EX-99.2 3 tm2032785d1_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

	2020												2019																		% Change
		1Q			2Q			3Q			Sep YTD			1Q			2Q			3Q			Sep YTD			4Q			Full Year			3Q		Sep YTD
Sales	$	12,057		$	10,872		$	12,551		$	35,479		$	10,816		$	11,760		$	12,397		$	34,972		$	11,868		$	46,840			1	%	1	%
Costs, Expenses and Other
Cost of sales		3,312			3,159			3,481			9,952			3,052			3,401			3,990			10,443			3,669			14,112			-13	%	-5	%
Selling, general and administrative		2,555			2,378			2,450			7,383			2,425			2,712			2,589			7,726			2,888			10,615			-5	%	-4	%
Research and development		2,209			2,123			3,390			7,721			1,931			2,189			3,204			7,324			2,548			9,872			6	%	5	%
Restructuring costs		72			83			114			269			153			59			232			444			194			638			-51	%	-39	%
Other (income) expense, net		71			(390	)		(312	)		(630	)		188			140			35			362			(223	)		139			*		*
Income Before Taxes		3,838			3,519			3,428			10,784			3,067			3,259			2,347			8,673			2,792			11,464			46	%	24	%
Taxes on Income		619			509			483			1,611			205			615			440			1,259			428			1,687
Net Income		3,219			3,010			2,945			9,173			2,862			2,644			1,907			7,414			2,364			9,777			54	%	24	%
Less: Net Income (Loss) Attributable to Noncontrolling Interests		-			8			4			12			(53	)		(26	)		6			(73	)		7			(66	)
Net Income Attributable to Merck & Co., Inc.	$	3,219		$	3,002		$	2,941		$	9,161		$	2,915		$	2,670		$	1,901		$	7,487		$	2,357		$	9,843			55	%	22	%
Earnings per Common Share Assuming Dilution	$	1.26		$	1.18		$	1.16		$	3.61		$	1.12		$	1.03		$	0.74		$	2.89		$	0.92		$	3.81			57	%	25	%

Average Shares Outstanding Assuming Dilution		2,547			2,536			2,538			2,541			2,603			2,588			2,572			2,587			2,559			2,580
Tax Rate		16.1	%		14.5	%		14.1	%		14.9	%		6.7	%		18.9	%		18.7	%		14.5	%		15.3	%		14.7	%

* 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

THIRD QUARTER 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

	GAAP			Acquisition and Divestiture-Related Costs ⁽¹⁾			Restructuring Costs ⁽²⁾			Certain Other Items ⁽⁴⁾			Adjustment Subtotal			Non-GAAP
Cost of sales	$	3,990			941			62						1,003		$	2,987
Selling, general and administrative		2,589			22			1						23			2,566
Research and development		3,204			6			1			982			989			2,215
Restructuring costs		232						232						232			-
Other (income) expense, net		35			6									6			29
Income Before Taxes		2,347			(975	)		(296	)		(982	)		(2,253	)		4,600
Income Tax Provision (Benefit)		440			(231	)⁽³⁾		(50	)⁽³⁾		-			(281	)		721
Net Income		1,907			(744	)		(246	)		(982	)		(1,972	)		3,879
Net Income Attributable to Merck & Co., Inc.		1,901			(744	)		(246	)		(982	)		(1,972	)		3,873
Earnings per Common Share Assuming Dilution	$	0.74			(0.29	)		(0.10	)		(0.38	)		(0.77	)	$	1.51

Tax Rate		18.7	%														15.7	%

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. In addition, senior management’s annual compensation is derived in part using non-GAAP pretax income. 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 primarily reflects $320 million of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $612 million of intangible asset impairment charges related to SIVEXTRO. Amount included in selling, general and administrative expenses primarily reflects integration, transaction and certain other costs related to business acquisitions and divestitures.

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

⁽⁴⁾ Amount included in research and development represents the charge related to the acquisition of Peloton Therapeutics, Inc.

