Merck & Co., Inc. (MRK)

Business

From the annual report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0000310158-26-000063).

Merck is a global health care company that sells prescription medicines, including biologic therapies, vaccines and animal health products. It runs two reportable segments, Pharmaceutical and Animal Health. Human health pharmaceuticals and vaccines go primarily to drug wholesalers and retailers, hospitals, government agencies, physicians, distributors and managed-care organizations such as health maintenance organizations and pharmacy benefit managers; animal health products go to veterinarians, distributors, animal producers, farmers and pet owners. Payment terms for U.S. pharmaceutical products are typically 35 days from invoice, with Keytruda at 90 days.

Total 2025 sales were $65,011 million, split Pharmaceutical $58,142 million, Animal Health $6,354 million and other revenues $515 million. The business is heavily concentrated: sales of Keytruda represented 49% of total Company sales in 2025. Sales by subsidiaries outside the U.S. were 44% of total sales in 2025, down from 50% in 2024 and 53% in 2023.

Top product lines in 2025 (with 2024 and 2023 comparatives, $ millions):

Pharmaceutical segment. Oncology is anchored by Keytruda (pembrolizumab), an anti-PD-1 therapy approved in over 45 indications in the U.S. covering 19 tumor types and two tumor-agnostic indications, and by Keytruda Qlex (pembrolizumab and berahyaluronidase alfa-pmph), the subcutaneous fixed combination first approved by the FDA in September 2025 and marketed as Keytruda SC in some markets. Other oncology assets include Welireg (belzutifan) and alliance revenue from Lynparza and Lenvima (AstraZeneca and Eisai collaborations respectively) and Reblozyl royalties (Bristol Myers Squibb). Vaccines comprise Gardasil/Gardasil 9, ProQuad, M-M-R II, Varivax, Vaxneuvance, RotaTeq, Capvaxive, Enflonsia and Pneumovax 23. Hospital acute care includes Bridion, Prevymis, Zerbaxa and Dificid. Cardiometabolic and respiratory includes Winrevair, Adempas and Verquvo (a Bayer collaboration) and Ohtuvayre. Virology includes Lagevrio, Isentress, Delstrigo and Pifeltro; neuroscience, Belsomra; diabetes, Januvia and Janumet.

Animal Health segment. Livestock products include the Nuflor antibiotic range, the Bovilis and Vista cattle vaccine lines, Banamine, Revalor, Safe-Guard, the Porcilis and Circumvent swine vaccine lines, the Nobilis and Innovax poultry lines, Exzolt, aquaculture products (Slice, Imvixa, Aquavac/Norvax, Aquaflor) and Allflex Livestock Intelligence identification and monitoring. Companion animal products center on the Bravecto parasiticide family, including Bravecto Quantum, the once-yearly injectable approved by the FDA in July 2025, plus the Sentinel line, Numelvi, the Nobivac vaccine lines, and Sure Petcare and Home Again identification products. Bravecto sales were $1.1 billion in 2025, 18% of Animal Health segment sales.

Research and development. Roughly 80 Phase 3 studies were underway at year end; in 2025 Merck announced positive late-stage results from 18 Phase 3 trials and initiated 21 new ones across cardiometabolic and respiratory, immunology, infectious diseases, oncology and ophthalmology. Late-stage and under-review assets span MK-8591A (doravirine/islatravir), Enflonsia, Winrevair label expansion, Welireg combinations, the Daiichi Sankyo antibody-drug conjugates (patritumab deruxtecan, ifinatamab deruxtecan, raludotatug deruxtecan), sacituzumab tirumotecan with Kelun-Biotech, intismeran autogene with Moderna, calderasib with Taiho/Astex, enlicitide decanoate, tulisokibart, V181 dengue vaccine, MK-3000 for diabetic macular edema, and MK-1406 (formerly CD388) for influenza obtained with Cidara.

Intellectual property. Patent protection is material in the aggregate. Royalty income on patent and know-how licenses was $1.5 billion in 2025 against $1.9 billion of royalty expense. Merck pays a 2.5% royalty on worldwide net sales of Keytruda/Keytruda Qlex through 2026 (down from 6.5% before 2024), terminating thereafter, plus a 2% royalty that expired in the U.S. in September 2024 and in major European markets in the second half of 2025 but continues in certain other markets through dates as late as 2035. Winrevair carries a 22% royalty to Bristol Myers Squibb; Gardasil/Gardasil 9 a 7% U.S. royalty expiring December 2028; Vaxneuvance and Capvaxive 7.25% through 2026, declining to 2.5% from 2027 through 2035.

People. As of December 31, 2025 Merck had approximately 75,000 employees worldwide, including about 30,000 in the U.S. and Puerto Rico, plus about 15,000 third-party contractors. Approximately 73,000 employees are full-time and approximately 21% are covered by collective bargaining agreements. Voluntary turnover was approximately 4.8% in 2025; about 6,800 people were hired globally.

Risk factors

From the annual report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0000310158-26-000063).

Loss of exclusivity, concentrated in Keytruda. Bridion loses U.S. market exclusivity in July 2026, at which point Merck anticipates a significant and rapid decline in U.S. Bridion sales. Januvia and Janumet lose U.S. market exclusivity in May 2026 and Janumet XR in July 2026; Merck expects to lose nearly all U.S. sales of those products afterward. Keytruda sales are expected to be materially negatively affected by biosimilar competition between 2028 and 2029: the primary compound patent expires in December 2028 and two patents in the composition-of-matter family expire in May and November 2029, but Merck expects those later patents to be litigated and biosimilar entry could begin in December 2028. European exclusivity is expected to be lost in 2031 on compound patent expiry, with possible earlier challenges after European data exclusivity expired in July 2026. Dificid lost U.S. exclusivity in July 2025. Because Keytruda was 49% of 2025 sales, any event affecting it, patent loss, price setting, weaker-than-expected Keytruda Qlex uptake, manufacturing cost, safety findings, would be significant to results.

Government price setting and most-favored-nation pricing. Under the Inflation Reduction Act's Drug Price Negotiation Program, a government-set price for Januvia took effect January 1, 2026; set prices for Janumet and Janumet XR take effect January 1, 2027 and for Lenvima January 1, 2028. Merck expects Keytruda to be selected in 2027 with a set price effective January 1, 2029, and expects U.S. Keytruda sales to decline materially after that. Merck has sued the U.S. government over the program. Medicare Part D redesign took effect in 2025 and shifts more benefit liability to manufacturers. In December 2025 Merck entered a three-year agreement with the U.S. government addressing the administration's most-favored-nation pricing goals: a direct-to-patient program at affordable prices covering Januvia, Janumet and Janumet XR (to be expanded to enlicitide decanoate on approval), discounted prices to Medicaid excluding certain products, most-favored-nation reference pricing for newly launched products in a specified group of countries, and repatriation and sharing of a portion of foreign revenue. Merck separately agreed with the U.S. Department of Commerce to delay Section 232 tariffs for three years in exchange for U.S. reshoring investment. A consequence of the agreement is that certain products may not be launched in the reference countries, or may be delayed, prompting adverse responses from those countries. The American Rescue Plan Act removed the cap on Medicaid rebates, so rebates on high-Medicaid-utilization drugs can exceed 100% of Average Manufacturer Price. Expanded 340B utilization is also pressuring results, and states are moving toward Prescription Drug Affordability Boards and upper payment limits.

