Merck Q2 revenue hits $16.6B as GARDASIL share shrinks

Merck (MRK) reported fiscal Q2 2026 total revenue of $16.6 billion, a 5.1% increase from a year earlier, while the company’s management shifted its strategic emphasis from the GARDASIL vaccine franchise to newer medicines. This pivot occurred as the stock traded at 5.5 times sales, a premium to the S&P 500 multiple, prompting a reevaluation of the company’s core growth drivers.

During the fiscal Q2 2026 earnings call, executives highlighted the FDA approval of LIPFENDRA, described as the first and only oral PCSK9 inhibitor for reducing LDL cholesterol. They also presented positive top-line results from a large Phase III program for sac-TMT, framing the company as more diversified. This stands in contrast to the fiscal Q4 2024 call in February 2025, where executives noted that conditions for GARDASIL in China remained challenging. By the August 4, 2026 call, management emphasized these newer assets, with GARDASIL mentioned only once.

GARDASIL remains a significant revenue contributor, posting $1.2 billion in sales for fiscal Q2 2026, which accounted for about 7% of total revenue. Excluding currency effects, these sales rose 3% from a year earlier, driven by growth in international markets. However, the vaccine’s trajectory has been volatile. In fiscal Q2 2025, GARDASIL sales were $1.1 billion, down 55% from the prior year during a quarter when total revenue fell 2%. In fiscal Q1 2026, sales declined less sharply than in that earlier period.

The newer portfolio is expanding rapidly. WINREVAIR, a treatment for pulmonary arterial hypertension, recorded sales of $525 million in fiscal Q2 2026, an increase of 87.5% from $280 million in fiscal Q1 2025. Management attributed this growth to strong demand. CAPVAXIVE, the pneumococcal vaccine, generated $142 million in sales for the period. That figure represented a 31% year-over-year increase after adjusting for currency effects. Despite this acceleration, both newer drugs still generate less revenue than GARDASIL.

Profitability presents a different picture than top-line growth. Over the twelve months to June 2026, Merck posted an operating margin of 10.5%, compared with 31.2% a year earlier. CNBC reported that in August, Merck raised its revenue outlook due to new product growth but cut its profit guidance because of a charge tied to the acquisition of Terns Pharmaceuticals. The next earnings report is expected on or around October 29, 2026.