- Total Worldwide Sales Were $16.1 Billion, an Increase of 7%
From Second Quarter 2023; Excluding the Impact of Foreign Exchange,
Growth Was 11%
- KEYTRUDA Sales Grew 16% to $7.3 Billion; Excluding the Impact
of Foreign Exchange, Sales Grew 21%
- GAAP EPS Was $2.14; Non-GAAP EPS Was $2.28
- Successful Initial Launch of WINREVAIR in the U.S.; Received
Positive EU CHMP Opinion for Adults With PAH
- Achieved Key Milestones in Vaccine Programs
- Following FDA Approval, CAPVAXIVE Unanimously Recommended by
the CDC’s ACIP for Pneumococcal Vaccination for Certain Adults
- Announced Positive Results From Phase 2b/3 Trial of Clesrovimab
(MK-1654), an Investigational RSV Preventative Monoclonal Antibody
for Infants
- Completed Acquisitions of EyeBio and Elanco’s Aqua Business in
July 2024
- Full-Year 2024 Financial Outlook
- Raises and Narrows Expected Worldwide Sales Range To Be Between
$63.4 Billion and $64.4 Billion
- Now Expects Non-GAAP EPS To Be Between $7.94 and $8.04; Outlook
Reflects Negative Impact From One-Time Charge of Approximately $1.3
Billion, or $0.51 per Share, for the Acquisition of EyeBio
Merck (NYSE: MRK), known as MSD outside the United States and
Canada, today announced financial results for the second quarter of
2024.
“Our business is demonstrating strong momentum as we exit the
first half of the year,” said Robert M. Davis, chairman and chief
executive officer, Merck. “Through excellent scientific, commercial
and operational execution, we’re achieving significant milestones
for our company and for patients, including the launch of
WINREVAIR. I am proud of our dedicated teams around the world that
are working tirelessly to advance our deep pipeline as we continue
delivering innovation that solves unmet medical needs.”
Financial Summary
$ in millions, except EPS amounts
Second Quarter
2024
2023
Change
Change Ex- Exchange
Sales
$16,112
$15,035
7%
11%
GAAP net income (loss)1
5,455
(5,975)
N/M
N/M
Non-GAAP net income (loss) that excludes
certain items1,2*
5,809
(5,220)
N/M
N/M
GAAP EPS
2.14
(2.35)
N/M
N/M
Non-GAAP EPS that excludes certain
items2*
2.28
(2.06)
N/M
N/M
*Refer to table on page 7.
N/M – Not meaningful
For the second quarter of 2024, Generally Accepted Accounting
Principles (GAAP) earnings per share (EPS) assuming dilution was
$2.14 and non-GAAP EPS was $2.28. GAAP and non-GAAP loss per share
for the second quarter of 2023 include a charge of $4.02 per share
for the acquisition of Prometheus Biosciences, Inc. (Prometheus).
Non-GAAP EPS in both periods excludes acquisition- and
divestiture-related costs, costs related to restructuring programs,
as well as income and losses from investments in equity securities.
Non-GAAP EPS in the second quarter of 2024 also excludes a tax
benefit due to a reduction in reserves for unrecognized income tax
benefits, resulting from the expiration of the statute of
limitations for assessments related to the 2019 federal tax return
year.
Year-to-date results can be found in the attached tables.
Second-Quarter Sales
Performance
The following table reflects sales of the company’s top products
and significant performance drivers.
Second Quarter
$ in millions
2024
2023
Change
Change Ex-Exchange
Commentary
Total Sales
$16,112
$15,035
7%
11%
Approximately 2 percentage points of the
negative impact of foreign exchange was due to devaluation of
Argentine peso, which was largely offset by inflation-related price
increases, consistent with practice in that market.
Pharmaceutical
14,408
13,457
7%
11%
Increase driven by growth in oncology,
cardiovascular and vaccines, partially offset by declines in
diabetes and virology.
KEYTRUDA
7,270
6,271
16%
21%
Growth driven by increased global uptake
in earlier-stage indications, including triple-negative breast
cancer (TNBC) and renal cell carcinoma, as well as non-small cell
lung cancer in the U.S., and continued strong global demand from
metastatic indications. Approximately 4 percentage points of the
negative impact of foreign exchange was due to devaluation of
Argentine peso, which was largely offset by inflation-related price
increases.
