Merck (MRK) Q4 2025 earnings

Merck on Tuesday reported fourth-quarter earnings and revenue that beat estimates due to strong demand for its Keytruda cancer immunotherapy and some newer products.

But the company posted a modest forecast for 2026 that fell short of Wall Street expectations as it prepares to lose a few of its drugs patent protection later this year and face generic competition. This includes the type 2 diabetes medications Januvia and Janumet, and Predion, a treatment that helps restore muscle function that was blocked during surgery.

While these drugs are not top-selling products like Keytruda, their combined lower sales will likely put pressure on the company.

The pharmaceutical giant expects its revenues for 2026 to range between $65.5 billion and $67 billion. Analysts expected revenue of $67.6 billion, according to LSEG.

Merck also expects adjusted earnings to range between $5 and $5.15 per share. That compares to analyst estimates of $5.36 per share, according to LSEG.

This range includes a one-time charge of about $9 billion, or about $3.65 per share, related to Merck’s acquisition of Cidara, a biotechnology company developing a drug to prevent influenza.

The guidance includes “manageable impacts” from the drug pricing deal Merck struck with President Donald Trump in December, as well as his administration’s recent move to scale back the U.S. pediatric vaccine schedule, according to a company spokesperson.

Under this “most favored nation” deal, Merck would voluntarily sell its existing treatments to Medicaid patients at the lowest price offered in other developed countries and guarantee pricing for new drugs, among other efforts. In return, Merck will receive a three-year exemption from customs duties.

Here’s what Merck reported for the fourth quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG:

• EPS: $2.09 was revised from $2.01 expected
• profit: $16.4 billion versus $16.19 billion expected

The company recorded net income of $2.96 billion, or $1.19 per share, during the quarter. This compares to net income of $3.74 billion, or $1.48 per share, in the same period a year earlier.

Excluding acquisition and restructuring costs, Merck earned $2.04 per share during the fourth quarter.

Merck achieved revenues of $16.4 billion during the quarter, an increase of 5% over the same period of the previous year.

The results come as Merck cuts $3 billion in costs by the end of 2027 and prepares to offset revenue losses from Keytruda’s upcoming patent expiration in 2028.

Merck’s pharmaceutical unit, which develops a wide range of drugs, generated revenue of $14.84 billion during the fourth quarter. This is 6% more than in the same period of the previous year.

Keytruda sales were $8.37 billion during the quarter, up 7% from the same period last year. Analysts were expecting revenue of $8.35 billion, according to StreetAccount estimates.

The company said the increase in Keytruda revenue was driven by increased take of the drug to treat early-stage cancer and strong demand for treating metastatic cancers, which have spread to other parts of the body.

Sales of the more convenient subcutaneous version of Keytruda, which received approval last year, were $35 million during the fourth quarter.

This version of Keytruda is a key component of Merck’s efforts to offset a potential decline in revenue after the original formulation of the drug, which is administered intravenously, goes off patent.

Meanwhile, Merck’s new drug Winrevair, which is used to treat a rare and fatal lung condition, posted sales of $467 million during the quarter, up 133% from the same period a year earlier.

Analysts had expected the drug to generate $459 million, according to StreetAccount estimates.

The growth of Winrevair, which first entered the market in mid-2024, largely reflects growing uptake in the US and its early launch in some international markets.

Merck has continued to see problems with sales in China of Gardasil, a vaccine that prevents cancer from human papillomavirus, the most common sexually transmitted infection in the United States.

Last February, Merck announced that it would stop Gardasil shipments to China starting that month. In July, Chief Financial Officer Carolyn Litchfield said the company would not resume shipments to China until at least the end of 2025, noting that inventories remain high and demand remains weak.

Gardasil achieved sales of $1.03 billion during the quarter, down 34% from the same period last year due to lower demand in China. However, that was in line with what analysts expected, according to StreetAccount.

Gardasil’s revenues could face more pressure in 2026. As part of changes the Centers for Disease Control and Prevention made to the childhood vaccine schedule, the agency said children should get one dose of the HPV vaccine instead of the two or three doses recommended on the label.

Merck’s animal health division, which develops vaccines and medications for dogs, cats and livestock, had sales of approximately $1.51 billion, up 8% from the same period a year earlier. The company said that this reflects the high demand for all types.