Merck & Co. 8K Merck Announces Fourth-Quarter and Full-Year 2022 Financial Results | MRK 2 Feb 23

Exhibit 99.2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

		2022															2021														% Change
		1Q			2Q			3Q			4Q			Full Year			1Q			2Q			3Q			4Q			Full Year		4Q		Full Year
Sales	$	15,901		$	14,593		$	14,959		$	13,830		$	59,283		$	10,627		$	11,402		$	13,154		$	13,521		$	48,704		2	%	22	%

Costs, Expenses and Other
Cost of sales		5,380			4,216			3,934			3,881			17,411			3,199			3,104			3,450			3,873			13,626		0	%	28	%
Selling, general and administrative		2,323			2,512			2,520			2,687			10,042			2,187			2,281			2,336			2,830			9,634		-5	%	4	%
Research and development		2,576			2,798			4,399			3,775			13,548			2,412			4,321			2,445			3,068			12,245		23	%	11	%
Restructuring costs		53			142			94			49			337			297			82			107			174			661		-72	%	-49	%
Other (income) expense, net		708			438			429			(75	)		1,501			(455	)		(103	)		(450	)		(333	)		(1,341	)	-77	%	*
Income from Continuing Operations Before Taxes		4,861			4,487			3,583			3,513			16,444			2,987			1,717			5,266			3,909			13,879		-10	%	18	%
Income Tax Provision		554			538			330			495			1,918			238			503			695			85			1,521
Net Income from Continuing Operations		4,307			3,949			3,253			3,018			14,526			2,749			1,214			4,571			3,824			12,358		-21	%	18	%
Less: Net (Loss) Income Attributable to Noncontrolling Interests		(3	)		5			5			1			7			4			1			4			4			13
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		4,310			3,944			3,248			3,017			14,519			2,745			1,213			4,567			3,820			12,345		-21	%	18	%
Income (Loss) from Discontinued Operations, Net of Taxes and Amounts Attributable to Noncontrolling Interests		-			-			-			-			-			434			332			-			(62	)		704		*		*
Net Income Attributable to Merck & Co., Inc.	$	4,310		$	3,944		$	3,248		$	3,017		$	14,519		$	3,179		$	1,545		$	4,567		$	3,758		$	13,049		-20	%	11	%

Basic Earnings (Loss) per Common Share Attributable to Merck & Co., Inc. Common Shareholders:
Income from Continuing Operations	$	1.70		$	1.56		$	1.28		$	1.19		$	5.73		$	1.08		$	0.48		$	1.81		$	1.51		$	4.88		-21	%	17	%
Income (Loss) from Discontinued Operations		-			-			-			-			-			0.17			0.13			-			(0.02	)		0.28		*		*
Net Income	$	1.70		$	1.56		$	1.28		$	1.19		$	5.73		$	1.26		$	0.61		$	1.81		$	1.49		$	5.16		-20	%	11	%

Earnings (Loss) per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders:
Income from Continuing Operations	$	1.70		$	1.55		$	1.28		$	1.18		$	5.71		$	1.08		$	0.48		$	1.80		$	1.51		$	4.86		-22	%	17	%
Income (Loss) from Discontinued Operations		-			-			-			-			-			0.17			0.13			-			(0.02	)		0.28		*		*
Net Income	$	1.70		$	1.55		$	1.28		$	1.18		$	5.71		$	1.25		$	0.61		$	1.80		$	1.48		$	5.14		-20	%	11	%

Average Shares Outstanding		2,528			2,531			2,533			2,536			2,532			2,531			2,533			2,530			2,527			2,530
Average Shares Outstanding Assuming Dilution		2,537			2,540			2,542			2,548			2,542			2,541			2,540			2,536			2,535			2,538
Tax Rate from Continuing Operations		11.4	%		12.0	%		9.2	%		14.1	%		11.7	%		8.0	%		29.3	%		13.2	%		2.2	%		11.0	%

* 100% or greater

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

MERCK & CO., INC.

FOURTH QUARTER AND FULL YEAR 2021 GAAP TO NON-GAAP RECONCILIATION - CONTINUING OPERATIONS

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

In 2022, the company changed the treatment of certain items for purposes of its non-GAAP reporting. Historically, Merck’s non-GAAP results excluded expenses for upfront and milestone payments related to collaborations and licensing agreements, as well as charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions, to the extent the charges were considered by the company to be significant to the results of a particular period (as well as any related adjustments recorded in a subsequent period). Beginning in 2022, Merck’s non-GAAP results no longer exclude charges related to these items. Results for 2021 have been recast to conform to the new presentation.