GARDASIL/GARDASIL 9
2,478
2,458
1%
4%
Growth primarily due to higher sales in
the U.S. driven by higher pricing, demand and public-sector buying
patterns, as well as higher demand in certain ex-U.S. markets.
Growth was largely offset by lower sales in China due to timing of
shipments compared with prior year.
JANUVIA/JANUMET
629
864
-27%
-23%
Decline primarily due to lower pricing and
demand in the U.S., as well as ongoing generic competition in many
international markets, particularly in Europe and the Asia Pacific
region.
PROQUAD, M-M-R II and VARIVAX
617
582
6%
7%
Growth largely from higher pricing and
demand in the U.S.
BRIDION
455
502
-9%
-8%
Decline primarily due to generic
competition in certain ex-U.S. markets, particularly in Europe and
the Asia Pacific region, partially offset by higher demand in the
U.S.
Lynparza*
317
310
2%
4%
Growth due to higher demand in the U.S.
and certain international markets, particularly in China and
Europe.
Lenvima*
249
242
3%
4%
Growth primarily from higher demand in the
U.S.
VAXNEUVANCE
189
168
13%
16%
Growth largely driven by continued uptake
from launches in Japan and Europe, partially offset by lower demand
and public-sector buying patterns in the U.S.
PREVYMIS
188
143
31%
35%
Growth primarily due to higher global
demand, particularly in the U.S., China and Europe.
ROTATEQ
163
131
25%
26%
Growth primarily due to timing of
shipments to China and public-sector buying patterns in the U.S.,
partially offset by lower demand in the U.S.
WELIREG
126
50
150%
150%
Growth primarily driven by higher demand
in the U.S., largely attributable to launch of a new
indication.
LAGEVRIO
110
203
-46%
-42%
Decline due to lower demand and pricing in
certain markets in the Asia Pacific region, partially offset by
higher demand in Japan and the U.S.
WINREVAIR
70
-
-
-
Represents sales in the U.S. following
approval in March 2024. About 40% of sales were attributable to
doses administered to patients and remainder was due to
distributors building inventory in support of increasing
demand.
Animal Health
1,482
1,456
2%
6%
Growth primarily driven by higher pricing
in both Livestock and Companion Animal product portfolios, as well
as higher demand for Livestock products, partially offset by a
decline in Companion Animal distributor inventory. Approximately 3
percentage points of the negative impact of foreign exchange was
due to devaluation of Argentine peso, which was largely offset by
inflation-related price increases.
Livestock
837
807
4%
11%
Growth primarily driven by higher demand
for ruminant and poultry products, as well as higher pricing across
product portfolio.
Companion Animal
645
649
-1%
1%
Sales were relatively flat compared with
prior year reflecting lower distributor inventory, largely offset
by higher pricing across product portfolio. Sales of BRAVECTO were
$331 million and $326 million in current and prior-year quarters,
respectively, which represented growth of 2%, or 3% excluding
impact of foreign exchange.
Other Revenues**
222
122
82%
53%
Growth primarily due to higher royalty
income and favorable impact of revenue hedging activities.
*Alliance revenue for this
product represents Merck’s share of profits, which are product
sales net of cost of sales and commercialization costs.
**Other revenues are comprised
primarily of revenues from third-party manufacturing arrangements
and miscellaneous corporate revenues, including revenue hedging
activities.
Second-Quarter Expense, EPS and Related
Information
The table below presents selected expense information.
$ in millions
GAAP
Acquisition- and Divestiture-
Related Costs3
Restructuring Costs
(Income) Loss From Investments
in Equity Securities
Non- GAAP2
Second Quarter 2024
Cost of sales
$3,745
$606
$66
$-
$3,073
Selling, general and administrative
2,739
24
31
-
2,684
Research and development
3,500
20
-
-
3,480
Restructuring costs
80
-
80
-
-
Other (income) expense, net
42
(17)
-
(49)
108
Second Quarter 2023
Cost of sales
$4,024
$467
$32
$-
$3,525
Selling, general and administrative
2,702
25
52
-
2,625
Research and development
13,321
9
1
-
13,311
Restructuring costs
151
-
151
-
-
Other (income) expense, net
172
(3)
-
194
(19)
GAAP Expense, EPS and Related
Information
Gross margin was 76.8% for the second quarter of 2024 compared
with 73.2% for the second quarter of 2023. The increase was
primarily due to the favorable impact of product mix (including
lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9),
partially offset by higher amortization of intangible assets.