Vaccine policy and coverage. In January 2026 the acting CDC director announced changes to the child and adolescent immunization schedule, cutting the number of routinely recommended vaccinations and creating three tiers, and reducing recommended adolescent HPV dosing to a single dose; the announcement is the subject of third-party litigation. In September 2025 the Advisory Committee on Immunization Practices recommended standalone varicella immunization rather than combined MMRV for children under four, adopted by the acting CDC director in October 2025, Merck is the only U.S. manufacturer of both the MMRV vaccine (ProQuad) and the varicella vaccine (Varivax). In December 2025 the CDC ended the universal hepatitis B birth-dose recommendation. Merck states it does not expect a material effect on ProQuad, Varivax, Recombivax HB, Vaxelis or Gardasil from these recommendations, but broader changes at HHS, the FDA and the CDC, including to the recommended schedule, state school immunization requirements, and the National Vaccine Injury Compensation Program, could reduce vaccine uptake.

China. Sales of Gardasil/Gardasil 9 fell sharply in 2025. Merck paused shipments to its distributor and commercialization partner Chongqing Zhifei Biological Products in February 2025 because of elevated channel inventory and does not expect China Gardasil sales to increase materially in 2026. A locally manufactured nine-valent HPV vaccine was approved in China in 2025 for females aged 9–45. National Reimbursement Drug List entries recently averaged about 60% price cuts and volume-based procurement rounds have cut mature-product prices by more than 50% on average. Merck also has significant research and manufacturing operations in China, and an anti-corruption campaign there adds administrative burden.

Pipeline failure and impairment risk. Bringing a compound from discovery to market can take a decade or more, with a high inherent failure rate and failures possible late, after large sums are invested. If pipeline programs are cancelled or their commercial prospects deteriorate, Merck may recognize material non-cash impairment charges on programs capitalized in acquisitions or collaborations.

Manufacturing, biologics and vaccines. Merck has experienced difficulties manufacturing certain products, including vaccines, and may face regulatory shutdowns, facility construction delays, supply chain and raw-material shortages, and capacity limits. Biologics and vaccines require long lead times and planning years ahead of demand, raising the risk of inventory write-downs; each lot must pass identity, strength, quality, purity and potency testing, and small process deviations can cause lot failures or recalls. Certain raw materials come from a single source. Merck also depends on third-party relationships and outsourcing arrangements, suppliers, distributors, alliances with other pharmaceutical and biotechnology companies, and third-party service providers, including support for its IT systems, for key aspects of developing, manufacturing and commercializing its products; failure by those parties to meet their contractual and regulatory obligations, or a material disruption of those relationships, could adversely affect the business.

International operations, currency and macro conditions. Risks include reimbursement and pricing restrictions, multiple regulatory regimes, trade protection measures and tariffs, foreign exchange, weaker IP protection in some countries, and regional instability. Argentina is experiencing hyperinflation. A uniform 10% weakening of the U.S. dollar would have reduced the market value of revenue hedges by an estimated $671 million at December 31, 2025 (versus $569 million a year earlier) and income before taxes by approximately $131 million (versus $239 million).

Litigation, tax and regulation. Exposure spans intellectual property disputes, product liability (including Gardasil litigation), consumer protection and commercial cases, anti-bribery matters, pricing and promotional matters, securities and antitrust claims, environmental matters, and tax assessments. Unexpected safety or efficacy concerns can also arise with marketed products, whether or not scientifically justified, leading to product recalls, withdrawals or declining sales as well as product liability, consumer fraud and other claims, including potential civil or criminal governmental actions. Merck self-insures substantially all product liability risk and carries no insurance for most product liabilities, having judged the cost of coverage to outweigh the available benefit. The IRS is examining the 2017 and 2018 returns, including the Tax Cuts and Jobs Act transition tax, and has issued Notices of Proposed Adjustment that would raise the one-time transition tax by approximately $1.3 billion plus approximately $260 million of penalties, exclusive of interest; Merck disagrees and is contesting. The 2021 and 2022 returns are also under examination. The 2021 Organon spin-off was treated as tax-free based on counsel's opinions; if the underlying representations fail, significant federal tax liabilities could arise for Merck and its shareholders.

Animal health specifics. Outbreaks such as Avian Influenza or African Swine Fever could cause widespread animal death and precautionary destruction, reduce demand for animals, or force production halts near main sites. Government procurement and pricing, weather and agribusiness cycles also affect the segment.

Technology, cybersecurity and artificial intelligence. Merck is increasingly dependent on sophisticated software applications, complex information technology systems, computing infrastructure and cloud service providers to conduct critical operations and financial reporting, and certain of those systems are managed, hosted or provided by third parties. Merck continues to be a target of cyber-attacks, which could disrupt worldwide manufacturing, research and sales operations, expose confidential information, modify critical data, or lead to theft of trade secrets and intellectual property. The aggregate impact of cyber-attacks and network disruptions has not been material to date, but Merck expects them to continue and states that such disruptions "have in the past and could in the future result in loss of revenue," alongside financial, legal, business or reputational harm and substantial remediation costs. A multi-year upgrade of its SAP system is beginning, and the Animal Health business sells technology products that could themselves be compromised once deployed. Merck's growing use of AI systems to automate processes, analyze data and support decision-making carries inherent risks: flaws, biases or malfunctions causing operational disruption, data loss or erroneous decision-making; ethical and legal exposure including emerging AI-specific regulation such as the EU AI Act and the NIS2 Directive; inadvertent disclosure of confidential information through unauthorized use of open-source or generative AI tools; increased cybersecurity exposure from AI deployment; and competitive risk if Merck fails to adopt such technologies in a timely fashion.

Climate and sustainability. Merck identifies physical risks (extreme weather, inland flooding, sea-level rise, reduced access to high-quality water, biodiversity loss), transition risks, and social effects, along with rising compliance costs from climate-related and sustainability reporting requirements such as the EU's CSRD.

Management's discussion, fiscal year 2025

From the annual report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0000310158-26-000063).

Headline results. Sales of $65,011 million rose 1% (2% excluding foreign exchange). GAAP net income attributable to Merck was $18,254 million, up 7% (9% ex-FX), and GAAP diluted EPS was $7.28, up 8%. Non-GAAP net income attributable to Merck was $22,513 million, up 16%, and non-GAAP diluted EPS was $8.98, up 17%. Both GAAP and non-GAAP EPS were reduced by $0.20 of per-share charges for upfront and pre-approval milestone payments and pre-approval assets obtained in asset acquisitions, versus $1.28 in 2024 and $6.21 in 2023.

