Merck & Co. 8K Merck Announces Second-Quarter 2021 Financial Results | MRK 29 Jul 21

Exhibit 99.2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

	2021									2020																		% Change
	1Q			2Q			June YTD			1Q			2Q			June YTD			3Q			4Q			Full Year			2Q			June YTD
Sales	$	10,627		$	11,402		$	22,029		$	10,288		$	9,353		$	19,641		$	10,929		$	10,948		$	41,518			22	%		12	%

Costs, Expenses and Other
Cost of sales		3,199			3,104			6,303			2,829			2,747			5,576			3,013			5,029			13,618			13	%		13	%
Selling, general and administrative		2,187			2,281			4,468			2,191			2,085			4,276			2,060			2,619			8,955			9	%		4	%
Research and development		2,412			4,321			6,732			2,175			2,085			4,260			3,349			5,788			13,397			*			58	%
Restructuring costs		297			82			380			70			82			152			113			310			575			0	%		*
Other (income) expense, net		(455	)		(103	)		(558	)		62			(387	)		(325	)		(312	)		(253	)		(890	)		-73	%		72	%
Income (Loss) from Continuing Operations Before Taxes		2,987			1,717			4,704			2,961			2,741			5,702			2,706			(2,545	)		5,863			-37	%		-18	%
Income Tax Provision		238			503			741			495			396			891			380			69			1,340
Net Income (Loss) from Continuing Operations		2,749			1,214			3,963			2,466			2,345			4,811			2,326			(2,614	)		4,523			-48	%		-18	%
Less: Net Income (Loss) Attributable to Noncontrolling Interests		4			1			5			(5	)		4			(1	)		2			3			4
Net Income (Loss) from Continuing Operations Attributable to Merck & Co., Inc.		2,745			1,213			3,958			2,471			2,341			4,812			2,324			(2,617	)		4,519			-48	%		-18	%
Income from Discontinued Operations, Net of Taxes and Amounts Attributable to Noncontrolling Interests		434			332			766			748			661			1,409			617			523			2,548			-50	%		-46	%
Net Income (Loss) Attributable to Merck & Co., Inc.	$	3,179		$	1,545		$	4,724		$	3,219		$	3,002		$	6,221		$	2,941		$	(2,094	)	$	7,067			-49	%		-24	%

Basic Earnings (Loss) per Common Share Attributable to Merck & Co., Inc. Common Shareholders:
Income (Loss) from Continuing Operations	$	1.08		$	0.48		$	1.56		$	0.98		$	0.93		$	1.90		$	0.92		$	(1.03	)	$	1.79			-48	%		-18	%
Income from Discontinued Operations		0.17			0.13			0.30			0.30			0.26			0.56			0.24			0.21			1.01			-50	%		-46	%
Net Income (Loss)	$	1.26		$	0.61		$	1.87		$	1.27		$	1.19		$	2.46		$	1.16		$	(0.83	)	$	2.79			-49	%		-24	%

Earnings (Loss) per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders:
Income (Loss) from Continuing Operations	$	1.08		$	0.48		$	1.56		$	0.97		$	0.92		$	1.89		$	0.92		$	(1.03	)	$	1.78			-48	%		-17	%
Income from Discontinued Operations		0.17			0.13			0.30			0.29			0.26			0.55			0.24			0.21			1.00			-50	%		-45	%
Net Income (Loss)	$	1.25		$	0.61		$	1.86		$	1.26		$	1.18		$	2.45		$	1.16		$	(0.83	)	$	2.78			-48	%		-24	%

Average Shares Outstanding		2,531			2,533			2,532			2,533			2,527			2,531			2,529			2,530			2,530
Average Shares Outstanding Assuming Dilution ⁽¹⁾		2,541			2,540			2,540			2,547			2,536			2,542			2,538			2,530			2,541
Tax Rate from Continuing Operations		8.0	%		29.3	%		15.8	%		16.7	%		14.4	%		15.6	%		14.0	%		-2.7	%		22.9	%

* 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 2020, 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. Income from discontinued operations was also computed using average common shares outstanding.

MERCK & CO., INC.

SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2020 GAAP TO NON-GAAP RECONCILIATION - CONTINUING OPERATIONS

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

The table below reflects a reconciliation of GAAP to non-GAAP financial information on a continuing operations basis. As Organon results are reflected within discontinued operations, they are excluded from the financial information provided below.

	GAAP			Acquisition and Divestiture- Related Costs ⁽¹⁾			Restructuring Costs ⁽²⁾			(Income) Loss from Investments in Equity Securities			Certain Other Items			Adjustment Subtotal			Non-GAAP
Second Quarter
Cost of sales	$	2,747			580			25									605		$	2,142
Selling, general and administrative		2,085			44			11									55			2,030
Research and development		2,085			(63	)		31									(32	)		2,117
Restructuring costs		82						82									82			-
Other (income) expense, net		(387	)		63						(511	)		(16	)		(464	)		77
Income From Continuing Operations Before Taxes		2,741			(624	)		(149	)		511			16			(246	)		2,987
Income Tax Provision (Benefit)		396			(91	)⁽³⁾		(27	)⁽³⁾		112	⁽³⁾		5	⁽³⁾		(1	)		397
Net Income from Continuing Operations		2,345			(533	)		(122	)		399			11			(245	)		2,590
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		2,341			(533	)		(122	)		399			11			(245	)		2,586
Earnings per Common Share Assuming Dilution from Continuing Operations	$	0.92			(0.21	)		(0.05	)		0.16			-			(0.10	)	$	1.02

Tax Rate		14.4	%																	13.3	%

June YTD
Cost of sales	$	5,576			968			93									1,061		$	4,516
Selling, general and administrative		4,276			157			22									179			4,097
Research and development		4,260			(23	)		48									25			4,235
Restructuring costs		152						152									152			-
Other (income) expense, net		(325	)		52						(598	)		(16	)		(562	)		237
Income From Continuing Operations Before Taxes		5,702			(1,153	)		(315	)		598			16			(854	)		6,556
Income Tax Provision (Benefit)		891			(241	)⁽³⁾		(34	)⁽³⁾		132	⁽³⁾		5	⁽³⁾		(139	)		1,030
Net Income from Continuing Operations		4,811			(912	)		(281	)		466			11			(715	)		5,526
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		4,812			(912	)		(281	)		466			11			(715	)		5,527
Earnings per Common Share Assuming Dilution from Continuing Operations	$	1.89			(0.36	)		(0.11	)		0.18			0.01			(0.28	)	$	2.17

Tax Rate		15.6	%																	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⁾Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative (SG&A) expenses reflect acquisition and divestiture-related costs, including $95 million of transaction costs in the six month period related to the acquisition of Arqule, Inc. Amounts included in research and development expenses primarily reflect a reduction in 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 costs related to increases 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⁾Represent the estimated tax impacts 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 - CONTINUING OPERATIONS
SECOND QUARTER 2021
(AMOUNTS IN MILLIONS)
(UNAUDITED)
Table 3a

	Global							U.S.								International
	2Q 2021			2Q 2020		% Change		2Q 2021			2Q 2020			% Change		2Q 2021			2Q 2020		% Change
TOTAL SALES ⁽¹⁾	$	11,402		$	9,353		22	$	5,100		$	4,322			18	$	6,301		$	5,031		25
PHARMACEUTICAL		9,980			8,178		22		4,647			3,958			17		5,333			4,220		26
Oncology
Keytruda		4,176			3,388		23		2,347			2,043			15		1,829			1,345		36
Alliance Revenue - Lynparza ⁽²⁾		248			178		39		124			105			18		124			73		70
Alliance Revenue - Lenvima ⁽²⁾		181			151		19		88			98			-11		93			53		74
Vaccines ⁽³⁾
Gardasil / Gardasil 9		1,234			656		88		454			168			170		781			488		60
ProQuad / M-M-R II / Varivax		516			378		36		386			263			47		130			115		13
Pneumovax 23		152			117		30		100			21			*		52			96		-46
RotaTeq		208			168		23		111			100			11		97			68		43
Vaqta		56			28		101		22			17			34		34			11		199
Hospital Acute Care
Bridion		387			224		72		197			107			84		190			117		62
Prevymis		93			63		47		37			28			29		56			35		61
Noxafil		66			73		-10		14			6			135		52			67		-23
Primaxin		60			64		-6					1			-90		60			63		-5
Cancidas		54			43		24		1			(2	)		-132		53			45		18
Invanz		48			43		10		(4	)					*		52			43		20
Zerbaxa		(1	)		32		-104		(2	)		17			-111		1			15		-96
Immunology
Simponi		202			191		5										202			191		5
Remicade		75			73		3										75			73		3
Neuroscience
Belsomra		78			84		-7		14			22			-36		63			61		4
Virology
Isentress / Isentress HD		192			196		-2		74			76			-3		118			120		-2
Cardiovascular
Alliance Revenue - Adempas/Verquvo ⁽⁴⁾		74			79		-7		81			73			10		(7	)		6		*
Adempas ⁽⁵⁾		74			57		29										74			57		29
Diabetes ⁽⁶⁾
Januvia		784			854		-8		284			413			-31		500			441		13
Janumet		477			490		-3		74			143			-48		403			348		16
Other Pharmaceutical ⁽⁷⁾		546			548				245			259			-5		301			289		4

