Merck & Co. (MRK) 8-K Results of Operations and Financial Condition

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			June YTD			1Q			2Q			June YTD			3Q			4Q			Full Year			2Q		June YTD
Sales	$	9,434		$	9,930		$	19,365		$	9,312		$	9,844		$	19,156		$	10,536		$	10,115		$	39,807		1	%	1	%
Costs, Expenses and Other
Materials and production	3,015			3,080			6,095			3,572			3,578			7,150			3,409			3,332			13,891			-14	%	-15	%
Marketing and administrative	2,411			2,438			4,849			2,318			2,458			4,776			2,393			2,593			9,762			-1	%	2	%
Research and development	1,796			1,749			3,545			1,659			2,151			3,810			1,664			4,650			10,124			-19	%	-7	%
Restructuring costs	151			166			317			91			134			225			161			265			651			24	%	41	%
Other (income) expense, net	58			58			117			48			19			67			22			631			720			*		75	%
Income (Loss) Before Taxes	2,003			2,439			4,442			1,624			1,504			3,128			2,887			(1,356		)	4,659			62	%	42	%
Income Tax Provision (Benefit)	447			488			935			494			295			789			699			(769		)	718
Net Income (Loss)	1,556			1,951			3,507			1,130			1,209			2,339			2,188			(587		)	3,941			61	%	50	%
Less: Net Income Attributable to Noncontrolling Interests	5			5			11			5			4			9			4			7			21
Net Income (Loss) Attributable to Merck & Co., Inc.	$	1,551		$	1,946		$	3,496		$	1,125		$	1,205		$	2,330		$	2,184		$	(594	)	$	3,920		61	%	50	%
Earnings (Loss) per Common Share Assuming Dilution (1)	$	0.56		$	0.71		$	1.27		$	0.40		$	0.43		$	0.83		$	0.78		$	(0.22	)	$	1.41		65	%	53	%
Average Shares Outstanding Assuming Dilution (1)	2,766			2,752			2,759			2,795			2,789			2,792			2,786			2,755			2,787
Tax Rate	22.3		%	20.0		%	21.0		%	30.4		%	19.6		%	25.2		%	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 fourth quarter of 2016, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive.

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

SECOND QUARTER 2016

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

				Acquisition and
				Divestiture-		Restructuring		Adjustment
	GAAP			Related Costs (1)		Costs (2)		Subtotal		Non-GAAP
Materials and production	$	3,578		1,120		66		1,186		$	2,392
Marketing and administrative	2,458			18		87		105		2,353
Research and development	2,151			207		64		271		1,880
Restructuring costs	134					134		134		—
Income Before Taxes	1,504			(1,345	)	(351	)	(1,696	)	3,200
Income Tax Provision (Benefit)	295			(235	)(3)	(79	)(3)	(314	)	609
Net Income	1,209			(1,110	)	(272	)	(1,382	)	2,591
Net Income Attributable to Merck & Co., Inc.	1,205			(1,110	)	(272	)	(1,382	)	2,587
Earnings per Common Share Assuming Dilution	$	0.43		(0.40	)	(0.10	)	(0.50	)	$	0.93
Tax Rate	19.6		%							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) Amounts included in materials and production costs reflect $1.0 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as $95 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 primarily reflect in-process research and development (IPR&D) impairment charges.

(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.

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

SIX MONTHS ENDED JUNE 30, 2016

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

				Acquisition and
				Divestiture-		Restructuring		Adjustment
	GAAP			Related Costs (1)		Costs (2)		Subtotal		Non-GAAP
Materials and production	$	7,150		2,506		113		2,619		$	4,531
Marketing and administrative	4,776			20		90		110		4,666
Research and development	3,810			242		119		361		3,449
Restructuring costs	225					225		225		—
Income Before Taxes	3,128			(2,768	)	(547	)	(3,315	)	6,443
Income Tax Provision (Benefit)	789			(444	)(3)	(122	)(3)	(566	)	1,355
Net Income	2,339			(2,324	)	(425	)	(2,749	)	5,088
Net Income Attributable to Merck & Co., Inc.	2,330			(2,324	)	(425	)	(2,749	)	5,079
Earnings per Common Share Assuming Dilution	$	0.83		(0.84	)	(0.15	)	(0.99	)	$	1.82
Tax Rate	25.2		%							21.0		%

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) Amounts included in materials and production costs reflect $2.1 billion of expenses for the amortization of intangible assets recognized as a result of 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 primarily reflect in-process research and development (IPR&D) impairment charges.

