Merck & Co. 8K Merck Announces Second-Quarter 2019 Financial Results | MRK 30 Jul 19

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.

(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.

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

	2019									2018
	1Q			2Q			June YTD			1Q			2Q			June YTD			3Q			4Q			Full Year			% Change 2Q

TOTAL PHARMACEUTICAL	$	9,663		$	10,460		$	20,123		$	8,919		$	9,282		$	18,201		$	9,658		$	9,830		$	37,689		13

United States	4,175			4,758			8,933			3,716			3,841			7,557			4,649			4,402			16,608			24
% Pharmaceutical Sales	43.2		%	45.5		%	44.4		%	41.7		%	41.4		%	41.5		%	48.1		%	44.8		%	44.1		%

Europe (1)	2,335			2,301			4,636			2,402			2,322			4,724			2,114			2,237			9,076			-1
% Pharmaceutical Sales	24.2		%	22.0		%	23.0		%	26.9		%	25.0		%	26.0		%	21.9		%	22.8		%	24.1		%

Japan	779			900			1,679			718			834			1,552			740			835			3,127			8
% Pharmaceutical Sales	8.1		%	8.6		%	8.3		%	8.1		%	9.0		%	8.5		%	7.7		%	8.5		%	8.3		%

Asia Pacific	1,367			1,351			2,718			1,112			1,224			2,336			1,054			1,199			4,589			10
% Pharmaceutical Sales	14.1		%	12.9		%	13.5		%	12.5		%	13.2		%	12.8		%	10.9		%	12.2		%	12.2		%

China	725			745			1,470			459			530			989			488			601			2,077			41
% Pharmaceutical Sales	7.5		%	7.1		%	7.3		%	5.1		%	5.7		%	5.4		%	5.1		%	6.1		%	5.5		%
��
Latin America	427			523			950			398			459			856			493			530			1,880			14
% Pharmaceutical Sales	4.4		%	5.0		%	4.7		%	4.5		%	4.9		%	4.7		%	5.1		%	5.4		%	5.0		%

Eastern Europe/Middle East Africa	343			388			731			335			356			691			347			349			1,388			9
% Pharmaceutical Sales	3.6		%	3.7		%	3.6		%	3.8		%	3.8		%	3.8		%	3.6		%	3.6		%	3.7		%

Canada	177			179			356			196			192			388			177			211			776			-7
% Pharmaceutical Sales	1.8		%	1.7		%	1.8		%	2.2		%	2.1		%	2.1		%	1.8		%	2.1		%	2.1		%

Other	60			60			120			42			54			96			84			67			245			11
% Pharmaceutical Sales	0.6		%	0.6		%	0.6		%	0.5		%	0.6		%	0.5		%	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

	2Q19			2Q18			June YTD 2019			June YTD 2018
Interest income	$	(75	)	$	(81	)	$	(164	)	$	(165	)
Interest expense	233			194			442			379
Exchange losses	27			71			128			77
Income from investments in equity securities, net (1)	(58		)	(153		)	(32		)	(178		)
Net periodic defined benefit plan (credit) cost other than service cost	(140		)	(130		)	(281		)	(265		)
Other, net	153			51			234			(188		)
Total	$	140		$	(48	)	$	327		$	(340	)

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

Merck & Co. (MRK) 8-KMerck Announces Second-Quarter 2019 Financial Results