Merck & Co., Inc. (MRK) reported strong third-quarter 2026 results, driven by robust oncology demand and contributions from newer medicines. The company's non-GAAP earnings of $2.49 per share surpassed Zacks Consensus Estimate of $2.12 by 17.5%, although earnings declined 3.5% year over year. Revenues increased 4.7% year over year to $18.09 billion, exceeding estimates by approximately 5%. The company's GAAP earnings declined 12% year over year to $2.04 per share, reflecting higher production costs and increased research and development expenses.
Merck raised its full-year sales and earnings outlook, with Chief Financial Officer Caroline Litchfield increasing the lower end of 2026 revenue guidance to $66.8 billion from $66.3 billion. Non-GAAP earnings guidance was also increased to $2.77-$2.82 per share from $2.66-$2.76. The company highlighted progress in developing a diversified portfolio to support growth beyond KEYTRUDA's loss of exclusivity, although executives cautioned about potential headwinds from generic competition and rising research expenditures in 2027.
The KEYTRUDA franchise remained Merck's primary revenue driver, with combined sales of $8.60 billion, up 6%. KEYTRUDA QLEX generated $830 million in third-quarter sales, primarily in the United States. Merck emphasized positive Phase III results from its TroFuse-005 trial evaluating sacituzumab tirumotecan, or sac-TMT, in advanced or recurrent endometrial cancer, which reduced the risk of death by 32% compared with chemotherapy. The company also reported encouraging results from its collaboration with Moderna on intismeran autogene, an individualized mRNA cancer vaccine.
Looking ahead, Merck expects modest revenue growth in 2027, with new product launches and Animal Health contributions partly offset by more than $2 billion in headwinds from generic competition and patent expirations. Despite these pressures, management expressed confidence in the company's long-term growth strategy, highlighting opportunities to generate more than $70 billion in annual revenues from its new and emerging portfolio by the mid-2030s.