Merck & Co., Inc. (MRK) — Q2 2026 Earnings Preview
Key Points
| Factor | Details |
|---|---|
| Consensus Revenue (Q2 2026) | $16,416M (+4% YoY vs. Q2 2025 actual $15,873M) |
| Consensus EPS (Q2 2026, GAAP) | $0.16 (vs. Q2 2025 actual $1.84) |
| Guidance (FY 2026, as of Q1 2026) | Sales: $65,800M–$67,000M; Non-GAAP EPS: $5.04–$5.16 (includes $3.62/share Cidara charge) |
| Q2 2025 Actuals | Revenue: $15,873M; GAAP EPS: $1.84; Non-GAAP EPS: $2.22 |
| Key Watch Items for Q2 2026 | Execution on new launches (WINREVAIR, OHTUVAYRE, KEYTRUDA QLEX, CAPVAXIVE), Oncology growth, GARDASIL stabilization, margin trends, impact of Cidara and Terns deals, FX tailwinds, and SG&A ramp |
| YoY Comparable | Q2 2025 was a relatively soft quarter due to GARDASIL China/Japan headwinds and generic pressure; Q2 2026 faces easier comps in vaccines but higher R&D/BD expense base |
Summary and Conclusions
- Merck is expected to report Q2 2026 revenue of $16,416M (+4% YoY) and GAAP EPS of $0.16, with consensus reflecting a rebound from a soft Q2 2025 that was impacted by GARDASIL declines in China/Japan and generic competition.
- FY 2026 guidance was raised and narrowed after Q1, with the midpoint for sales at $66,400M and non-GAAP EPS at $5.10, including a $3.62/share Cidara charge.
- Key focus areas for the quarter are execution on new launches (notably WINREVAIR, OHTUVAYRE, KEYTRUDA QLEX, and CAPVAXIVE), continued oncology momentum, stabilization in GARDASIL, and margin management amid heavy investment in pipeline and business development.
- Q2 2026 faces an easier YoY comparable in vaccines but will be lapping higher R&D and BD charges, especially from the Cidara acquisition.
- Investors will be watching for updates on the ramp of new products, progress on cost discipline, and any changes to full-year guidance.
Most Important Factors to Watch in Q2 2026
| Factor | Why It Matters |
|---|---|
| Execution on New Launches | WINREVAIR, OHTUVAYRE, KEYTRUDA QLEX, and CAPVAXIVE are critical to offsetting LOEs and driving growth. Uptake, market access, and physician adoption trends will be scrutinized. |
| Oncology Franchise Growth | KEYTRUDA/KEYTRUDA QLEX remains the largest driver. Early-stage indications, QLEX adoption (targeting 30–40% by end-2027), and new combo regimens are key. |
| GARDASIL Trends | Stabilization in the U.S. and ex-China/Japan is expected; China/Japan remain headwinds but are now a smaller part of the base. Any signs of recovery or further erosion will be notable. |
| Margin and Expense Discipline | Gross margin and SG&A trends will be watched closely, especially as Merck invests in launches and absorbs Cidara/Terns costs. Guidance assumes SG&A ramps through the year. |
| Impact of Business Development | Integration and financial impact of Cidara (MK-1406, flu antiviral) and Terns (TERN-701, CML) will be monitored. One-time charges and ongoing investment are significant. |
| Guidance Updates | Any changes to FY 2026 sales or EPS guidance, especially in light of FX, launch momentum, or macro headwinds. |
| FX Impact | Guidance assumes a +1% FX tailwind for FY 2026; actuals vs. this assumption will be parsed. |
| Pipeline Progress | Readouts and regulatory milestones in oncology, HIV, immunology, and ophthalmology are expected in 2H26; any commentary on timing or risk will be important. |
Quarterly Financials — Actuals vs. Consensus
Quarterly Income Statement: Actuals and Consensus
| Quarter | Revenue ($M) | YoY Growth | GAAP EPS | Non-GAAP EPS | Notes |
|---|---|---|---|---|---|
| Q2 2026 (consensus) | 16,416 | +4% | 0.16 | Consensus estimates | |
| Q1 2026 (actual) | 16,286 | +5% | -1.72 | -1.28 | Includes $3.62/share Cidara charge |
| Q4 2025 (actual) | 16,400 | +5% | 1.19 | 2.04 | Includes $0.05/share MK-8690 charge |
| Q3 2025 (actual) | 17,277 | +4% | 2.32 | 2.58 | Includes $0.10/share LaNova charge |
| Q2 2025 (actual) | 15,873 | 1.84 | 2.22 | GARDASIL China/Japan headwinds | |
| Q1 2025 (actual) | 15,530 | 2.01 | 2.22 |
Full-Year Guidance and Consensus
FY 2026 Guidance (as of Q1 2026)
| Metric | Guidance (FY 2026) | Prior Guidance | Notes |
|---|---|---|---|
| Sales ($M) | $65,800–$67,000 | $65,500–$67,000 | Raised and narrowed after Q1 |
| Non-GAAP EPS | $5.04–$5.16 | $5.00–$5.15 | Includes $3.62/share Cidara charge |
| Non-GAAP Gross Margin | ~82% | ~82% | |
| Non-GAAP OpEx | $36,000–$36,800M | $35,900–$36,900M | Includes $9B Cidara charge |
| Non-GAAP Other (income) expense | ~$1,300M expense | ~$1,300M expense | |
| Non-GAAP Tax Rate | 23.5%–24.5% | 23.5%–24.5% | Includes Cidara charge impact |
| Share Count (diluted) | ~2.48B | ~2.48B |
Guidance does not include impact from the proposed Terns acquisition (expected to close in May 2026, $5.8B one-time charge, $2.35/share impact).
