Merck Beats Q2 Revenue on Keytruda Strength, Raises Full-Year Outlook

Merck & Co. reported second-quarter revenue that topped Wall Street estimates and raised its full-year sales forecast, citing the continued strong performance of its blockbuster cancer treatment, Keytruda. The U.S. drugmaker posted quarterly revenue of $16.61 billion, a 5% increase from the prior year and above the LSEG consensus estimate of $16.36 billion.

Keytruda Drives Top-Line Growth

Sales of the immunotherapy Keytruda, the world's best-selling prescription drug, were a primary driver of the revenue beat. The treatment generated $8.37 billion in the quarter, a 5% rise that exceeded analysts' projections of $8.07 billion.

Notably, sales included $463 million from its newer subcutaneous formulation, Keytruda QLEX. Chief Financial Officer Caroline Litchfield said in an interview that stronger-than-expected uptake of QLEX contributed to the beat, stating, "We’re at double-digit of QLEX as a portion of the total business in the United States, and we are very much on a path that takes us to the 30% to 40% adoption by the end of 2027."

Acquisition Charge Leads to Net Loss

Despite the strong sales performance, Merck reported a quarterly loss of 13 cents per share. This was the result of a one-time $5.7 billion charge, equivalent to $2.31 per share, related to its acquisition of cancer drug developer Terns Pharmaceuticals. Analysts had anticipated a wider adjusted loss of 27 cents per share, according to LSEG data.

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Mixed Performance in Other Segments

Performance across Merck's other major product lines was varied:

• Gardasil: The HPV vaccine saw sales of $1.17 billion, slightly ahead of the $1.15 billion analyst consensus.
• Animal Health: The division posted an 8% sales increase to $1.78 billion, beating Wall Street projections of $1.75 billion.
• Childhood Vaccines: Sales for its measles, mumps, rubella, and chickenpox vaccines fell 3% to $592 million, below estimates of $608 million. Litchfield attributed the decline to lower overall demand in the U.S. vaccine market.

Upgraded Full-Year Forecast

Buoyed by the strong quarter, Merck raised its 2026 revenue forecast to a range of $66.3 billion to $67.3 billion, up from a previous range of $65.8 billion to $67.0 billion. The new midpoint is slightly above the LSEG consensus forecast of about $66.8 billion. The company now expects 2026 adjusted earnings of $2.66 to $2.76 per share, which includes charges from its acquisitions of Terns and Cidara Therapeutics.