Merck beats on fourth quarter revenue but disappoints on outlook

3rd Feb 2026 12:42

(Sharecast News) - Merck & Co reported better-than-expected fourth-quarter results on Tuesday, driven by continued strength in its oncology franchise and animal health division, but shares slipped after the drugmaker issued a 2026 outlook that fell short of market expectations as it braced for patent expiries and generic competition.

Fourth-quarter sales rose 5% to $16.4bn, ahead of forecasts, while non-GAAP earnings were $2.04 a share, topping consensus estimates.

GAAP earnings declined year-on-year to $1.19 per share, reflecting higher restructuring and acquisition-related costs.

Full-year revenue edged up 1% to $65bn, with non-GAAP earnings climbing 17% to $8.98 per share, supported by operating leverage and a lower burden from business development charges.

Growth was again anchored by Keytruda, Merck's flagship cancer immunotherapy, which generated $8.37bn in fourth-quarter sales and $31.7bn for the year, up 7%, as uptake expanded across earlier-stage and metastatic indications.

Newer launches also gained traction, with pulmonary arterial hypertension drug Winrevair posting $467m in quarterly sales, up 133%, and respiratory therapy Ohtuvayre contributing $178m following the Verona Pharma acquisition.

Animal health sales rose 8% in the quarter to $1.5bn, led by strong livestock demand.

The gains were partly offset by a sharp decline in vaccines, notably Gardasil, whose fourth-quarter sales fell 34% to $1.03bn amid weak demand in China and softer volumes in Japan.

Management cautioned that pressure on the HPV franchise could persist into 2026, compounded by changes to the US paediatric vaccine schedule.

Looking ahead, Merck forecast 2026 revenue of $65.5bn to $67bn and non-GAAP earnings of $5.00 to $5.15 per share, below analyst expectations.

The outlook included a one-time charge of around $3.65 per share tied to the $9.2bn acquisition of Cidara Therapeutics, as well as the impact of drugs such as Januvia, Janumet and Bridion losing exclusivity.

Merck said the guidance also reflected "manageable" effects from its drug-pricing agreement with the US government, which grants tariff relief in exchange for lower prices and expanded patient access.

Chief executive Robert Davis said Merck was entering the next phase of its strategy with momentum building across a broad late-stage pipeline, citing positive results from 18 phase three trials in 2025 and roughly 80 phase three studies now underway.

At 0810 ET (1310 GMT), shares in Merck & Co were down 0.33% in premarket trading in New York at $113.00.

Reporting by Josh White for Sharecast.com.