Merck posts quarterly loss on Cidara charge, raises revenue outlook

Merck’s first quarter laid bare the tradeoff now defining the drugmaker: strong cash generation from its biggest medicines on one side, and a costly push to buy new growth on the other. The company reported a net loss of $4.24 billion, or $1.72 a share, after a charge tied to its Cidara Therapeutics acquisition, even as revenue rose 5% to $16.286 billion and came in ahead of Wall Street expectations.

The loss included a $3.62-per-share charge related to Cidara, which Merck completed buying on Jan. 7 at $221.50 a share. On a non-GAAP basis, Merck posted a loss of $1.28 a share, better than analysts had expected. The quarter also marked a sharp reversal from a year earlier, when Merck reported net income of $5.08 billion, or $2.01 a share.

Investors are watching the company’s acquisition strategy closely because Merck is trying to blunt the pressure from patent expiration and generic competition. Januvia sales fell 28% in the quarter, and Gardasil declined 19%, underscoring the strain on older franchises. Merck has also warned that generic competition for Januvia and Janumet is coming later this year, while Keytruda, its blockbuster cancer drug, faces its own patent cliff in 2028.

For now, Keytruda remains the company’s anchor. Sales of the drug rose 12% to $8.0 billion, including $128 million from the newer injectable Keytruda Qlex. Merck said growth reflected earlier-stage cancer use and strong demand in metastatic cancers. Winrevair, the lung disease treatment, delivered one of the quarter’s biggest surprises, jumping 88% to $525 million. Animal health sales rose 13% to $1.8 billion, and the pharmaceutical division generated $14.35 billion in revenue, up 5%.

Merck responded to the operating momentum by lifting and narrowing its 2026 outlook. It now expects non-GAAP earnings of $5.04 to $5.16 a share, up from a prior range of $5.00 to $5.15, and sales of $65.8 billion to $67.0 billion, compared with an earlier forecast of $65.5 billion to $67.0 billion. The guidance does not include the impact of Merck’s proposed acquisition of Terns Pharmaceuticals, which the company says is expected to close in May and would bring a one-time charge of about $5.8 billion, or about $2.35 a share.

Merck began the Terns tender offer on April 7 at $53.00 a share, with the offer set to expire on May 4 unless extended. The company said the Terns deal, like Cidara, fits a broader effort to diversify beyond aging blockbusters. In the quarter, Merck also won FDA approval of IDVYNSO for certain adults with virologically suppressed HIV-1 and presented positive phase 3 CORALreef AddOn data at ACC.26. Chief executive Robert M. Davis has said Merck is trying to transform the portfolio with more diversified growth drivers across therapeutic areas. For investors, the question is whether the Cidara charge is a one-time strategic bet or the price of defending a business model under mounting patent pressure.