Revenue drivers. Growth came from oncology (Keytruda and Welireg, plus higher alliance revenue from Koselugo, Reblozyl and Lynparza), cardiometabolic and respiratory (the Winrevair launch and the inclusion of Ohtuvayre after the October 2025 Verona Pharma acquisition), diabetes (higher Januvia net pricing) and animal health (livestock). Offsets were vaccines, chiefly Gardasil/Gardasil 9, down 39%, partly cushioned by the Capvaxive ramp and the U.S. Enflonsia launch, immunology, where Remicade and Simponi marketing rights in former Merck territories returned to Johnson & Johnson on October 1, 2024, and virology, where Lagevrio fell 61%. U.S. sales grew 13% to $36.5 billion; international sales fell 11% (10% ex-FX) and were 44% of the total, down from 50%.

Selected product movements: combined Keytruda/Keytruda Qlex grew 7% on higher U.S. demand and net pricing and broader international uptake in earlier-stage indications, with EU launch pricing a headwind and a Keytruda biosimilar launched in Argentina; Welireg rose 41%; Prevymis rose 25%; Capvaxive reached $759 million; Winrevair reached $1.4 billion; Ohtuvayre contributed $178 million post-closing; Bridion grew 4%; Pneumovax 23 fell 37% as the adult market shifted to newer conjugates; Dificid fell 27% on U.S. generic entry; livestock grew 13% and companion animal 2%.

Costs and margins ($ millions).

Gross margin was 74.8% versus 76.3%, hurt by higher restructuring costs (mainly accelerated depreciation of manufacturing lines at two sites under the 2025 program), higher inventory write-downs concentrated in vaccines, more intangible amortization, and an $83 million inventory fair-value step-up from Verona Pharma, partly offset by product mix. Cost of sales included $2.8 billion of intangible amortization (2024: $2.4 billion) and $1.5 billion of restructuring-related expense (2024: $495 million). R&D fell mainly on lower business development charges; Merck Research Laboratories spend was $10.8 billion (2024: $10.1 billion), while other R&D components, animal health research, collaboration and licensing payments, asset-acquisition charges and support costs, were $4.8 billion versus $7.7 billion. 2025 business development charges included $300 million for the MK-2010 technology transfer from LaNova, $200 million for the Hengrui Pharma license, $150 million for the Falk agreement covering MK-8690, and $100 million on an EyeBio development milestone. Other (income) expense swung unfavorably largely because 2024 included $170 million of income from expanding the Daiichi Sankyo agreement, plus higher net interest expense and foreign exchange losses.

Restructuring. The 2025 Restructuring Program approved in July 2025 will cut positions in sales, administration and R&D, reduce the global real estate footprint and continue optimizing manufacturing. Most actions should be largely complete by the end of 2027, certain manufacturing actions by the end of 2029. Cumulative pretax cost is estimated at approximately $3.0 billion, roughly 60% cash, with expected annual savings of approximately $1.7 billion substantially realized by the end of 2027. It sits inside a multiyear optimization initiative targeting $3.0 billion of annual savings by the end of 2027, to be fully reinvested in growth areas. The 2024 Restructuring Program, aimed at the human health and animal health manufacturing networks, runs to the end of 2031 at an estimated $4.0 billion cumulative pretax cost (about 50% non-cash) for approximately $750 million of cumulative annual net savings. Aggregate pretax restructuring costs recognized across all line items were $2.6 billion in 2025 versus $888 million in 2024. Accelerated depreciation within total depreciation expense of $3.0 billion was $1.2 billion in 2025, versus $254 million in 2024.

Segments and tax ($ millions).

The effective tax rate was 13.3% in 2025, reflecting jurisdictional mix and certain discrete items, versus 14.1% in 2024, which included a 2.6 point benefit from a $519 million reserve release on expiry of the statute of limitations for the 2019 and 2020 federal returns and a 1.5 point combined charge drag from the Harpoon, EyeBio and MK-1045 acquisitions. Both years include the OECD Pillar 2 global minimum tax; the OBBBA enacted in July 2025 had an immaterial 2025 effect.

GAAP to non-GAAP bridge ($ millions except per share). From income before taxes of $21,067 million, Merck added back acquisition- and divestiture-related costs of $3,007 million and restructuring costs of $2,551 million, and removed $306 million of net income from equity securities, giving non-GAAP income before taxes of $26,319 million. Non-GAAP taxes were $3,797 million against $2,804 million reported, producing non-GAAP net income attributable to Merck of $22,513 million and non-GAAP diluted EPS of $8.98 versus $7.28 GAAP.

Business development. Merck acquired Verona Pharma in October 2025 (obtaining Ohtuvayre) for $10.4 billion of cash consideration, closed the Hengrui Pharma license for MK-7262 and the Falk agreement for MK-8690, and agreed to acquire Cidara Therapeutics, closing in January 2026 for approximately $9.2 billion including payments to settle share-based awards, a transaction expected to be an asset acquisition with an approximately $9.0 billion charge, because MK-1406 accounts for substantially all of the fair value acquired.

Liquidity and capital returns. Operating cash flow was $16.5 billion versus $21.5 billion in 2024, the decline reflecting income tax payments of $6.1 billion (2024: $3.9 billion) and upfront, milestone, option and continuation payments of $3.0 billion (2024: $1.1 billion). Investing used $13.7 billion (2024: $7.7 billion) on acquisitions including Verona Pharma, higher capital expenditure including a facility purchased from WuXi Vaccines, and securities purchases. Financing used $1.9 billion (2024: $7.0 billion), with higher debt issuance offsetting larger buybacks, debt repayments and dividends. Merck issued $8.0 billion of senior unsecured notes in December 2025, partly to fund Cidara, and $6.0 billion in September 2025, partly to fund Verona Pharma; $2.5 billion of 2.75% notes matured and were repaid. A $6.0 billion credit facility maturing May 2030 backs commercial paper and remains undrawn. Capital expenditure was $4.1 billion (2024: $3.4 billion), with approximately $20 billion planned across 2025–2029, more than $12 billion of it in the U.S. Merck returned $13.3 billion to shareholders, $8.2 billion of dividends and $5.1 billion of repurchases, about 59 million shares, raised the quarterly dividend to $0.85 from $0.81 in November 2025, and had $7.3 billion left under the $10 billion authorization approved in January 2025. Accrued contingent sales-based milestones under the Alteogen license were $890 million at year end, and purchase obligations totalled $6.5 billion with $2.7 billion payable in 2026.

Current quarter, second quarter and first half of 2026

From the quarterly report on Form 10-Q for the quarter ended June 30, 2026 (accession 0000310158-26-000212), with the full-year outlook from the earnings release furnished on Form 8-K (accession 0001104659-26-090045).

Top line. Second-quarter sales were $16,607 million, up 5% (4% ex-FX); first-half sales were $32,893 million, up 5% (3% ex-FX). U.S. sales were $9,367 million in the quarter, up 6%, and $18,532 million in the half, up 7%. International sales were $7,240 million in the quarter, up 4% (2% ex-FX), and $14,361 million in the half, up 3% but down 1% ex-FX. Growth came from oncology, cardiometabolic and respiratory, and animal health, offset by diabetes and infectious diseases, with vaccines also down in the half.

