Exhibit 99.2

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

 

		2017															2016															% Change
		1Q			2Q			3Q			4Q			Full Year			1Q			2Q			3Q			4Q			Full Year			4Q		Full Year
Sales		$	9,434		$	9,930		$	10,325		$	10,433		$	40,122		$	9,312		$	9,844		$	10,536		$	10,115		$	39,807		3	%	1	%
Costs, Expenses and Other
Materials and production		3,015			3,080			3,274			3,406			12,775			3,572			3,578			3,409			3,332			13,891			2	%	-8	%
Marketing and administrative		2,411			2,438			2,401			2,580			9,830			2,318			2,458			2,393			2,593			9,762			-1	%	1	%
Research and development		1,796			1,749			4,383			2,055			9,982			1,659			2,151			1,664			4,650			10,124			-56	%	-1	%
Restructuring costs		151			166			153			306			776			91			134			161			265			651			15	%	19	%
Other (income) expense, net		58			58			(86		)	(19		)	12			48			19			22			631			720			*		-98	%
Income (Loss) Before Taxes		2,003			2,439			200			2,105			6,747			1,624			1,504			2,887			(1,356		)	4,659			*		45	%
Income Tax Provision (Benefit)		447			488			251			2,969			4,155			494			295			699			(769		)	718
Net Income (Loss)		1,556			1,951			(51		)	(864		)	2,592			1,130			1,209			2,188			(587		)	3,941			47	%	-34	%
Less: Net Income Attributable to Noncontrolling Interests		5			5			5			8			24			5			4			4			7			21
Net Income (Loss) Attributable to Merck & Co., Inc.		$	1,551		$	1,946		$	(56	)	$	(872	)	$	2,568		$	1,125		$	1,205		$	2,184		$	(594	)	$	3,920		47	%	-34	%
Earnings (Loss) per Common Share Assuming Dilution (1)		$	0.56		$	0.71		$	(0.02	)	$	(0.32	)	$	0.93		$	0.40		$	0.43		$	0.78		$	(0.22	)	$	1.41		45	%	-34	%
Average Shares Outstanding Assuming Dilution (1)		2,766			2,752			2,727			2,715			2,748			2,795			2,789			2,786			2,755			2,787
Tax Rate		22.3		%	20.0		%	125.5		%	141.0		%	61.6		%	30.4		%	19.6		%	24.2		%	56.7		%	15.4		%

 

* 100% or greater

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

 

(1) Because the company recorded a net loss in the third and fourth quarter of 2017 and fourth quarter of 2016, no potential dilutive common shares were used in the computations of loss per common share assuming dilution as the effects would have been anti-dilutive.

 

 

MERCK & CO., INC.
GAAP TO NON-GAAP RECONCILIATION
FOURTH QUARTER 2016
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2c

 

					Acquisition and
					Divestiture-Related		Restructuring		Certain Other		Adjustment
		GAAP			Costs (1)		Costs (2)		Items (3)		Subtotal		Non-GAAP
Materials and production		$	3,332		756		32				788		$	2,544
Marketing and administrative		2,593			22		4				26		2,567
Research and development		4,650			2,897		9				2,906		1,744
Restructuring costs		265					265				265		—
Other (income) expense, net		631			35				564		599		32
(Loss) Income Before Taxes		(1,356		)	(3,710	)	(310	)	(564	)	(4,584	)	3,228
Income Tax (Benefit) Provision		(769		)	(1,303	)(4)	(60	)(4)	(157	)(4)	(1,520	)	751
Net (Loss) Income		(587		)	(2,407	)	(250	)	(407	)	(3,064	)	2,477
Net (Loss) Income Attributable to Merck & Co., Inc.		(594		)	(2,407	)	(250	)	(407	)	(3,064	)	2,470
(Loss) Earnings per Common Share Assuming Dilution		$	(0.22	)	(0.87	)	(0.09	)	(0.15	)	(1.11	)	$	0.89
Tax Rate		56.7		%									23.3		%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results and permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

(1)             Amounts included in materials and production costs reflect expenses for the amortization of intangible assets recognized as a result of business acquisitions. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses reflect $3.3 billion of in-process research and development (IPR&D) impairment charges, partially offset by a reduction of expenses of $432 million related to a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amount included in other (income) expense, net represents a goodwill impairment charge related to a business within the Healthcare Services segment.

 

(2)             Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company’s formal restructuring programs.

 

(3)             Primarily reflects a $625 million charge to settle worldwide patent litigation related to KEYTRUDA.

