10-QPeriod: Q2 FY2026

Merck & Co., Inc. Quarterly Report for Q2 Ended Jun 30, 2026

Filed August 7, 2026For Securities:MRK

Summary

Merck & Co., Inc. reported a net loss of $1.335 billion for the second quarter of 2026, a significant shift from the $4.427 billion net income reported in the same period of the prior year. This loss, equating to $0.54 per share, is largely attributable to substantial investments in research and development, particularly the significant charges related to the acquisitions of Terns Pharmaceuticals, Inc. ($5.7 billion) and Cidara Therapeutics, Inc. ($9.0 billion). Despite the quarterly loss, total sales showed a modest increase of 5% year-over-year to $16.6 billion, driven by strong performance in oncology, notably Keytruda, and the Animal Health segment. The company's strategic acquisitions aim to bolster its pipeline and future growth, but have created near-term pressure on profitability. For the first six months of 2026, Merck reported a net loss of $5.575 billion compared to a net income of $9.506 billion in the prior year. This widening loss is also heavily influenced by the substantial R&D expenses from acquisitions. The balance sheet reflects a significant decrease in cash and cash equivalents, from $14.565 billion at the end of 2025 to $6.849 billion at June 30, 2026, due in part to funding these acquisitions. While the company faces profitability headwinds in the short term due to these strategic investments, the continued growth in key pharmaceutical products and the Animal Health division signal underlying operational strength.

Key Highlights

  • 1Merck reported a net loss of $1.335 billion for Q2 2026, a significant decline from $4.427 billion net income in Q2 2025, primarily due to large R&D expenses from acquisitions.
  • 2Total sales increased by 5% year-over-year to $16.6 billion in Q2 2026, indicating continued top-line growth despite the net loss.
  • 3Significant R&D expenses were incurred due to the acquisitions of Terns Pharmaceuticals ($6.8 billion, including $5.7 billion IPR&D charge) and Cidara Therapeutics ($9.2 billion, including $9.0 billion IPR&D charge) in 2026.
  • 4Keytruda sales continued to grow, with combined sales of Keytruda/Keytruda Qlex increasing 5% in Q2 2026, driven by higher net pricing and increased demand, particularly in earlier-stage indications.
  • 5The Animal Health segment demonstrated robust growth, with sales increasing 8% in Q2 2026, driven by both livestock and companion animal products.
  • 6Cash and cash equivalents decreased substantially from $14.565 billion at the end of 2025 to $6.849 billion at June 30, 2026, reflecting cash outflows for acquisitions and other investments.
  • 7The company is facing ongoing pricing pressures globally due to healthcare cost containment efforts and legislative actions like the Inflation Reduction Act (IRA), with certain key products like Januvia and Janumet selected for government price setting.

Frequently Asked Questions

Merck reported a net loss of $1.335 billion in the second quarter of 2026 primarily due to significant research and development expenses stemming from substantial acquisitions. Specifically, the acquisitions of Terns Pharmaceuticals, Inc. and Cidara Therapeutics, Inc. resulted in substantial charges for acquired in-process research and development (IPR&D).

Merck's total sales increased by 5% year-over-year to $16.6 billion in the second quarter of 2026. This growth was driven by strong performance in the oncology franchise, particularly Keytruda, and continued momentum in the Animal Health segment.

Keytruda, along with Keytruda Qlex, continues to show growth, with combined sales up 5% in Q2 2026. The growth is attributed to higher net pricing, increased demand across various tumor types and earlier-stage indications, and ongoing regulatory approvals for new uses.

Merck's cash and cash equivalents significantly decreased from $14.565 billion at the end of 2025 to $6.849 billion at June 30, 2026. This reduction is largely due to substantial cash outlays for strategic acquisitions, including Terns Pharmaceuticals and Cidara Therapeutics, as well as other investing activities.

Merck faces ongoing pricing pressures globally due to healthcare cost containment efforts. In the U.S., legislative actions like the Inflation Reduction Act are leading to government price setting for certain key products, including Januvia and Janumet, which will likely impact future revenue. International markets also continue to exert pricing pressure through government-mandated actions and cost-containment measures.