Terns acquisition. Merck completed the acquisition of Terns Pharmaceuticals in May 2026 for $6.8 billion, including $606 million of payments to settle share-based equity awards, acquiring Terns' lead candidate MK-4208 (formerly TERN-701), an investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor in a Phase 1/2 trial in previously treated Philadelphia chromosome-positive chronic phase chronic myeloid leukemia; the transaction was accounted for as an asset acquisition because MK-4208 accounted for substantially all of the fair value of the gross assets acquired, with the resulting charge recorded in research and development as acquired in-process research and development with no alternative future use.

Bottom line turned negative on acquisition charges. Merck recorded a pretax loss of $683 million in the quarter (versus income of $4,999 million a year earlier) and $4,217 million in the half (versus income of $10,902 million). GAAP net loss attributable to Merck was $1,335 million in the quarter and $5,575 million in the half, against income of $4,427 million and $9,506 million in the prior-year periods. GAAP diluted loss per share was $0.54 in the quarter and $2.26 in the half; non-GAAP loss per share was $0.13 and $1.41, against non-GAAP EPS of $2.13 and $4.35 a year earlier. The cause is two asset acquisitions charged to R&D: $5.7 billion, or $2.31 per share, for Terns Pharmaceuticals in the second quarter, and $9.0 billion, or $3.62 per share, for Cidara in the first quarter, $5.93 per share combined in the half. Because both GAAP and non-GAAP results were losses, no dilutive shares were used in the per-share computations.

Costs ($ millions).

Gross margin fell to 73.5% from 77.5% in the quarter and to 73.9% from 77.7% in the half, on higher intangible amortization ($984 million in the quarter versus $599 million; $1.9 billion in the half versus $1.2 billion), higher inventory write-downs concentrated in vaccines, higher restructuring costs, and Verona Pharma inventory step-up of $83 million in the quarter and $166 million in the half, partly offset by product mix. SG&A rose on administrative costs including IT investment, launch-related promotion and selling, and currency. Merck Research Laboratories spend was flat at $2.8 billion in the quarter and $5.3 billion in the half, each inclusive of a $200 million and $400 million benefit from the Blackstone Life Sciences funding arrangement for sacituzumab tirumotecan; the rest of R&D swelled to $7.0 billion in the quarter and $17.0 billion in the half, from $1.2 billion and $2.3 billion, on the acquisition charges.

Tax. The quarter's $654 million provision on a pretax loss produced an effective rate of negative 95.9%, including a 108.9 point unfavorable impact from the Terns charge, which carried no tax benefit. The half's $1.4 billion provision on a $4.2 billion pretax loss produced negative 32.3%, including a 45.3 point combined drag from the Cidara and Terns charges. Prior-year rates were 11.4% and 12.7%.

Segments ($ millions). Pharmaceutical segment profits were $11,612 million in the quarter (prior year $11,103 million) and $23,151 million in the half ($21,973 million). Animal Health segment profits were $636 million and $1,359 million ($593 million and $1,226 million). Non-segment activity was a charge of $12,931 million in the quarter and $28,727 million in the half, versus $6,697 million and $12,297 million, which is where the acquisition charges sit.

Product detail. Keytruda/Keytruda Qlex sales were $8,366 million in the quarter, up 5% (4% ex-FX), and $16,400 million in the half, up 8% (6% ex-FX); the earnings release disclosed Keytruda Qlex sales of $463 million in the quarter. The half benefited from approximately $250 million of favorable wholesaler purchase timing. Welireg rose 67% in the quarter and 57% in the half. Winrevair sales were $588 million, up 75%. Gardasil/Gardasil 9 rose 4% to $1,169 million in the quarter on Asia-Pacific and European demand and tender timing, but fell 9% to $2,238 million in the half on China and Japan. Prevymis rose 29% to $295 million. Capvaxive grew 42% in the quarter and 38% in the half. Vaxneuvance fell 35% in the quarter and 24% in the half, largely against $60 million of favorable prior-year CDC stockpile activity. Enflonsia sales were only $2 million in the quarter and $3 million in the half given seasonality and high RSV monoclonal antibody inventory in the market, with shipments expected to increase in the second half. Bridion sales were $497 million in the quarter, up 8%, and $969 million in the half, up 7%, as higher U.S. demand and pricing was partly offset by lower demand in most international markets on generic competition. Januvia/Janumet fell 31% to $429 million in the quarter and 29% to $1,003 million in the half. Dificid fell 77% and Lagevrio 95% in the quarter. Animal Health sales were $1,775 million, up 8% (5% ex-FX), with livestock $1,041 million and companion animal $734 million; Bravecto was $359 million in the quarter and $738 million in the half.

China restart. Merck entered a revised supply contract with Chongqing Zhifei Biological Products in April 2026 and began making limited Gardasil shipments to China in the second quarter, but expects revenue associated with the revised contract to be immaterial in 2026.

Policy developments in the period. A federal district court in Massachusetts issued a preliminary injunction on March 16, 2026 staying, among other things, the immunization schedule changes announced by the CDC in January 2026, and the government is appealing to the First Circuit; the September 2025 ACIP varicella recommendations are also subject to that injunction. Health insurer members of AHIP have said they will keep covering immunizations recommended as of September 1, 2025 without cost-sharing through the end of 2027. In June 2026 Merck signed an agreement with CMS to join the GENEROUS Model for Medicaid reference pricing. Also in June 2026, the Secretary of HHS gave advance notice that the declaration supporting the Lagevrio Emergency Use Authorization will terminate effective June 29, 2027; Merck does not expect FDA approval of a Lagevrio new drug application before then and is working with the FDA on a U.S. disposition plan.

Pipeline in the period. Idvynso (MK-8591A) was approved by the FDA in April 2026 and in Japan in March 2026 for HIV-1 treatment in virologically suppressed adults, and is under review in the EU. Ifinatamab deruxtecan is under U.S. priority review for previously treated extensive-stage small cell lung cancer with a PDUFA date of October 10, 2026. Welireg plus Lenvima carries a U.S. PDUFA date of October 4, 2026, and the Winrevair HYPERION label update September 21, 2026. Tulisokibart met its primary endpoint in the Phase 3 ATLAS-UC induction-only ulcerative colitis study and in a Phase 2 hidradenitis suppurativa study, but missed in a Phase 2 systemic sclerosis-associated interstitial lung disease study, which will be discontinued. The Phase 3 KEYNOTE-D46/EVOKE-03 study of Trodelvy with Keytruda in first-line metastatic NSCLC is being discontinued on Data Monitoring Committee recommendation. Merck will not proceed with prospective single-dose Gardasil 9 trials, citing operational infeasibility, and is instead funding a five-year extension of the Costa Rica ESCUDDO trial expected to start in the third quarter of 2026. In June 2026 Merck received a letter from the Chairman of the House Select Committee on China about its clinical trial conduct in China.