 

(4)             Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

 

MERCK & CO., INC.
GAAP TO NON-GAAP RECONCILIATION
FULL YEAR 2016
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2d

 

					Acquisition and
					Divestiture-Related		Restructuring		Certain Other		Adjustment
		GAAP			Costs (1)		Costs (2)		Items (3)		Subtotal		Non-GAAP
Materials and production		$	13,891		4,035		181				4,216		$	9,675
Marketing and administrative		9,762			78		95				173		9,589
Research and development		10,124			3,152		142				3,294		6,830
Restructuring costs		651					651				651		—
Other (income) expense, net		720			47				558		605		115
Income Before Taxes		4,659			(7,312	)	(1,069	)	(558	)	(8,939	)	13,598
Income Tax Provision (Benefit)		718			(1,936	)(4)	(229	)(4)	(156	)(4)	(2,321	)	3,039
Net Income		3,941			(5,376	)	(840	)	(402	)	(6,618	)	10,559
Net Income Attributable to Merck & Co., Inc.		3,920			(5,376	)	(840	)	(402	)	(6,618	)	10,538
Earnings per Common Share Assuming Dilution		$	1.41		(1.93	)	(0.30	)	(0.14	)	(2.37	)	$	3.78
Tax Rate		15.4		%									22.3		%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results and permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

(1)             Amounts included in materials and production costs primarily reflect $3.7 billion of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $347 million of intangible asset impairment charges. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses reflect $3.6 billion of in-process research and development (IPR&D) impairment charges, partially offset by a reduction of expenses of $402 million related to a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amounts included in other (income) expense, net represent goodwill impairment charges related to businesses within the Healthcare Services segment.

 

(2)             Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company’s formal restructuring programs.

 

(3)             Primarily reflects a $625 million charge to settle worldwide patent litigation related to KEYTRUDA.

 

(4)             Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

 

MERCK & CO., INC.
FRANCHISE / KEY PRODUCT SALES
FOURTH QUARTER 2017
(AMOUNTS IN MILLIONS)
Table 3a

 

		Global								U.S.								International
		4Q 2017			4Q 2016			% Change		4Q 2017			4Q 2016			% Change		4Q 2017			4Q 2016			% Change
TOTAL SALES (1)		$	10,433		$	10,115		3		$	4,328		$	4,686		-8		$	6,105		$	5,429		12
PHARMACEUTICAL		9,290			8,904			4		3,967			4,282			-7		5,323			4,622			15
Primary Care and Women’s Health
Cardiovascular
Zetia		323			575			-44		54			335			-84		269			240			12
Vytorin		186			299			-38		11			132			-92		176			167			5
Atozet		54			50			7					1			-97		54			49			9
Adempas		79			49			63										79			49			63
Diabetes
Januvia		938			932			1		508			538			-6		430			394			9
Janumet		586			577			2		223			259			-14		363			318			14
General Medicine & Women’s Health
NuvaRing		188			207			-9		139			155			-10		49			52			-6
Implanon / Nexplanon		183			160			14		129			112			15		54			48			12
Follistim AQ		66			87			-25		19			36			-48		47			51			-9
Hospital and Specialty
Hepatitis
Zepatier		296			229			29		88			180			-51		208			49			*
HIV
Isentress / Isentress HD		308			337			-9		143			175			-19		165			162			2
Hospital Acute Care
Bridion		209			139			50		76			36			114		132			104			28
Noxafil		179			161			11		89			81			10		90			80			13
Invanz		157			152			3		93			90			4		64			63			2
Cancidas		95			152			-37		3			6			-48		92			146			-37
Cubicin		92			119			-22		40			82			-51		52			36			43
Primaxin		74			66			12		3			1			*		71			65			9
Immunology
Simponi		217			186			17										217			186			17
Remicade		186			269			-31										186			269			-31
Oncology
Keytruda		1,297			483			169		787			311			153		510			172			196
Emend		143			144			-1		85			90			-6		58			53			8
Temodar		73			67			10		12			6			101		62			61			1
Diversified Brands
Respiratory
Singulair		182			210			-13		12			11			15		170			199			-15
Nasonex		120			112			8		37			23			60		83			88			-6
Dulera		77			105			-26		70			99			-29		7			6			14
Other
Cozaar / Hyzaar		125			121			3		3			3			18		121			118			3
Arcoxia		91			108			-16										91			108			-16
Fosamax		62			68			-9		(1		)	2			-138		62			65			-4
Vaccines (2)
Gardasil / Gardasil 9		633			542			17		370			409			-9		262			134			96
ProQuad / M-M-R II / Varivax		403			405					316			308			2		88			97			-9
Pneumovax 23		263			238			11		189			180			5		74			57			28
RotaTeq		160			162			-1		104			126			-17		56			36			55
Zostavax		121			221			-45		66			155			-57		55			66			-17
Other Pharmaceutical (3)		1,124			1,172			-4		299			340			-12		826			834			-1
ANIMAL HEALTH		981			884			11		248			263			-6		733			620			18
Other Revenues (4)		162			327			-51		113			141			-19		49			187			-74

 

* 200% or greater

 

(1)             Only select products are shown.

