Merck KGaA ETR: MRK reported what executives described as a “solid start” to 2026, with organic growth in its Life Science and Electronics businesses offsetting a decline in Healthcare, and raised its full-year outlook after stronger momentum late in the quarter.
Group Chief Executive Officer Kai Beckmann said on the company’s first-quarter investor call that organic group sales rose 2.9%, while EBITDA pre increased 5.3% organically. Reported net sales declined 2.8% to 5.134 billion euros, as foreign-exchange headwinds outweighed organic growth. Reported EBITDA pre slipped 0.3% to 1.530 billion euros, while EPS pre was 2.11 euros, compared with 2.12 euros in the prior-year period.
“If I was to characterize this quarter, I would call it a solid start to 2026 despite global challenges,” Beckmann said.
Chief Financial Officer Helene von Roeder said the first quarter faced “disproportionate FX headwinds,” particularly from U.S. and Asian currencies, and that the company expects the impact to ease over the year. Merck’s EBITDA pre margin improved 70 basis points year over year to 29.8%, though von Roeder said the underlying margin was approximately stable.
Life Science Leads Growth as Process Solutions Tops 1 Billion Euros
Life Science was the strongest contributor in the quarter, with organic sales growth of 8.3%. Within the segment, Process Solutions grew 16% organically and generated more than 1 billion euros in quarterly sales for the first time since the first quarter of 2023.
Von Roeder attributed the acceleration in Process Solutions to strong demand for downstream processing and single-use solutions toward the end of the quarter, along with limited customer safety stock build-up and new customer projects. She also said order intake remained strong and book-to-bill stayed “comfortably above 1.”
During the question-and-answer session, Life Science CEO Jean-Charles Wirth said Process Solutions benefited from three factors: operational efficiency gains from a new go-to-market model, contributions from new customer projects, and stronger buying patterns, particularly from Asia-Pacific customers. Excluding those effects, Wirth said the business would still be closer to the upper end of the 8% to 12% growth range discussed at Merck’s Capital Markets Day.
Wirth said some exceptional effects may continue into the second quarter but are expected to be less pronounced in the second half, when the company anticipates a return to a normalized underlying growth rate around 10%.
Discovery Solutions grew 1.6% organically, while Advanced Solutions rose 4%. Von Roeder said Discovery Solutions continued to face muted spending in academia and government and an evolving market environment in China. Wirth later described the China market for Advanced Solutions and Discovery Solutions as still soft.
Healthcare Declines on MAVENCLAD Competition
Healthcare sales fell 3.4% organically, mainly due to generic competition for MAVENCLAD in the U.S. Von Roeder said the decline was better than the indication given on the prior quarterly call, helped by MAVENCLAD U.S. sales and positive phasing in China.
Rare diseases was the largest contributor to growth in Healthcare, including a 4.4 percentage-point contribution from SpringWorks and initial sales from the launch of pimicotinib in China. Von Roeder said OGSIVEO and GOMEKLI sales were sequentially lower because of U.S. stocking effects.
Healthcare CEO Danny Bar-Zohar said rare disease sales totaled 94 million euros in the quarter, with 93 million euros attributed to OGSIVEO and GOMEKLI. He said Q1 sales were down 9 million euros sequentially from Q4, mostly because of OGSIVEO, but added that new patient starts for OGSIVEO increased in Q1 versus Q4.
In fertility, sales declined 5.2% organically, driven by remaining U.S. pricing pressure on GONAL-f. Bar-Zohar said most of that effect should annualize in the second quarter and that GONAL-f sales are expected to be broadly stable year over year from Q2 onward. Pergoveris continued to grow strongly, up 20% organically, and the company is preparing for a U.S. launch in the second half of 2026, subject to regulatory progress.
On the pipeline, von Roeder said Merck dosed the first patient in its Phase III enpatoran program in lupus rash. Bar-Zohar also highlighted ongoing Phase III work for cladribine capsules in generalized myasthenia gravis and said a Phase III study of the anti-CCND5 antibody-drug conjugate M9140 in third-line metastatic colorectal cancer is expected to start in the coming weeks.
Electronics Growth Helped by Semiconductor Materials
Electronics sales increased 4.2% organically, supported by Semiconductor Solutions, which grew 7.5% organically. Von Roeder said semiconductor materials grew at low double-digit organic rates, driven by artificial intelligence, advanced nodes, and specialty and mature nodes in Asia.
Reported Electronics sales declined 13.9%, reflecting currency headwinds and a negative portfolio effect from the divestment of Surface Solutions. EBITDA pre in Electronics rose 30.1% organically, but von Roeder noted that profitability was elevated by 68 million euros in one-off items. Those included a 42 million euro gain from the divestment of Merck’s OLED intellectual property portfolio to Universal Display Corporation and a 25 million euro cost recovery tied to a supplier mislabeling dispute not related to product quality.
Electronics CEO Benjamin Hein said DS&S, which represents roughly 15% of Electronics sales, stabilized quarter over quarter after bottoming out in Q4 2025. He said Merck expects DS&S to be stable in 2026 and no longer a growth headwind.
Merck Raises 2026 Guidance
Merck raised its 2026 guidance, now expecting group sales of 20.4 billion euros to 21.4 billion euros and EBITDA pre of 5.7 billion euros to 6.1 billion euros. The company now expects organic group sales growth of 0% to 3%, up from a prior range of negative 1% to positive 2%.
For EBITDA pre, Merck now expects organic growth of negative 2% to positive 2%, compared with the previous range of negative 4% to positive 1%. EPS pre guidance was raised to 7.50 euros to 8.20 euros per share, from 7.10 euros to 8.00 euros.
By segment, Merck increased its Life Science organic sales growth outlook to 4% to 7%, from 3% to 6%, and lifted its Life Science organic EBITDA pre growth outlook to 4% to 8%, from 2% to 6%. The company also raised Healthcare guidance by one percentage point, now expecting organic sales to decline 3% to 6% and organic EBITDA pre to decline 8% to 12%. Merck confirmed its Electronics organic sales and EBITDA pre growth guidance.
CEO Outlines Strategic Direction
Beckmann also used the call to outline Merck’s strategic direction, centered on what he described as the broader life sciences value chain and the company’s capabilities in biology, chemistry, physics, data and artificial intelligence.
He said the company plans to pursue four strategic streams: focusing on high-growth value drivers, shifting selected product portfolios toward integrated workflow solutions, leveraging platform capabilities across businesses, and sourcing and scaling innovation through M&A and in-licensing.
Beckmann said M&A remains a growth lever across the group, with financial criteria unchanged, including internal rate of return above the weighted average cost of capital, EPS pre accretion after synergies, and maintaining a strong investment-grade rating. In Healthcare, he said Merck aims to manage the business above a 30% EBITDA pre margin while moving R&D spending toward 25% of sales over the midterm, depending on pipeline opportunities.
“Merck is operating from a position of strength,” Beckmann said, adding that the company remains committed to the midterm guidance it shared at last year’s Capital Markets Day.
About Merck KGaA ETR: MRK
Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company's Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies.
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