EX-99.2 3 tm2227726d1_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

	2022												2021																		% Change
	1Q			2Q			3Q			Sep YTD			1Q			2Q			3Q			Sep YTD			4Q			Full Year			3Q			Sep YTD
Sales	$	15,901		$	14,593		$	14,959		$	45,453		$	10,627		$	11,402		$	13,154		$	35,183		$	13,521		$	48,704			14	%		29	%

Costs, Expenses and Other
Cost of sales		5,380			4,216			3,934			13,530			3,199			3,104			3,450			9,752			3,873			13,626			14	%		39	%
Selling, general and administrative		2,323			2,512			2,520			7,355			2,187			2,281			2,336			6,804			2,830			9,634			8	%		8	%
Research and development		2,576			2,798			4,399			9,773			2,412			4,321			2,445			9,177			3,068			12,245			80	%		6	%
Restructuring costs		53			142			94			288			297			82			107			487			174			661			-12	%		-41	%
Other (income) expense, net		708			438			429			1,576			(455	)		(103	)		(450	)		(1,007	)		(333	)		(1,341	)		*			*
Income from Continuing Operations Before Taxes		4,861			4,487			3,583			12,931			2,987			1,717			5,266			9,970			3,909			13,879			-32	%		30	%
Income Tax Provision		554			538			330			1,423			238			503			695			1,436			85			1,521
Net Income from Continuing Operations		4,307			3,949			3,253			11,508			2,749			1,214			4,571			8,534			3,824			12,358			-29	%		35	%
Less: Net (Loss) Income Attributable to Noncontrolling Interests		(3	)		5			5			6			4			1			4			9			4			13
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		4,310			3,944			3,248			11,502			2,745			1,213			4,567			8,525			3,820			12,345			-29	%		35	%
Income (Loss) from Discontinued Operations, Net of Taxes and Amounts Attributable to Noncontrolling Interests		-			-			-			-			434			332			-			766			(62	)		704			0	%		*
Net Income Attributable to Merck & Co., Inc.	$	4,310		$	3,944		$	3,248		$	11,502		$	3,179		$	1,545		$	4,567		$	9,291		$	3,758		$	13,049			-29	%		24	%

Basic Earnings (Loss) per Common Share Attributable to Merck & Co., Inc. Common Shareholders:
Income from Continuing Operations	$	1.70		$	1.56		$	1.28		$	4.55		$	1.08		$	0.48		$	1.81		$	3.37		$	1.51		$	4.88			-29	%		35	%
Income (Loss) from Discontinued Operations		-			-			-			-			0.17			0.13			-			0.30			(0.02	)		0.28			0	%		*
Net Income	$	1.70		$	1.56		$	1.28		$	4.55		$	1.26		$	0.61		$	1.81		$	3.67		$	1.49		$	5.16			-29	%		24	%

Earnings (Loss) per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders:
Income from Continuing Operations	$	1.70		$	1.55		$	1.28		$	4.53		$	1.08		$	0.48		$	1.80		$	3.36		$	1.51		$	4.86			-29	%		35	%
Income (Loss) from Discontinued Operations		-			-			-			-			0.17			0.13			-			0.30			(0.02	)		0.28			0	%		*
Net Income	$	1.70		$	1.55		$	1.28		$	4.53		$	1.25		$	0.61		$	1.80		$	3.66		$	1.48		$	5.14			-29	%		24	%

Average Shares Outstanding		2,528			2,531			2,533			2,531			2,531			2,533			2,530			2,531			2,527			2,530
Average Shares Outstanding Assuming Dilution		2,537			2,540			2,542			2,540			2,541			2,540			2,536			2,539			2,535			2,538
Tax Rate from Continuing Operations		11.4	%		12.0	%		9.2	%		11.0	%		8.0	%		29.3	%		13.2	%		14.4	%		2.2	%		11.0	%

* 100% or greater

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

MERCK & CO., INC.

THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2021 GAAP TO NON-GAAP RECONCILIATION - CONTINUING OPERATIONS

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

In 2022, the company changed the treatment of certain items for purposes of its non-GAAP reporting. Historically, Merck’s non-GAAP results excluded expenses for upfront and milestone payments related to collaborations and licensing agreements, as well as charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions, to the extent the charges were considered by the company to be significant to the results of a particular period (as well as any related adjustments recorded in a subsequent period). Beginning in 2022, Merck’s non-GAAP results no longer exclude charges related to these items. Results for 2021 have been recast to conform to the new presentation.

The table below reflects a reconciliation of GAAP to non-GAAP financial information on a continuing operations basis. As Organon results are reflected within discontinued operations, they are excluded from the financial information provided below.

