$16.29B4.9%$15.53B
Revenue Growth Remains Solid
MRK grew total revenue to $16.29B in Q1 FY2026, up 4.9% from $15.53B in Q1 FY2025, indicating continued underlying business momentum despite the headline net loss.
Source: Source: 10-Q Income Statement
AI Takeaway
MRK reported Q1 FY2026 revenue of $16.3B (+4.9% YoY), but swung to a net loss of -$4.24B driven by a massive $12.6B R&D expense surge (+247.7% YoY), likely reflecting a large in-process R&D charge from an acquisition, while operating cash flow improved significantly to $3.9B.
Revenue
$16.29B
++4.87% YoY
EPS (Basic)
$-1.72
-185.57% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
MRK grew total revenue to $16.29B in Q1 FY2026, up 4.9% from $15.53B in Q1 FY2025, indicating continued underlying business momentum despite the headline net loss.
Source: Source: 10-Q Income Statement
R&D expense surged to $12.59B (+247.7% YoY from $3.62B), almost certainly reflecting a large in-process R&D (IPR&D) charge associated with a business acquisition or licensing deal, which caused the company to report a net loss of -$4.24B versus net income of $5.08B in the prior-year period.
Source: Source: 10-Q Income Statement
Cost of revenue rose 22.7% YoY to $4.20B versus $3.42B, outpacing revenue growth of 4.9% and compressing gross profitability, suggesting product mix shifts or higher manufacturing/royalty costs.
Source: Source: 10-Q Income Statement
2 more insights available
Upgrade to unlockThe apparent large acquisition driving the $12.6B R&D charge and $10.2B investing outflow creates significant integration risk. If the acquired pipeline assets fail in clinical trials or do not achieve commercial success, the company may face further impairments or write-downs on top of the already-recognized charge.
Source: Source: 10-Q Income Statement & Cash Flow Statement
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $-1.28 versus the $-1.52 analyst consensus — a +16.0% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $16.29B | $15.53B | +4.87% |
Cost of Revenue | $4.2B | $3.42B | +22.70% |
Net Income | $-4.24B | $5.08B | -183.48% |
EPS (Basic) | $-1.72 | $2.01 | -185.57% |
EPS (Diluted) | $-1.72 | $2.01 | -185.57% |
R&D Expense | $12.59B | $3.62B | +247.75% |
SG&A Expense | $2.7B | $2.55B | +5.80% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $128.69B | $115.12B | +11.78% |
Current Assets | $35.02B | $35.5B | -1.37% |
Current Liabilities | $26.95B | $25.17B | +7.04% |
Stockholders' Equity | $45.88B | $48.34B | -5.08% |
Cash & Equivalents | $5.33B | $8.63B | -38.27% |
Long-Term Debt | $46.67B | $33.48B | +39.39% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $3.92B | $2.5B | +56.72% |
Investing Cash Flow | $-10.21B | $-1.49B | -586.62% |
Financing Cash Flow | $-2.98B | $-5.75B | +48.20% |
Share Buybacks | $874M | $1.16B | -24.91% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Net Margin | -26.0% | — | — |
ROE | -9.2% | — | — |
ROA | -3.3% | — | — |
Current Ratio | $1.299 | — | — |
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MRK's revenue grew 4.9% YoY to $16.29B in Q1 FY2026, but R&D expense surged 247.7% to $12.59B, likely due to a large in-process R&D (IPR&D) charge from an acquisition or licensing deal. This non-cash or upfront charge caused a net loss of -$4.24B, even though operating cash flow was a healthy $3.92B.
The headline story is a net loss of -$4.24B (EPS of -$1.72) driven by a ~$9B spike in R&D expense, almost certainly from an acquisition-related charge. However, underlying business health looks intact: revenue grew 4.9% to $16.29B and operating cash flow surged 56.7% to $3.92B, suggesting the loss is largely a one-time accounting event.
As of Q1 FY2026, MRK's long-term debt stood at $46.67B, up 39.4% from $33.48B a year ago, reflecting significant acquisition financing. Cash and equivalents declined to $5.33B, resulting in a net debt position of approximately $41.3B.
Yes, dramatically — MRK's R&D expense jumped 247.7% YoY to $12.59B in Q1 FY2026 from $3.62B in Q1 FY2025. This extraordinary increase is almost certainly attributable to an upfront IPR&D charge related to a major acquisition or licensing agreement rather than a sustained increase in ongoing research spending.
MRK's near-term liquidity is adequate with a current ratio of 1.30x and $5.33B in cash, but leverage has increased significantly with $46.67B in long-term debt. The positive operating cash flow of $3.92B supports the company's ability to service its debt, though the balance sheet is more stretched than a year ago following what appears to be a major acquisition.