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Fourth-Quarter 2025 Sales and Earnings Merck & Co., Inc., Rahway, N.J., USA February 3, 2026 Strategy and Business Update Robert M. Davis Chairman and Chief Executive Officer Financial Results and Outlook Caroline Litchfield Executive Vice President and Chief Financial Officer Research Update Dr. Dean Y. Li Executive Vice President and President, Research Laboratories Question & Answer Session 2 Agenda Agenda Forward-looking statement of Merck & Co., Inc., Rahway, N.J., USA This presentation of Merck & Co., ...

Core Insights - Merck reported quarterly earnings of $2.04 per share, exceeding the Zacks Consensus Estimate of $2.03 per share, and showing an increase from $1.72 per share a year ago, resulting in an earnings surprise of +0.62% [1] - The company achieved revenues of $16.4 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 1.33% and up from $15.62 billion year-over-year [2] - Merck's stock has increased by approximately 7.7% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3] Earnings Outlook - The future performance of Merck's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $16.13 billion, and for the current fiscal year, it is $6.20 on revenues of $67.36 billion [7] Estimate Revisions - Prior to the earnings release, the estimate revisions trend for Merck was unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] Industry Context - The Large Cap Pharmaceuticals industry, to which Merck belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Another company in the same industry, Eli Lilly, is expected to report quarterly earnings of $6.99 per share, reflecting a year-over-year increase of +31.4%, with revenues projected at $17.87 billion, up 32.1% from the previous year [9][10]

Group 1 - PepsiCo's snack division, Frito-Lay, is struggling due to the impact of GLP-1 weight loss drugs, prompting concerns about the company's future performance [1] - CEO Ramon Laguarta may take significant actions to reduce the company's reliance on snacks, indicating potential strategic shifts [1] - Despite these challenges, PepsiCo's stock closed nearly five points higher, suggesting market optimism or a broader positive trend following a strong quarter from Colgate [1] Group 2 - The market is currently seeing declines in traditional safety stocks, with PepsiCo down over 8% for the year, although it has a 4% yield and is under pressure from an activist firm [3] - Comparatively, other companies like Conagra have experienced even steeper declines, with a nearly 33% drop, highlighting the challenging environment for food and beverage stocks [3]

Merck closed the fourth quarter with earnings and revenue ahead of Wall Street estimates, supported by strong demand for its blockbuster cancer drug Keytruda and accelerating sales from newer medicine... ...

Core Viewpoint - Merck's stock has declined due to full-year revenue and profit forecasts falling short of market expectations [1] Group 1: Financial Performance - The company's full-year revenue outlook is below expectations, indicating potential challenges in meeting market demands [1] - Profit forecasts for the year also did not meet analyst predictions, contributing to the stock decline [1] Group 2: Market Reaction - Following the announcement of the disappointing outlook, Merck's stock experienced a notable drop, reflecting investor concerns [1]

While reporting financial results for the fourth quarter on Tuesday, biopharmaceutical company Merck & Co., Inc. (MRK), known as MSD outside the U.S. and Canada, initiated its adjusted earnings and net sales guidance for the full-year 2026.For fiscal 2026, Merck now projects adjusted earnings in a range of $5.00 to $5.15 per share on sales between $65.5 billion and $67.0 billion.On average, analysts polled expect the company to report earnings of $5.63 per share on sales of $67.58 billion for the year. Ana ...

Core Viewpoint - Merck anticipates a decline in earnings for 2026 due to the acquisition of Cidara Therapeutics [1] Group 1 - The acquisition of Cidara Therapeutics is expected to impact Merck's financial performance negatively in 2026 [1]

