Merck Q3 Sales Rise 5% as New Products Grow; 2026 EPS Outlook Updated

Merck & Co. Inc. (NYSE: MRK) reported a 5% increase in third-quarter 2026 sales, supported by continued KEYTRUDA demand and growing contributions from newer products, while higher operating expenses weighed on earnings. The company also narrowed its full-year revenue outlook and raised the range for non-GAAP earnings per share, though favorable U.S. purchase timing provided a substantial benefit that is expected to unwind in coming periods.

Worldwide sales reached $18.1 billion, up from $17.3 billion a year earlier. Revenue increased 4% excluding foreign-exchange effects. Human Health sales rose 4% to $16.3 billion on both a reported and constant-currency basis, while Animal Health revenue increased 4% as reported and 3% excluding currency movements to $1.7 billion.

Revenue from recently launched products climbed to $2.2 billion from $800 million in the prior-year quarter. The launch portfolio includes WINREVAIR, KEYTRUDA QLEX, CAPVAXIVE, OHTUVAYRE, ENFLONSIA, IDVYNSO, LIPFENDRA, BRAVECTO QUANTUM and NUMELVI.

Non-GAAP earnings per share declined 3% to $2.49, or 5% excluding foreign exchange. GAAP EPS fell 12% to $2.04. Both measures included a $400 million charge, equal to $0.12 per share, tied to an exclusive global license agreement with SciBrunch Therapeutics.

Non-GAAP operating expenses rose 12% to $7.4 billion, while the non-GAAP gross margin decreased by 0.5 percentage point to 81.4%. The non-GAAP tax rate fell to 10.9% from 13.4%. On a GAAP basis, selling, general and administrative expenses plus research and development costs increased 8% to $7.4 billion.

KEYTRUDA and newer medicines drive growth

Sales of the KEYTRUDA family increased 6% excluding foreign exchange to $8.6 billion. Merck attributed the growth to stronger use in earlier-stage cancers and continued demand in metastatic indications, including uptake in certain cervical and breast cancers, combination use with Padcev in urothelial cancer, and adoption in earlier-stage head and neck cancer.

KEYTRUDA QLEX, the subcutaneous formulation launched in the third quarter of 2025, generated $830 million in sales. Merck said a year-over-year timing headwind in the U.S. was largely offset by higher channel inventory, which it expects to unwind in the fourth quarter of 2026.

Elsewhere in oncology, WELIREG revenue rose 58% excluding currency effects to $307 million, reflecting higher U.S. demand and international launch uptake. Lenvima alliance revenue increased 11% to $287 million, mainly because of U.S. demand. Lynparza alliance revenue declined 7% to $352 million due primarily to lower U.S. net pricing and weaker demand and pricing in China.

WINREVAIR remained a major contributor outside oncology, with sales rising 94% excluding foreign exchange to $694 million. Growth reflected new patient starts, higher prescription volumes and a benefit from channel inventory. Merck reported about 1,600 new U.S. patients prescribed the medicine during the quarter and more than 38,000 total prescriptions dispensed. OHTUVAYRE generated $184 million, with continued demand partly offset by the timing of specialty-pharmacy purchases.

GARDASIL sales increased 14% excluding currency effects to $2.0 billion, driven by a significant U.S. Centers for Disease Control and Prevention purchase and higher U.S. pricing. CAPVAXIVE revenue rose 7% to $263 million as international launches and U.S. market-share gains outweighed lower U.S. pneumococcal vaccination rates. ENFLONSIA generated $187 million, reflecting seasonal demand and inventory building.

Animal Health sales growth was led by a 6% increase in companion-animal products, supported by new launches. Livestock revenue grew 2% on higher demand for poultry products.

Full-year outlook updated

Merck now expects 2026 revenue of $66.8 billion to $67.3 billion, compared with its previous range of $66.3 billion to $67.3 billion. The forecast implies reported growth of 3% to 4% and constant-currency growth of 2% to 3%, with foreign exchange expected to contribute about one percentage point.

The company forecast non-GAAP EPS of $2.77 to $2.82, up from its prior range of $2.66 to $2.76. The outlook includes the $0.12-per-share SciBrunch charge and assumes an approximately $0.15 benefit from foreign exchange. Merck also lowered its projected non-GAAP tax rate to 32% to 33% from 35% to 36%.

Expected non-GAAP operating expenses were revised to between $42.4 billion and $42.9 billion from $42.0 billion to $42.7 billion, including the SciBrunch charge. The company continues to expect a non-GAAP gross margin of about 81% and approximately 2.48 billion shares outstanding, assuming around $3 billion of share repurchases. The guidance does not incorporate additional significant potential business-development transactions.

Merck cautioned that third-quarter sales benefited by about $550 million from favorable U.S. purchase timing. It expects the KEYTRUDA and WINREVAIR benefits to reverse fully in the fourth quarter, while most of the vaccine benefit—primarily related to GARDASIL—is expected to unwind in 2027. Management also expects KEYTRUDA growth to moderate as certain approved indications approach peak revenue, while German policy dynamics and generic competition for BRIDION represent additional pressures. Underlying operating expenses are expected to increase at a mid- to high-single-digit rate in 2027.

Pipeline milestones expand beyond KEYTRUDA

Merck highlighted clinical and regulatory progress across oncology, immunology, ophthalmology and cardiopulmonary disease. In advanced endometrial cancer, the Phase 3 TroFuse-005 study showed that sacituzumab tirumotecan reduced the risk of death by 32% and extended median overall survival by 6.9 months compared with chemotherapy in certain previously treated patients. The therapy also reduced the risk of disease progression or death by 41%.

The company also reported that intismeran autogene, developed with Moderna, plus KEYTRUDA improved recurrence-free and distant metastasis-free survival over KEYTRUDA alone in patients with completely resected stage IIB to IV melanoma.

In immunology, Merck plans to advance tulisokibart into Phase 3 development for hidradenitis suppurativa following positive Phase 2b results. In ophthalmology, both evaluated doses of remigromig demonstrated non-inferiority to ranibizumab at one year in a Phase 3 diabetic macular edema trial. Merck also plans to begin the Phase 3 CHORUS study of WINREVAIR in a form of pulmonary hypertension associated with heart failure with preserved ejection fraction.

The company emphasized that pipeline candidates remain subject to clinical, regulatory and commercial uncertainty. Other disclosed risks include competition, healthcare regulation and cost containment, currency and interest-rate movements, manufacturing difficulties, patent protection, litigation and the company’s ability to predict market conditions.