MRK · Q4 2025 Earnings
CautiousMerck & Co.
Reported February 3, 2026
30-second summary
Q4 revenue rose 5% YoY to $16.4B with US Pharma +12% and Keytruda $8.34B (+6%) offsetting a 33% Gardasil collapse and a 58% China Pharma decline. FY2025 closed at $65.0B revenue (+1.3%) and $7.65 non-GAAP EPS — revenue at the top of the refreshed $64.5–65.0B October guide. Management issued FY2026 non-GAAP guidance of $65.5–67B revenue (+1–3%, ~1pt FX tailwind) and $5.00–5.15 EPS (midpoint $5.08), with the headline EPS depressed by a ~$3.65/share one-time Sedera acquisition charge plus ~$0.30 of ongoing MK1406/financing costs — ex-those items, midpoint EPS is $9.03. Reported growth is compressed by a ~$2.5B LOE headwind (Januvia family, Bridion, Dificid, IRA, Koselugo), with management framing underlying ex-LOE growth at 4–7%/5–8% and reiterating a ~$70B mid-2030s commercial opportunity.
Headline numbers
EPS
Q4 FY2025
$1.72
Revenue
Q4 FY2025
$16.40B
+5.0% YoY
Key financials
Q4 FY2025| Metric | Q4 FY2025 | YoY | Q3 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $16.40B | +5.0% | $17.28B | -5.1% |
| EPS | $1.72 | — | $1.57 | +9.6% |
Guidance
No comparable guidance provided; unable to assess beat/miss or guidance changes.
No comparable guidance provided; unable to assess beat/miss or guidance changes.
Segment KPIs
Q4 FY2025| Segment | Q4 FY2025 | YoY |
|---|---|---|
| Pharmaceutical | $14.843B | +5.7% |
| Animal Health | $1.505B | +7.8% |
| Keytruda (Oncology) | $8.337B | +6.4% |
| Gardasil/Gardasil 9 (Vaccines) | $1.031B | -33.5% |
| Winrevair (Cardiometabolic & Respiratory) | $0.467B | +133.5% |
| Bridion (Hospital Acute Care) | $0.499B | +11.1% |
| Keytruda Q4 Revenue | $8.337B | — |
| Oncology Revenue Growth (Q4) | 6% | — |
| Vaccines Revenue (Q4) | $2.364B | — |
| Animal Health Revenue Growth (Q4) | 8% | — |
Other KPIs
Q4 FY2025| Segment | Q4 FY2025 | YoY |
|---|---|---|
| United States | $9.139B | +11.6% |
| International | $7.261B | -2.4% |
| U.S. Pharmaceutical Growth (Q4) | 12% | — |
| International Pharmaceutical Decline (Q4) | -2% | — |
| China Pharmaceutical Decline (Q4) | -58% | — |
| Tax Rate (Q4 GAAP) | 13.4% | — |
Management tone
Narrative arc: Q2 "China pause, hill not cliff" → Q3 "BD continuing, MFN active, opex ramp coming" → Q4 "$70B opportunity, portfolio de-risked by 2027."
The most significant shift across the three quarters is on the LOE bridge framing. In Q2, Rob Davis was anchoring on "20+ growth drivers" and "more of a hill than a cliff." In Q3, the framing tightened around specific assets (Verona/Ohtuvayre, Winrevair ramp, earlier-stage Keytruda mix). On the Q4 call, in response to TD Cowen's Steve Scala, Davis escalated to a hard number: "over $70 billion of potential commercial opportunity by the mid-2030s" — $20B more than a year ago and explicitly more than double the ~$35B Keytruda consensus 2028 peak. Davis also added that "substantially all" of the $70B will be clinically de-risked by end of 2027, and that animal health is expected to "more than double" by the mid-2030s. The shift from qualitative reassurance to a quantified ceiling — paired with a real FY2026 EPS range — signals management has decided the bridge story now needs both a long-term anchor and a near-term number.
The MFN pricing framework has gone silent. In Q3, Davis was "very optimistic" about a "constructive outcome." On the Q4 call, MFN does not appear in prepared remarks or Q&A — neither as a flagged risk nor as a resolved framework. Either the negotiation remains active with no disclosure, or Merck has deprioritized it as a near-term variable. Given how central management made it in October, the silence is itself a signal.
The pipeline narrative has shifted from breadth to specificity. Q2 and Q3 emphasized "20+ launches" and "80+ Phase III studies." Q4 walked through individual assets with quantified market sizes — most prominently MK1406 (>$5B revenue potential per Davis's prepared remarks) — and a concrete 2026/2027 readout calendar (Islatravir PDUFA April 28, ISLEND 1/2 weekly-oral data, MK3000 Brunello in DME, Tulisokibart ATLAS-UC, SAC-TMT Phase 3 in 2027). The "$70 billion" framing requires identifiable assets to back it, and management spent Q4 doing exactly that work.
