Merck & Co. (MRK) 8-K Merck Announces First-Quarter 2020 Financial Results

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			1Q			2Q			3Q			4Q			Full Year				1Q
Sales	$	12,057		$	10,816		$	11,760		$	12,397		$	11,868		$	46,840				11	%
Costs, Expenses and Other
Cost of sales		3,312			3,052			3,401			3,990			3,669			14,112				9	%
Selling, general and administrative		2,555			2,425			2,712			2,589			2,888			10,615				5	%
Research and development		2,209			1,931			2,189			3,204			2,548			9,872				14	%
Restructuring costs		72			153			59			232			194			638				-53	%
Other (income) expense, net		71			188			140			35			(223	)		139				-62	%
Income Before Taxes		3,838			3,067			3,259			2,347			2,792			11,464				25	%
Taxes on Income		619			205			615			440			428			1,687
Net Income		3,219			2,862			2,644			1,907			2,364			9,777				12	%
Less: Net (Loss) Income Attributable to Noncontrolling Interests		-			(53	)		(26	)		6			7			(66	)
Net Income Attributable to Merck & Co., Inc.	$	3,219		$	2,915		$	2,670		$	1,901		$	2,357		$	9,843		��		10	%
Earnings per Common Share Assuming Dilution	$	1.26		$	1.12		$	1.03		$	0.74		$	0.92		$	3.81				13	%
Average Shares Outstanding Assuming Dilution		2,547			2,603			2,588			2,572			2,559			2,580
Tax Rate		16.1	%		6.7	%		18.9	%		18.7	%		15.3	%		14.7	%

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

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

FIRST QUARTER 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

	GAAP			Acquisition and Divestiture-Related Costs(1)			Restructuring Costs(2)			Certain Other Items			Adjustment Subtotal			Non-GAAP
Cost of sales	$	3,052			413			34						447		$	2,605
Selling, general and administrative		2,425			(1	)								(1	)		2,426
Research and development		1,931			(31	)								(31	)		1,962
Restructuring costs		153						153						153			-
Other (income) expense, net		188			167									167			21
Income Before Taxes		3,067			(548	)		(187	)					(735	)		3,802
Income Tax Provision (Benefit)		205			(98	)(3)		(31	)(3)		(293	)(4)		(422	)		627
Net Income		2,862			(450	)		(156	)		293			(313	)		3,175
Less: Net (Loss) Income Attributable to Noncontrolling Interests		(53	)		(53	)								(53	)		-
Net Income Attributable to Merck & Co., Inc.		2,915			(397	)		(156	)		293			(260	)		3,175
Earnings per Common Share Assuming Dilution	$	1.12			(0.15	)		(0.06	)		0.11			(0.10	)	$	1.22
Tax Rate		6.7	%														16.5	%

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. 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⁾Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amounts included in research and development expenses primarily reflect a reduction in expenses related to a net 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, 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 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

