Merck Cuts Full-Year Profit Forecast as Acquisition Costs Weigh on Bottom Line

By Kelly Cloonan

Merck & Co. slashed its profit outlook for the year due to charges tied to its acquisition of cancer biotech company Terns Pharmaceuticals.

However, Merck also bumped up its full-year sales outlook as new product launches bolstered its topline in the second quarter, helping sales come in above Wall Street's expectations.

For the full year, the company now projects adjusted earnings per share of $2.66 to $2.76, down from $5.04 to $5.16 previously.

The updated guidance factors in charges related to Merck's acquisition of Terns that were previously excluded from its outlook, including a one-time charge of $2.31 a share. The company also expects costs of about 12 cents a share from financing the deal, and advancing Terns's drug for the blood cancer chronic myeloid leukemia.

The deal, which closed in May, is part of Merck's efforts to add to its portfolio as it prepares for Keytruda - its top-selling drug - to lose patent protection, allowing competitors to introduce lower-cost versions.

Merck now expects sales of $66.3 billion to $67.3 billion for the year, up from its prior outlook of $65.8 billion to $67 billion.

Analysts polled by FactSet expect sales of $66.86 billion and adjusted per-share earnings of $2.79 for the year.

The updated guidance comes as the Rahway, N.J., company recorded higher sales in its latest quarter, helped by growing contributions from new product launches.

Sales rose 5%, to $16.61 billion, topping analyst estimates of $16.37 billion.

Sales of Keytruda gained 5%, to $8.4 billion. That includes $463 million from a new form of the drug called Qlex, which is administered by injection rather than intravenously. The FDA approved Qlex last year.

Other new product launches also contributed to the growth, including pulmonary arterial hypertension treatment Winrevair, which brought in $588 million in sales, up 75% from a year ago.

Merck's second-quarter loss came in at $1.34 billion, or 54 cents a share, compared with a profit of $4.43 billion, or $1.76 a share, a year earlier.

On an adjusted basis, loss per share came in at 13 cents. Analysts polled by FactSet expected an adjusted loss per share of 27 cents.

The loss was driven by a one-time charge of $2.31 a share for the acquisition of Terns, Merck said.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

August 04, 2026 06:46 ET (10:46 GMT)