Merck Q2 2026: sales up 5.0%, but a Terns charge drives a net loss
Merck's quarter looks ugly on the bottom line and solid on the top line: sales rose 5.0% to $16.61 billion, while a $5.7 billion charge for the Terns acquisition pushed GAAP EPS to a loss of $0.54. Strip out deal and restructuring costs and the non-GAAP loss was still $0.13, which is better than the $0.27 loss analysts expected. Read the sales line and the pipeline news, not the earnings line.
1 · Expected vs. Actual
Free preview belowGAAP EPS was a loss of $0.54 and the non-GAAP figure was a loss of $0.13, because the Terns acquisition added a $2.31 per share charge for which no tax benefit was recorded. That is a violent swing against last year's GAAP EPS of $1.76 and non-GAAP EPS of $2.13, but excluding the deal charge the company still produced $550 million of non-GAAP pretax income. The $0.13 loss is worse than a year ago yet better than the $0.27 loss consensus expected.
Revenue rose 5.0% to $16.61 billion from $15.81 billion, and 4.0% after currency effects. Pharmaceuticals brought in $14.76 billion and Animal Health $1.78 billion, with WINREVAIR up 75.0% to $588 million and KEYTRUDA/KEYTRUDA QLEX at $8.37 billion. The soft spot is gross margin, which fell to 73.5% from 77.5% on higher intangible amortization and inventory write-downs.
Merck raised and narrowed full-year sales guidance to between $66.3 billion and $67.3 billion, from $65.8 billion to $67.0 billion. Non-GAAP EPS guidance of $2.66 to $2.76 now carries $3.62 per share of Cidara charges plus $2.31 per share of Terns charges, and the non-GAAP tax rate jumps to 35.0%-36.0% from 23.5%-24.5%. This is guidance re-based for one-time deals, not a demand downgrade.
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Figures on this page come from the company's original SEC filings. The analysis is generated automatically and checked against validation rules, but may still contain errors or omissions. Not investment advice. · Generated 2026-09-17
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