Selling, general and administrative (SG&A) expenses were
$2.7 billion in the second quarter of 2024, an increase of 1%
compared with the second quarter of 2023. The increase was
primarily due to higher administrative and promotional costs,
largely offset by the favorable impact of foreign exchange and
lower restructuring costs.
Research and development (R&D) expenses were $3.5 billion in
the second quarter of 2024 compared with $13.3 billion in the
second quarter of 2023. The decrease was primarily due to a $10.2
billion charge in the second quarter of 2023 for the acquisition of
Prometheus, partially offset by higher clinical development
spending and increased compensation and benefit costs.
Other (income) expense, net, was $42 million of expense in the
second quarter of 2024 compared with $172 million of expense in the
second quarter of 2023. The decrease was primarily due to income
from investments in equity securities in 2024 compared with losses
in 2023, partially offset by higher net interest expense in
2024.
The effective tax rate of 9.1% for the second quarter of 2024
includes a 4.3 percentage point favorable impact due to a reduction
in reserves for unrecognized income tax benefits, resulting from
the expiration of the statute of limitations for assessments
related to the 2019 federal tax return year.
GAAP EPS was $2.14 for the second quarter of 2024 compared with
GAAP loss per share of $2.35 for the second quarter of 2023. GAAP
loss per share in the second quarter of 2023 includes a charge of
$4.02 per share for the acquisition of Prometheus.
Non-GAAP Expense, EPS and Related
Information
Non-GAAP gross margin was 80.9% for the second quarter of 2024
compared with 76.6% for the second quarter of 2023. The increase
was primarily due to the favorable impact of product mix (including
lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL
9).
Non-GAAP SG&A expenses were $2.7 billion in the second
quarter of 2024, an increase of 2% compared with the second quarter
of 2023. The increase was primarily due to higher administrative
and promotional costs, largely offset by the favorable impact of
foreign exchange.
Non-GAAP R&D expenses were $3.5 billion in the second
quarter of 2024 compared with $13.3 billion in the second quarter
of 2023. The decrease was primarily due to a $10.2 billion charge
in the second quarter of 2023 for the acquisition of Prometheus,
partially offset by higher clinical development spending and
increased compensation and benefit costs.
Non-GAAP other (income) expense, net, was $108 million of
expense in the second quarter of 2024 compared with $19 million of
income in the second quarter of 2023, primarily due to higher net
interest expense.
The non-GAAP effective tax rate was 14.1% for the second quarter
of 2024.
Non-GAAP EPS was $2.28 for the second quarter of 2024 compared
with non-GAAP loss per share of $2.06 for the second quarter of
2023. Non-GAAP loss per share in the second quarter of 2023
includes a charge of $4.02 per share for the acquisition of
Prometheus.
A reconciliation of GAAP to non-GAAP net income (loss) and EPS
is provided in the table that follows.
Second Quarter
$ in millions, except EPS amounts
2024
2023
EPS
GAAP EPS
$2.14
$(2.35)
Difference
0.14
0.29
Non-GAAP EPS that excludes items listed
below2
$2.28
$(2.06)
Net Income (Loss)
GAAP net income (loss)1
$5,455
$(5,975)
Difference
354
755
Non-GAAP net income (loss) that excludes
items listed below1,2
$5,809
$(5,220)
Excluded Items:
Acquisition- and divestiture-related
costs3
$633
$498
Restructuring costs
177
236
(Income) loss from investments in equity
securities
(49)
194
Decrease to net income/increase to net
loss before taxes
761
928
Income tax (benefit) expense4
(407)
(173)
Decrease to net income/increase to net
loss
$354
$755
Pipeline and Portfolio
Highlights
In the second quarter, Merck demonstrated further progress in
its strong and diverse pipeline, achieving multiple regulatory and
clinical milestones.