	GAAP			Acquisition and Divestiture- Related Costs ⁽¹⁾			Restructuring Costs ⁽²⁾			(Income) Loss from Investments in Equity Securities			Certain Other Items			Adjustment Subtotal			Non-GAAP
Third Quarter
Cost of sales	$	3,450			346			48									394		$	3,056
Selling, general and administrative		2,336			61			5									66			2,270
Research and development		2,445			48			8									56			2,389
Restructuring costs		107						107									107			-
Other (income) expense, net		(450	)		(10	)					(684	)					(694	)		244
Income from Continuing Operations Before Taxes		5,266			(445	)		(168	)		684						71			5,195
Income Tax Provision (Benefit)		695			(96	)⁽⁴⁾		(26	)⁽⁴⁾		151	⁽⁴⁾					29			666
Net Income from Continuing Operations		4,571			(349	)		(142	)		533						42			4,529
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		4,567			(349	)		(142	)		533						42			4,525
Earnings per Common Share Assuming Dilution from Continuing Operations	$	1.80			(0.13	)		(0.06	)		0.21						0.02		$	1.78

Tax Rate		13.2	%																	12.8	%

Sep YTD
Cost of sales	$	9,752			1,188			113						225	⁽³⁾		1,526		$	8,226
Selling, general and administrative		6,804			96			9									105			6,699
Research and development		9,177			82			21									103			9,074
Restructuring costs		487						487									487			-
Other (income) expense, net		(1,007	)		79						(1,503	)					(1,424	)		417
Income from Continuing Operations Before Taxes		9,970			(1,445	)		(630	)		1,503			(225	)		(797	)		10,767
Income Tax Provision (Benefit)		1,436			(283	)⁽⁴⁾		(82	)⁽⁴⁾		331	⁽⁴⁾		(257	)⁽⁴⁾		(291	)		1,727
Net Income from Continuing Operations		8,534			(1,162	)		(548	)		1,172			32			(506	)		9,040
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		8,525			(1,162	)		(548	)		1,172			32			(506	)		9,031
Earnings per Common Share Assuming Dilution from Continuing Operations	$	3.36			(0.46	)		(0.22	)		0.46			0.02			(0.20	)	$	3.56

Tax Rate		14.4	%																	16.0	%

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 non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented 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 cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses primarily reflect expenses for the amortization of intangible assets. Amounts included in other (income) expense, net, for the third quarter and nine month period primarily reflect an increase in the estimated fair value measurement of liabilities for contingent consideration related to the prior termination of the Sanofi-Pasteur MSD joint venture. Additionally, the nine month period also includes a loss on a forward exchange contract entered into in conjunction with the Organon spin-off. Amount included in other (income) expense, net, for the nine month period was partially offset by royalty income related to the prior 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⁾ Represents charges for the discontinuation of COVID-19 development programs.

⁽⁴⁾ Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Certain other items for the nine month period also includes a $207 million net tax benefit related to the settlement of certain federal income tax matters.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES - CONTINUING OPERATIONS

THIRD QUARTER 2022

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

	Global							U.S.							International
	3Q 2022		3Q 2021			% Change		3Q 2022		3Q 2021			% Change		3Q 2022		3Q 2021			% Change
TOTAL SALES ⁽¹⁾	$	14,959	$	13,154			14	$	7,322	$	6,276			17	$	7,637	$	6,878			11
PHARMACEUTICAL		12,963		11,496			13		6,620		5,670			17		6,343		5,826			9
Oncology
Keytruda		5,426		4,534			20		3,331		2,580			29		2,095		1,954			7
Alliance Revenue - Lynparza ⁽²⁾		284		246			16		144		129			12		140		117			20
Alliance Revenue - Lenvima ⁽²⁾		202		188			7		142		114			25		60		74			-19
Alliance Revenue - Reblozyl ⁽³⁾		39					*		32					*		7					*
Vaccines ⁽⁴⁾
Gardasil / Gardasil 9		2,294		1,993			15		957		839			14		1,337		1,154			16
ProQuad / M-M-R II / Varivax		668		661			1		532		537			-1		136		125			9
RotaTeq		256		227			12		154		135			13		102		92			11
Pneumovax 23		131		277			-53		68		181			-62		63		97			-35
Vaqta		64		48			33		27		32			-16		36		16			134
Hospital Acute Care
Bridion		423		369			15		233		181			29		190		188			1
Prevymis		114		96			19		49		39			26		64		57			14
Dificid		77		54			42		72		52			37		6		2			146
Primaxin		63		70			-9							-57		63		69			-9
Noxafil		62		64			-3		13		19			-30		49		45			8
Invanz		50		53			-7		2		(2	)		-174		48		55			-14
Zerbaxa		43		(2	)		*		24		(1	)		*		19		(1	)		*
Cancidas		43		56			-24		1		1			81		42		56			-25
Cardiovascular
Alliance Revenue - Adempas/Verquvo ⁽⁵⁾		88		100			-12		85		73			17		3		27			-90
Adempas ⁽⁶⁾		57		59			-5									57		59			-5
Virology
Lagevrio		436					*							-		436					*
Isentress / Isentress HD		161		189			-15		68		77			-12		93		112			-17
Neuroscience
Belsomra		62		81			-24		20		23			-13		42		58			-28
Immunology
Simponi		173		203			-15									173		203			-15
Remicade		49		73			-33									49		73			-33
Diabetes ⁽⁷⁾
Januvia		717		852			-16		332		365			-9		385		487			-21
Janumet		417		487			-14		90		86			4		327		401			-18
Other Pharmaceutical ⁽⁸⁾		564		518			9		244		210			16		321		306			5