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

	GAAP			Acquisition and Divestiture-Related Costs ⁽¹⁾			Restructuring Costs ⁽²⁾			Certain Other Items ⁽⁴⁾			Adjustment Subtotal			Non-GAAP
Cost of sales	$	10,443			1,801			161						1,962		$	8,481
Selling, general and administrative		7,726			82			33						115			7,611
Research and development		7,324			(21	)		4			982			965			6,359
Restructuring costs		444						444						444			-
Other (income) expense, net		362			321						48			369			(7	)
Income Before Taxes		8,673			(2,183	)		(642	)		(1,030	)		(3,855	)		12,528
Income Tax Provision (Benefit)		1,259			(438	)⁽³⁾		(106	)⁽³⁾		(304	)⁽⁵⁾		(848	)		2,107
Net Income		7,414			(1,745	)		(536	)		(726	)		(3,007	)		10,421
Less: Net (Loss) Income Attributable to Noncontrolling Interests		(73	)		(89	)								(89	)		16
Net Income Attributable to Merck & Co., Inc.		7,487			(1,656	)		(536	)		(726	)		(2,918	)		10,405
Earnings per Common Share Assuming Dilution	$	2.89			(0.64	)		(0.21	)		(0.28	)		(1.13	)	$	4.02

Tax Rate		14.5	%														16.8	%

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

⁽¹⁾Amount included in cost of sales primarily reflects $1.1 billion of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $693 million of intangible asset impairment charges, including $612 million related to SIVEXTRO. Amount included in selling, general and administrative expenses primarily reflects integration, transaction and certain other costs related to business acquisitions and divestitures, including costs related to the acquisition of Antelliq Corporation. Amount included in research and development expenses primarily reflects a reduction in expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amount included in other (income) expense, net primarily reflects goodwill and intangible asset impairment charges related to certain businesses in the Healthcare Services segment and expenses related to 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.

⁽³⁾ Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

⁽⁴⁾ Amount included in research and development represents the charge related to the acquisition of Peloton Therapeutics, Inc.

⁽⁵⁾ Primarily reflects a $360 million net tax benefit related to the settlement of certain federal income tax matters and a $67 million tax charge related to the finalization of treasury regulations associated with the 2017 enactment of U.S. tax legislation.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

THIRD QUARTER 2020

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

	Global						U.S.								International
	3Q 2020		3Q 2019		% Change		3Q 2020			3Q 2019			% Change		3Q 2020		3Q 2019		% Change
TOTAL SALES ⁽¹⁾	$	12,551	$	12,397		1	$	5,625		$	5,573			1	$	6,926	$	6,824		1
PHARMACEUTICAL		11,320		11,095		2		5,218			5,180			1		6,102		5,914		3
Oncology
Keytruda		3,715		3,070		21		2,157			1,743			24		1,559		1,327		17
Alliance Revenue - Lynparza ⁽²⁾		196		123		59		107			71			52		89		53		70
Alliance Revenue - Lenvima ⁽²⁾		142		109		30		82			65			26		60		44		36
Emend		39		98		-60		8			42			-82		31		56		-44
Vaccines ⁽³⁾
Gardasil / Gardasil 9		1,187		1,320		-10		579			761			-24		608		558		9
ProQuad / M-M-R II / Varivax		576		623		-8		437			482			-9		139		141		-2
Pneumovax 23		375		237		58		276			179			54		99		58		72
RotaTeq		210		180		16		114			102			11		96		78		23
Vaqta		51		62		-18		32			36			-11		19		26		-26
Hospital Acute Care
Bridion		320		284		13		162			133			22		157		151		4
Noxafil		79		177		-55		13			77			-83		66		100		-34
Prevymis		77		45		72		32			22			42		46		23		101
Primaxin		74		77		-4		1			2			-34		73		75		-3
Invanz		51		57		-10		1			(1	)		*		50		58		-14
Cancidas		50		62		-20		1			0			80		49		62		-21
Zerbaxa		43		35		22		20			20			4		23		15		47
Cubicin		39		52		-26		11			14			-22		28		38		-28
Immunology
Simponi		209		203		3										209		203		3
Remicade		82		101		-19										82		101		-19
Neuroscience
Belsomra		81		80		1		18			23			-24		63		57		11
Virology
Isentress / Isentress HD		205		250		-18		92			102			-10		113		149		-24
Zepatier		28		83		-67		6			24			-76		22		59		-63
Cardiovascular
Zetia		103		147		-30		(1	)		5			-115		103		142		-27
Vytorin		47		57		-17		3			5			-34		44		52		-16
Atozet		111		97		14										111		97		14
Alliance Revenue - Adempas ⁽⁴⁾		83		50		67		78			48			64		5		2		117
Adempas ⁽⁵⁾		55		57		-5										55		57		-5
Diabetes ⁽⁶⁾
Januvia		821		807		2		342			367			-7		479		440		9
Janumet		506		503				105			129			-18		400		375		7
Women's Health
Implanon / Nexplanon		189		199		-5		137			136			1		52		62		-17
NuvaRing		58		241		-76		24			202			-88		34		39		-13
Diversified Brands
Cozaar / Hyzaar		91		116		-21		5			6			-7		86		110		-22
Singulair		82		152		-46		4			11			-61		78		140		-44
Arcoxia		68		72		-5										68		72		-5
Follistim AQ		50		62		-18		20			27			-28		31		35		-11
Nasonex		41		58		-30					4			-110		41		55		-24
Other Pharmaceutical ⁽⁷⁾		1,186		1,149		3		352			343			3		834		804		4