In vaccines, Merck recently received approval from the U.S. Food
and Drug Administration (FDA) for CAPVAXIVE, now the first
pneumococcal conjugate vaccine specifically designed to address the
serotypes responsible for approximately 85% of invasive
pneumococcal disease cases in adults age 65 and older, based on the
U.S. Centers for Disease Control and Prevention (CDC) data from
2018-2021. The CDC’s Advisory Committee on Immunization Practices
(ACIP) unanimously voted to recommend CAPVAXIVE for adults age 65
and older who have not received a pneumococcal conjugate vaccine or
whose vaccination history is unknown, for adults 19 to 64 with
certain risk conditions, and for adults 19 and older who have
started their pneumococcal vaccine series with PCV13. Additionally,
shared clinical decision-making is recommended for a supplemental
dose of CAPVAXIVE for adults over 65 who completed their vaccine
series with both PCV13 and PPSV23.
The company also recently announced positive topline results
from its Phase 2b/3 trial of clesrovimab (MK-1654), an
investigational respiratory syncytial virus (RSV) preventative
monoclonal antibody for infants, which met all primary safety and
efficacy endpoints.
In cardiometabolic disease, Merck continued to make progress in
its launch of WINREVAIR in the U.S. As of the end of June, more
than 1,000 patients have received WINREVAIR. The company also
announced that the European Union’s (EU) Committee for Medicinal
Products for Human Use (CHMP) issued a positive opinion for
WINREVAIR. If approved by the European Commission, WINREVAIR will
be the first activin signaling inhibitor therapy for pulmonary
arterial hypertension (PAH, World Health Organization [WHO] Group
1) to be approved in Europe, offering a new treatment option for
certain adults with this rare, progressive disease. Additional
worldwide regulatory filings for WINREVAIR are underway.
In oncology, Merck received FDA approval for KEYTRUDA in
combination with chemotherapy, followed by KEYTRUDA as a single
agent, for the treatment of certain patients with endometrial
carcinoma. This marks the 40th indication for KEYTRUDA in the U.S.,
reinforcing its importance as a foundational therapy for certain
types of cancer.
At the 2024 American Society of Clinical Oncology Annual
Meeting, new data were presented on four approved oncology
medicines and four pipeline candidates in more than 25 types of
cancer. In collaboration with Moderna, Inc., Merck announced
encouraging three-year follow-up data for V940 (mRNA-4157) in
combination with KEYTRUDA for the adjuvant treatment of patients
with high-risk stage III and IV melanoma following complete
resection. In addition, new Phase 3 data from a study conducted in
China and independently led by Kelun-Biotech evaluating sacituzumab
tirumotecan (MK-2870/SKB264), an investigational anti-TROP2
antibody-drug conjugate being developed by Merck in collaboration
with Kelun-Biotech, were presented in previously treated patients
with locally recurrent or metastatic TNBC.
Merck Animal Health launched the 12-month injectable formulation
of BRAVECTO for use in dogs in a number of markets in Europe for
the treatment and persistent killing of fleas (Ctenocephalides
felis and Ctenocephalides canis) and ticks (Rhipicephalus
sanguineus, Ixodes ricinus, Ixodes hexagonus, and Dermacentor
reticulatus). In addition, in July 2024, Merck completed the
acquisition of the aqua business of Elanco Animal Health
Incorporated.
In July 2024, Merck also completed the acquisition of Eyebiotech
Limited (EyeBio), which includes the lead candidate
Restoret™/MK-3000 that is being evaluated for the treatment of
patients with certain retinal diseases, including diabetic macular
edema and neovascular age-related macular degeneration, as well as
preclinical candidates. And, Merck and Orion Corporation announced
the mutual exercise of an option to convert the companies’ ongoing
co-development and co-commercialization agreement for opevesostat
(MK-5684/ODM-208), an investigational CYP11A1 inhibitor, and other
candidates, into an exclusive global license for Merck.
Notable recent news releases on Merck’s pipeline and portfolio
are provided in the table that follows.
Oncology
FDA Approved KEYTRUDA Plus Carboplatin and
Paclitaxel as Treatment for Adult Patients With Primary Advanced or
Recurrent Endometrial Carcinoma, Based on Results From Phase 3
NRG-GY018/KEYNOTE-868 Trial
(Read Announcement)
FDA Granted Priority Review to Merck’s
Application for KEYTRUDA Plus Chemotherapy as First-Line Treatment
of Patients With Unresectable Advanced or Metastatic Malignant
Pleural Mesothelioma, Based on Results From Phase 3 KEYNOTE-483
Trial; FDA Set Prescription Drug User Fee Act (PDUFA) Date of Sept.