FIRST QUARTER 2020

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

	Global						U.S.								International
	1Q 2020		1Q 2019		% Change		1Q 2020			1Q 2019			% Change		1Q 2020		1Q 2019		% Change
TOTAL SALES(1)	$	12,057	$	10,816		11	$	5,137		$	4,555			13	$	6,920	$	6,261		11
PHARMACEUTICAL		10,655		9,663		10		4,714			4,215			12		5,941		5,448		9
Oncology
Keytruda		3,284		2,269		45		1,906			1,284			48		1,378		985		40
Alliance Revenue - Lynparza(2)		145		79		84		85			50			68		60		29		111
Alliance Revenue - Lenvima(2)		128		74		72		90			50			79		38		24		58
Emend		43		117		-63		5			63			-92		38		53		-29
Vaccines(3)
Gardasil / Gardasil 9		1,097		838		31		461			362			27		636		476		34
ProQuad / M-M-R II / Varivax		435		496		-12		333			343			-3		102		153		-33
Pneumovax 23		256		185		39		182			125			45		75		59		26
RotaTeq		222		211		5		140			154			-9		82		57		44
Vaqta		60		47		28		30			29			5		30		18		63
Hospital Acute Care
Bridion		299		255		17		143			119			20		157		136		15
Noxafil		94		190		-50		8			91			-92		87		99		-12
Invanz		64		72		-10		6			14			-58		59		58		1
Prevymis		60		32		88		26			18			49		33		14		136
Cancidas		55		61		-10		3			1			133		52		60		-13
Primaxin		51		59		-13										51		59		-13
Cubicin		46		88		-48		15			42			-65		31		46		-31
Zerbaxa		37		26		40		20			12			63		16		14		20
Immunology
Simponi		215		208		3										215		208		3
Remicade		88		123		-28										88		123		-28
Neuroscience
Belsomra		79		67		18		27			24			14		53		44		20
Virology
Isentress / Isentress HD		245		255		-4		75			108			-30		170		147		16
Zepatier		55		114		-52		18			33			-46		37		81		-54
Cardiovascular
Zetia		145		140		3		(2	)					*		147		140		5
Vytorin		53		97		-45		3			3			18		50		94		-47
Atozet		122		94		30										122		94		30
Adempas(4)		56		48		18										56		48		18
Alliance Revenue - Adempas(5)		53		42		26		49			40			20		5		2		133
Diabetes(6)
Januvia		774		824		-6		355			384			-7		419		440		-5
Janumet		503		530		-5		113			167			-32		390		364		7
Women's Health
Implanon / Nexplanon		195		199		-2		149			149					45		50		-10
NuvaRing		63		219		-71		26			185			-86		37		34		8
Diversified Brands
Singulair		155		191		-19		5			5			-11		151		186		-19
Cozaar / Hyzaar		102		103		-1		7			4			78		95		99		-4
Nasonex		71		96		-26		6			(1	)		*		65		97		-33
Arcoxia		70		75		-6										70		75		-6
Follistim AQ		41		57		-28		21			29			-30		21		28		-25
Other Pharmaceutical(7)		1,194		1,082		10		409			328			25		780		754		3
ANIMAL HEALTH		1,214		1,025		18		384			294			31		830		731		13
Livestock		739		611		21		162			117			39		577		494		17
Companion Animals		475		414		15		222			177			25		253		237		7
Other Revenues(8)		188		128		47		39			46			-15		149		82		80

* 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 $2,155 million and $1,887 million on a global basis for first quarter 2020 and 2019, respectively.

⁽⁴⁾ Net product sales in Merck's marketing territories.

⁽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⁾ Total Diabetes sales were $1,353 million and $1,402 million on a global basis for first quarter 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.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	2020			2019															% Change
	1Q			1Q			2Q			3Q			4Q			Full Year			1Q
TOTAL PHARMACEUTICAL	$	10,655		$	9,663		$	10,460		$	11,095		$	10,533		$	41,751			10
United States(1)		4,714			4,215			4,807			5,180			4,751			18,953			12
% Pharmaceutical Sales		44.2	%		43.6	%		46.0	%		46.7	%		45.1	%		45.4	%
Europe(2)		2,543			2,335			2,301			2,304			2,373			9,314			9
% Pharmaceutical Sales		23.9	%		24.2	%		22.0	%		20.8	%		22.5	%		22.3	%
China		846			725			745			898			773			3,141			17
% Pharmaceutical Sales		7.9	%		7.5	%		7.1	%		8.1	%		7.3	%		7.5	%
Japan		789			779			900			894			921			3,494			1
% Pharmaceutical Sales		7.4	%		8.1	%		8.6	%		8.1	%		8.7	%		8.4	%
Asia Pacific (other than China and Japan)		613			642			606			638			614			2,500			-4
% Pharmaceutical Sales		5.8	%		6.6	%		5.8	%		5.8	%		5.8	%		6.0	%
Eastern Europe/Middle East Africa		490			343			388			423			423			1,577			43
% Pharmaceutical Sales		4.6	%		3.6	%		3.7	%		3.8	%		4.0	%		3.8	%
Latin America		419			427			523			534			429			1,914			-2
% Pharmaceutical Sales		3.9	%		4.4	%		5.0	%		4.8	%		4.1	%		4.6	%
Canada		212			177			179			211			216			783			20
% Pharmaceutical Sales		2.0	%		1.8	%		1.7	%		1.9	%		2.0	%		1.9	%
Other(1)		29			20			11			13			33			75			45
% Pharmaceutical Sales		0.3	%		0.2	%		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

		1Q20			1Q19
Interest income	$	(25	)	$	(89	)
Interest expense		212			209
Exchange losses		54			101
(Income) loss from investments in equity securities, net(1)		(52	)		25
Net periodic defined benefit plan (credit) cost other than service cost		(90	)		(141	)
Other, net		(28	)		83
Total	$	71		$	188

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