ANIMAL HEALTH		1,220		1,122		9		398			337			18		822		785		5
Livestock		758		726		5		164			144			14		594		582		2
Companion Animals		462		396		17		234			193			22		228		203		12

Other Revenues ⁽⁸⁾		11		180		-94		9			56			-85		2		125		-99

* 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⁾Total Vaccines sales were $2,521 million and $2,517 million on a global basis in the third quarter of 2020 and 2019, respectively.

⁽⁴⁾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.

⁽⁵⁾Net product sales in Merck's marketing territories.

⁽⁶⁾Total Diabetes sales were $1,405 million and $1,360 million on a global basis in the third quarter of 2020 and 2019, respectively.

⁽⁷⁾Includes Pharmaceutical products not individually shown above.

⁽⁸⁾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

SEPTEMBER YEAR-TO-DATE 2020

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	Global						U.S.							International
	Sep YTD 2020		Sep YTD 2019		% Change		Sep YTD 2020			Sep YTD 2019		% Change		Sep YTD 2020		Sep YTD 2019		% Change
TOTAL SALES ⁽¹⁾	$	35,479	$	34,972		1	$	15,396		$	15,320			$	20,084	$	19,652		2
PHARMACEUTICAL		31,654		31,218		1		14,202			14,202				17,452		17,016		3
Oncology
Keytruda		10,387		7,973		30		6,106			4,525		35		4,281		3,448		24
Alliance Revenue - Lynparza ⁽²⁾		519		313		66		297			186		59		223		126		76
Alliance Revenue - Lenvima ⁽²⁾		421		280		50		270			169		60		152		112		36
Emend		115		336		-66		18			173		-89		96		163		-41
Vaccines ⁽³⁾
Gardasil / Gardasil 9		2,941		3,044		-3		1,209			1,579		-23		1,732		1,464		18
ProQuad / M-M-R II / Varivax		1,390		1,794		-23		1,033			1,325		-22		356		469		-24
Pneumovax 23		748		592		26		478			428		12		270		164		64
RotaTeq		601		564		7		355			360		-2		246		203		21
Vaqta		139		167		-17		79			103		-23		60		65		-7
Hospital Acute Care
Bridion		843		817		3		412			381		8		431		437		-1
Noxafil		247		560		-56		27			268		-90		220		291		-25
Prevymis		200		115		74		87			60		45		113		55		106
Primaxin		189		207		-9		2			2				187		204		-9
Invanz		159		206		-23		7			30		-77		152		176		-14
Cancidas		148		191		-22		2			5		-63		147		187		-21
Cubicin		116		207		-44		36			78		-54		80		129		-37
Zerbaxa		112		88		27		57			45		27		54		43		26
Immunology
Simponi		615		625		-2									615		625		-2
Remicade		242		322		-25									242		322		-25
Neuroscience
Belsomra		244		223		9		67			68		-2		177		155		14
Virology
Isentress / Isentress HD		646		752		-14		243			304		-20		403		449		-10
Zepatier		122		304		-60		38			96		-60		83		208		-60
Cardiovascular
Zetia		384		443		-13		(4	)		11		-140		389		432		-10
Vytorin		139		231		-40		9			11		-23		130		219		-41
Atozet		348		283		23									348		283		23
Alliance Revenue - Adempas ⁽⁴⁾		216		144		50		200			137		46		16		7		130
Adempas ⁽⁵⁾		167		158		6									167		158		6
Diabetes ⁽⁶⁾
Januvia		2,449		2,539		-4		1,110			1,223		-9		1,339		1,317		2
Janumet		1,499		1,567		-4		361			462		-22		1,138		1,105		3
Women's Health
Implanon / Nexplanon		515		581		-11		374			421		-11		142		160		-12
NuvaRing		184		700		-74		85			593		-86		98		107		-8
Diversified Brands
Singulair		338		503		-33		14			24		-44		324		479		-32
Cozaar / Hyzaar		292		329		-11		17			16		6		275		313		-12
Arcoxia		204		221		-8									204		221		-8
Nasonex		161		226		-29		9			2		*		152		224		-32
Follistim AQ		136		182		-26		60			80		-26		76		102		-26
Other Pharmaceutical ⁽⁷⁾		3,478		3,431		1		1,144			1,037		10		2,334		2,394		-3

ANIMAL HEALTH		3,535		3,271		8		1,124			966		16		2,411		2,305		5
Livestock		2,145		2,007		7		448			406		10		1,697		1,601		6
Companion Animals		1,390		1,264		10		676			560		21		714		704		2

Other Revenues ⁽⁸⁾		290		483		-40		70			152		-54		221		331		-33

* 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⁾Total Vaccines sales were $6,094 million and $6,441 million on a global basis for September YTD 2020 and 2019, respectively.