25, 2024
(Read Announcement)
Merck Received Positive EU CHMP Opinion
for KEYTRUDA Plus Padcev as First-Line Treatment for Patients With
Unresectable or Metastatic Urothelial Carcinoma, Based on Results
From Phase 3 KEYNOTE-A39/EV-302 Trial
(Read Announcement)
Moderna and Merck Announced Three-Year
Data for mRNA-4157 (V940) in Combination With KEYTRUDA Demonstrated
Sustained Improvement in Recurrence-Free Survival and Distant
Metastasis-Free Survival Versus KEYTRUDA in Patients With High-Risk
Stage III/IV Melanoma Following Complete Resection
(Read Announcement)
Merck Announced Phase 3 KEYNOTE-522 Trial
Met Its Overall Survival (OS) Endpoint in Patients With High-Risk
Early-Stage TNBC
(Read Announcement)
Merck Announced Phase 3 KEYNOTE-811 Trial
Met Dual Primary Endpoint of OS as First-Line Treatment in Patients
With HER2-Positive Advanced Gastric or Gastroesophageal Junction
Adenocarcinoma
(Read Announcement)
Patritumab Deruxtecan Biologics License
Application Submission Received Complete Response Letter From FDA
Due to Inspection Findings at Third-Party Manufacturer
(Read Announcement)
Vaccines
FDA Approved CAPVAXIVE for Prevention of
Invasive Pneumococcal Disease and Pneumococcal Pneumonia in Adults,
Based on Results From Four Phase 3 Trials
(Read Announcement)
CDC’s ACIP Unanimously Recommended
CAPVAXIVE for Pneumococcal Vaccination in Appropriate Adults
(Read Announcement)
Merck Announced Topline Results From Phase
2b/3 Trial of Clesrovimab (MK-1654), an Investigational RSV
Preventative Monoclonal Antibody for Infants, Met All Primary
Safety and Efficacy Endpoints
(Read Announcement)
Cardiometabolic
Merck Received Positive EU CHMP Opinion
for WINREVAIR (sotatercept) in PAH
(Read Announcement)
Full-Year 2024 Financial
Outlook
The following table summarizes the company’s full-year financial
outlook.
Full Year 2024
Updated
Prior
Sales*
$63.4 to $64.4 billion
$63.1 to $64.3 billion
Non-GAAP Gross margin2
Approximately 81%
Approximately 81%
Non-GAAP Operating expenses2**
$26.8 to $27.6 billion
$25.2 to $26.1 billion
Non-GAAP Other (income) expense, net2
Approximately $350 million
expense
Approximately $250 million
expense
Non-GAAP Effective tax rate2
15.5% to 16.5%
14.5% to 15.5%
Non-GAAP EPS2***
$7.94 to $8.04
$8.53 to $8.65
Share count (assuming dilution)
Approximately 2.54 billion
Approximately 2.55 billion
*The company does not have any
non-GAAP adjustments to sales.
**Includes one-time R&D
charges of $656 million for Harpoon Therapeutics, Inc. (Harpoon)
acquisition and $1.3 billion for EyeBio acquisition. Outlook does
not assume any additional significant potential business
development transactions.
***Includes one-time charges
totaling $0.77 per share for the Harpoon and EyeBio
acquisitions.
Merck has not provided a reconciliation of forward-looking
non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other
(income) expense, net, non-GAAP effective tax rate and non-GAAP EPS
to the most directly comparable GAAP measures, given it cannot
predict with reasonable certainty the amounts necessary for such a
reconciliation, including intangible asset impairment charges,
legal settlements, and gains and losses from investments in equity
securities either owned directly or through ownership interests in
investment funds, without unreasonable effort. These items are
inherently difficult to forecast and could have a significant
impact on the company’s future GAAP results.
Merck continues to experience strong global demand for key
growth products, particularly in oncology, and despite impacts
related to the lower sell out of GARDASIL from Zhifei Biological
Products Co., Ltd. (the company’s distributor and commercialization
partner in China) into the points of vaccination in the market
during the quarter, Merck is raising and narrowing its full-year
sales outlook.
