Merck reported first-quarter financial results on Thursday, with revenue and earnings exceeding expectations, while narrowing its full-year 2026 performance guidance. Strong demand for new products, including Winrevair and the subcutaneous formulation of the blockbuster cancer drug Keytruda, contributed to excellent sales performance for the quarter. Global sales increased nearly 5% to $16.3 billion, surpassing the average analyst estimate of $15.8 billion. After accounting for expenses related to the $9.2 billion acquisition of Cidara Therapeutics Inc., the adjusted loss per share was $1.28, which was better than analysts' average forecast. At the time of writing, the stock was down approximately 1%. The company, headquartered in Rahway, New Jersey, adjusted its full-year revenue guidance range to $65.8 billion to $67.0 billion, narrowing the lower end from the previous $65.5 billion. Adjusted earnings per share are now projected to be between $5.04 and $5.16, higher than the prior forecast of $5.00 to $5.15. Analysts had expected normalized earnings per share of $5.11 and revenue of $66.49 billion. Merck, based in Rahway, New Jersey, will see several of its established blockbuster drugs face lower-priced competition in the coming years, with Keytruda being the most closely watched. The company has been actively seeking new growth drivers to offset the impending revenue gap. One of these new drugs is Winrevair, used to treat pulmonary arterial hypertension. Merck stated that the drug continues to grow in the U.S. and in some overseas markets, including Japan and Europe. Sales of Keytruda and Keytruda Qlex increased 12% to $8.0 billion during the quarter. Keytruda Qlex is a key part of the drugmaker's strategy to continue extracting value from Keytruda after its patents begin expiring in 2028; this formulation uses subcutaneous injection, allowing for faster and more convenient administration. Sales of the hypertension drug Winrevair, co-marketed by Merck and Bristol Myers Squibb, also grew 88% to $525 million in the quarter. However, some of Merck's other new drugs performed below expectations. Sales of the lung disease treatment Ohtuvayre were $131 million, and sales of the pneumonia vaccine Capvaxive were $142 million, both falling short of market expectations. Sales of Merck's human papillomavirus (HPV) vaccine series, Gardasil/Gardasil 9, continued to decline, dropping 19% year-over-year to $1.07 billion in the first quarter, impacted by weak demand in China and lower sales in Japan. Research and development expenses increased to $12.6 billion from $3.6 billion in the same period last year, primarily due to the $9 billion cost of the Cidara acquisition, increased clinical development spending, and unfavorable impacts from foreign exchange and restructuring costs. CEO Robert Davis stated, "In the first quarter, we continued to strengthen our pipeline through science-led business development, including the planned acquisition of Terns. We also achieved several important milestones, such as the FDA approval of IDVYNSO—marking a new chapter in our long-standing commitment to serving people living with HIV. I am pleased with our progress and look forward to the future as we enter an intensive period of Phase 3 data readouts and deliver on the promise of our pipeline for patients." Commenting on the results, analyst Stephen Ayers said, "Merck's first-quarter report shows some early positive signs of its transformation ahead of the Keytruda patent cliff. The 88% year-over-year growth for Winrevair validates its diversification efforts. However, the acquisition-driven GAAP loss of $1.72 per share also tells us there is still a long way to go."