Litigation developments. The proposed October 2025 agreement with plaintiffs' counsel to substantially resolve U.S. Gardasil product liability litigation has met its conditions and is now final; the total payment is considerably less than anticipated defense costs and is not material to Merck. Fewer than 15 product liability cases are pending outside the U.S. Halozyme's patent claims over an ingredient in subcutaneous pembrolizumab remain live across U.S. and European proceedings, and timing of Keytruda SC availability in individual EU countries depends in part on that outcome. In June 2026 Merck and AstraZeneca received a second Paragraph IV notice from Cipla on generic Lynparza tablets.

Balance sheet and cash flow. Cash and investments were $8,363 million at June 30, 2026, down from $15,521 million at December 31, 2025; working capital fell to $8,948 million from $15,189 million; total debt as a share of total liabilities and equity rose to 41.5% from 36.0%. Operating cash flow was $9.3 billion in the half versus $5.8 billion. Investing used $15.8 billion versus $2.3 billion, driven by Cidara and Terns. Financing used $1.2 billion versus $9.3 billion. In April 2026 Merck entered a 364-day delayed draw term loan facility of up to $6.0 billion and drew it in full to fund part of the approximately $6.8 billion Terns consideration; in May 2026 it issued $6.0 billion of senior unsecured notes, $500 million floating rate due 2028, $1.0 billion 4.30% due 2028, $500 million 4.65% due 2031, $1.0 billion 4.95% due 2033, $1.5 billion 5.20% due 2036, $500 million 5.75% due 2046 and $1.0 billion 5.85% due 2056, and used the proceeds to repay the term loan, which has since been repaid in full. Maturities of $135 million of 6.30% debentures and $1.0 billion of 0.75% notes were repaid in January and February 2026. Dividends paid were $4.2 billion, at $0.85 per share per quarter. Merck repurchased $1.6 billion (14 million shares) in the half, expects approximately $3.0 billion of repurchases in 2026, and had $5.7 billion of authorization remaining at June 30, 2026.

Full-year 2026 outlook (as updated August 4, 2026).

The sales range was raised and narrowed and includes an approximately 1% positive foreign exchange impact at mid-July 2026 rates. The operating expense and EPS ranges carry the one-time R&D charges of $9.0 billion ($3.62 per share) for Cidara and $5.7 billion ($2.31 per share) for Terns, the Terns charge was not in the prior outlook, plus approximately $0.12 per share of costs to finance the Terns acquisition and advance MK-4208. The tax rate range reflects the non-deductibility of both charges. Foreign exchange is expected to add approximately $0.15 per share. The outlook assumes no additional significant business development transactions.

Subsequent events

From the quarterly report on Form 10-Q for the quarter ended June 30, 2026 (accession 0000310158-26-000212). Events after June 30, 2026.

• TARGAN acquisition, July 2026. Merck acquired TARGAN, a privately held company developing and commercializing biodevice solutions for the poultry industry, for approximately $650 million. The deal broadens Merck Animal Health's commercial poultry portfolio with WingScan, an automated vision-technology solution for gender identification, and adds a high-speed precision ocular spray technology for administering respiratory and coccidiosis vaccines to day-old chicks. Merck expects to account for the transaction as a business combination; there are no future contingent payments. Merck already held an investment in TARGAN and recorded a related unrealized gain of $71 million in other (income) expense, net in the second quarter.
• Peloton milestone payment, July 2026. The June 2026 FDA approval of Welireg in combination with Keytruda or Keytruda Qlex for adjuvant treatment of certain clear cell renal cell carcinoma patients triggered a $50 million regulatory milestone payment to former Peloton Therapeutics shareholders, made in July 2026. Merck also recorded a $100 million non-current liability in the second quarter for a future sales-based milestone it judged probable, increased the Welireg intangible asset by $192 million, and took $65 million of cumulative amortization catch-up to cost of sales. Former Peloton shareholders remain eligible for up to $900 million of sales-based milestones.
• Interest rate swap, July 2026. Merck entered an additional interest rate swap contract with a notional amount of $250 million related to its 5.20% notes due 2036, adding to the ten pay-floating, receive-fixed swaps outstanding at June 30, 2026.
• Daiichi Sankyo collaboration amended, July 2026. Merck and Daiichi Sankyo amended their DXd antibody-drug conjugate collaboration agreement, under which the companies otherwise share development costs, so that certain clinical development expenses may be incurred solely by Merck and are not shareable under the collaboration agreement, though they may be partially reimbursed subject to certain conditions.
• Lipfendra approval, July 2026. The FDA approved Lipfendra (enlicitide) tablets as an adjunct to diet and exercise to reduce LDL cholesterol in adults with hypercholesterolemia, including heterozygous familial hypercholesterolemia, a macrocyclic peptide and the first FDA-approved oral PCSK9 inhibitor shown to lower LDL-C, based on the CORALreef Lipids and CORALreef HeFH trials.
• Keytruda label expansion, July 2026. The FDA approved Keytruda and Keytruda Qlex in combination with Padcev for expanded use as neoadjuvant treatment and then continued after cystectomy as adjuvant treatment for adults with muscle-invasive bladder cancer, including those eligible for cisplatin-containing chemotherapy, based on KEYNOTE-B15.
• Exclusivity losses, July 2026. Bridion lost U.S. market exclusivity; Merck expects U.S. Bridion sales to decline depending on generic supply and expects to discontinue U.S. sales in 2027. Janumet XR lost U.S. market exclusivity, following Januvia and Janumet in May 2026; Merck expects to lose a substantial portion of U.S. sales of all three.
• German pricing legislation, July 2026. The German parliament approved the Statutory Health Insurance Contribution Rate Stabilization Act (GKV-BStabG), with the majority of provisions effective January 1, 2027. Merck is evaluating the implications and states the law will exert significant downward pressure on sales in Germany.
• Lynparza patent suit, July 2026. Following a second Paragraph IV notice from Cipla in June 2026, Merck and AstraZeneca filed a patent infringement lawsuit in the U.S. District Court for the District of New Jersey asserting a number of Orange Book-listed patents; the FDA will stay approval of Cipla's second abbreviated new drug application for 30 months from the notice date.
• Dividend, July 2026. The $0.85 per share quarterly dividend for the third quarter of 2026, declared in May 2026, was paid in July 2026.