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
Fourth Quarter
Cost of sales	$	3,873		419		47				(4	)	462		$	3,411
Selling, general and administrative		2,830		226		10						236			2,594
Research and development		3,068		397		7						404			2,664
Restructuring costs		174				174						174			-
Other (income) expense, net		(333	)	(3	)			(381	)			(384	)		51
Income from Continuing Operations Before Taxes		3,909		(1,039	)	(238	)	381		4		(892	)		4,801
Income Tax Provision (Benefit)		85		(163	)⁽⁴⁾	(39	)⁽⁴⁾	84	⁽⁴⁾	(2	)⁽⁴⁾	(120	)		205
Net Income from Continuing Operations		3,824		(876	)	(199	)	297		6		(772	)		4,596
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		3,820		(876	)	(199	)	297		6		(772	)		4,592
Earnings per Common Share Assuming Dilution from Continuing Operations	$	1.51		(0.34	)	(0.08	)	0.12		-		(0.30	)	$	1.81

Tax Rate		2.2	%												4.3	%

Full Year
Cost of sales	$	13,626		1,607		160				221	⁽³⁾	1,988		$	11,638
Selling, general and administrative		9,634		322		19						341			9,293
Research and development		12,245		479		28						507			11,738
Restructuring costs		661				661						661			-
Other (income) expense, net		(1,341	)	76				(1,884	)			(1,808	)		467
Income from Continuing Operations Before Taxes		13,879		(2,484	)	(868	)	1,884		(221	)	(1,689	)		15,568
Income Tax Provision (Benefit)		1,521		(446	)⁽⁴⁾	(121	)⁽⁴⁾	415	⁽⁴⁾	(259	)⁽⁴⁾	(411	)		1,932
Net Income from Continuing Operations		12,358		(2,038	)	(747	)	1,469		38		(1,278	)		13,636
Net Income from Continuing Operations Attributable to Merck & Co., Inc.		12,345		(2,038	)	(747	)	1,469		38		(1,278	)		13,623
Earnings per Common Share Assuming Dilution from Continuing Operations	$	4.86		(0.80	)	(0.30	)	0.58		0.01		(0.51	)	$	5.37

Tax Rate		11.0	%												12.4	%

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 non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP 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 a non-GAAP pretax income metric. The non-GAAP information presented 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 expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures, including $169 million of transaction costs related to the acquisition of Acceleron Pharma Inc. (Acceleron) in 2021. Amounts included in research and development expenses primarily reflect a $275 million in-process research and development (IPR&D) impairment charge related to nemtabrutinib, which was obtained as part of the 2020 ArQule, Inc. acquisition, $105 million of Acceleron transaction costs, and expenses for the amortization of intangible assets. Amounts included in other (income) expense, net, reflect increases in the estimated fair value measurement of liabilities for contingent consideration and royalty income related to the prior termination of the Sanofi-Pasteur MSD joint venture. Additionally, the full year includes a loss on a forward exchange contract entered into in conjunction with the Organon spin-off.

⁽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⁾Reflects charges for the discontinuation of COVID-19 development programs.

⁽⁴⁾Represent the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Certain other items for the full year also includes a $207 million net tax benefit related to the settlement of certain federal income tax matters.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES - CONTINUING OPERATIONS

FOURTH QUARTER 2022

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

	Global						U.S.								International
	4Q 2022		4Q 2021		% Change		4Q 2022			4Q 2021			% Change		4Q 2022			4Q 2021		% Change
TOTAL SALES ⁽¹⁾	$	13,830	$	13,521		2	$	6,279		$	6,259			-	$	7,551		$	7,262		4
PHARMACEUTICAL		12,180		12,039		1		5,871			5,790			1		6,309			6,249		1
Oncology
Keytruda		5,450		4,577		19		3,378			2,657			27		2,071			1,920		8
Alliance Revenue - Lynparza ⁽²⁾		292		268		9		157			144			9		135			123		9
Alliance Revenue - Lenvima ⁽²⁾		216		206		5		154			131			18		62			75		-18
Alliance Revenue - Reblozyl ⁽³⁾		41		17		145		36						100		6			17		-66
Vaccines ⁽⁴⁾
Gardasil / Gardasil 9		1,470		1,528		-4		262			275			-5		1,207			1,253		-4
ProQuad / M-M-R II / Varivax		526		509		3		387			374			4		139			135		3
Pneumovax 23		145		292		-50		66			193			-66		79			99		-20
RotaTeq		139		213		-35		82			109			-25		57			105		-46
Vaqta		39		41		-5		23			20			14		16			21		-24
Hospital Acute Care
Bridion		441		436		1		257			218			18		183			218		-16
Prevymis		118		100		17		52			42			25		65			58		12
Dificid		67		60		12		57			57			-1		10			3		*
Noxafil		58		62		-5		13			11			11		46			50		-9
Primaxin		54		65		-17		1			1			-53		53			64		-16
Zerbaxa		49		10		*		25			9			169		24			1		*
Invanz		40		45		-10					(3	)		-86		41			48		-15
Cancidas		36		45		-19		1						*		35			45		-21
Cardiovascular
Alliance Revenue - Adempas/Verquvo ⁽⁵⁾		82		94		-12		85	��		90			-6		(2	)		4		-166
Adempas ⁽⁶⁾		57		63		-10										57			63		-10
Virology
Lagevrio		825		952		-13					632			-100		825			320		158
Isentress / Isentress HD		167		178		-7		78			72			7		89			106		-16
Neuroscience
Belsomra		59		80		-27		19			22			-12		39			58		-32
Immunology
Simponi		166		206		-19										166			206		-19
Remicade		44		67		-34										44			67		-34
Diabetes ⁽⁷⁾
Januvia		561		878		-36		290			407			-29		271			472		-43
Janumet		353		514		-31		97			123			-21		255			391		-35
Other Pharmaceutical ⁽⁸⁾		685		533		29		351			206			70		336			327		3