ANIMAL HEALTH		1,472			1,101		34		459			342			34		1,012			759		33
Livestock		821			648		27		161			122			32		659			526		25
Companion Animals		651			453		44		298			220			36		353			233		51

Other Revenues ⁽⁸⁾		(50	)		74		-167		(6	)		22			-127		(44	)		52		-184

* 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 $2,293 million in the second quarter of 2021 and $1,418 million in the second quarter of 2020.

⁽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 $1,330 million in the second quarter of 2021 and $1,418 million in the second quarter of 2020.

⁽⁷⁾Includes Pharmaceutical products not individually shown above.

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

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES - CONTINUING OPERATIONS

JUNE YEAR-TO-DATE 2021

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	Global							U.S.							International
	June YTD 2021			June YTD 2020		% Change		June YTD 2021			June YTD 2020		% Change		June YTD 2021			June YTD 2020		% Change
TOTAL SALES ⁽¹⁾	$	22,029		$	19,641		12	$	9,890		$	9,053		9	$	12,139		$	10,588		15
PHARMACEUTICAL		19,218			17,083		12		8,941			8,266		8		10,277			8,818		17
Oncology
Keytruda		8,076			6,672		21		4,528			3,949		15		3,548			2,722		30
Alliance Revenue - Lynparza ⁽²⁾		475			323		47		242			190		28		233			133		75
Alliance Revenue - Lenvima ⁽²⁾		310			279		11		173			188		-8		137			91		50
Vaccines ⁽³⁾
Gardasil / Gardasil 9		2,151			1,753		23		766			629		22		1,385			1,124		23
ProQuad / M-M-R II / Varivax		965			813		19		718			596		20		246			217		13
Pneumovax 23		323			373		-13		173			203		-15		150			170		-12
RotaTeq		366			391		-6		229			241		-5		137			150		-8
Vaqta		90			88		2		47			47		1		43			41		4
Hospital Acute Care
Bridion		727			524		39		364			250		46		363			274		32
Prevymis		174			123		42		72			55		31		103			68		51
Noxafil		133			168		-21		29			14		113		104			154		-32
Primaxin		125			115		8					1		-92		125			114		9
Cancidas		111			98		13		3			1		*		108			98		11
Invanz		104			108		-3					6		-94		104			102		2
Zerbaxa		(9	)		69		-113		(4	)		37		-110		(5	)		32		-116
Immunology
Simponi		416			406		2									416			406		2
Remicade		160			160											160			160
Neuroscience
Belsomra		157			163		-4		32			49		-34		125			114		10
Virology
Isentress / Isentress HD		401			441		-9		145			151		-4		256			290		-12
Cardiovascular
Alliance Revenue - Adempas/Verquvo ⁽⁴⁾		149			133		12		149			122		22					11		-99
Adempas ⁽⁵⁾		129			113		15									129			113		15
Diabetes ⁽⁶⁾
Januvia		1,593			1,628		-2		632			768		-18		961			860		12
Janumet		962			993		-3		158			256		-38		805			737		9
Other Pharmaceutical ⁽⁷⁾		1,130			1,149		-2		485			513		-5		644			637		1

ANIMAL HEALTH		2,890			2,314		25		896			726		23		1,994			1,588		26
Livestock		1,640			1,386		18		318			284		12		1,322			1,102		20
Companion Animals		1,250			928		35		578			442		31		672			486		38

Other Revenues ⁽⁸⁾		(79	)		244		-132		53			61		-13		(132	)		182		-172

* 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 $4,102 million and $3,574 million on a global basis for June YTD 2021 and 2020, 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 $2,693 million and $2,772 million on a global basis for June YTD 2021 and 2020, respectively.