ANIMAL HEALTH		1,371		1,417			-3		475		467			2		896		951			-6
Livestock		829		864			-4		186		190			-2		643		675			-5
Companion Animals		542		553			-2		289		277			4		253		276			-8

Other Revenues ⁽⁹⁾		625		241			159		227		139			63		398		101			*

* 200% or greater

Sum of U.S. plus international may not equal global due to rounding.

⁽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⁾ Alliance Revenue represents royalties.

⁽⁴⁾ Total Vaccines sales were $3,552 million in the third quarter of 2022 and $3,315 million in the third quarter of 2021.

⁽⁵⁾ Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.

⁽⁶⁾ Net product sales in Merck's marketing territories.

⁽⁷⁾ Total Diabetes sales were $1,231 million in the third quarter of 2022 and $1,417 million in the third quarter of 2021.

⁽⁸⁾ Includes Pharmaceutical products not individually shown above.

⁽⁹⁾ Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $10 million in the third quarter of 2022 and $135 million in the third quarter of 2021.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES - CONTINUING OPERATIONS

SEPTEMBER YEAR-TO-DATE 2022

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	Global							U.S.							International
	September YTD 2022		September YTD 2021			% Change		September YTD 2022		September YTD 2021			% Change		September YTD 2022		September YTD 2021			% Change
TOTAL SALES ⁽¹⁾	$	45,453	$	35,183			29	$	20,927	$	16,166			29	$	24,526	$	19,017			29
PHARMACEUTICAL		39,826		30,714			30		19,119		14,611			31		20,707		16,103			29
Oncology
Keytruda		15,487		12,609			23		9,307		7,108			31		6,180		5,501			12
Alliance Revenue - Lynparza ⁽²⁾		825		721			14		427		371			15		397		350			14
Alliance Revenue - Lenvima ⁽²⁾		660		498			33		426		287			48		235		211			11
Alliance Revenue - Reblozyl ⁽³⁾		124					*		87					*		37					*
Vaccines ⁽⁴⁾
Gardasil / Gardasil 9		5,428		4,144			31		1,803		1,605			12		3,624		2,539			43
ProQuad / M-M-R II / Varivax		1,716		1,626			6		1,337		1,255			6		379		371			2
RotaTeq		644		593			9		427		364			17		218		229			-5
Pneumovax 23		457		600			-24		280		354			-21		177		247			-28
Vaqta		134		138			-3		72		80			-9		62		58			6
Hospital Acute Care
Bridion		1,244		1,096			13		665		545			22		579		551			5
Prevymis		310		270			15		136		111			23		174		159			9
Dificid		196		115			70		184		108			70		12		7			75
Primaxin		185		194			-5		1					87		185		194			-5
Noxafil		180		197			-9		39		48			-20		141		149			-5
Invanz		148		157			-6		4		(2	)		*		144		159			-10
Cancidas		138		168			-18		5		4			27		133		164			-19
Zerbaxa		120		(11	)		*		64		(5	)		*		55		(6	)		*
Cardiovascular
Alliance Revenue - Adempas/Verquvo ⁽⁵⁾		258		248			4		244		222			10		14		26			-47
Adempas ⁽⁶⁾		181		188			-4									181		188			-4
Virology
Lagevrio		4,859					*		1,523					*		3,336					*
Isentress / Isentress HD		466		590			-21		196		222			-12		270		368			-27
Neuroscience
Belsomra		199		238			-16		60		56			7		139		183			-24
Immunology
Simponi		540		619			-13									540		619			-13
Remicade		163		233			-30									163		233			-30
Diabetes ⁽⁷⁾
Januvia		2,252		2,445			-8		958		997			-4		1,294		1,448			-11
Janumet		1,347		1,449			-7		258		244			6		1,089		1,205			-10
Other Pharmaceutical ⁽⁸⁾		1,565		1,589			-1		616		637			-3		949		950			-

ANIMAL HEALTH		4,320		4,307			-		1,425		1,363			5		2,894		2,944			-2
Livestock		2,486		2,503			-1		521		508			3		1,965		1,996			-2
Companion Animals		1,834		1,804			2		904		855			6		929		948			-2

Other Revenues ⁽⁹⁾		1,307		162			*		383		192			99		925		(30	)		*

* 200% or greater

Sum of U.S. plus international may not equal global due to rounding.

