Merck & Co posted a loss in the first quarter after recording an acquisition-related charge that offset gains in product revenue, the company reported on Thursday.
Product sales increased 5% from the prior year, helping drive total first-quarter revenue to $16.3 billion, up from $15.5 billion a year earlier. That top-line figure was above the average Wall Street estimate of $15.8 billion, as compiled by LSEG.
The company reported an adjusted loss of $1.28 per share for the quarter after taking a $3.62 per share charge related to its acquisition of antiviral drug maker Cidara Therapeutics. The adjusted loss compared with analysts' expectations for a loss of $1.51 per share.
Merck revised its full-year 2026 outlook, narrowing the prior range and increasing the midpoint. The company now expects profit of $5.04 to $5.16 per share on sales of $65.8 billion to $67.0 billion, versus the earlier projection of $5.00 to $5.15 per share on sales of $65.5 billion to $67.0 billion. Merck said this outlook does not reflect any financial impact from its planned acquisition of biotech Terns Pharmaceuticals - that transaction is expected to result in a one-time charge of $2.35 per share.
Analysts have forecast Merck’s 2026 profit at $5.12 per share on revenue of $66.6 billion.
Several of Merck’s key products posted strong sales in the quarter. Blockbuster cancer immunotherapy Keytruda generated $8.0 billion in sales, up 12% and above analyst estimates of $7.6 billion. That total included $128 million attributed to a newer injected version of Keytruda, which until recently had been available only as an infusion.
Sales of the lung disease therapy Winrevair rose 88% to $525 million, exceeding the $479 million forecast by analysts. Merck also reported a decline in sales for certain other products: diabetes medication Januvia fell 28% to $574 million amid lower U.S. demand and pricing pressures as well as generic competition in some international markets, while human papillomavirus vaccine Gardasil dropped 19% to $1.07 billion.
Animal health was a notable bright spot, with sales in the quarter climbing 13% to $1.8 billion.
Summary
Merck's first-quarter results combined an increase in product sales with a significant acquisition-related charge that produced an adjusted per-share loss. Revenue beat estimates, driven by gains for Keytruda, respiratory products, and animal health, while certain legacy products faced declines due to demand, pricing and competition. The company tightened its 2026 guidance and raised the midpoint, excluding the expected one-time charge from the planned Terns acquisition.
Key points
- First-quarter revenue rose to $16.3 billion from $15.5 billion, a 5% increase and above the LSEG consensus of $15.8 billion.
- An acquisition-related charge of $3.62 per share tied to Cidara drove an adjusted loss of $1.28 per share for the quarter.
- Merck narrowed its 2026 forecast range and increased the midpoint - current guidance of $5.04 to $5.16 per share on $65.8 billion to $67.0 billion in sales - not including an expected $2.35 per share one-time charge from the planned Terns acquisition.
Risks and uncertainties
- Acquisition-related charges can materially affect quarterly earnings - relevant to investors assessing pharmaceutical M&A impacts on earnings.
- Planned transactions carry a known one-time charge (Terns Pharmaceuticals estimated at $2.35 per share) that is not reflected in current guidance, creating potential earnings volatility.
- Product-level pressures such as lower U.S. demand, pricing declines and generic competition - cited for Januvia - present downside risk to revenue in diabetes and related therapeutic markets.