Exhibit 99.2

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

 

		2019									2018																		% Change
		1Q			2Q			June YTD			1Q			2Q			June YTD			3Q			4Q			Full Year			2Q		June YTD
Sales		$	10,816		$	11,760		$	22,575		$	10,037		$	10,465		$	20,502		$	10,794		$	10,998		$	42,294		12	%	10	%
Costs, Expenses and Other
Cost of sales		3,052			3,401			6,453			3,184			3,417			6,601			3,619			3,289			13,509			—		-2	%
Selling, general and administrative		2,425			2,712			5,138			2,508			2,508			5,016			2,443			2,643			10,102			8	%	2	%
Research and development		1,931			2,189			4,119			3,196			2,274			5,470			2,068			2,214			9,752			-4	%	-25	%
Restructuring costs		153			59			212			95			228			323			171			138			632			-74	%	-34	%
Other (income) expense, net		188			140			327			(291		)	(48		)	(340		)	(172		)	110			(402		)	*		*
Income Before Taxes		3,067			3,259			6,326			1,345			2,086			3,432			2,665			2,604			8,701			56	%	84	%
Taxes on Income		205			615			820			604			370			975			707			826			2,508
Net Income		2,862			2,644			5,506			741			1,716			2,457			1,958			1,778			6,193			54	%	*
Less: Net (Loss) Income Attributable to Noncontrolling Interests		(53		)	(26		)	(79		)	5			9			14			8			(49		)	(27		)
Net Income Attributable to Merck & Co., Inc.		$	2,915		$	2,670		$	5,585		$	736		$	1,707		$	2,443		$	1,950		$	1,827		$	6,220		56	%	*
Earnings per Common Share Assuming Dilution		$	1.12		$	1.03		$	2.15		$	0.27		$	0.63		$	0.90		$	0.73		$	0.69		$	2.32		63	%	*
Average Shares Outstanding Assuming Dilution		2,603			2,588			2,596			2,710			2,696			2,702			2,678			2,634			2,679
Tax Rate		6.7		%	18.9		%	13.0		%	44.9		%	17.8		%	28.4		%	26.5		%	31.7		%	28.8		%

 

* 100% or greater

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

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

SECOND QUARTER 2018

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

 

		GAAP			Acquisition and Divestiture-Related Costs (1)		Restructuring Costs (2)		Certain Other Items (3)		Adjustment Subtotal		Non-GAAP
Cost of sales		$	3,417		733		3				736		$	2,681
Selling, general and administrative		2,508			16		1				17		2,491
Research and development		2,274			1		3		344		348		1,926
Restructuring costs		228					228				228		—
Other (income) expense, net		(48		)	105				(32	)	73		(121		)
Income Before Taxes		2,086			(855	)	(235	)	(312	)	(1,402	)	3,488
Income Tax Provision (Benefit)		370			(113	)(4)	(28	)(4)	(114	)(4)	(255	)	625
Net Income		1,716			(742	)	(207	)	(198	)	(1,147	)	2,863
Net Income Attributable to Merck & Co., Inc.		1,707			(742	)	(207	)	(198	)	(1,147	)	2,854
Earnings per Common Share Assuming Dilution		$	0.63		(0.28	)	(0.08	)	(0.07	)	(0.43	)	$	1.06
Tax Rate		17.8		%									17.9		%

 

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 as it 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) Amount included in cost of sales reflects expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amount included in selling, general and administrative expenses reflects integration, transaction and certain other costs related to business acquisitions and divestitures.  Amount included in research and development expenses reflects an increase in the estimated fair value measurement of liabilities for contingent consideration.  Amount included in other (income) expense, net reflects an increase in the estimated fair value measurement of liabilities for contingent consideration, partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.

 

(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) Amount included in research and development expenses represents a charge for the acquisition of Viralytics Limited.

