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				3Q				4Q				Full Year				1Q				2Q				3Q				4Q			Full Year				4Q				Full Year
Sales		$	10,816			$	11,760			$	12,397			$	11,868			$	46,840			$	10,037			$	10,465			$	10,794			$	10,998		$	42,294				8	%			11	%
Costs, Expenses and Other
Cost of sales			3,052				3,401				3,990				3,669				14,112				3,184				3,417				3,619				3,289			13,509				12	%			4	%
Selling, general and administrative			2,425				2,712				2,589				2,888				10,615				2,508				2,508				2,443				2,643			10,102				9	%			5	%
Research and development			1,931				2,189				3,204				2,548				9,872				3,196				2,274				2,068				2,214			9,752				15	%			1	%
Restructuring costs			153				59				232				194				638				95				228				171				138			632				41	%			1	%
Other (income) expense, net			188				140				35				(223	)			139				(291	)			(48	)			(172	)			110			(402	)			*				*
Income Before Taxes			3,067				3,259				2,347				2,792				11,464				1,345				2,086				2,665				2,604			8,701				7	%			32	%
Taxes on Income			205				615				440				428				1,687				604				370				707				826			2,508
Net Income			2,862				2,644				1,907				2,364				9,777				741				1,716				1,958				1,778			6,193				33	%			58	%
Less: Net (Loss) Income Attributable to Noncontrolling Interests			(53	)			(26	)			6				7				(66	)			5				9				8				(49)			(27	)
Net Income Attributable to Merck & Co., Inc.		$	2,915			$	2,670			$	1,901			$	2,357			$	9,843			$	736			$	1,707			$	1,950			$	1,827		$	6,220				29	%			58	%
Earnings per Common Share Assuming Dilution		$	1.12			$	1.03			$	0.74			$	0.92			$	3.81			$	0.27			$	0.63			$	0.73			$	0.69		$	2.32				33	%			64	%
Average Shares Outstanding Assuming Dilution			2,603				2,588				2,572				2,559				2,580				2,710				2,696				2,678				2,634			2,679
Tax Rate			6.7	%			18.9	%			18.7	%			15.3	%			14.7	%			44.9	%			17.8	%			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

FOURTH 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				Adjustment Subtotal				Non-GAAP
Cost of sales		$	3,289				525				10				3				538			$	2,751
Selling, general and administrative			2,643				6				1								7				2,636
Research and development			2,214				91				1								92				2,122
Restructuring costs			138								138								138				-
Other (income) expense, net			110				179								(3	)			176				(66	)
Income Before Taxes			2,604				(801	)			(150	)			-				(951	)			3,555
Income Tax Provision (Benefit)			826				(148	)(3)			(13	)(3)			186	(4)			25				801
Net Income			1,778				(653	)			(137	)			(186	)			(976	)			2,754
Less: Net (Loss) Income Attributable to Noncontrolling Interests			(49	)			(58	)											(58	)			9
Net Income Attributable to Merck & Co., Inc.			1,827				(595	)			(137	)			(186	)			(918	)			2,745
Earnings per Common Share Assuming Dilution		$	0.69				(0.23	)			(0.05	)			(0.07	)			(0.35	)		$	1.04
Tax Rate			31.7	%																			22.5	%

 

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⁾ Amounts included in cost of sales reflect expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures.  Amounts included in research and development expenses reflect $149 million of in-process research and development (IPR&D) impairment charges, partially offset by a reduction of expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration.  Amounts included in other (income) expense, net primarily reflect goodwill impairment charges related to certain businesses in the Healthcare Services segment and 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⁾ 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⁾ Includes the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Also includes adjustments to the provisional amounts recorded in the prior year associated with the enactment of U.S. tax legislation, including $124 million related to the transition tax.

