Merck & Company (MRK) Q3 2026 Earnings Report

The call was strongly positive, with solid third-quarter revenue growth, raised 2026 guidance, strong performance from KEYTRUDA, WELIREG, WINREVAIR, Gardasil, and animal health, and multiple favorable clinical and regulatory milestones. Management expressed increased confidence in the pipeline and long-term growth beyond the KEYTRUDA loss-of-exclusivity period. Offsetting concerns included 2027 generic and loss-of-exclusivity headwinds, moderating KEYTRUDA growth, lower adult vaccination utilization, modestly lower gross margin, higher operating expenses, the QLEX European injunctions, and withdrawal of the ifinatamab deruxtecan application. Highlights significantly outweighed the lowlights.

For 2026, Merck expects revenue between $66.8 billion and $67.3 billion, representing growth of 3% to 4% including a positive impact from foreign exchange of approximately 1 percentage point using mid October rates; gross margin approximately 81%; operating expenses between $42.4 billion and $42.9 billion; other expense approximately $1.4 billion; a full year tax rate between 32-33%; approximately 2.48 billion shares outstanding; and EPS of $2.77 to $2.82 including a positive impact from foreign exchange of approximately $0.15 using mid October rates, with the Ceybrion charge included. The company expects approximately $3 billion in share repurchases this year, moderate top line growth in 2027, more than $2 billion of headwinds from generic competition and LOE, a $250 million CDC buy unwinding in 2027, underlying operating expenses to increase at a mid to high single digit rate, and a shallow dip in revenues in the initial period post the price setting through IRA and the LOE, followed by a quick return to growth; it also expects 30% to 40% QLEX use in the United States by the end of 2027, large coverage of access in the commercial space in the 2027 time frame, and Medicare coverage in the 2028 time frame.