Merck & Co., Inc. (MRK) Q2 2026: Revenue Growth Amid Significant Losses — Disappointing Quarter for Shareholders

In the second quarter of 2026, Merck & Co., Inc. reported total worldwide sales of $16.6 billion, reflecting a 5% increase compared to $15.8 billion in the same quarter of 2025. However, this growth was overshadowed by a substantial GAAP loss per share of $0.54, a stark contrast to earnings of $1.76 per share in the prior year.

This quarter is disappointing for shareholders primarily due to the significant losses incurred, despite the revenue growth. The losses stemmed from a $2.31 per share charge related to the acquisition of Terns Pharmaceuticals, which heavily impacted both GAAP and non-GAAP earnings.

Key Financial Metrics:

• Total Worldwide Sales: $16.6 billion (up $800 million or 5% YoY)
• GAAP Loss per Share: $0.54 (down from $1.76 YoY)
• Non-GAAP Loss per Share: $0.13 (down from $2.13 YoY)
• KEYTRUDA Sales: $8.4 billion (up $434 million or 5% YoY)
• WINREVAIR Sales: $588 million (up $252 million or 75% YoY)
• Animal Health Sales: $1.8 billion (up $144 million or 8% YoY)

Analysis

The revenue growth of $800 million is commendable, driven by strong performances in oncology, particularly from KEYTRUDA and the newly launched WINREVAIR. KEYTRUDA sales alone contributed $8.4 billion, with an additional $463 million from KEYTRUDA QLEX. The 75% growth in WINREVAIR sales indicates a successful market entry, particularly in Japan and Europe.

However, the financial results are marred by the substantial losses reported. The GAAP loss of $1,335 million in Q2 2026 compared to a net income of $4,427 million in Q2 2025 is alarming. The $2.31 per share charge for the Terns acquisition significantly impacted earnings, leading to a non-GAAP loss per share of $0.13, down from $2.13 in the previous year.

Dividend and Share Buyback

There were no announcements regarding dividends or share buybacks in this quarter, which may concern investors looking for returns amid the losses.

Guidance Update

Merck has narrowed and raised its full-year 2026 sales outlook to a range of $66.3 billion to $67.3 billion, up from the previous range of $65.8 billion to $67.0 billion. The company now expects non-GAAP EPS to be between $2.66 and $2.76, which includes significant one-time charges related to acquisitions.

Forward Catalysts

Investors should closely monitor the upcoming Oncology Investor Event scheduled for October 26, 2026, during the European Society for Medical Oncology Congress. This event will provide insights into Merck's oncology strategy and pipeline developments, which could be pivotal for future growth and recovery in share price.

In conclusion, while Merck's revenue growth is a positive sign, the substantial losses and lack of dividends make this a disappointing quarter for shareholders. The focus will now shift to how effectively the company can leverage its pipeline and manage costs moving forward.

Note: The following tables contain amounts in millions.

	Second Quarter 2026	Second Quarter 2025	Change	Change Ex-Exchange
Sales	$16,607	$15,806	5%	4%
GAAP net (loss)	$(1,335)	$4,427	N/M	N/M
Non-GAAP net (loss)	$(330)	$5,366	N/M	N/M
GAAP EPS	$(0.54)	$1.76	N/M	N/M
Non-GAAP EPS	$(0.13)	$2.13	N/M	N/M

	June 30, 2026	December 31, 2025
Assets
Cash and cash equivalents	$4,566	$5,789
Accounts receivable	$9,459	$7,809
Inventories	$3,905	$3,701
Other current assets	$1,041	$1,259
Total current assets	$18,971	$18,558
Property, plant and equipment	$25,571	$25,967
Other long-term assets	$7,529	$5,888
Total assets	$52,071	$50,413
Liabilities
Current liabilities	$12,796	$11,823
Long-term debt	$22,500	$22,123
Other liabilities	$4,170	$3,626
Total liabilities	$39,466	$37,572
Equity
Common stock	$1,656	$1,626
Additional paid-in capital	$9,945	$9,854
Retained earnings	$1,904	$1,361
Total equity	$12,605	$12,841
Total liabilities and equity	$52,071	$50,413

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