Filings that contain financial statements

• 8-K filed August 4, 2026 (accession 0001104659-26-090045): Exhibit 99.1 furnishes Merck's second-quarter 2026 results, including an income-statement summary (sales, GAAP/non-GAAP net income and EPS), product-level sales detail, and an expense/GAAP-to-non-GAAP reconciliation table. Exhibit 99.2 furnishes supplemental data.
• 8-K filed April 30, 2026 (accession 0001104659-26-052081): Exhibit 99.1 furnishes first-quarter 2026 results in the same format (income statement summary, sales by product, expense detail, GAAP-to-non-GAAP reconciliation).
• 8-K filed February 3, 2026 (accession 0001104659-26-009495): Exhibit 99.1 furnishes fourth-quarter and full-year 2025 results, including full-year income statement summary and sales tables for 2025 vs. 2024.
• 8-K filed October 30, 2025 (accession 0001104659-25-103974): Exhibit 99.1 furnishes third-quarter 2025 results (income statement summary, sales detail, expense/EPS reconciliation).
• 8-K filed July 29, 2025 (accession 0001104659-25-071380): Exhibit 99.1 furnishes second-quarter 2025 results.
• 8-K filed April 24, 2025 (accession 0001104659-25-038301): Exhibit 99.1 furnishes first-quarter 2025 results (income statement summary, sales detail, expense/EPS reconciliation).
• 8-K filed February 4, 2025 (accession 0001104659-25-008863): Exhibit 99.1 furnishes fourth-quarter and full-year 2024 results.
• 10-K filed February 24, 2026 (accession 0000310158-26-000063): full-year 2025 audited financial statements, including Note 3 (Acquisitions) with detail on the Verona Pharma and Cidara Therapeutics transactions.
• 10-Q filed August 7, 2026 (accession 0000310158-26-000212): the Condensed Consolidated Statement of Operations and the Condensed Consolidated Statement of Comprehensive (Loss) Income each present both three-month and six-month columns for the periods ended June 30, 2026 and 2025, so Q2 2026 three-month income-statement data is available here. The Condensed Consolidated Statement of Cash Flows, however, presents only six-month columns (including cash-flow lines for the Cidara and Terns acquisitions), three-month Q2 2026 cash-flow data is not in this filing and must be sourced elsewhere.

Earnings and guidance

• Second quarter 2026 (reported August 4, 2026; accession 0001104659-26-090045): Worldwide sales were $16.6 billion, up 5% (4% ex-FX). GAAP loss per share was $0.54 and non-GAAP loss per share was $0.13, both driven by a $2.31-per-share charge for the acquisition of Terns Pharmaceuticals. Merck narrowed and raised full-year 2026 sales guidance to $66.3–$67.3 billion and non-GAAP EPS guidance to $2.66–$2.76, an outlook that includes $2.43 per share of charges tied to the Terns acquisition and its financing.
• First quarter 2026 (reported April 30, 2026; accession 0001104659-26-052081): Worldwide sales were $16.3 billion, up 5% (3% ex-FX). GAAP loss per share was $1.72 and non-GAAP loss per share was $1.28, both due to a $3.62-per-share charge for the acquisition of Cidara Therapeutics. Merck narrowed and raised the midpoint of full-year 2026 sales guidance to $65.8–$67.0 billion and non-GAAP EPS guidance to $5.04–$5.16 (a range that excluded any impact from the then-pending Terns acquisition).
• Fourth quarter and full-year 2025 (reported February 3, 2026; accession 0001104659-26-009495): Fourth-quarter sales were $16.4 billion (up 5%); full-year 2025 sales were $65.0 billion (up 1%, 2% ex-FX). Full-year GAAP EPS was $7.28 and non-GAAP EPS was $8.98. For full-year 2026, Merck guided to worldwide sales of $65.5–$67.0 billion and non-GAAP EPS of $5.00–$5.15, reflecting a roughly $3.65-per-share one-time charge for the Cidara acquisition.
• Third quarter 2025 (reported October 30, 2025; accession 0001104659-25-103974): Sales were $17.3 billion, up 4% (3% ex-FX); GAAP EPS was $2.32 and non-GAAP EPS was $2.58. Merck raised and narrowed full-year 2025 EPS guidance to $8.93–$8.98 non-GAAP and narrowed sales guidance to $64.5–$65.0 billion.
• Second quarter 2025 (reported July 29, 2025; accession 0001104659-25-071380): Sales were $15.8 billion, down 2%, largely on a steep decline in Gardasil/Gardasil 9 sales in China. GAAP EPS was $1.76 and non-GAAP EPS was $2.13, both reduced by a $0.07-per-share charge tied to closing a license agreement with Jiangsu Hengrui Pharmaceutical. Full-year 2025 guidance was narrowed to $64.3–$65.3 billion in sales and $8.87–$8.97 in non-GAAP EPS, excluding any impact from the newly announced Verona Pharma acquisition.
• First quarter 2025 (reported April 24, 2025; accession 0001104659-25-038301): Worldwide sales were $15.5 billion, down 2% (up 1% ex-FX). GAAP EPS was $2.01 and non-GAAP EPS was $2.22. Merck disclosed an exclusive license agreement with Hengrui Pharma for an investigational oral Lp(a) inhibitor, expected to close in the second quarter of 2025, and reaffirmed full-year 2025 sales guidance of $64.1–$65.6 billion while narrowing non-GAAP EPS guidance to $8.82–$8.97 to reflect an estimated $0.06-per-share charge tied to the Hengrui agreement.
• Fourth quarter and full-year 2024 (reported February 4, 2025; accession 0001104659-25-008863): Fourth-quarter sales were $15.6 billion, up 7%; full-year 2024 sales were $64.2 billion, up 7% (10% ex-FX), led by 18% growth in Keytruda. Full-year 2025 guidance issued at this time (later superseded) called for full-year 2025 sales of $64.1–$65.6 billion and non-GAAP EPS of $8.88–$9.03.

Across this period, sales growth has consistently been driven by continued strength in Keytruda/Keytruda Qlex, the Winrevair launch, and Animal Health, while Gardasil/Gardasil 9 (largely China-driven), Januvia/Janumet and Lagevrio have declined. GAAP results in the first half of 2026 were pushed to a net loss almost entirely by one-time IPR&D charges from the Cidara and Terns acquisitions rather than by underlying operating weakness.

Mergers and acquisitions

• Cidara Therapeutics, Inc., closed January 2026. Merck completed the acquisition of Cidara for approximately $9.2 billion (including payments to settle share-based equity awards), gaining Cidara's lead drug-Fc conjugate candidate MK-1406 (formerly CD388), a long-acting antiviral for seasonal and pandemic influenza. Merck recorded an approximately $9.0 billion research-and-development charge for acquired in-process R&D with no alternative future use in the first quarter of 2026. This transaction is disclosed in the Form 10-K filed February 24, 2026 (accession 0000310158-26-000063) and in the first- and second-quarter 2026 earnings releases; the deal was disclosed in these periodic reports rather than in a dedicated Form 8-K.
• Terns Pharmaceuticals, Inc., announced April 2026, closed May 2026. Merck's April 30, 2026 earnings release (accession 0001104659-26-052081) disclosed that in April 2026 the company announced a tender offer to acquire Terns and its lead candidate MK-4208 (formerly TERN-701), a novel candidate for chronic myeloid leukemia, expected to close in May 2026. The acquisition closed in May 2026 for total consideration of $6.8 billion (including $606 million to settle share-based equity awards), per the Form 10-Q filed August 7, 2026 (accession 0000310158-26-000212). Merck recorded a $5.7 billion R&D charge for the acquired IPR&D, reflected in second-quarter 2026 results (accession 0001104659-26-090045).
• Verona Pharma plc, announced July 2025, closed October 7, 2025. The July 29, 2025 earnings release (accession 0001104659-25-071380) disclosed a definitive agreement to acquire Verona Pharma and its approved COPD treatment Ohtuvayre, expected to close in the fourth quarter of 2025. The October 30, 2025 earnings release (accession 0001104659-25-103974) confirmed the acquisition had completed that month. Per the Form 10-K filed February 24, 2026 (accession 0000310158-26-000063), total consideration was $10.4 billion (including payments to settle share-based equity awards), and Merck recorded a $12.1 billion Ohtuvayre intangible asset.
• TARGAN, completed July 2026. Merck's Animal Health business completed the acquisition of TARGAN, a privately held developer of biodevice solutions for the poultry industry, for approximately $650 million, adding TARGAN's WingScan gender-identification technology and high-speed ocular spray vaccine-delivery capability to its commercial poultry portfolio. Per Note 2, Acquisitions, Research Collaborations and Licensing Agreements, to the Form 10-Q filed August 7, 2026 (accession 0000310158-26-000212), the transaction is expected to be accounted for as a business combination with no future contingent payments, and Merck recorded a $71 million unrealized gain on its pre-existing investment in TARGAN. The Form 8-K filed August 4, 2026 (accession 0001104659-26-090045), reporting second-quarter 2026 results, carried the completed acquisition as a headline item.

Restructuring

• 2025 Restructuring Program, approved July 25, 2025, disclosed July 29, 2025 (8-K accession 0001104659-25-071380, Item 2.05). Merck approved a new restructuring program eliminating certain sales, administrative and R&D positions, reducing its global real estate footprint, and optimizing its manufacturing network. Cumulative pretax implementation costs are estimated at approximately $3.0 billion (about 60% cash), with actions expected to be largely complete by the end of 2027 (manufacturing actions by the end of 2029). The program is expected to generate approximately $1.7 billion in annual cost savings, substantially realized by the end of 2027, as part of a broader multiyear optimization initiative targeting $3.0 billion in annual savings to be reinvested into growth areas.

Capital actions, debt issuance

• May 22, 2026 (accession 0001628280-26-037738): Merck closed an underwritten public offering of $6.0 billion aggregate principal amount of notes across seven tranches (floating-rate notes due 2028 and fixed-rate notes due 2028, 2031, 2033, 2036, 2046 and 2056), issued under its shelf registration statement.
• December 4, 2025 (accession 0001628280-25-055388): Merck closed an underwritten public offering of approximately $8.0 billion aggregate principal amount of notes across eight tranches (floating-rate notes due 2029 and fixed-rate notes due 2029, 2031, 2032, 2035, 2046, 2055 and 2065).
• September 9, 2025 (accession 0000310158-25-000047): Merck closed an underwritten public offering of approximately $6.0 billion aggregate principal amount of notes across six tranches (floating-rate notes due 2027 and fixed-rate notes due 2027, 2030, 2032 and 2035, and 2055).

Governance

• May 26, 2026 Annual Meeting of Shareholders (8-K filed May 28, 2026, accession 0001104659-26-067509, Item 5.07): all thirteen director nominees were elected, executive compensation was approved on an advisory basis, and the appointment of the independent registered public accounting firm for 2026 was ratified. Three shareholder proposals, on a report on DEI risks in federal contracting, a report on healthcare coverage gaps, and a report on political contributions, were voted down.
• May 27, 2025 Annual Meeting of Shareholders (accession 0001104659-25-054131): all thirteen director nominees were elected, executive compensation was approved on an advisory basis, and the auditor appointment was ratified. Several shareholder proposals (on human rights impact assessment, tax transparency, DEI goals and civil liberties in advertising) were voted down.
• November 19–22, 2024 (accession 0001104659-24-122027): The board elected Surendralal L. "Lal" Karsanbhai as a new director effective January 1, 2025, appointing him to the Audit and Governance Committees, and adopted amended and restated by-laws revising indemnification provisions for directors, officers, employees and agents.

Merck's licensing and collaboration activity with partners such as Kelun-Biotech, Daiichi Sankyo, Gilead, AstraZeneca and Blackstone Life Sciences is disclosed in its periodic reports, the earnings releases and the Form 10-K/10-Q financial-statement notes cited above, rather than in a dedicated Form 8-K.

About this file

MRK annual income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

MRK quarterly income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

MRK year-to-date income statement and cash flow

Taken from the SEC filings and normalized to actual dollars.

MRK trailing twelve month income statement and cash flow

Derived by AI from the figures the filings report. No filing prints these, so none of them is linked.

• Derivation. Not a period either filing presents. Each line is the FY2025 figure from the 10-K plus the first-six-months 2026 figure from the 10-Q less the first-six-months 2025 figure from the same 10-Q.