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

FULL YEAR 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		$	13,509				2,672				21				423				3,116			$	10,393
Selling, general and administrative			10,102				32				3								35				10,067
Research and development			9,752				98				2				1,744				1,844				7,908
Restructuring costs			632								632								632				-
Other (income) expense, net			(402	)			264								(57	)			207				(609	)
Income Before Taxes			8,701				(3,066	)			(658	)			(2,110	)			(5,834	)			14,535
Income Tax Provision (Benefit)			2,508				(378	)(4)			(82	)(4)			85	(5)			(375	)			2,883
Net Income			6,193				(2,688	)			(576	)			(2,195	)			(5,459	)			11,652
Less: Net (Loss) Income Attributable to Noncontrolling Interests			(27	)			(58	)											(58	)			31
Net Income Attributable to Merck & Co., Inc.			6,220				(2,630	)			(576	)			(2,195	)			(5,401	)			11,621
Earnings per Common Share Assuming Dilution		$	2.32				(0.98	)			(0.22	)			(0.82	)			(2.02	)		$	4.34
Tax Rate			28.8	%																			19.8	%

 

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⁾ Amounts included in cost of sales reflect expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures.  Amounts included in research and development expenses reflect $152 million of in-process research and development (IPR&D) impairment charges, partially offset by a reduction of expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration.  Amounts included in other (income) expense, net primarily reflect goodwill impairment charges related to certain businesses in the Healthcare Services segment and 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 cost of sales represents a charge related to the termination of a collaboration agreement with Samsung Bioepis Co., Ltd. for insulin glargine.  Amounts included in research and development expenses represent 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. 

 

⁽⁵⁾ Includes the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.  Also includes adjustments to the provisional amounts recorded in the prior year associated with the enactment of U.S. tax legislation, including $124 million related to the transition tax.

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

FOURTH QUARTER 2019

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

 

		Global												U.S.												International
		4Q 2019				4Q 2018				% Change				4Q 2019				4Q 2018				% Change				4Q 2019				4Q 2018				% Change
TOTAL SALES (1)		$	11,868			$	10,998				8			$	5,142			$	4,787				7			$	6,726			$	6,211				8
PHARMACEUTICAL			10,533				9,830				7				4,694				4,402				7				5,839				5,427				8
Oncology
Keytruda			3,111				2,151				45				1,780				1,243				43				1,331				907				47
Alliance Revenue - Lynparza (2)			132				62				111				82				39				113				49				24				107
Alliance Revenue - Lenvima (2)			124				71				74				70				46				53				53				25				111
Emend			53				126				-58				10				73				-86				42				53				-21
Vaccines (3)
Gardasil / Gardasil 9			693				835				-17				252				450				-44				441				384				15
ProQuad / M-M-R II / Varivax			481				455				6				358				333				8				123				122				1
Pneumovax 23			334				322				4				251				232				8				83				89				-7
RotaTeq			227				188				21				146				112				30				81				76				7
Vaqta			71				72				-2				28				32				-13				43				40				8
Hospital Acute Care
Bridion			313				256				22				152				114				33				162				142				14
Noxafil			103				191				-46				14				96				-85				89				95				-7
Primaxin			67				53				25								1				-168				67				52				28
Cancidas			58				69				-17				2				2				-21				56				67				-17
Invanz			57				59				-5								1				-102				57				58				-3
Cubicin			50				80				-38				13				41				-67				36				39				-8
Immunology
Simponi			205				220				-7																205				220				-7
Remicade			89				123				-27																89				123				-27
Neuroscience
Belsomra			83				69				19				24				20				18				59				49				20
Virology
Isentress / Isentress HD			223				280				-20				95				130				-27				128				150				-15
Zepatier			66				108				-38				23								*				44				108				-60
Cardiovascular
Zetia			146				162				-9				3				11				-73				144				151				-5
Vytorin			54				83				-35				4				(1	)			*				49				84				-41
Atozet			108				89				22																108				89				22
Adempas			117				91				28																117				91				28
Diabetes (4)
Januvia			943				930				1				502				503								441				427				3
Janumet			475				535				-11				127				185				-31				348				350				-1
Women's Health
Implanon / Nexplanon			206				169				22				147				120				22				59				48				21
NuvaRing			179				216				-17				150				171				-13				29				45				-35
Diversified Brands
Singulair			195				187				4				5				4				14				190				183				4
Cozaar / Hyzaar			113				105				8				8				4				83				105				101				4
Nasonex			67				102				-34				7				15				-53				60				87				-31
Arcoxia			67				86				-23																67				86				-23
Follistim AQ			58				70				-16				22				33				-32				36				37				-3
Other Pharmaceutical (5)			1,265				1,215				4				419				392				7				848				825				3
ANIMAL HEALTH			1,122				1,036				8				341				314				9				781				722				8
Livestock			777				684				14				177				144				23				600				540				11
Companion Animals			345				352				-2				164				170				-3				181				183				-1
Other Revenues (6)			213				132				61				107				71				51				106				62				72