(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.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

SECOND QUARTER 2017

(AMOUNTS IN MILLIONS)

Table 3a

	Global					U.S.					International
	2Q 2017		2Q 2016		% Change	2Q 2017		2Q 2016		% Change	2Q 2017		2Q 2016		% Change
TOTAL SALES (1)	$	9,930	$	9,844	1	$	4,308	$	4,507	-4	$	5,623	$	5,337	5
PHARMACEUTICAL	8,759		8,700		1	3,929		4,169		-6	4,830		4,531		7
Primary Care and Women’s Health
Cardiovascular
Zetia	367		702		-48	122		457		-73	246		245
Vytorin	182		293		-38	30		123		-76	152		170		-11
Liptruzet	63		33		88						63		34		87
Adempas	67		40		68						67		40		68
Diabetes
Januvia	948		1,064		-11	541		631		-14	407		433		-6
Janumet	563		569		-1	248		258		-4	315		312		1
General Medicine & Women’s Health
NuvaRing	199		200			153		149		2	47		51		-8
Implanon / Nexplanon	178		164		9	125		112		12	53		52		1
Follistim AQ	79		73		9	32		20		65	47		53		-12
Hospital and Specialty
Hepatitis
Zepatier	517		112		*	256		107		138	261		4		*
HIV
Isentress/Isentress HD	282		338		-17	136		169		-20	146		169		-14
Hospital Acute Care
Bridion	163		113		44	54		13		*	109		100		9
Noxafil	155		143		8	77		67		15	78		76		2
Invanz	150		143		5	93		81		14	57		61		-7
Cancidas	112		131		-14	6		6		6	106		125		-15
Cubicin	103		357		-71	53		304		-83	50		53		-5
Primaxin	71		81		-13	1		2		-12	70		79		-13
Immunology
Remicade	208		339		-39						208		339		-39
Simponi	199		199								199		199
Oncology
Keytruda	881		314		180	556		160		*	325		154		111
Emend	143		143			83		93		-10	60		50		20
Temodar	65		73		-12	3		1		*	61		72		-15
Diversified Brands
Respiratory
Singulair	203		229		-11	6		7		-11	197		222		-11
Nasonex	85		101		-16	21		29		-27	64		72		-11
Dulera	69		121		-43	63		115		-45	5		6		-17
Other
Cozaar / Hyzaar	119		132		-10	3		4		-26	116		128		-9
Arcoxia	89		117		-24						89		117		-24
Fosamax	66		73		-10	2				*	65		73		-12
Vaccines (2)
Gardasil / Gardasil 9	469		393		19	312		315		-1	156		78		101
ProQuad / M-M-R II / Varivax	399		383		4	341		324		5	58		58
Pneumovax 23	166		120		38	104		78		34	61		43		44
Zostavax	160		149		7	107		116		-8	52		33		59
RotaTeq	123		130		-5	72		85		-15	51		45		12
Other Pharmaceutical (3)	1,116		1,128		-1	329		343		-4	789		785		1
ANIMAL HEALTH	955		900		6	270		256		5	685		644		6
Other Revenues (4)	216		244		-11	109		82		34	106		162		-34

* 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 $87 million and $91 million on a global basis for second 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

JUNE YEAR-TO-DATE 2017

(AMOUNTS IN MILLIONS)