Sales Performance - Total sales for 2025 reached $65,011 million, a 5% increase compared to $64,168 million in 2024[2] - Total sales for Q4 2025 reached $16,400 million, a 5% increase from $15,624 million in Q4 2024[11] - Global pharmaceutical sales increased to $65,011 million in 2025 from $58,142 million in 2024, representing a growth of 12%[20] - Pharmaceutical sales for 2025 reached $58,142 million, a 1% increase from $57,400 million in 2024[27] - U.S. pharmaceutical sales were $36,510 million in 2025, up from $34,409 million in 2024, an increase of 6%[20] - International pharmaceutical sales decreased to $28,501 million in 2025 from $31,891 million in 2024, a decline of 11%[20] Income and Expenses - Net income attributable to Merck for 2025 was $17,117 million, down 21% from $18,254 million in 2024[2] - Earnings per share assuming dilution for 2025 was $6.74, a decrease of 20% compared to $7.28 in 2024[2] - Income before taxes for 2025 was $19,936 million, a 6% increase from $19,936 million in 2024[2] - Research and development expenses decreased by 12% to $17,938 million in 2025 from $15,789 million in 2024[2] - Selling, general and administrative expenses for 2025 were $10,733 million, a slight decrease of 1% from $10,816 million in 2024[2] - Restructuring costs for 2025 totaled $889 million, with a significant increase from $309 million in 2024[2] Tax and Interest - The tax rate for 2025 was 14.1%, compared to 13.3% in 2024[2] - Interest income for 2025 was reported at $(343) million, an improvement from $(415) million in 2024[30] - Total interest expense for 2025 was $1,357 million, compared to $1,271 million in 2024[30] - Exchange losses increased to $323 million in 2025 from $227 million in 2024[30] - The total net periodic defined benefit plan cost for 2025 was $(615) million, slightly improved from $(633) million in 2024[30] Product Sales Breakdown - Pharmaceutical sales were $14,843 million in Q4 2025, up 6% from $14,042 million in Q4 2024[11] - Keytruda sales increased by 6% to $8,337 million in Q4 2025, compared to $7,836 million in Q4 2024[11] - Alliance revenue from Lynparza grew by 7% to $389 million in Q4 2025, up from $365 million in Q4 2024[11] - Total vaccines sales decreased to $2,364 million in Q4 2025, down 12% from $2,693 million in Q4 2024[15] - Total diabetes sales increased to $579 million in Q4 2025, a 6% rise from $546 million in Q4 2024[17] - Animal health sales increased by 8% to $1,505 million in Q4 2025, up from $1,397 million in Q4 2024[11] - The company reported a 37% increase in Welireg sales, reaching $220 million in Q4 2025, compared to $160 million in Q4 2024[11] - Dificid sales dropped by 68% to $25 million in Q4 2025, down from $79 million in Q4 2024[11] - Keytruda sales rose to $31,641 million in 2025, up from $29,482 million in 2024, marking an increase of 7%[20] - Total vaccines sales decreased to $10,711 million in 2025 from $13,448 million in 2024, reflecting a decline of 20%[23] - Total diabetes sales increased to $2,862 million in 2025, compared to $2,599 million in 2024, showing a growth of 10%[24] - Alliance revenue for Koselugo reached $436 million in 2025, up from $170 million in 2024, indicating a significant increase of 156%[24] - Other revenues from third-party manufacturing and miscellaneous corporate activities were $138 million in 2025, compared to $106 million in 2024, representing a growth of 30%[25] - Sales of Gardasil/Gardasil 9 dropped significantly to $5,233 million in 2025 from $8,583 million in 2024, a decrease of 39%[20] - Winrevair sales surged to $1,443 million in 2025 from $419 million in 2024, reflecting a substantial increase of over 200%[20] - Sales in Japan decreased by 18% year-over-year, with 2025 sales at $2,632 million compared to $3,199 million in 2024[27] - Sales in China dropped significantly by 66%, totaling $1,816 million in 2025 compared to $5,394 million in 2024[27] - Gardasil/Gardasil 9 sales in China were $193 million in 2025, a significant decline from $1,253 million in 2024[28]

Core Viewpoint - Merck reported an increase in revenue for its fourth quarter but anticipates a slowdown in earnings growth due to increased acquisition activities [1] Group 1 - Merck's revenue for the fourth quarter showed a positive trend, indicating strong sales performance [1] - The company is actively pursuing acquisitions, which is expected to impact its earnings growth negatively in the near term [1] - The strategic focus on acquisitions suggests a shift in the company's growth strategy, potentially leading to long-term benefits despite short-term earnings pressure [1]