Merck now expects its full-year sales to be between $63.4
billion and $64.4 billion, including a negative impact of foreign
exchange of approximately 3 percentage points, at mid-July 2024
exchange rates. Approximately 2 percentage points of the negative
impact of foreign exchange is due to the devaluation of the
Argentine peso, which the company expects will largely be offset by
inflation-related price increases, consistent with practice in that
market.
Merck now expects its full-year non-GAAP effective income tax
rate to be between 15.5% and 16.5%, which includes an unfavorable
impact related to the one-time charge for the acquisition of
EyeBio, which is not tax deductible.
Merck now expects its full-year non-GAAP EPS to be between $7.94
and $8.04, including one-time charges of $0.26 and $0.51 per share
for the acquisitions of Harpoon and EyeBio, respectively. The
outlook includes a negative impact of foreign exchange of more than
$0.30 per share. The negative impact of foreign exchange is
primarily due to the devaluation of the Argentine peso, which the
company expects will largely be offset by inflation-related price
increases, consistent with practice in that market. This revised
non-GAAP EPS range reflects the following items, which were not
previously included in the outlook:
- A charge of $1.3 billion, or $0.51 per share, for the
acquisition of EyeBio.
- Estimated 2024 expense of approximately $0.09 per share to be
incurred to finance the EyeBio and Elanco aqua business
acquisitions and to advance the acquired assets.
Consistent with past practice, the financial outlook does not
assume additional significant potential business development
transactions.
Non-GAAP EPS excludes acquisition- and divestiture-related
costs, costs related to restructuring programs, income and losses
from investments in equity securities, as well as a tax benefit in
2024 due to a reduction in reserves for unrecognized income tax
benefits, resulting from the expiration of the statute of
limitations for assessments related to the 2019 federal tax return
year.
Earnings Conference Call
Investors, journalists and the general public may access a live
audio webcast of the earnings conference call on Tuesday, July 30,
at 9 a.m. ET via this weblink. A replay of the webcast, along with
the sales and earnings news release, supplemental financial
disclosures, and slides highlighting the results, will be available
at www.merck.com.
All participants may join the call by dialing (800) 779-0641
(U.S. and Canada Toll-Free) or (517) 308-9147 and using the access
code 4761229.
About Merck
At Merck, known as MSD outside of the United States and Canada,
we are unified around our purpose: We use the power of leading-edge
science to save and improve lives around the world. For more than
130 years, we have brought hope to humanity through the development
of important medicines and vaccines. We aspire to be the premier
research-intensive biopharmaceutical company in the world – and
today, we are at the forefront of research to deliver innovative
health solutions that advance the prevention and treatment of
diseases in people and animals. We foster a diverse and inclusive
global workforce and operate responsibly every day to enable a
safe, sustainable and healthy future for all people and
communities. For more information, visit www.merck.com and connect
with us on X (formerly Twitter), Facebook, Instagram, YouTube and
LinkedIn.
Forward-Looking Statement of Merck & Co., Inc., Rahway,
N.J., USA
This news release of Merck & Co., Inc., Rahway, N.J., USA
(the “company”) includes “forward-looking statements” within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are
based upon the current beliefs and expectations of the company’s
management and are subject to significant risks and uncertainties.
There can be no guarantees with respect to pipeline candidates that
the candidates will receive the necessary regulatory approvals or
that they will prove to be commercially successful. If underlying
assumptions prove inaccurate or risks or uncertainties materialize,
actual results may differ materially from those set forth in the
forward-looking statements.
Risks and uncertainties include but are not limited to, general
industry conditions and competition; general economic factors,
including interest rate and currency exchange rate fluctuations;
the impact of pharmaceutical industry regulation and health care
legislation in the United States and internationally; global trends
toward health care cost containment; technological advances, new
products and patents attained by competitors; challenges inherent
in new product development, including obtaining regulatory
approval; the company’s ability to accurately predict future market
conditions; manufacturing difficulties or delays; financial
instability of international economies and sovereign risk;
dependence on the effectiveness of the company’s patents and other
protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory
actions.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in the company’s Annual
Report on Form 10-K for the year ended December 31, 2023 and the
company’s other filings with the Securities and Exchange Commission
(SEC) available at the SEC’s Internet site (www.sec.gov).
Appendix
Generic product names are provided below.