Q&A highlights
Mohit Benzal · Wells Fargo
Seeking clarification on MK1406 (CD388) trial strategy, event rates, and interim analysis timing given strong flu season.
Dean Lee confirmed northern hemisphere enrollment is complete and parallel southern hemisphere recruitment is underway. Trial is event-driven; timing of interim analysis communication has not been determined. Emphasized need for robust data across subpopulations for future labeling.
Evan Sigerman · BMO Capital Markets
Contextualization of dual-regimen HIV approach versus triple-drug standard of care; unmet needs for two-drug vs three-drug regimens.
Dean Lee highlighted Islatravir as next-generation nucleoside analog with translocation inhibition mechanism. Emphasized patient preference for treatment options, metabolic benefits of sparing integrase, and unique value of weekly two-drug and monthly PrEP options not available in market.
Steve Scala · TD Cowen
Big picture on Merck's sustainable growth prospects; whether minimal growth in 2025 and projected 2026 growth is the expectation going forward despite challenges.
Rob Davis reframed 2025 performance as context-dependent and emphasized long-term growth trajectory. Adjusted for LOE headwinds ($2.5B impact), underlying growth is 4-7% or 5-8%. Highlighted $70B pipeline opportunity (double Keytruda peak consensus), animal health expected to more than double, and de-risking of portfolio by end of 2027.
Jeff Beecham · Citi
Real-world trends on Winrevere: duration of therapy, safety/tolerability vs Phase 3; potential in related pulmonology indications beyond CADENCE.
Dean Lee described Winrevere as reshaping PAH standard of care through differentiated mechanism (genetics-based vs. classic vasodilators). Caroline Litchfield provided real-world data: 110K+ prescriptions, 9,100+ patients started, high compliance, discontinuation rates lower than comparators, safety consistent with label. Company exploring connective tissue disorder and pulmonary fibrosis applications.
Chris Shaw · JPMorgan
Confidence drivers for MK3000 as key de-risking asset within $70B opportunity; market size potential assuming positive data.
Dean Lee emphasized first-in-class mechanism (Wnt agonist vs VEGF focus). Caroline Litchfield quantified market: 1.6M DME patients and 1.5M wet AMD patients in US (~$15B total market); 30-40% suboptimal responders to anti-VEGF. Referenced MK8748 as complementary bispecific asset; combined opportunity >$5B.
Answers to last quarter's watch list
What to watch into next quarter
Ex-Sedera EPS bridge credibility. The $9.03 ex-charge midpoint is the figure the sell-side will model. Watch how Q1 commentary characterizes Sedera amortization, ongoing MK1406 spend, and whether the $0.30/share MK1406-related cost holds or expands.
Islatravir PDUFA April 28. Weekly oral combination with Gilead is a near-term, defined-date catalyst. Watch approval, label scope (treatment-naive vs experienced), and any commentary on launch quarter modeling. ISLEND 1/2 top-line for weekly oral two-drug regimen also expected.
MK1406 interim readout timing. Management declined to commit to an interim communication plan. Watch whether southern hemisphere enrollment progress brings forward a disclosed analysis date; this is the single largest near-term pipeline catalyst in the $70B framing.
QLEX J-code implementation (early April). Watch the post-J-code conversion curve; the 30–40% adoption target by 2028 implicitly demands visible step-ups starting in Q2.
Winrevair sequential growth. $467M Q4 vs $360M Q3 implies ~$107M sequential add. Watch whether the ramp sustains $400M+ quarterly adds through 2026 — or whether the launch curve flattens, which would force the bridge narrative to lean harder on Ohtuvayre and Capvaxive.
MFN pricing framework. Silence on Q4 after explicit management optimism in Q3 is notable. Watch for a binding announcement or, alternatively, confirmation that the framework has been deferred or restructured.
Cadence/Inlicitide ACC March presentations. Two detailed readouts at one congress; Phase 3 endpoint design for Cadence in CPC-PH due to HFpEF is in active FDA discussion.
Sources
- Merck Q4 2025 earnings press release (SEC EDGAR Ex. 99.2): https://www.sec.gov/Archives/edgar/data/310158/000110465926009495/tm264564d1_ex99-2.htm
- Merck Q4 2025 earnings call prepared remarks and Q&A (Rob Davis, Caroline Litchfield, Dean Lee).
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