 

* 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 $1,928 million and $2,008 million on a global basis for fourth quarter 2019 and 2018, respectively.

 

⁽⁴⁾ Total Diabetes sales were $1,472 million and $1,485 million on a global basis for fourth 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

FULL YEAR 2019

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

 

		Global												U.S.												International
		Full Year 2019				Full Year 2018				% Change				Full Year 2019				Full Year 2018				% Change				Full Year 2019				Full Year 2018				% Change
TOTAL SALES (1)		$	46,840			$	42,294				11			$	20,325			$	18,212				12			$	26,515			$	24,083				10
PHARMACEUTICAL			41,751				37,689				11				18,759				16,608				13				22,992				21,081				9
Oncology
Keytruda			11,084				7,171				55				6,305				4,150				52				4,779				3,021				58
Alliance Revenue - Lynparza (2)			444				187				137				269				127				112				176				61				190
Alliance Revenue - Lenvima (2)			404				149				171				239				95				152				165				54				*
Emend			388				522				-26				183				312				-41				205				210				-2
Vaccines (3)
Gardasil / Gardasil 9			3,737				3,151				19				1,831				1,873				-2				1,905				1,279				49
ProQuad / M-M-R II / Varivax			2,275				1,798				27				1,683				1,430				18				592				368				61
Pneumovax 23			926				907				2				679				627				8				247				281				-12
RotaTeq			791				728				9				506				496				2				284				232				22
Vaqta			238				239								130				127				2				108				112				-4
Hospital Acute Care
Bridion			1,131				917				23				533				386				38				598				531				13
Noxafil			662				742				-11				282				353				-20				380				389				-2
Primaxin			273				265				3				2				7				-72				271				258				5
Invanz			263				496				-47				30				253				-88				233				243				-4
Cubicin			257				367				-30				92				191				-52				165				176				-7
Cancidas			249				326				-24				6				12				-46				242				314				-23
Immunology
Simponi			830				893				-7																830				893				-7
Remicade			411				582				-29																411				582				-29
Neuroscience
Belsomra			306				260				18				92				96				-4				214				164				30
Virology
Isentress / Isentress HD			975				1,140				-15				398				513				-22				576				627				-8
Zepatier			370				455				-19				118				8				*				252				447				-44
Cardiovascular
Zetia			590				857				-31				14				45				-69				575				813				-29
Vytorin			285				497				-43				16				10				51				269				487				-45
Atozet			391				347				13																391				347				13
Adempas			419				329				27																419				329				27
Diabetes (4)
Januvia			3,482				3,686				-6				1,724				1,969				-12				1,758				1,718				2
Janumet			2,041				2,228				-8				589				811				-27				1,452				1,417				2
Women's Health
NuvaRing			879				902				-3				742				722				3				136				180				-24
Implanon / Nexplanon			787				703				12				568				495				15				219				208				5
Diversified Brands
Singulair			698				708				-1				29				20				46				669				688				-3
Cozaar / Hyzaar			442				453				-3				24				23				5				418				431				-3
Nasonex			293				376				-22				9				23				-61				284				353				-19
Arcoxia			288				335				-14																288				335				-14
Follistim AQ			241				268				-10				103				115				-11				138				153				-10
Other Pharmaceutical (5)			4,901				4,705				4				1,563				1,319				18				3,343				3,380				-1
ANIMAL HEALTH			4,393				4,212				4				1,306				1,238				6				3,086				2,974				4
Livestock			2,784				2,630				6				582				528				10				2,201				2,102				5
Companion Animals			1,609				1,582				2				724				710				2				885				872				2
Other Revenues (6)			696				393				77				260				366				-29				437				28				*

 

* 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 $8,368 million and $7,262 million on a global basis for December YTD 2019 and 2018, respectively.

