Merck Q4 EPS, Revenue Beat, But 2026 Sales Guidance Trails Estimates
Merck posted Q4 adjusted EPS of $2.04, beating consensus of $2.01, with revenue up 5% to $16.4 billion driven by Keytruda sales of $8.37 billion and animal health revenue of $1.51 billion. For fiscal 2026, Merck forecast EPS of $5.00–5.15 and sales of $65.5–67.0 billion, below Street estimates.
1. Q4 2025 Financial Highlights
Merck reported adjusted earnings per share of $2.04 for the fourth quarter of 2025, surpassing the consensus estimate of $2.01 and up from $1.72 a year earlier. Revenue rose 5% year-over-year to $16.40 billion, exceeding the $16.19 billion analysts had forecast. Net income for the period was $2.96 billion, or $1.19 per share, compared with $3.74 billion, or $1.48 per share, in the year-ago quarter.
2. Segment Performance and Key Drivers
The pharmaceutical segment generated $14.84 billion in sales, a 6% increase driven by robust oncology demand and gains in cardiometabolic and respiratory medicines, partially offset by a decline in vaccine revenue. Animal Health delivered $1.51 billion, up 8% as elevated livestock demand continued to support the division. Within pharmaceuticals, Keytruda sales grew 7% to $8.37 billion, reflecting strong uptake in both early-stage and metastatic cancer indications. Vaccine sales fell 34% to $1.03 billion, weighed down by softer demand in China and waning catch-up immunization programs in Japan.
3. Growth from Newer Products
Merck’s newer portfolio also contributed meaningfully to top-line growth. Winrevair, a treatment for pulmonary arterial hypertension, saw sales more than double to $467 million, while Capvaxive, an investigational immunomodulator, recorded $759 million in revenue. The diabetes franchise—led by Januvia and Janumet—grew 3% to $501 million, underscoring resilience against mounting generic competition.
4. 2026 Outlook and Investor Implications
For fiscal 2026, Merck projected adjusted earnings of $5.00 to $5.15 per share, below the $5.38 consensus, reflecting a one-time charge of about $3.65 per share tied to the Cidara Therapeutics acquisition. Revenue guidance was set at $65.5 billion to $67.0 billion, trailing the $67.58 billion street estimate. Management cited impending patent expirations on non-core assets, pricing pressures from recent Medicaid pricing agreements, and the expected impact of generic entrants as headwinds. Investors will be watching margin trends and the company’s ability to offset volume declines with cost-savings initiatives totaling $3 billion by 2027.