases, almost all with blockbuster potential across various therapeutic areas. The company anticipates these new growth drivers alone could generate over $70 billion in commercial opportunity by the mid-2030s. This diversification strategy aims to extend leadership in oncology while building a powerful, broad portfolio.

    02

    Strategic Business Development

    The proposed acquisition of Terns Pharmaceuticals, with its promising candidate TERN-701 for chronic myeloid leukemia, exemplifies Merck's science-led business development strategy. TERN-701 is viewed as a potential best-in-class therapy with multibillion-dollar commercial potential, expected to drive growth in the next decade. Merck maintains its disciplined approach, seeking compelling science and value alignment, and has capacity for additional value-enhancing transactions.

    03

    Operational Structure Evolution and Leadership

    To enhance speed and precision, Merck announced an evolution of its commercial operating structure to a new business unit model, organized around products and therapeutic areas. This aims to drive accountability, sharpen focus, and increase agility. Key leadership appointments include Brian Ford leading the new specialty pharma and infectious diseases unit, Yani Ushausen leading global oncology and MSD International, and Corp Guindo heading a new strategic access policy and communications unit.

    04

    AI and Digital Partnerships

    Merck is accelerating its digital transformation through strategic partnerships. A multiyear collaboration with Google Cloud will scale advanced AI, data, and agentic capabilities across the company. This complements an expanded collaboration with Tempus AI for precision oncology and an agreement with the Mayo Clinic to leverage clinical insights and genomic data. These efforts are expected to improve productivity and accelerate pipeline innovation.

    05

    Cardiometabolic and Respiratory Pipeline Progress

    In cardiometabolic, additional Phase III data for enlicitide, an investigational oral PCSK9 inhibitor, demonstrated statistically significant reductions in LDL-cholesterol. For respiratory, the Phase II CADENCE trial showed WINREVAIR met its primary endpoint in pulmonary hypertension with heart failure with preserved ejection fraction, providing proof-of-concept for further evaluation in a condition with no approved therapies.

    06

    Oncology Pipeline Expansion and Milestones

    KEYTRUDA continues to expand its indications, with FDA and EC approvals for platinum-resistant ovarian cancer and priority review for muscle-invasive bladder cancer. WELIREG also saw sBLAs granted priority review for adjuvant RCC and advanced RCC. The company continues to advance its broader oncology portfolio, including I-DXd, which received priority review for extensive stage small cell lung cancer.

    07

    HIV Innovation and Future Outlook

    The FDA approved IDVYNSO, a once-daily, single-tablet 2-drug regimen for virologically suppressed HIV-1, marking the first approved 2-drug regimen without an integrase strand transfer inhibitor. Islatravir, a key component, is also being evaluated in late-phase trials for once-weekly combinations and potentially a monthly oral option, demonstrating Merck's profound commitment to addressing evolving HIV needs.

    AI-generated summary of the company’s earnings call. Not investment advice.