⁽⁴⁾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.

⁽⁵⁾Net product sales in Merck's marketing territories.

⁽⁶⁾Total Diabetes sales were $4,177 million and $4,242 million on a global basis for September YTD 2020 and 2019, respectively.

⁽⁷⁾Includes Pharmaceutical products not individually shown above.

⁽⁸⁾Other Revenues are comprised primarily of Healthcare Services segment revenues, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

	2020												2019																		% Change
	1Q			2Q			3Q			Sep YTD			1Q			2Q			3Q			Sep YTD			4Q			Full Year			3Q
TOTAL PHARMACEUTICAL	$	10,655		$	9,679		$	11,320		$	31,654		$	9,663		$	10,460		$	11,095		$	31,218		$	10,533		$	41,751			2

United States ⁽¹⁾		4,714			4,270			5,218			14,202			4,215			4,807			5,180			14,202			4,751			18,953			1
% Pharmaceutical Sales		44.2	%		44.1	%		46.1	%		44.9	%		43.6	%		46.0	%		46.7	%		45.5	%		45.1	%		45.4	%
Europe ⁽²⁾		2,543			2,196			2,549			7,288			2,335			2,301			2,304			6,941			2,373			9,314			11
% Pharmaceutical Sales		23.9	%		22.7	%		22.5	%		23.0	%		24.2	%		22.0	%		20.8	%		22.2	%		22.5	%		22.3	%
China		846			811			990			2,646			725			745			898			2,368			773			3,141			10
% Pharmaceutical Sales		7.9	%		8.4	%		8.7	%		8.4	%		7.5	%		7.1	%		8.1	%		7.6	%		7.3	%		7.5	%
Japan		789			847			805			2,441			779			900			894			2,573			921			3,494			-10
% Pharmaceutical Sales		7.4	%		8.8	%		7.1	%		7.7	%		8.1	%		8.6	%		8.1	%		8.2	%		8.7	%		8.4	%
Asia Pacific (other than China and Japan)		613			555			601			1,769			642			606			638			1,886			614			2,500			-6
% Pharmaceutical Sales		5.8	%		5.7	%		5.3	%		5.6	%		6.6	%		5.8	%		5.8	%		6.0	%		5.8	%		6.0	%
Eastern Europe/Middle East/Africa		490			416			419			1,325			343			388			423			1,154			423			1,577			-1
% Pharmaceutical Sales		4.6	%		4.3	%		3.7	%		4.2	%		3.6	%		3.7	%		3.8	%		3.7	%		4.0	%		3.8	%
Latin America		419			399			477			1,294			427			523			534			1,484			429			1,914			-11
% Pharmaceutical Sales		3.9	%		4.1	%		4.2	%		4.1	%		4.4	%		5.0	%		4.8	%		4.8	%		4.1	%		4.6	%
Canada		212			160			216			589			177			179			211			568			216			783			2
% Pharmaceutical Sales		2.0	%		1.7	%		1.9	%		1.9	%		1.8	%		1.7	%		1.9	%		1.8	%		2.0	%		1.9	%
Other ⁽¹⁾		29			25			45			100			20			11			13			42			33			75			246
% Pharmaceutical Sales		0.3	%		0.3	%		0.4	%		0.3	%		0.2	%		0.1	%		0.1	%		0.1	%		0.3	%		0.2	%

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

⁽¹⁾Alliance revenue related to Adempas attributable to the United States has been reclassified from Other.

⁽²⁾Europe primarily represents all European Union countries and the European Union accession markets.

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

OTHER (INCOME) EXPENSE, NET

	3Q20			3Q19			Sep YTD 2020			Sep YTD 2019
Interest income	$	(9	)	$	(61	)	$	(48	)	$	(225	)
Interest expense		203			231			624			674
Exchange losses		10			38			89			166
Income from investments in equity securities, net ⁽¹⁾		(360	)		(16	)		(964	)		(50	)
Net periodic defined benefit plan (credit) cost other than service cost		(88	)		(128	)		(259	)		(409	)
Other, net		(68	)		(29	)		(72	)		206
Total	$	(312	)	$	35		$	(630	)	$	362

⁽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 ownership interests in investment funds are accounted for on a one quarter lag.