Pharmaceutical
BRIDION (sugammadex) CAPVAXIVE (Pneumococcal
21-valent Conjugate Vaccine) GARDASIL (Human Papillomavirus
Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)
GARDASIL 9 (Human Papillomavirus 9-valent Vaccine,
Recombinant) JANUMET (sitagliptin and metformin HCl)
JANUVIA (sitagliptin) KEYTRUDA (pembrolizumab)
LAGEVRIO (molnupiravir) Lenvima (lenvatinib)
Lynparza (olaparib) M-M-R II (Measles, Mumps and
Rubella Virus Vaccine Live) PREVYMIS (letermovir)
PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine
Live) ROTATEQ (Rotavirus Vaccine, Live, Oral, Pentavalent)
VARIVAX (Varicella Virus Vaccine Live) VAXNEUVANCE
(Pneumococcal 15-valent Conjugate Vaccine) WELIREG
(belzutifan) WINREVAIR (sotatercept-csrk)
Animal Health
BRAVECTO (fluralaner)
_________________________
1
Net income (loss) attributable to Merck
& Co., Inc.
2
Merck is providing certain 2024 and 2023
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 because management uses non-GAAP results
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,
annual employee compensation, including senior management’s
compensation, is derived in part using a non-GAAP pretax income
metric. This information should be considered in addition to, but
not as a substitute for or superior to, information prepared in
accordance with GAAP. For a description of the non-GAAP
adjustments, see Table 2a attached to this release.
3
Reflects expenses related to acquisitions
of businesses, including the amortization of intangible assets,
intangible asset impairment charges and expense or income related
to changes in the estimated fair value measurement of liabilities
for contingent consideration. Also includes integration,
transaction and certain other costs associated with acquisitions
and divestitures, as well as amortization of intangible assets
related to collaborations and licensing arrangements.
4
Represents the estimated tax impacts on
the reconciling items based on applying the statutory rate of the
originating territory of the non-GAAP adjustments, as well as a
$259 million benefit in the second quarter of 2024, due to a
reduction in reserves for unrecognized income tax benefits
resulting from the expiration of the statute of limitations for
assessments related to the 2019 federal tax return year.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF
OPERATIONS - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE
FIGURES) (UNAUDITED) Table 1 GAAP
% Change GAAP % Change
2Q24
2Q23
June YTD 2024 June YTD 2023 Sales
$
16,112
$
15,035
7
%
$
31,887
$
29,522
8
%
Costs, Expenses and Other Cost of sales
3,745
4,024
-7
%
7,285
7,951
-8
%
Selling, general and administrative
2,739
2,702
1
%
5,221
5,182
1
%
Research and development
3,500
13,321
-74
%
7,492
17,597
-57
%
Restructuring costs
80
151
-47
%
202
218
-7
%
Other (income) expense, net
42
172
-76
%
12
259
-95
%
Income (Loss) Before Taxes
6,006
(5,335
)
*
11,675
(1,685
)
* Income Tax Provision
545
637
1,447
1,462
Net Income (Loss)
5,461
(5,972
)
*
10,228
(3,147
)
* Less: Net Income Attributable to Noncontrolling Interests
6
3
11
7
Net Income (Loss) Attributable to Merck & Co., Inc.
$
5,455
$
(5,975
)
*
$
10,217
$
(3,154
)
* Earnings (Loss) per Common Share Assuming Dilution (1)
$
2.14
$
(2.35
)
*
$
4.02
$
(1.24
)
* Average Shares Outstanding Assuming Dilution (1)
2,544
2,539
2,544
2,539
Tax Rate
9.1
%
-11.9
%
12.4
%
-86.8
%
* 100% or greater (1) Because the company recorded a
net loss in the second quarter and first six months of 2023, 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. THREE
AND SIX MONTHS ENDED JUNE 30, 2024 GAAP TO NON-GAAP
RECONCILIATION (AMOUNTS IN MILLIONS, EXCEPT PER SHARE
FIGURES) (UNAUDITED) Table 2a 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
$
3,745
606
66
672
$
3,073
Selling, general and administrative
2,739
24
31
55
2,684
Research and development
3,500
20
20
3,480
Restructuring costs
80
80
80
–
Other (income) expense, net
42
(17
)
(49
)
(66
)
108
Income Before Taxes
6,006
(633
)
(177
)
49
(761
)
6,767
Income Tax Provision (Benefit)
545
(129
)
(3)
(30
)
(3)
11
(3)
(259
)
(4)
(407
)
952
Net Income
5,461
(504
)
(147
)
38
259
(354
)
5,815
Net Income Attributable to Merck & Co., Inc.