 

⁽⁴⁾ Total Diabetes sales were $5,714 million and $5,994 million on a global basis for December YTD 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.

PHARMACEUTICAL GEOGRAPHIC SALES 

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

 

		2019																				2018																				% Change				% Change
			1Q				2Q				3Q				4Q				Full Year				1Q				2Q				3Q				4Q				Full Year			4Q				Full Year
TOTAL PHARMACEUTICAL		$	9,663			$	10,460			$	11,095			$	10,533			$	41,751			$	8,919			$	9,282			$	9,658			$	9,830			$	37,689				7				11
United States			4,175				4,758				5,132				4,694				18,759				3,716				3,841				4,649				4,402				16,608				7				13
% Pharmaceutical Sales			43.2	%			45.5	%			46.3	%			44.6	%			44.9	%			41.7	%			41.4	%			48.1	%			44.8	%			44.1	%
Europe (1)			2,335				2,301				2,304				2,373				9,314				2,402				2,322				2,114				2,237				9,076				6				3
% Pharmaceutical Sales			24.2	%			22.0	%			20.8	%			22.5	%			22.3	%			26.9	%			25.0	%			21.9	%			22.8	%			24.1	%
Japan			779				900				894				921				3,494				718				834				740				835				3,127				10				12
% Pharmaceutical Sales			8.1	%			8.6	%			8.1	%			8.7	%			8.4	%			8.1	%			9.0	%			7.7	%			8.5	%			8.3	%
China			725				745				898				773				3,141				459				530				488				601				2,077				29				51
% Pharmaceutical Sales			7.5	%			7.1	%			8.1	%			7.3	%			7.5	%			5.1	%			5.7	%			5.1	%			6.1	%			5.5	%
Asia Pacific (other than Japan and China)			642				606				638				614				2,500				653				694				566				598				2,512				3				0
% Pharmaceutical Sales			6.6	%			5.8	%			5.8	%			5.8	%			6.0	%			7.3	%			7.5	%			5.9	%			6.1	%			6.7	%
Latin America			427				523				534				429				1,914				398				459				493				530				1,880				-19				2
% Pharmaceutical Sales			4.4	%			5.0	%			4.8	%			4.1	%			4.6	%			4.5	%			4.9	%			5.1	%			5.4	%			5.0	%
Eastern Europe/Middle East Africa			343				388				423				423				1,577				335				356				347				349				1,388				21				14
% Pharmaceutical Sales			3.6	%			3.7	%			3.8	%			4.0	%			3.8	%			3.8	%			3.8	%			3.6	%			3.6	%			3.7	%
Canada			177				179				211				216				783				196				192				177				211				776				2				1
% Pharmaceutical Sales			1.8	%			1.7	%			1.9	%			2.0	%			1.9	%			2.2	%			2.1	%			1.8	%			2.1	%			2.1	%
Other			60				60				61				90				269				42				54				84				67				245				34				10
% Pharmaceutical Sales			0.6	%			0.6	%			0.5	%			0.9	%			0.6	%			0.5	%			0.6	%			0.9	%			0.7	%			0.7	%

 

⁽¹⁾ 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

 

			4Q19				4Q18				Full Year 2019				Full Year 2018
Interest income		$	(50	)		$	(86	)		$	(274	)		$	(343	)
Interest expense			220				203				893				772
Exchange losses			21				25				187				145
(Income) loss from investments in equity securities, net (1)			(119	)			52				(170	)			(324	)
Net periodic defined benefit plan (credit) cost other than service cost			(136	)			(128	)			(545	)			(512	)
Other, net			(159	)			44				48				(140	)
Total		$	(223	)		$	110			$	139			$	(402	)

 

⁽¹⁾ Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds.