Latest / Beta Finch - Merck - MRK - EN / Merck Q2 2026 Earnings Analysis

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Merck Q2 2026 Earnings Analysis · Beta Finch - Merck - MRK - EN

• 0:08
  Speaker 1: Hey everyone, welcome back to Beta Finch. I'm Alex, here
• 0:11
  Speaker 1: with Jordan as always, and today we're digging into Merck's
• 0:14
  Speaker 1: second quarter 2026 numbers. Before we get into it, quick disclaimer.
• 0:20
  Speaker 1: This podcast is AI-generated content for educational and entertainment purposes only.
• 0:25
  Speaker 1: Nothing we discuss should be considered investment advice. Always do
• 0:29
  Speaker 1: your own research and consult a qualified financial advisor before
• 0:33
  Speaker 1: making any investment decisions.
• 0:36
  Speaker 2: Good disclaimer to lead with, because there's a lot to
• 0:38
  Speaker 2: unpack here. This was a noisy quarter on paper, but
• 0:41
  Speaker 2: honestly a pretty exciting one underneath the hood.
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  Speaker 1: Right. Let's start with the headline numbers. Merck posted revenue
• 0:49
  Speaker 1: of $ 16. 6 billion, up 5%, or 4% if you strip
• 0:54
  Speaker 1: out currency effects. Oncology and animal health carried a lot
• 0:58
  Speaker 1: of that weight, plus growing contributions from newer launches.
• 1:02
  Speaker 2: But here's where it gets interesting. On the bottom line,
• 1:06
  Speaker 2: Merck actually reported a loss of 13 cents per share.
• 1:09
  Speaker 2: That sounds alarming until you realize it's almost entirely a
• 1:14
  Speaker 2: one-time accounting quirk.
• 1:16
  Speaker 1: Exactly. They completed the acquisition of Terns Pharmaceuticals this quarter,
• 1:21
  Speaker 1: picking up a promising CML, chronic myeloid leukemia, drug candidate.
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  Speaker 1: That came with a $ 5. 7 billion charge. And because it
• 1:30
  Speaker 1: wasn't tax deductible, their tax rate for the quarter ballooned
• 1:33
  Speaker 1: to over 160%.
• 1:36
  Speaker 2: Which tanked EPS by $ 2. 31 a share. Take that out,
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  Speaker 2: and the underlying business is actually performing quite well. It's
• 1:45
  Speaker 2: a classic case of red past the gap headline number.
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  Speaker 1: They also raised and narrowed full-year guidance, now expecting revenue
• 1:53
  Speaker 1: between $ 66. 30 and $ 67. 3 billion, 2-4% growth, and full-year EPS
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  Speaker 1: of $ 2. 66 to $ 2. 76.
• 2:06
  Speaker 2: Let's talk product performance, because this is really a story
• 2:09
  Speaker 2: of old reliable versus new and exciting. Keytruda, the flagship
• 2:14
  Speaker 2: cancer immunotherapy, grew 4% to $ 8. 4 billion, still the workhorse,
• 2:21
  Speaker 2: but management flagged that U.S. growth is moderating as it
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  Speaker 2: approaches peak penetration in a lot of indications.
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  Speaker 1: Meanwhile, the newer stuff is popping. Winervere, their pulmonary hypertension drug,
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  Speaker 1: was up 75% to $ 588 million. Wellireg jumped 67%. Kefaxiv,
• 2:41
  Speaker 1: their pneumococcal vaccine, up 40%.
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  Speaker 2: Those growth rates matter a lot for the bigger narrative here,
• 2:48
  Speaker 2: which is what happens when Keytruda eventually loses patent exclusivity
• 2:53
  Speaker 2: around the end of the decade. CEO Rob Davis addressed
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  Speaker 2: this directly in the Q & A. He called it
• 3:00
  Speaker 2: more of a hill than a cliff, with a shallow
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  Speaker 2: dip and a fast return to growth, backed by more
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  Speaker 2: than $ 70 billion in commercial opportunity from over 20 new products.
• 3:10
  Speaker 1: And a big one this quarter was Lipfendra, the first
• 3:13
  Speaker 1: oral PCSK9 inhibitor approved by the FDA for lowering LDL cholesterol.
• 3:19
  Speaker 1: It got fast-tracked through a national priority voucher process.
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  Speaker 2: This is a big deal because current injectable PCSK9 drugs
• 3:27
  Speaker 2: only reach about 5% of the eligible market, mostly because
• 3:31
  Speaker 2: doctors and patients don't love needles for a chronic condition.
