Merck & Co., Inc. Q3 Earnings Call Highlights

Key Points

• Q3 revenue rose 5% to $18.1 billion, supported by oncology, vaccines, cardiometabolic products and animal health; non-GAAP EPS was $2.49, including a $0.12-per-share SciBrunch charge.
• KEYTRUDA-family sales increased 6% to $8.6 billion, while newer products including WINREVAIR, WELIREG and GARDASIL posted strong growth. Merck raised its 2026 guidance to $66.8–$67.3 billion in revenue and $2.77–$2.82 in non-GAAP EPS, though some Q3 purchase-timing benefits are expected to reverse.
• Pipeline progress remains central to Merck’s post-KEYTRUDA strategy, with positive late-stage results for sac-TMT in endometrial cancer and Moderna-partnered intismeran in melanoma, alongside advancing programs in pulmonary hypertension, immunology and ophthalmology.

Merck & Co., Inc. NYSE: MRK reported third-quarter 2026 revenue of $18.1 billion, up 5% from a year earlier, as growth in oncology, vaccines, cardiometabolic products and animal health helped offset product-specific and market headwinds.

Non-GAAP earnings per share were $2.49 for the quarter, including a $0.12-per-share charge tied to a license agreement with SciBrunch. Chief Executive Officer Rob Davis said the company’s newer launches and clinical pipeline progress were increasingly supporting its strategy to grow beyond the expected loss of exclusivity for KEYTRUDA.

“The opportunity we have to drive strong long-term growth beyond the KEYTRUDA LOE period is becoming increasingly clear,” Davis said during the company’s earnings call.

KEYTRUDA, New Products Drive Revenue

Sales of the KEYTRUDA product family, including KEYTRUDA QLEX, rose 6% to $8.6 billion on an operational basis. Growth reflected use in earlier-stage cancers and sustained demand in metastatic settings, with particular contributions from cervical and breast cancers, urothelial cancer and earlier-stage head and neck cancer.

KEYTRUDA QLEX generated $830 million in sales during the quarter. Jannie Oosthuizen, president of Merck’s Oncology Business Unit and MSD International, said the company remains targeting 30% to 40% adoption of the subcutaneous formulation in the U.S. by the end of 2027.

Oosthuizen said a Dutch court injunction currently affects supply in Italy, Denmark, the Netherlands, France, Belgium and Ireland, though he characterized those as generally smaller-volume markets. He said Merck continues to believe it has intellectual property supporting its ability to market QLEX and is seeking to overturn the decision.

Other notable product results included:

• WELIREG: Sales increased 58% to $307 million, aided by U.S. use in previously treated patients and as adjuvant treatment for certain renal cell carcinoma patients, as well as international launches.
• GARDASIL: Sales rose 14% to $2 billion. U.S. sales increased 18%, benefiting from a significant CDC purchase and pricing, while international sales grew 6%.
• CAPVAXIVE: Sales increased 7% to $263 million, supported by international launches. U.S. sales fell 13% as lower adult pneumococcal vaccination rates more than offset market-share gains.
• WINREVAIR: Global sales increased 94% to $694 million, driven by demand in pulmonary arterial hypertension and channel inventory. Nearly 1,600 new U.S. patients received prescriptions during the quarter, according to the company.
• OHTUVAYRE: Sales were $184 million, reflecting demand among adults with COPD.
• ENFLONSIA: Sales totaled $187 million, reflecting seasonal demand and inventory build.

Merck also cited early prescription momentum for LIPFENDRA, its treatment option for adults with elevated LDL cholesterol. Brian Foard, president of Specialty Pharma and Infectious Diseases, said the product recorded more than 11,000 prescriptions in the third quarter from more than 6,500 prescribers. He said the company expects broad commercial coverage in 2027 and Medicare coverage in 2028, while acknowledging that sampling and coupon programs will affect near-term revenue.

