Timing clarification: Merck’s second-quarter earnings call is scheduled for 9:00 a.m. ET on Tuesday, August 4, 2026 — today, not tomorrow. (merck.com)
| Metric | Current setup |
|---|---|
| Revenue consensus | $16.33 billion, approximately +3.4% YoY |
| Headline EPS consensus | Approximately -$0.25 |
| Prior 2026 revenue guidance | $65.8-$67.0 billion |
| Prior 2026 EPS guidance | $5.04-$5.16, excluding Terns |
| Expected Terns acquisition charge | Approximately $5.8 billion / $2.35 per share |
| MRK share price | Approximately $127.77 |
| Year-to-date share performance | Approximately +21% |
The negative EPS estimate is principally an accounting issue rather than an indication that Merck’s underlying business lost money. The Terns acquisition closed on May 5 and is expected to produce a roughly $2.35-per-share R&D charge in Q2, included in both GAAP and Merck’s non-GAAP results. Merck also previously estimated about $0.12 per share of 2026 financing and development costs associated with the transaction. (merck.com)
Adding back the expected Terns charge implies underlying quarterly EPS of roughly $2.10, although taxes and other adjustments could alter the exact figure.
This is less a conventional beat-or-miss quarter than a portfolio-transition checkpoint.
The most important questions are:
With MRK shares up roughly 21% this year, the market appears more willing to credit the diversification story. That also means the bar for a favorable reaction is higher than it was at the beginning of 2026.
The Keytruda franchise generated $8.03 billion in Q1, growing 8% excluding currency. About $250 million of Q1 U.S. sales benefited from purchase timing, but management indicated that the offset should occur in the third quarter, not Q2.
The principal Q2 swing factor is therefore likely to be underlying demand rather than wholesaler normalization. Investors should focus on:
Qlex generated $128 million in Q1 and received its permanent J-code on April 1. Merck subsequently said adoption exited Q1 in the mid-single digits and reiterated a target of 30%-40% peak adoption by the end of 2027. That makes Q2 the first clean test of whether improved reimbursement is accelerating conversion.
Recent approvals have also broadened the franchise, including Keytruda or Qlex with Welireg in adjuvant renal-cell carcinoma, with Trodelvy in advanced triple-negative breast cancer, and with Padcev around surgery for cisplatin-eligible muscle-invasive bladder cancer. (merck.com)
What would be encouraging: high-single-digit franchise growth and clear sequential acceleration in Qlex.
What would disappoint: slowing underlying Keytruda demand, weak Qlex conversion or greater-than-expected pricing pressure.
Winrevair is the clearest near-term diversification asset. Q1 sales reached $525 million, up 87% excluding currency, driven by U.S. demand and early international launches.
The key issues are:
Investors will likely tolerate some quarterly variability, but Winrevair needs to remain on a credible blockbuster trajectory.
Ohtuvayre produced $131 million in Q1. Results were affected by Medicare deductible resets and reimbursement changes, although prescriptions began recovering in March.
Merck previously said it expected increased commercial investment to accelerate growth in the second half. Q2 should show whether the underlying prescription recovery is intact before that spending ramps.
Welireg sales were $199 million in Q1, up 43% excluding currency. Its June approval with Keytruda/Qlex in adjuvant clear-cell RCC materially expands the long-term opportunity, although it came late enough that the benefit to Q2 sales should be limited. (merck.com)
A strong result would include continued growth in the existing advanced-RCC business plus confidence around the new adjuvant launch.
Capvaxive reached $142 million in Q1 and should continue benefiting from international launches and U.S. adult demand. Animal Health grew 6% excluding currency in Q1 and remains a useful source of relatively stable, diversified growth.
Gardasil is the largest near-term risk to revenue. Q1 sales fell 22% excluding currency to $1.07 billion, reflecting:
Merck has indicated that possible China shipments later in 2026 would have an immaterial full-year revenue effect. Investors should therefore avoid interpreting any stabilization as an immediate return to growth.
These products lost U.S. exclusivity in May. Merck previously expected to lose nearly all U.S. Januvia and Janumet revenue following generic entry. Q2 will include the beginning of that erosion, with a larger effect likely in the second half.
The central earnings question is whether Keytruda and the newer launches can more than offset these predictable declines.
Merck entered Q2 with revenue guidance of $65.8-$67.0 billion and EPS guidance of $5.04-$5.16, but that outlook excluded the Terns acquisition.
A mechanical adjustment for the approximately $2.35-per-share acquisition charge and $0.12 of related 2026 costs would reduce the prior midpoint from $5.10 to roughly $2.63. Investors should not treat such a reduction as an operational guidance cut.
The more informative disclosures will be:
Merck’s presentation of acquisition-related R&D charges in its non-GAAP results can make headline comparisons unusually noisy. A clear bridge between operational performance and transaction-related charges would reduce confusion.
The FDA approved Lipfendra, Merck’s once-daily oral PCSK9 inhibitor, on July 16. It produced placebo-adjusted LDL-C reductions of 56% and 59% in its pivotal studies. (merck.com)
There will be essentially no Q2 revenue contribution, but management commentary could be material. Key questions include:
Lipfendra could become one of Merck’s most important post-Keytruda products, but early access and reimbursement execution will determine the pace of adoption.
Merck enters the call with several meaningful positive developments:
The earnings call may not add much new clinical data, given Merck’s HIV investor event on August 3, but investors should listen for filing timelines, launch sequencing and updates on commercial investment.
The setup is constructive but not low-expectation. Merck’s recent regulatory and pipeline progress has reduced some of the market’s concern about the eventual Keytruda patent cliff, and the stock’s year-to-date appreciation reflects that improved confidence.
For this quarter, the cleanest indicators are Keytruda/Qlex growth, Winrevair momentum and the underlying guidance bridge. The reported EPS number will be dominated by Terns accounting and should carry limited informational value. The best result would demonstrate that Merck can absorb Gardasil and legacy-product declines while preserving revenue growth—and that its newer products are beginning to form a commercially meaningful portfolio rather than a collection of future possibilities.