Table 3b

	Global					U.S.					International
	June YTD		June YTD			June YTD		June YTD			June YTD		June YTD
	2017		2016		% Change	2017		2016		% Change	2017		2016		% Change
TOTAL SALES (1)	$	19,365	$	19,156	1	$	8,503	$	8,728	-3	$	10,862	$	10,427	4
PHARMACEUTICAL	16,944		16,804		1	7,690		8,082		-5	9,255		8,722		6
Primary Care and Women’s Health
Cardiovascular
Zetia	701		1,314		-47	233		843		-72	468		471		-1
Vytorin	423		570		-26	120		232		-48	303		337		-10
Liptruzet	112		56		99						112		57		98
Adempas	151		72		109						151		72		109
Diabetes
Januvia	1,787		1,970		-9	1,048		1,180		-11	740		790		-6
Janumet	1,059		1,075		-2	442		483		-8	617		592		4
General Medicine & Women’s Health
NuvaRing	359		376		-4	265		277		-4	94		99		-5
Implanon / Nexplanon	349		298		17	257		211		22	92		87		6
Follistim AQ	160		167		-4	74		73		2	86		94		-9
Hospital and Specialty
Hepatitis
Zepatier	895		161		*	455		156		191	440		5		*
HIV
Isentress/Isentress HD	587		678		-13	279		331		-16	308		347		-11
Hospital Acute Care
Bridion	310		204		52	99		18		*	211		186		13
Noxafil	296		288		3	142		137		3	154		150		3
Invanz	286		257		11	175		147		19	111		110		1
Cancidas	233		263		-12	11		10		12	222		254		-12
Cubicin	198		649		-69	107		559		-81	92		89		2
Primaxin	133		154		-14	2		2		-27	132		152		-13
Immunology
Remicade	437		688		-37						437		688		-37
Simponi	383		387		-1						383		387		-1
Oncology
Keytruda	1,465		563		160	917		293		*	547		270		102
Emend	276		268		3	169		175		-3	107		94		14
Temodar	130		139		-6	4		5		-16	126		134		-6
Diversified Brands
Respiratory
Singulair	389		465		-16	12		24		-50	377		442		-15
Nasonex	224		331		-32	39		141		-72	185		190		-3
Dulera	151		234		-35	139		222		-37	12		12		1
Other
Cozaar / Hyzaar	231		258		-10	6		9		-39	226		248		-9
Arcoxia	192		228		-16						192		228		-16
Fosamax	127		148		-14	3		1		152	124		147		-16
Vaccines (2)
Gardasil / Gardasil 9	1,001		770		30	711		635		12	290		136		114
ProQuad / M-M-R II / Varivax	754		739		2	639		634		1	115		105		10
RotaTeq	347		318		9	250		233		7	96		85		14
Pneumovax 23	329		228		44	219		145		51	110		83		33
Zostavax	313		274		14	216		225		-4	97		49		97
Other Pharmaceutical (3)	2,156		2,214		-3	657		681		-4	1,498		1,532		-2
ANIMAL HEALTH	1,894		1,729		10	553		489		13	1,341		1,241		8
Other Revenues (4)	527		623		-15	260		157		65	266		464		-43
* 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 $175 million and $195 million on a global basis for June YTD 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.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

	2017									2016																		% Change
	1Q			2Q			June YTD			1Q			2Q			June YTD			3Q			4Q			Full Year			2Q
TOTAL PHARMACEUTICAL	$	8,185		$	8,759		$	16,944		$	8,104		$	8,700		$	16,804		$	9,443		$	8,904		$	35,151		1
United States	3,761			3,929			7,690			3,913			4,169			8,082			4,710			4,282			17,073			-6
% Pharmaceutical Sales	45.9		%	44.9		%	45.4		%	48.3		%	47.9		%	48.1		%	49.9		%	48.1		%	48.6		%
Europe (1)	1,977			2,082			4,059			1,914			1,997			3,911			1,935			1,843			7,689			4
% Pharmaceutical Sales	24.2		%	23.8		%	24.0		%	23.6		%	23.0		%	23.3		%	20.5		%	20.7		%	21.9		%
Japan	688			818			1,507			620			673			1,293			812			659			2,764			22
% Pharmaceutical Sales	8.4		%	9.3		%	8.9		%	7.7		%	7.7		%	7.7		%	8.6		%	7.4		%	7.9		%
Asia Pacific	889			946			1,835			806			890			1,696			914			912			3,522			6
% Pharmaceutical Sales	10.9		%	10.8		%	10.8		%	9.9		%	10.2		%	10.1		%	9.7		%	10.2		%	10.0		%
China	328			353			681			337			353			690			350			333			1,374			0
Latin America	375			462			837			359			430			789			448			538			1,776			7
% Pharmaceutical Sales	4.6		%	5.3		%	4.9		%	4.4		%	4.9		%	4.7		%	4.7		%	6.0		%	5.1		%
Eastern Europe/Middle East Africa	255			314			569			272			314			586			364			429			1,379			0
% Pharmaceutical Sales	3.1		%	3.6		%	3.4		%	3.4		%	3.6		%	3.5		%	3.9		%	4.8		%	3.9		%
Canada	182			171			353			147			170			318			184			180			682			0
% Pharmaceutical Sales	2.2		%	2.0		%	2.1		%	1.8		%	2.0		%	1.9		%	1.9		%	2.0		%	1.9		%
Other	58			37			94			73			57			129			76			61			266			-35
% Pharmaceutical Sales	0.7		%	0.4		%	0.6		%	0.9		%	0.7		%	0.8		%	0.8		%	0.7		%	0.8		%

(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

							June YTD			June YTD
	2Q17			2Q16			2017			2016
INTEREST INCOME	$	(96	)	$	(78	)	$	(194	)	$	(157	)
INTEREST EXPENSE	193			171			375			343
EXCHANGE LOSSES	19			37			11			76
EQUITY (INCOME) LOSS FROM AFFILIATES	(5		)	(4		)	8			(38		)
Other, net	(53		)	(107		)	(83		)	(157		)
TOTAL	$	58		$	19		$	117		$	67