Guidance Raised as Purchase-Timing Benefits Expected to Reverse

Chief Financial Officer Caroline Litchfield said Merck narrowed its full-year outlook and raised the midpoint of its revenue and earnings guidance. The company now expects 2026 revenue of $66.8 billion to $67.3 billion, representing growth of 3% to 4%, including an approximately one-percentage-point foreign-exchange benefit using mid-October rates.

Merck expects non-GAAP EPS of $2.77 to $2.82, including an approximately $0.15 foreign-exchange benefit and the SciBrunch charge. It retained its forecast for approximately 81% gross margin and projected operating expenses of $42.4 billion to $42.9 billion.

Litchfield said third-quarter sales received an approximately $550 million benefit from favorable U.S. purchase timing. That included $200 million related to KEYTRUDA, $50 million related to WINREVAIR and $300 million related primarily to GARDASIL and vaccines. The KEYTRUDA and WINREVAIR benefits are expected to unwind in the fourth quarter, while $250 million of the vaccine-related benefit is expected to unwind in 2027.

For 2027, Litchfield said Merck expects modest revenue growth, with contributions from launches and animal health partly offset by more than $2 billion in headwinds from generic competition and loss of exclusivity affecting BRIDION, the JANUVIA family and ADEMPAS. Merck also expects continued investment in launches and pipeline programs, with underlying operating expenses rising at a mid- to high-single-digit rate.

Pipeline Updates Include Oncology, Immunology and Ophthalmology

Merck highlighted positive Phase III results from its TroFuse-005 study of sac-TMT in advanced or recurrent endometrial cancer following platinum chemotherapy and anti-PD-L1 immunotherapy. Dean Li, president of Merck Research Laboratories, said the study showed a nearly seven-month improvement in median overall survival compared with chemotherapy alone.

The company is also advancing sac-TMT, a TROP2-directed antibody-drug conjugate, across lung, breast and other cancers. Li said Merck plans to begin Phase III studies of sac-TMT combined with MK-2010, its PD-1/VEGF bispecific, in first-line non-small cell lung cancer during the first half of 2027.

Merck and Moderna also presented Phase III data for intismeran autogene plus KEYTRUDA as adjuvant treatment for completely resected stage IIB to IV melanoma. Li said the INTerpath-001 study showed clinically meaningful improvements in recurrence-free survival and distant metastasis-free survival compared with KEYTRUDA alone. Merck said it is engaged with the FDA regarding a regulatory submission.

In other areas, the FDA approved a WINREVAIR label update incorporating Phase III HYPERION results. Merck plans to initiate the Phase III Core study in a Group 2 pulmonary hypertension population associated with heart failure with preserved ejection fraction. The company also plans to advance tulisokibart, an anti-TL1A antibody, into Phase III testing for hidradenitis suppurativa after positive Phase IIb data.

In ophthalmology, Merck said its Phase IIb/III BRUNELLO study of remigromig met its primary endpoint in diabetic macular edema, with both monthly doses demonstrating non-inferior visual acuity versus monthly ranibizumab at one year. A companion BAROLO study remains pending.

Davis said the company’s previously discussed $70 billion mid-2030s revenue opportunity was not based on contributions from the Terns acquisition and included limited assumptions for the PD-1/VEGF program. He added that the commercial profile for intismeran now appears stronger than Merck’s earlier expectations, while cautioning that additional clinical readouts remain ahead.

About Merck & Co., Inc. (NYSE:MRK)

Merck & Co, Inc is a global healthcare company that develops, manufactures and markets prescription medicines, vaccines and animal-health products. Its pharmaceutical business focuses on oncology, infectious diseases, cardiology, immunology and other areas of significant medical need. The company serves patients, healthcare providers and institutions in markets worldwide.

Merck's principal products include Keytruda, an immunotherapy used to treat a range of cancers; Gardasil and Gardasil 9, vaccines that help protect against human papillomavirus; and Januvia and Janumet, medicines used to manage type 2 diabetes.

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