Merck & Co Inc

Q2 performance: steady growth + strong new launches - Total revenues: $16.6B, +5% YoY (or +4% excluding FX), driven by Oncology and Animal Health, plus increasing contribution from recent product launches. - KEYTRUDA family: $8.4B (+4%); growth attributed to adoption in earlier-stage cancers, continued demand in metastatic disease, and increasing combination use (notably KEYTRUDA + Padcev in urothelial). - Key offsets/other: GARDASIL $1.2B (+3%) (international growth, U.S. roughly flat due to CDC purchase timing/price), CAPVAXIVE $184M (+40%), WINREVAIR $588M (+75%), OHTUVAYRE $204M. - Animal Health sales: +5% (livestock +6%, companion animals +5%).

Financials: margins pressured by reserves; big acquisition charge; non-GAAP guidance raised - Gross margin: 81.1% (-1.1pp), mainly due to higher inventory reserves. - Operating expense up to $12.6B; included $5.7B acquisition-related charge for Terns Pharmaceuticals (vs $200M business development charge a year ago). - Reported EPS: loss of $0.13 including a $2.31/share onetime acquisition charge; guidance and commentary were framed largely on a non-GAAP basis. - 2026 guidance raised and narrowed: - Revenue: $66.3B–$67.3B (+2% to +4%, includes ~+1pp FX impact). - Gross margin assumed ~81% (again reflecting reserve pressure). - Operating expenses: $42.0B–$42.7B (includes ~$5.8B upfront Terns charge + investment to advance MK-4208). - EPS: $2.66–$2.76 (midpoint $2.71), including ~+$0.15 from FX, plus ~$2.31/share acquisition-related upfront and ~$0.12/share ongoing MK-4208 costs/financing. - Tax rate: expected 35%–36% (reflects nontax deductible one-time Terns effect). - Capital return/financing: company still on pace for ~$3B share repurchases in 2026 and reiterated dividend commitment (dividend growth “over time”).

Outlook: confident for H2; key commercial “lumpiness” items - Company confidence for remainder of 2026 supported by strong demand and launch pipeline. - Watch-outs for H2: - OHTUVAYRE: Q3 impacted by unwind of specialty pharmacy purchases in Q2; company expects accelerated growth in 2027 after channel normalization. - KEYTRUDA: U.S. YoY growth expected to moderate as peak penetration increases across indications. - BRIDION: U.S. decline expected to be slower than previously expected due to less generic pressure. - Other revenue: H2 expected significantly higher than H2’25 due to revenue hedging and a Q4 milestone from an out-license agreement.