Merck’s second quarter performance aligned with Wall Street’s revenue expectations but drew a negative reaction from the market, as sales declined 1.9% year-over-year. Management attributed the drop primarily to weaker demand for GARDASIL in China, which reduced overall growth by 9 percentage points. CEO Robert Davis cited robust performances in oncology and Animal Health, as well as strong launches of new products like WINREVAIR, which has achieved $1 billion in cumulative sales since approval. CFO Caroline Litchfield noted, “excluding China, global growth was 7%, primarily driven by strength in oncology and Animal Health as well as new products.”
Is now the time to buy MRK? Find out in our full research report (it’s free).
Merck (MRK) Q2 CY2025 Highlights:
- Revenue: $15.81 billion vs analyst estimates of $15.75 billion (1.9% year-on-year decline, in line)
- Adjusted EPS: $2.13 vs analyst estimates of $2.03 (5% beat)
- Adjusted EBITDA: $7.48 billion vs analyst estimates of $7.16 billion (47.3% margin, 4.5% beat)
- The company reconfirmed its revenue guidance for the full year of $64.8 billion at the midpoint
- Adjusted EPS guidance for the full year is $8.92 at the midpoint, beating analyst estimates by 0.6%
- Operating Margin: 31.6%, down from 37.5% in the same quarter last year
- Constant Currency Revenue fell 2% year on year (11% in the same quarter last year)
- Market Capitalization: $200.6 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Merck’s Q2 Earnings Call
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Daina Graybosch (Leerink Partners) asked for clarity on the CADENCE trial’s endpoints for WINREVAIR in heart failure, and Dean Li explained that the most important outcome is a substantial impact on pulmonary vascular resistance, but a Phase III trial may still be required for broader approval.
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Vamil Divan (Guggenheim Securities) sought details about the ex-U.S. strategy for WINREVAIR, particularly regarding market size and pricing. CEO Robert Davis replied that international launches are early but progressing, with most reimbursements and growth expected in the second half of the year.
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Chris Schott (JPMorgan) questioned how the $3 billion cost optimization would affect operating expenses and margins, and Davis emphasized that all savings will be reinvested in pipeline and launch activities, aiming for efficiency rather than expense reduction.
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Asad Haider (Goldman Sachs) inquired about GARDASIL’s U.S. demand and the potential impact of ACIP’s recommendations on dosing. CFO Caroline Litchfield noted that future growth does not assume changes in dosing, and management is monitoring CDC and ACIP guidance closely.
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Timothy Anderson (Bank of America) challenged management’s view that the KEYTRUDA loss of exclusivity is a “hill not a cliff.” Davis reiterated that Merck’s diversified pipeline and growth from new launches are expected to offset revenue declines after KEYTRUDA’s patent expiry.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will monitor (1) the pace of WINREVAIR’s adoption in new markets and additional indications, (2) progress on Merck’s multiyear cost optimization and reinvestment program, and (3) regulatory milestones for late-stage pipeline assets such as enlicitide, ENFLONSIA, and upcoming oncology approvals. The trajectory of GARDASIL sales outside China and ongoing business development activity will also be key indicators of Merck’s execution and future growth potential.
Merck currently trades at $80.26, down from $84.08 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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