• 3:35
  Speaker 2: An oral pill could meaningfully expand that market. Davis was
• 3:39
  Speaker 2: clear they're not trying to steal share from injectables. They're
• 3:42
  Speaker 2: trying to grow the whole pie. 30 million Americans are
• 3:46
  Speaker 2: on lipid therapy but not hitting their LDL targets.
• 3:50
  Speaker 1: There's also real pipeline momentum beyond Lipfendra. SACT-TMT, their TRO,
• 3:56
  Speaker 1: two-antibody drug conjugate for cancer, put up positive phase 3
• 4:00
  Speaker 1: results in endometrial cancer, ahead of schedule. Same with Tulasocobart,
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  Speaker 1: their ulcerative colitis drug, which hit positive phase 3 results
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  Speaker 1: faster than expected to.
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  Speaker 2: Dr. Dean Lee, their research chief, made a point of
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  Speaker 2: saying their confidence is actually higher now than it was
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  Speaker 2: back in January because so many of these pipeline bets
• 4:21
  Speaker 2: are reading out early and positive. That's not something you
• 4:24
  Speaker 2: hear often on earnings calls. Usually, it's the opposite.
• 4:27
  Speaker 1: Not everything was rosy, though. Their immunology drug, telosocobart, failed
• 4:32
  Speaker 1: its primary endpoint in a scleroderma-related lung disease study.
• 4:37
  Speaker 2: But Lee made a nuanced point there. He said the
• 4:39
  Speaker 2: placebo arm barely progressed at all. which makes it statistically
• 4:43
  Speaker 2: hard to show any drug looks better. He was pretty
• 4:46
  Speaker 2: adamant this doesn't kill the broader thesis around targeting fibrosis
• 4:50
  Speaker 2: with this drug in other diseases like Crohn's or hydradenitis operativa,
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  Speaker 2: where a separate study actually did hit its goals.
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  Speaker 1: One more thing worth flagging for investors. Operating expenses jumped
• 5:03
  Speaker 1: to $ 12. 6 billion, largely due to that term's charge. but
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  Speaker 1: also increased R & D investment behind all these late-stage
• 5:10
  Speaker 1: pipeline bets and new launches.
• 5:13
  Speaker 2: And a couple of near-term expectation setters for the back
• 5:17
  Speaker 2: half of the year. Odevere, their COPD drug, will see
• 5:20
  Speaker 2: a sales dip in third quarter due to inventory timing.
• 5:24
  Speaker 2: No real demand issue, just a specialty pharmacy purchasing pattern unwinding.
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  Speaker 2: And Breedion, an older anesthesia drug, is actually declining slower
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  Speaker 2: than expected because generic competition hasn't hit as hard as anticipated.
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  Speaker 2: A rare bit of good news on a mature product.
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  Speaker 1: Also worth noting, capital allocation-wise, they're sticking to about $ 3
• 5:47
  Speaker 1: billion in share buybacks this year and remain committed to
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  Speaker 1: growing the dividend.
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  Speaker 2: So bottom line for investors, the loss per share headline
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  Speaker 2: looks scary, but it's a one-time deal charge, not operational weakness.
• 6:01
  Speaker 2: The core business is growing, guidance moved up, and the
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  Speaker 2: pipeline story that's supposed to carry Merck through the key
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  Speaker 2: to the patent cliff is de-risking faster than management, even
• 6:11
  Speaker 2: expected a few months ago.
• 6:13
  Speaker 1: The things to watch heading into the second half. Lipthendra's
• 6:16
  Speaker 1: commercial ramp, especially getting primary care doctors on board. The
• 6:21
  Speaker 1: Wintervera label update decision expected September 21st, and more Tulasokabart
• 6:26
  Speaker 1: and SAC-TMT data at their October investor event in Madrid.
• 6:30
  Speaker 2: Before we wrap, everything discussed is AI-generated analysis for educational purposes.
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  Speaker 2: Past performance doesn't guarantee future results. Please do your own
• 6:41
  Speaker 2: due diligence.
• 6:43
  Speaker 1: That's a wrap on Merck's second quarter. Lots of moving pieces,
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  Speaker 1: but the underlying trend looks constructive heading into a busy
• 6:50
  Speaker 1: back half of 2026.
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  Speaker 2: Thanks for tuning in to Beta Finch. We'll catch you
• 6:56
  Speaker 2: next time.