ANIMAL HEALTH		1,230		1,261		-2		396			395			-		834			866		-4
Livestock		814		791		3		188			158			19		626			633		-1
Companion Animals		416		470		-11		208			237			-12		208			233		-10

Other Revenues ⁽⁹⁾		420		221		90		12			74			-84		408			147		178

* 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⁾Alliance Revenue represents royalties.

⁽⁴⁾Total Vaccines sales were $2,554 million in the fourth quarter of 2022 and $2,715 million in the fourth quarter of 2021.

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

⁽⁷⁾Total Diabetes sales were $1,012 million in the fourth quarter of 2022 and $1,475 million in the fourth quarter of 2021.

⁽⁸⁾Includes Pharmaceutical products not individually shown above.

⁽⁹⁾Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $10 million in the fourth quarter of 2022, and $27 million in the fourth quarter of 2021.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES - CONTINUING OPERATIONS

FULL YEAR 2022

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	Global							U.S.							International
	Full Year 2022		Full Year 2021			% Change		Full Year 2022		Full Year 2021			% Change		Full Year 2022		Full Year 2021			% Change
TOTAL SALES ⁽¹⁾	$	59,283	$	48,704			22	$	27,206	$	22,425			21	$	32,077	$	26,279			22
PHARMACEUTICAL		52,005		42,754			22		24,989		20,401			22		27,016		22,353			21
Oncology
Keytruda		20,937		17,186			22		12,686		9,765			30		8,251		7,421			11
Alliance Revenue - Lynparza ⁽²⁾		1,116		989			13		584		515			13		532		473			12
Alliance Revenue - Lenvima ⁽²⁾		876		704			24		579		417			39		297		287			3
Alliance Revenue - Reblozyl ⁽³⁾		166		17			*		123					100		43		17			153
Vaccines ⁽⁴⁾
Gardasil / Gardasil 9		6,897		5,673			22		2,065		1,881			10		4,832		3,792			27
ProQuad / M-M-R II / Varivax		2,241		2,135			5		1,724		1,629			6		518		506			2
RotaTeq		783		807			-3		508		473			8		275		334			-18
Pneumovax 23		602		893			-33		346		547			-37		256		346			-26
Vaqta		173		179			-3		95		100			-4		78		79			-2
Hospital Acute Care
Bridion		1,685		1,532			10		922		762			21		762		770			-1
Prevymis		428		370			16		188		153			23		240		218			10
Dificid		263		175			50		241		166			45		22		10			130
Primaxin		239		259			-8		1		2			-9		238		258			-8
Noxafil		238		259			-8		51		60			-14		187		199			-6
Invanz		189		202			-7		4		(5	)		-171		185		207			-11
Cancidas		174		212			-18		6		4			51		168		208			-19
Zerbaxa		169		(1	)		*		89		4			*		79		(5	)		*
Cardiovascular
Alliance Revenue - Adempas/Verquvo ⁽⁵⁾		341		342			-		329		312			5		12		30			-62
Adempas ⁽⁶⁾		238		252			-6									238		252			-6
Virology
Lagevrio		5,684		952			*		1,523		632			141		4,161		320			*
Isentress / Isentress HD		633		769			-18		274		294			-7		359		474			-24
Neuroscience
Belsomra		258		318			-19		79		78			2		179		241			-26
Immunology
Simponi		706		825			-14									706		825			-14
Remicade		207		299			-31									207		299			-31
Diabetes ⁽⁷⁾
Januvia		2,813		3,324			-15		1,248		1,404			-11		1,565		1,920			-18
Janumet		1,700		1,964			-13		355		367			-3		1,344		1,597			-16
Other Pharmaceutical ⁽⁸⁾		2,249		2,118			6		969		841			15		1,282		1,275			1

ANIMAL HEALTH		5,550		5,568			-		1,822		1,758			4		3,728		3,810			-2
Livestock		3,300		3,295			-		710		667			6		2,590		2,628			-1
Companion Animals		2,250		2,273			-1		1,112		1,091			2		1,138		1,182			-4

Other Revenues ⁽⁹⁾		1,728		382			*		395		266			48		1,333		116			*

* 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⁾Alliance Revenue represents royalties and a milestone payment.