Adjustments

Notes

• Coverage. Everything here comes from two filings: Merck's FY2025 Form 10-K (accession 0000310158-26-000063, filed February 24, 2026) and its Form 10-Q for the quarter ended June 30, 2026 (accession 0000310158-26-000212, filed August 7, 2026). The 10-K's income statement and cash flow statement each present three years, 2025, 2024 and 2023, and its balance sheet presents two, December 31, 2025 and December 31, 2024. The 10-Q presents the three months ended June 30, 2026 and 2025, the six months ended June 30, 2026 and 2025, a balance sheet at June 30, 2026, and a cash flow statement for the six months only. Those are exactly the periods in this record.
• Line-item naming. Merck captions its top line "Sales"; it is reported here as revenue. Merck's income statement does not present an operating income subtotal, it runs from sales through a single total of costs, expenses and other to income before taxes, so no operating income figure is shown, and pretax income is the first profit measure. Merck also does not print a gross profit line; the figures named gross_profit_derived are sales less cost of sales, calculated here. Merck captions one line "Other (income) expense, net" and presents it inside Costs, Expenses and Other, so in this record a positive other_income_expense_net is net expense ($151 million in 2025 and $99 million in the second quarter of 2026) and a negative value is net income ($24 million of income in 2024 and $7 million of income in the second quarter of 2025).
• Derived balance-sheet figures. Merck's balance sheet prints no total-liabilities line and no total-debt line. total_liabilities_derived is the sum of the four liability captions Merck does print (total current liabilities, long-term debt, deferred income taxes and other noncurrent liabilities); it reconciles exactly to total assets less total equity in each period shown. total_debt_derived is loans payable and current portion of long-term debt plus long-term debt: $49.3 billion at December 31, 2025, $37.1 billion at December 31, 2024, and $53.9 billion at June 30, 2026. Where a figure here is calculated rather than printed, the field name says so with a _derived suffix.
• FY2023 has no balance sheet. The FY2025 10-K's balance sheet presents only December 31, 2025 and 2024, so the 2023 entry carries an income statement and a cash flow statement and no balance sheet. A December 31, 2023 balance sheet is not in either filing read for this record.
• No three-month cash flow figures. Merck's 10-Q presents its cash flow statement for the six months ended June 30 only, with no three-month column, so the quarterly entries carry no cash flow block. Operating cash flow, capital expenditures and free cash flow for the current period appear in the six-month year-to-date block and in the trailing-twelve-month block. The balance sheet at June 30, 2026 is carried on the Q2 2026 entry.
• The term loan is not in the interim debt-financing lines. Merck's 10-Q prints proceeds from a $6,000 million term loan and payments on that term loan as separate financing lines for the first six months of 2026. The term loan was both drawn and fully repaid within the period, so it is not included in payments_on_debt or proceeds_from_issuance_of_debt here.
• What drove the 2026 loss. Merck reported a net loss of $1,335 million for the second quarter of 2026 and $5,575 million for the first six months, against net income of $4,427 million and $9,506 million in the year-ago periods, on higher sales. The swing sits in research and development, which rose to $9,741 million in the quarter from $4,048 million and to $22,333 million in the six months from $7,669 million. Two asset acquisitions accounted for most of it: Merck charged $9.0 billion to research and development for the January 2026 acquisition of Cidara Therapeutics, Inc. and $5.7 billion for the May 2026 acquisition of Terns Pharmaceuticals, Inc., both treated as asset acquisitions of acquired in-process research and development with no alternative future use. Neither charge carried a tax benefit, which is why the second quarter records a $654 million tax provision on a pretax loss.
• Segment profits were recast in the 10-Q. Merck states in the 10-Q that certain costs previously included in the Pharmaceutical segment are now reported as non-segment unallocated expenses, and that prior-period Pharmaceutical segment profits have been recast to match. The quarterly and six-month segment profits here are therefore on the recast basis, and are not directly comparable with the FY2023-FY2025 segment profits, which are as presented in the 10-K. Segment SALES are unaffected, and so are all consolidated figures. For the same reason the trailing-twelve-month block carries segment SALES but no segment profits: combining an annual figure on the old basis with interim figures on the recast basis would not describe any real twelve months.
• Segment figures tie to the consolidated line. In every period shown, Pharmaceutical plus Animal Health segment sales plus sales not allocated to a segment equal total sales, and Pharmaceutical plus Animal Health segment profits plus non-segment activity equal income before taxes. Merck defines segment profits narrowly, they exclude unallocated cost of sales, Merck Research Laboratories' research spending, corporate general and administrative expense, restructuring, and acquisition- and divestiture-related costs, so non-segment activity is large by construction.
• Trailing twelve months is derived, not filed. Neither filing presents a twelve months ended June 30, 2026 column. Each line in that block is the FY2025 figure from the 10-K plus the first-six-months 2026 figure from the 10-Q less the first-six-months 2025 figure from the same 10-Q. On that basis sales were $66,569 million, income before taxes $5,948 million, net income attributable to Merck $3,173 million, operating cash flow $19,967 million and free cash flow $16,063 million. The trailing-twelve-month per-share amounts are the reported per-share amounts combined the same way ($7.28 + $(2.26) - $3.77 = $1.25 diluted); because Merck's share count fell over the period, dividing trailing net income by a weighted average share count gives a slightly higher $1.28. No trailing-twelve-month share count is shown, because neither filing reports one.
• Share counts and per-share amounts. Weighted average basic and diluted share counts are taken from the earnings per share notes, Note 16 of the 10-K and Note 13 of the 10-Q, whose scaling notes read "shares in millions" and "($ and shares in millions except per share amounts)". Because Merck reported a loss in both 2026 periods, no dilutive shares were included in those computations, so basic and diluted counts are identical at 2,470 million for the quarter and 2,471 million for the six months. Dividends declared per common share are read from the statements of equity: $3.28 in 2025, $3.12 in 2024 and $2.96 in 2023; $0.85 for the second quarter of 2026 against $0.81 a year earlier, and $1.70 for the first six months of 2026 against $1.62.
• Inventories are understated by the balance-sheet caption alone. Merck classifies part of its inventory in Other assets: $6,381 million at June 30, 2026, $5,681 million at December 31, 2025 and $4,193 million at December 31, 2024, in addition to the $6,207 million, $6,658 million and $6,109 million shown in current assets.
• The December 31, 2025 balance sheet appears in both filings and agrees line for line. Cash of $14,565 million, total assets of $136,866 million and total equity of $52,662 million are identical in the 10-K and in the 10-Q's comparative column, so no restatement of that period has occurred. Nothing in either filing restates 2023 or 2024.

Uncertainties

• The trailing-twelve-month block is a calculation, not a reported period, and Merck has never published it. It combines a 10-K annual column with two 10-Q interim columns; any item Merck presents differently between an annual and an interim statement would carry into it. The trailing-twelve-month diluted figure of $1.25 is the sum of reported per-share amounts; net income over a weighted average share count gives $1.28. Both readings are given in the notes; neither is a figure Merck prints.
• The first quarters of 2026 and 2025 are not reported here as discrete three-month periods. They could be obtained by subtracting the second quarter from the six-month column, but neither the 10-K nor the 10-Q prints them, so they are left out rather than inferred.
• No three-month cash flow, capital expenditure or free cash flow figure is available for either quarter, because Merck's 10-Q presents cash flows for the six-month period only.
• There is no December 31, 2023 balance sheet in either filing, so no 2023 balance sheet, total debt or book value figure appears in this record.
• Segment profits for the 2026 and 2025 interim periods are on the basis Merck recast in the Q2 2026 10-Q; the annual segment profits for 2023 through 2025 are on the basis the 10-K presents. The two are not directly comparable, and Merck does not quantify the reclassification.
• Merck declared no stock split in any period reported here, the earliest of which begins January 1, 2023. Every per-share amount in this record other than the derived trailing-twelve-month figures is taken from the FY2025 10-K (accession 0000310158-26-000063) or the Q2 2026 10-Q (accession 0000310158-26-000212), which state per-share figures on a single consistent basis, so no per-share figure required a split adjustment.
• Merck's reported effective tax rates in 2026 are distorted by the Cidara and Terns charges, which reduced pretax income with no offsetting tax benefit, and are shown here as Merck reports them: negative 95.9% for the second quarter and negative 32.3% for the first six months. Every other effective rate in this record is the tax provision over pretax income and matches the rate Merck states (13.3% for 2025, 14.1% for 2024, 11.4% and 12.7% for the 2025 quarter and six months). The second-quarter 2026 rate is the only one where that ratio differs from Merck's stated figure, $654 million over a $683 million pretax loss gives 95.8%, because Merck computes it from unrounded amounts; Merck's own (95.9)% is used. The trailing-twelve-month rate of 46.7% is calculated, not stated. The 2023 rate of 80.0% is calculated here as the tax provision over pretax income, and Merck also prints it, as the total of the 2024/2023 effective income tax rate reconciliation in the FY2025 10-K.
• Total liabilities and total debt are calculated from the captions Merck prints rather than read off a printed total, because its balance sheet shows neither subtotal. Both reconcile exactly in every period shown, but the figures are sums, not printed lines.

Company details

Fiscal period

Source filings