⁽⁷⁾Includes Pharmaceutical products not individually shown above.

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

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES - CONTINUING OPERATIONS

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

	2021									2020																		% Change
	1Q			2Q			June YTD			1Q			2Q			June YTD			3Q			4Q			Full Year			2Q		June YTD
TOTAL PHARMACEUTICAL	$	9,238		$	9,980		$	19,218		$	8,905		$	8,178		$	17,083		$	9,714		$	9,813		$	36,610			22		12

United States		4,294			4,647			8,941			4,308			3,958			8,266			4,842			4,903			18,010			17		8
% Pharmaceutical Sales		46.5	%		46.6	%		46.5	%		48.4	%		48.4	%		48.4	%		49.8	%		50.0	%		49.2	%
Europe ⁽¹⁾		2,276			2,404			4,680			2,116			1,855			3,971			2,171			2,314			8,455			30		18
% Pharmaceutical Sales		24.6	%		24.1	%		24.4	%		23.8	%		22.7	%		23.2	%		22.3	%		23.6	%		23.1	%
China		688			944			1,632			628			600			1,228			764			670			2,661			57		33
% Pharmaceutical Sales		7.4	%		9.5	%		8.5	%		7.1	%		7.3	%		7.2	%		7.9	%		6.8	%		7.3	%
Japan		607			637			1,244			561			601			1,162			648			704			2,514			6		7
% Pharmaceutical Sales		6.6	%		6.4	%		6.5	%		6.3	%		7.3	%		6.8	%		6.7	%		7.2	%		6.9	%
Asia Pacific (other than China and Japan)		437			442			879			411			377			789			411			414			1,614			17		11
% Pharmaceutical Sales		4.7	%		4.4	%		4.6	%		4.6	%		4.6	%		4.6	%		4.2	%		4.2	%		4.4	%
Latin America		353			379			732			314			312			626			372			371			1,369			21		17
% Pharmaceutical Sales		3.8	%		3.8	%		3.8	%		3.5	%		3.8	%		3.7	%		3.8	%		3.8	%		3.7	%
Eastern Europe/Middle East/Africa		357			318			675			353			309			659			289			251			1,199			3		2
% Pharmaceutical Sales		3.9	%		3.2	%		3.5	%		4.0	%		3.8	%		3.9	%		3.0	%		2.6	%		3.3	%
Canada		160			157			318			159			121			280			169			149			599			31		14
% Pharmaceutical Sales		1.7	%		1.6	%		1.7	%		1.8	%		1.5	%		1.6	%		1.7	%		1.5	%		1.6	%
Other		66			52			117			55			45			102			48			37			189			16		15
% Pharmaceutical Sales		0.8	%		0.4	%		0.5	%		0.5	%		0.6	%		0.6	%		0.6	%		0.3	%		0.5	%

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

⁽¹⁾Europe represents all European Union countries, the European Union accession markets and the United Kingdom.

MERCK & CO., INC.
OTHER (INCOME) EXPENSE, NET - GAAP
(AMOUNTS IN MILLIONS)
(UNAUDITED)
Table 4

OTHER (INCOME) EXPENSE, NET

		2Q21			2Q20			June YTD 2021			June YTD 2020
Interest income	$	(9	)	$	(14	)	$	(20	)	$	(39	)
Interest expense		202			209			401			421
Exchange losses		114			24			155			78
Income from investments in equity securities, net ⁽¹⁾		(280	)		(551	)		(854	)		(603	)
Net periodic defined benefit plan (credit) cost other than service cost		(110	)		(80	)		(199	)		(170	)
Other, net		(20	)		25			(41	)		(12	)
Total	$	(103	)	$	(387	)	$	(558	)	$	(325	)

⁽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.

Merck & Co. (MRK) 8-KMerck Announces Second-Quarter 2021 Financial Results