⁽⁴⁾Total Vaccines sales were $11,297 million and $10,132 million on a global basis for December YTD 2022 and 2021, respectively.

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

⁽⁷⁾Total Diabetes sales were $4,848 million and $5,584 million on a global basis for December YTD 2022 and 2021, respectively.

⁽⁸⁾Includes Pharmaceutical products not individually shown above.

⁽⁹⁾Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $165 million and $218 million on a global basis for December YTD 2022 and 2021 respectively.

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES - CONTINUING OPERATIONS

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

	2022															2021															% Change
	1Q			2Q			3Q			4Q			Full Year			1Q			2Q			3Q			4Q			Full Year			4Q		Full Year
TOTAL PHARMACEUTICAL	$	14,107		$	12,756		$	12,963		$	12,180		$	52,005		$	9,238		$	9,980		$	11,496		$	12,039		$	42,754			1		22
United States		6,773			5,726			6,620			5,871			24,989			4,294			4,647			5,670			5,790			20,401			1		22
% Pharmaceutical Sales		48.0	%		44.9	%		51.1	%		48.2	%		48.1	%		46.5	%		46.6	%		49.3	%		48.1	%		47.7	%
Europe ⁽¹⁾		3,309			2,677			2,427			2,494			10,906			2,276			2,404			2,445			2,655			9,780			-6		12
% Pharmaceutical Sales		23.5	%		21.0	%		18.7	%		20.5	%		21.0	%		24.6	%		24.1	%		21.3	%		22.1	%		22.9	%
China		1,113			1,355			1,419			1,216			5,102			688			944			1,278			1,352			4,262			-10		20
% Pharmaceutical Sales		7.9	%		10.6	%		10.9	%		10.0	%		9.8	%		7.4	%		9.5	%		11.1	%		11.2	%		10.0	%
Japan		965			1,092			653			832			3,542			607			637			614			771			2,629			8		35
% Pharmaceutical Sales		6.8	%		8.6	%		5.0	%		6.8	%		6.8	%		6.6	%		6.4	%		5.3	%		6.4	%		6.1	%
Asia Pacific (other than China and Japan)		786			854			702			691			3,034			437			442			450			488			1,817			42		67
% Pharmaceutical Sales		5.6	%		6.7	%		5.4	%		5.7	%		5.8	%		4.7	%		4.4	%		3.9	%		4.1	%		4.2	%
Latin America		435			453			511			472			1,871			353			379			434			421			1,587			12		18
% Pharmaceutical Sales		3.1	%		3.6	%		3.9	%		3.9	%		3.6	%		3.8	%		3.8	%		3.8	%		3.5	%		3.7	%
Eastern Europe/Middle East/Africa		450			339			360			320			1,469			357			318			362			278			1,315			15		12
% Pharmaceutical Sales		3.2	%		2.7	%		2.8	%		2.6	%		2.8	%		3.9	%		3.2	%		3.1	%		2.3	%		3.1	%
Canada		189			166			166			158			678			160			157			164			167			650			-6		4
% Pharmaceutical Sales		1.3	%		1.3	%		1.3	%		1.3	%		1.3	%		1.7	%		1.6	%		1.4	%		1.4	%		1.5	%
Other		87			94			105			126			414			66			52			79			117			313			8		32
% Pharmaceutical Sales		0.6	%		0.6	%		0.9	%		1.0	%		0.8	%		0.8	%		0.4	%		0.8	%		0.9	%		0.8	%

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

		4Q22			4Q21			Full Year 2022			Full Year 2021
Interest income	$	(95	)	$	(9	)	$	(157	)	$	(36	)
Interest expense		235			208			962			806
Exchange losses		17			95			237			297
Loss (income) from investments in equity securities, net ⁽¹⁾		59			(403	)		1,419			(1,940	)
Net periodic defined benefit plan cost (credit) other than service cost		(71	)		(53	)		(279	)		(212	)
Other, net		(220	)		(171	)		(681	)		(256	)
Total	$	(75	)	$	(333	)	$	1,501		$	(1,341	)

⁽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 gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.

Merck & Co. (MRK) 8-KMerck Announces Fourth-Quarter and Full-Year 2022 Financial Results