Q1 Revenues Reach $16.3B Driven By Keytruda As Merck Reaffirms 2026 Guidance (MRK Q1 2026 Earnings Call)

Keytruda Leads Oncology Growth Despite Gardasil Headwinds

Total company revenue grew 5% year-over-year to $16.3 billion. This performance was anchored by the oncology franchise, where the Keytruda family generated $8.0 billion, an 8% increase driven by strong demand in metastatic indications and earlier-stage cancers, particularly in breast and cervical tumors. The recently launched Keytruda QLEX formulation contributed $128 million and secured a permanent J-code on April 1st, paving the way for broader access. Welireg also posted strong growth, with sales surging 43% to $199 million.

Conversely, the vaccine portfolio faced challenges. Gardasil sales declined 22% to $1.1 billion due to expected lower demand in China and Japan, compounded by a 10% drop in the U.S. related to the timing of CDC purchases. The bottom line was heavily impacted by a $9 billion one-time, non-tax-deductible charge related to the acquisition of Cidara Therapeutics, resulting in a reported quarterly loss of $1.28 per share.

New Product Launches Gain Commercial Traction

Merck's efforts to diversify its revenue base are showing clear progress in the cardiometabolic and respiratory segments. Winrevair, the company's novel treatment for pulmonary arterial hypertension, generated $525 million in global sales. Chief Financial Officer Caroline Litchfield noted that more than 1,600 new patients in the U.S. have received a prescription, highlighting rapid adoption.

In the respiratory portfolio, Ohtuvayre recorded $131 million in sales. While impacted by Medicare deductible resets and CMS reimbursement changes early in the quarter, management observed prescription trends beginning to recover in March and plans to accelerate investments to drive second-half growth. The Animal Health division also delivered a solid quarter, with sales increasing 6% globally.

Reaffirming the 2026 Financial Outlook

Despite the significant upfront charges from business development, Merck narrowed the range and raised the midpoint of its 2026 guidance. The company now projects full-year revenue between $65.8 billion and $67.0 billion, and anticipates non-GAAP EPS of $5.04 to $5.16. These projections do not include the financial impact of the pending Terns Pharmaceuticals acquisition, which is expected to result in an additional $5.8 billion research and development charge.

Capital allocation priorities remain unchanged. The company is prioritizing investments in its deep pipeline and commercial launches while committing to a growing dividend. Merck remains on pace to execute approximately $3 billion in share repurchases this year. To support this growth, the company recently evolved its commercial operating structure into specialized business units to increase agility.

Pipeline Expansion Through Strategic Acquisitions

Merck continues to supplement its internal research with targeted business development. CEO Rob Davis highlighted the pending acquisition of Terns Pharmaceuticals as a prime example of the company's science-led strategy. The deal brings TERN-701, an oral allosteric inhibitor for chronic myeloid leukemia, into the hematology pipeline. Management expressed confidence that the drug could achieve major molecular response rates north of 50%, representing a multi-billion-dollar commercial opportunity.

The company is also leveraging technology to accelerate drug development. Davis announced a new multiyear partnership with Google Cloud to scale advanced artificial intelligence capabilities across the organization. This agreement complements existing collaborations with Tempus AI and the Mayo Clinic, positioning Merck to utilize clinical insights and genomic data sets to improve R&D productivity.