 

(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

SIX MONTHS ENDED JUNE 30, 2018

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

 

		GAAP			Acquisition and Divestiture-Related Costs (1)		Restructuring Costs (2)		Certain Other Items (3)		Adjustment Subtotal		Non-GAAP
Cost of sales		$	6,601		1,467		9				1,476		$	5,125
Selling, general and administrative		5,016			24		2				26		4,990
Research and development		5,470			2		5		1,744		1,751		3,719
Restructuring costs		323					323				323		—
Other (income) expense, net		(340		)	95				(54	)	41		(381		)
Income Before Taxes		3,432			(1,588	)	(339	)	(1,690	)	(3,617	)	7,049
Income Tax Provision (Benefit)		975			(204	)(4)	(49	)(4)	(109	)(4)	(362	)	1,337
Net Income		2,457			(1,384	)	(290	)	(1,581	)	(3,255	)	5,712
Net Income Attributable to Merck & Co., Inc.		2,443			(1,384	)	(290	)	(1,581	)	(3,255	)	5,698
Earnings per Common Share Assuming Dilution		$	0.90		(0.51	)	(0.11	)	(0.59	)	(1.21	)	$	2.11
Tax Rate		28.4		%									19.0		%

 

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 as it 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) Amount included in cost of sales reflects expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amount included in selling, general and administrative expenses reflects integration, transaction and certain other costs related to business acquisitions and divestitures.  Amount included in research and development expenses reflects an increase in the estimated fair value measurement of liabilities for contingent consideration.  Amount included in other (income) expense, net reflects an increase in the estimated fair value measurement of liabilities for contingent consideration, partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.

 

(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) Amount included in research and development expenses represents a $1.4 billion charge related to the formation of a collaboration with Eisai Co., Ltd., as well as a $344 million charge for the acquisition of Viralytics Limited.

 

(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

SECOND QUARTER 2019

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

 

		Global								U.S.								International
		2Q 2019			2Q 2018			% Change		2Q 2019			2Q 2018			% Change		2Q 2019			2Q 2018			% Change
TOTAL SALES (1)		$	11,760		$	10,465		12		$	5,144		$	4,262		21		$	6,616		$	6,203		7
PHARMACEUTICAL		10,460			9,282			13		4,758			3,841			24		5,702			5,442			5
Oncology
Keytruda		2,634			1,667			58		1,498			959			56		1,136			707			61
Emend		121			148			-18		67			89			-25		54			59			-8
Alliance Revenue - Lynparza (2)		111			44			154		66			31			113		45			13			*
Alliance Revenue - Lenvima (2)		97			35			177		54			19			182		43			16			172
Vaccines (3)
Gardasil / Gardasil 9		886			608			46		456			302			51		430			306			40
ProQuad / M-M-R II / Varivax		675			426			58		500			356			40		174			70			149
RotaTeq		172			156			10		104			99			4		68			57			20
Pneumovax 23		170			193			-12		123			122			1		47			71			-33
Vaqta		58			65			-10		38			42			-9		20			23			-13
Hospital Acute Care
Bridion		278			240			16		129			95			36		149			145			3
Noxafil		193			188			3		100			87			15		93			100			-8
Invanz		78			149			-48		18			87			-80		60			63			-3
Primaxin		71			68			5		0			0			*		70			68			4
Cancidas		67			87			-22		3			4			-24		64			83			-22
Cubicin		67			94			-29		22			48			-54		45			46			-2
Immunology
Simponi		214			233			-8										214			233			-8
Remicade		98			157			-37										98			157			-37
Neuroscience
Belsomra		76			71			8		21			29			-26		55			42			31
Virology
Isentress / Isentress HD		247			305			-19		94			132			-28		153			174			-12
Zepatier		108			113			-5		39			-10			*		68			123			-44
Cardiovascular
Zetia		156			226			-31		6			8			-27		150			218			-31
Vytorin		76			155			-51		3			3			28		73			152			-52
Atozet		92			101			-9										92			101			-9
Adempas		104			75			39										104			75			39
Diabetes (4)
Januvia		908			949			-4		471			503			-6		437			446			-2
Janumet		533			585			-9		166			209			-20		366			377			-3
Women’s Health
NuvaRing		240			236			2		206			187			10		34			49			-30
Implanon / Nexplanon		183			174			6		136			114			20		48			60			-21
Diversified Brands
Singulair		160			185			-13		8			5			58		153			180			-15
Cozaar / Hyzaar		109			125			-13		6			7			-14		103			118			-13
Arcoxia		75			84			-11										75			84			-11
Nasonex		72			81			-11		-1						*		73			81			-9
Follistim AQ		63			70			-10		24			27			-13		39			43			-8
Other Pharmaceutical (5)		1,268			1,189			7		401			287			40		869			902			-4
ANIMAL HEALTH		1,124			1,090			3		335			311			8		789			779			1
Livestock		671			633			6		145			107			35		526			526
Companion Animals		453			457			-1		190			204			-7		263			253			4
Other Revenues (6)		176			93			88		51			110			-53		125			-18			*

 

* 200% or greater

 

(1) Only select products are shown.

