Key Notes
- Merck reported $18.09 billion in third-quarter sales and $2.49 adjusted EPS, exceeding consensus despite a year-over-year decline in earnings.
- Combined Keytruda and Keytruda Qlex sales rose 6% to $8.60 billion, including $830 million from the newer injectable formulation.
- Merck raised its 2026 adjusted EPS forecast to $2.77–$2.82 and lifted the bottom of its sales outlook to $66.8 billion.
Merck & Co. Inc. (NYSE: MRK) beat third-quarter earnings and revenue estimates and raised its full-year profit outlook, as growth in Keytruda, its newer injectable formulation and other medicines helped offset pressure from generic competition and higher research spending.
The US drugmaker reported adjusted earnings of $2.49 a share on revenue of $18.09 billion. MRK traded at $143.99, up 2.17%, in premarket trading at 7:17 a.m. EDT on October 29, before the regular US session.
Merck’s results showed sales growth of 5% from a year earlier, but adjusted EPS declined 3%. The distinction matters for shareholders: the company exceeded near-term forecasts while earnings remained below the previous year’s level.
Quarterly Results Beat Wall Street Estimates
Merck’s headline results compared with the LSEG consensus estimates reported by CNBC as follows:
- Adjusted EPS of $2.49, compared with $2.08 expected.
- Revenue of $18.09 billion, compared with $17.31 billion expected.
- GAAP net income of $5.07 billion, or $2.04 a share, down from $5.79 billion, or $2.32 a share, a year earlier.
The adjusted EPS beat was 41 cents, approximately 20%, while reported revenue exceeded the estimate by roughly $775 million using Merck’s unrounded sales figure of $18.085 billion.
Adjusted EPS excludes acquisition-related costs, restructuring and certain investment gains. It still includes a 12-cent charge associated with a global licensing agreement with SciBrunch. That charge should not be added back when comparing the reported $2.49 with the adjusted consensus.
The company’s adjusted net income fell 4% to $6.16 billion. Higher operating expenses and net interest costs weighed on earnings, partly offset by business growth and a lower effective tax rate.
Keytruda Qlex Builds Its Sales Contribution
Combined Keytruda and Keytruda Qlex sales rose 6% to $8.601 billion. The total includes $830 million from Qlex, the newer subcutaneous formulation, rather than an additional $830 million outside the headline franchise figure.
Merck said growth reflected demand in earlier-stage cancer indications and certain metastatic settings. The company also described offsetting effects from wholesaler purchasing and channel inventory, underscoring that quarterly shipments do not always move exactly with underlying treatment demand.
Other products added to the growth. Winrevair sales increased 93% to $694 million, while Gardasil and Gardasil 9 sales rose 14% to $1.995 billion, supported by US public-sector purchasing patterns and higher net pricing.
Animal Health contributed $1.676 billion in sales, up 4%. Pharmaceutical sales rose 4% to $16.268 billion, although Merck said purchasing timing benefited growth by approximately $550 million. Investors will need subsequent quarters to assess how much of that benefit repeats.
Generic Competition and Research Costs Remain Headwinds
The gains were partly offset by declines in older products. Januvia and Janumet sales fell 39% to $380 million, while Bridion revenue dropped 67% to $144 million as generic competition followed the loss of US market exclusivity.
Non-GAAP research and development spending rose 13% to $4.533 billion. The figure includes a $400 million SciBrunch licensing charge and higher clinical-development spending, partly offset by a $200 million expense reduction under a research-funding agreement.
Adjusted gross margin slipped to 81.4% from 81.9%, reflecting higher production costs. Adjusted selling, general and administrative expenses increased 10% to $2.862 billion as administrative costs and promotion supporting product launches increased.
For MRK investors, those figures show why higher sales did not produce year-over-year EPS growth. New medicines are adding revenue, but developing and launching them also requires spending before their full commercial potential is known.
Higher Guidance Still Includes Major Deal Charges
Merck now expects 2026 adjusted EPS of $2.77–$2.82, up from $2.66–$2.76. It raised the bottom of its sales forecast to $66.8 billion from $66.3 billion, while keeping the upper end at $67.3 billion.
The full-year EPS range is not a forecast for the fourth quarter alone. It includes substantial one-time charges recorded during 2026: $3.62 a share for the Cidara acquisition, $2.31 for Terns and 12 cents for the SciBrunch agreement.
Those charges help explain why the annual adjusted EPS forecast is only modestly above the third-quarter figure. The guidance also assumes no additional significant business-development transactions and incorporates a lower expected full-year adjusted tax rate of 32%–33%, previously 35%–36%.
Oncology Pipeline Shapes the Longer-Term Stock Outlook
The earnings release followed new oncology data presented at ESMO. Merck highlighted sac-TMT and its investigational personalized cancer vaccine combination with Moderna, building on the collaboration we previously reported.
Merck said the FDA accepted the sac-TMT application for priority review, with a June 15, 2027 target decision date. An accepted application and positive trial results remain different from a marketing approval or guaranteed future sales.
The immediate stock story combines a quarterly beat, improving sales guidance and continued investment in the pipeline. As with Johnson & Johnson’s recent earnings report, investors need to read the adjusted result alongside acquisition charges and the reported profit comparison. Our earnings calendar tracks upcoming corporate reports.