⁽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⁾ Alliance Revenue represents royalties and a milestone payment.

⁽⁴⁾ Total Vaccines sales were $8,743 million and $7,417 million on a global basis for September YTD 2022 and 2021, respectively.

⁽⁵⁾ Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.

⁽⁶⁾ Net product sales in Merck's marketing territories.

⁽⁷⁾ Total Diabetes sales were $3,836 million and $4,110 million on a global basis for September YTD 2022 and 2021, respectively.

⁽⁸⁾ Includes Pharmaceutical products not individually shown above.

⁽⁹⁾ Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $156 million and $191 million on a global basis for September YTD 2022 and 2021, respectively.

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES - CONTINUING OPERATIONS

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

	2022												2021																		% Change
	1Q			2Q			3Q			Sep YTD			1Q			2Q			3Q			Sep YTD			4Q			Full Year			3Q		Sep YTD
TOTAL PHARMACEUTICAL	$	14,107		$	12,756		$	12,963		$	39,826		$	9,238		$	9,980		$	11,496		$	30,714		$	12,039		$	42,754			13		30

United States		6,773			5,726			6,620			19,119			4,294			4,647			5,670			14,611			5,790			20,401			17		31
% Pharmaceutical Sales		48.0	%		44.9	%		51.1	%		48.0	%		46.5	%		46.6	%		49.3	%		47.6	%		48.1	%		47.7	%
Europe ⁽¹⁾		3,309			2,677			2,427			8,412			2,276			2,404			2,445			7,124			2,655			9,780			-1		18
% Pharmaceutical Sales		23.5	%		21.0	%		18.7	%		21.1	%		24.6	%		24.1	%		21.3	%		23.2	%		22.1	%		22.9	%
China		1,113			1,355			1,419			3,887			688			944			1,278			2,910			1,352			4,262			11		34
% Pharmaceutical Sales		7.9	%		10.6	%		10.9	%		9.8	%		7.4	%		9.5	%		11.1	%		9.5	%		11.2	%		10.0	%
Japan		965			1,092			653			2,710			607			637			614			1,858			771			2,629			6		46
% Pharmaceutical Sales		6.8	%		8.6	%		5.0	%		6.8	%		6.6	%		6.4	%		5.3	%		6.0	%		6.4	%		6.1	%
Asia Pacific (other than China and Japan)		786			854			702			2,342			437			442			450			1,329			488			1,817			56		76
% Pharmaceutical Sales		5.6	%		6.7	%		5.4	%		5.9	%		4.7	%		4.4	%		3.9	%		4.3	%		4.1	%		4.2	%
Latin America		435			453			511			1,399			353			379			434			1,166			421			1,587			18		20
% Pharmaceutical Sales		3.1	%		3.6	%		3.9	%		3.5	%		3.8	%		3.8	%		3.8	%		3.8	%		3.5	%		3.7	%
Eastern Europe/Middle East/Africa		450			339			360			1,149			357			318			362			1,037			278			1,315			-1		11
% Pharmaceutical Sales		3.2	%		2.7	%		2.8	%		2.9	%		3.9	%		3.2	%		3.1	%		3.4	%		2.3	%		3.1	%
Canada		189			166			166			521			160			157			164			482			167			650			1		8
% Pharmaceutical Sales		1.3	%		1.3	%		1.3	%		1.3	%		1.7	%		1.6	%		1.4	%		1.6	%		1.4	%		1.5	%
Other		87			94			105			287			66			52			79			197			117			313			33		46
% Pharmaceutical Sales		0.6	%		0.6	%		0.9	%		0.7	%		0.8	%		0.4	%		0.8	%		0.6	%		0.9	%		0.8	%

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

⁽¹⁾ Europe represents all European Union countries, the European Union accession markets and the United Kingdom.

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

OTHER (INCOME) EXPENSE, NET

	3Q22			3Q21			Sep YTD 2022			Sep YTD 2021
Interest income	$	(40	)	$	(7	)	$	(62	)	$	(27	)
Interest expense		244			196			727			597
Exchange losses		96			46			220			202
Loss (income) from investments in equity securities, net ⁽¹⁾		371			(683	)		1,361			(1,535	)
Net periodic defined benefit plan (credit) cost other than service cost		(60	)		40			(208	)		(159	)
Other, net		(182	)		(42	)		(462	)		(85	)
Total	$	429		$	(450	)	$	1,576		$	(1,007	)

⁽¹⁾Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds. Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.