 

(2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

(3) Total Vaccines sales were $2,037 million and $1,533 million on a global basis for second quarter 2019 and 2018, respectively.

 

(4) Total Diabetes sales were $1,480 million and $1,571 million on a global basis for second quarter 2019 and 2018, respectively.

 

(5) Includes Pharmaceutical products not individually shown above.

 

(6) Other Revenues are comprised primarily of Healthcare Services segment revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

JUNE YEAR-TO-DATE 2019

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

 

		Global								U.S.								International
		June YTD 2019			June YTD 2018			% Change		June YTD 2019			June YTD 2018			% Change		June YTD 2019			June YTD 2018			% Change
TOTAL SALES (1)		$	22,575		$	20,502		10		$	9,659		$	8,395		15		$	12,917		$	12,107		7
PHARMACEUTICAL		20,123			18,201			11		8,933			7,557			18		11,190			10,644			5
Oncology
Keytruda		4,903			3,131			57		2,782			1,797			55		2,121			1,333			59
Emend		237			273			-13		130			168			-23		107			105			2
Alliance Revenue - Lynparza (2)		190			76			149		116			55			112		74			22			*
Alliance Revenue - Lenvima (2)		171			35			*		104			19			*		67			16			*
Vaccines (3)
Gardasil / Gardasil 9		1,724			1,269			36		818			682			20		906			586			55
ProQuad / M-M-R II / Varivax		1,171			818			43		843			668			26		328			150			118
RotaTeq		383			349			10		258			250			3		125			99			26
Pneumovax 23		355			372			-4		248			234			6		107			137			-22
Vaqta		105			101			4		67			60			12		39			42			-7
Hospital Acute Care
Bridion		533			444			20		248			175			41		285			269			6
Noxafil		383			363			5		191			168			14		192			195			-2
Cubicin		155			192			-19		64			95			-32		91			97			-7
Invanz		150			300			-50		31			177			-82		118			123			-3
Primaxin		130			140			-7		1			5			-87		129			135			-4
Cancidas		129			178			-28		4			7			-44		125			171			-27
Immunology
Simponi		422			464			-9										422			464			-9
Remicade		221			324			-32										221			324			-32
Neuroscience
Belsomra		143			125			15		45			52			-14		98			73			35
Virology
Isentress / Isentress HD		502			586			-14		202			260			-22		300			326			-8
Zepatier		221			243			-9		72			-10			*		149			253			-41
Cardiovascular
Zetia		296			531			-44		6			25			-76		290			505			-43
Vytorin		174			322			-46		6			11			-41		167			311			-46
Atozet		186			174			7										186			174			7
Adempas		194			143			36										194			143			36
Diabetes (4)
Januvia		1,732			1,829			-5		855			968			-12		877			862			2
Janumet		1,063			1,129			-6		333			401			-17		730			729
Women’s Health
NuvaRing		459			452			2		391			357			9		68			95			-28
Implanon / Nexplanon		382			348			10		285			242			18		98			106			-8
Diversified Brands
Singulair		352			360			-2		13			11			25		338			350			-3
Cozaar / Hyzaar		213			245			-13		10			14			-27		202			231			-12
Nasonex		168			203			-17		-2			2			-199		170			201			-16
Arcoxia		149			166			-10										149			166			-10
Follistim AQ		121			138			-12		53			56			-5		67			81			-17
Other Pharmaceutical (5)		2,406			2,378			1		759			608			25		1,650			1,770			-7
ANIMAL HEALTH		2,149			2,155					628			618			2		1,521			1,537			-1
Livestock		1,282			1,286					261			231			13		1,021			1,055			-3
Companion Animals		867			869					367			387			-5		500			482			4
Other Revenues (6)		303			146			107		98			220			-55		206			-74			*

 

* 200% or greater

 

(1) Only select products are shown.

 

(2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

(3) Total Vaccines sales were $3,924 million and $3,094 million on a global basis for second quarter 2019 and 2018, respectively.

 

(4) Total Diabetes sales were $2,882 million and $3,003 million on a global basis for second quarter 2019 and 2018, respectively.

 

(5) Includes Pharmaceutical products not individually shown above.

 

(6) Other Revenues are comprised primarily of Healthcare Services segment revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.