Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Merck's second quarter of fiscal 2026 was shaped by a $5.7 billion in-process R&D charge from its Terns Pharmaceuticals acquisition, resulting in a net loss despite 5% revenue growth. The top line was propelled by Keytruda and Winrevair, while the diabetes and vaccine franchises faced headwinds from U.S. pricing reforms and demand softness. Excluding the one-time charge, underlying operating performance remained strong, with significant cash flow generation year-to-date.
Revenue
$16.61B
+5.07% YoY
EPS (Diluted)
-$0.54
-130.68% YoY
Source: SEC XBRL
Merck & Co (MRK) reported Q2 FY2026 revenue of $16.61B, up 5.1% year over year. MRK's fiscal Q2 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026This filing | -0.13 | -0.27 | Beat +52.4% |
| Mar 2026 | -1.28 | -1.52 | Beat +16.0% |
| Dec 2025 | 2.09 | 2.03 | Beat +3.0% |
| Sep 2025 | 2.68 | 2.37 | Beat +13.1% |
Adjusted (non-GAAP) EPS of -$0.13 versus the -$0.27 analyst consensus — a +52.4% beat for Jun 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was -$0.54.
2 reported segments · SEC XBRL
Segment revenue totals $16.54B; with $72M of reconciling items (corporate, unallocated and eliminations) it ties to the $16.61B of consolidated revenue on the income statement.
Profit above is reported as pre-tax income, the measure MRK itself discloses in this filing. Each company chooses its own measure here, so these margins are not comparable with another company's.
Compiled by AI from this SEC filing
A $5.7 billion IPR&D charge for Terns' MK-4208 and a $9.0 billion charge for Cidara's MK-1406 in the first six months caused a sharp rise in R&D expenses, turning the company unprofitable on a GAAP basis.
Source: 10-Q Item 2 MD&A
Government-set prices for Januvia took effect January 2026, contributing to lower diabetes sales; Janumet/Janumet XR price setting begins in 2027, and Lenvima was selected for 2028.
Source: 10-Q Item 2 MD&A
Keytruda sales rose 5%, benefiting from higher net pricing and earlier-stage indications, while Winrevair surged 75% on strong U.S. and international launch uptake.
Source: 10-Q Item 2 MD&A
Year-to-date operating cash flow increased 60% to $9.3 billion, aided by lower working capital demands and non-cash acquisition charges.
Source: 10-Q Cash Flow Statement (XBRL)
Compiled by AI from this SEC filing · 2 high, 3 medium, 0 low
The Inflation Reduction Act and the MFN Agreement impose direct government price setting for key drugs, including Januvia and potentially Keytruda, which could materially reduce revenue and margins.
Source: 10-Q Item 2 MD&A
Keytruda accounts for over 50% of revenue; biosimilar launches in international markets and potential future U.S. competition create significant downside risk.
Source: 10-Q Income Statement (XBRL)
Large R&D expenses from acquisitions, including $14.7 billion in IPR&D charges in the first half of 2026, may not yield approved products, pressuring future profitability.
Source: 10-Q Income Statement (XBRL)
Long-term debt increased 50% to $51 billion while stockholders' equity declined, raising leverage and interest expense concerns amid potential credit rating pressure.
Source: 10-Q Balance Sheet (XBRL)
Gardasil sales fell 9% year-to-date due to lower demand in China and U.S., and changes to CDC immunization schedules, though stayed by court order, create ongoing uncertainty.
Source: 10-Q Item 2 MD&A
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 16.61 $B | 15.81 $B | +5.07% |
Cost of Revenue $B | 4.40 $B | 3.56 $B | +23.56% |
Net Income $B | -1.34 $B | 4.43 $B | -130.16% |
EPS (Basic) $ | -0.54 $ | 1.76 $ | -130.68% |
EPS (Diluted) $ | -0.54 $ | 1.76 $ | -130.68% |
R&D Expense $B | 9.74 $B | 4.05 $B | +140.64% |
SG&A Expense $B | 2.90 $B | 2.65 $B | +9.63% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
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.
Merck (MRK) delivered modest revenue growth of 1.3% to $65.0B in FY2025, with net income rising 6.6% to $18.3B and EPS up 8.0% to $7.28, though operating cash flow declined 23.3% and long-term debt surged 35.7% amid significant investing activity.
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