 

(2)             Vaccine sales in 2017 include sales in the European markets that were previously part of the Sanofi Pasteur MSD (SPMSD) joint venture that was terminated on December 31, 2016. Amounts for 2016 reflect supply sales to SPMSD.

 

(3)             Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $123 million and $126 million on a global basis for fourth quarter 2017 and 2016, respectively.

 

(4)             Other Revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

 

 

MERCK & CO., INC.
FRANCHISE / KEY PRODUCT SALES
FULL YEAR 2017
(AMOUNTS IN MILLIONS)
Table 3b

 

		Global								U.S.								International
		Full Year			Full Year					Full Year			Full Year					Full Year			Full Year
		2017			2016			% Change		2017			2016			% Change		2017			2016			% Change
TOTAL SALES (1)		$	40,122		$	39,807		1		$	17,424		$	18,478		-6		$	22,698		$	21,329		6
PHARMACEUTICAL		35,390			35,151			1		15,854			17,073			-7		19,536			18,077			8
Primary Care and Women’s Health
Cardiovascular
Zetia		1,344			2,560			-48		352			1,588			-78		992			972			2
Vytorin		751			1,141			-34		124			473			-74		627			668			-6
Atozet		225			146			54					1			-98		225			146			55
Adempas		300			169			78										300			169			78
Diabetes
Januvia		3,737			3,908			-4		2,153			2,286			-6		1,584			1,622			-2
Janumet		2,158			2,201			-2		863			984			-12		1,296			1,217			6
General Medicine & Women’s Health
NuvaRing		761			777			-2		564			576			-2		197			202			-2
Implanon / Nexplanon		686			606			13		496			420			18		191			186			2
Follistim AQ		298			355			-16		123			157			-22		174			197			-12
Hospital and Specialty
Hepatitis
Zepatier		1,660			555			199		771			488			58		888			67			*
HIV
Isentress / Isentress HD		1,204			1,387			-13		565			721			-22		639			666			-4
Hospital Acute Care
Bridion		704			482			46		239			77			*		465			405			15
Noxafil		636			595			7		309			284			9		327			312			5
Invanz		602			561			7		361			329			10		241			233			4
Cancidas		422			558			-24		20			25			-16		402			533			-25
Cubicin		382			1,087			-65		189			906			-79		193			181			7
Primaxin		280			297			-6		10			4			151		270			293			-8
Immunology
Remicade		837			1,268			-34										837			1,268			-34
Simponi		819			766			7										819			766			7
Oncology
Keytruda		3,809			1,402			172		2,309			792			192		1,500			610			146
Emend		556			549			1		342			356			-4		213			193			11
Temodar		271			283			-4		16			15			2		256			268			-4
Diversified Brands
Respiratory
Singulair		732			915			-20		40			40					692			874			-21
Nasonex		387			537			-28		54			184			-71		333			352			-5
Dulera		287			436			-34		261			412			-37		26			24			9
Other
Cozaar / Hyzaar		484			511			-5		18			16			10		466			494			-6
Arcoxia		363			450			-19										363			450			-19
Fosamax		241			284			-15		6			5			21		235			279			-16
Vaccines (2)
Gardasil / Gardasil 9		2,308			2,173			6		1,565			1,780			-12		743			393			89
ProQuad / M-M-R II / Varivax		1,676			1,640			2		1,374			1,362			1		303			279			9
Pneumovax 23		821			641			28		581			447			30		240			193			24
RotaTeq		686			652			5		481			482					204			169			21
Zostavax		668			685			-2		422			518			-18		246			168			47
Other Pharmaceutical (3)		4,295			4,574			-6		1,246			1,345			-7		3,049			3,228			-6
ANIMAL HEALTH		3,875			3,478			11		1,090			989			10		2,785			2,489			12
Other Revenues (4)		857			1,178			-27		480			416			15		377			763			-51

 

* 200% or greater

 

(1)                Only select products are shown.

 

(2)               Vaccine sales in 2017 include sales in the European markets that were previously part of the Sanofi Pasteur MSD (SPMSD) joint venture that was terminated on December 31, 2016. Amounts for 2016 reflect supply sales to SPMSD.

 

(3)                Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $388 million and $455 million on a global basis for December Full Year 2017 and 2016, respectively.

 

(4)                Other Revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.