5,455
(504
)
(147
)
38
259
(354
)
5,809
Earnings per Common Share Assuming Dilution
$
2.14
(0.20
)
(0.06
)
0.02
0.10
(0.14
)
$
2.28
Tax Rate
9.1
%
14.1
%
June YTD Cost of sales
$
7,285
1,069
182
1,251
$
6,034
Selling, general and administrative
5,221
45
36
81
5,140
Research and development
7,492
36
2
38
7,454
Restructuring costs
202
202
202
–
Other (income) expense, net
12
(21
)
(165
)
(186
)
198
Income Before Taxes
11,675
(1,129
)
(422
)
165
(1,386
)
13,061
Income Tax Provision (Benefit)
1,447
(221
)
(3)
(72
)
(3)
36
(3)
(259
)
(4)
(516
)
1,963
Net Income
10,228
(908
)
(350
)
129
259
(870
)
11,098
Net Income Attributable to Merck & Co., Inc.
10,217
(908
)
(350
)
129
259
(870
)
11,087
Earnings per Common Share Assuming Dilution
$
4.02
(0.35
)
(0.14
)
0.05
0.10
(0.34
)
$
4.36
Tax Rate
12.4
%
15.0
%
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
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,
annual employee compensation, including senior management’s
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. Amounts included in research and development expenses
primarily reflect the amortization of intangible assets. Amounts
included in other (income) expense, net, primarily reflect royalty
income related to the prior 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 impacts on
the reconciling items based on applying the statutory rate of the
originating territory of the non-GAAP adjustments. (4) Represents a
benefit due to a reduction in reserves for unrecognized income tax
benefits resulting from the expiration of the statute of
limitations for assessments related to the 2019 federal tax return
year.
MERCK & CO., INC.
FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS)
(UNAUDITED) Table 3
2024
2023
2Q
June YTD
1Q
2Q
June YTD
1Q
2Q
June YTD
3Q
4Q
Full Year
Nom %
Ex-Exch %
Nom %
Ex-Exch %
TOTAL SALES (1)
$15,775
$16,112
$31,887
$14,487
$15,035
$29,522
$15,962
$14,630
$60,115
7
11
8
11
PHARMACEUTICAL
14,006
14,408
28,415
12,721
13,457
26,179
14,263
13,141
53,583
7
11
9
12
Oncology Keytruda
6,947
7,270
14,217
5,795
6,271
12,065
6,338
6,608
25,011
16
21
18
22
Alliance Revenue – Lynparza (2)
292
317
609
275
310
585
299
315
1,199
2
4
4
6
Alliance Revenue – Lenvima (2)
255
249
504
232
242
474
260
226
960
3
4
6
7
Welireg
85
126
211
42
50
92
54
72
218
150
150
128
128
Alliance Revenue – Reblozyl (3)
71
90
161
43
47
90
52
70
212
92
92
80
80
Vaccines (4) Gardasil/Gardasil 9
2,249
2,478
4,727
1,972
2,458
4,430
2,585
1,871
8,886
1
4
7
10
ProQuad/M-M-R II/Varivax
570
617
1,187
528
582
1,109
713
545
2,368
6
7
7
7
Vaxneuvance
219
189
408
106
168
274
214
176
665
13
16
49
51
RotaTeq
216
163
379
297
131
428
156
185
769
25
26
-11
-10
Pneumovax 23
61
59
120
96
92
188
140
85
412
-36
-32
-36
-32
Hospital Acute Care Bridion
440
455
895
487
502
989
424
429
1,842
-9
-8
-9
-8
Prevymis
174
188
362
129
143
273
157
175
605
31
35
33
37
Dificid
73
92
165
65
76
141
74
87
302
20
20
16
16
Zerbaxa
56
62
118
50
54
104
53
61
218
14
18
13
16
Noxafil
56
45
101
60
55
116
51
46
213
-20
-9
-13
-2
Cardiovascular Alliance Revenue - Adempas/Verquvo (5)
98
106
203
99
68
167
92
108
367
56
56
22
22
Adempas (6)
70
72
142
59
65
125
65
66
255
11
15
14
17
Winrevair
70
70
-
-
-
-
Virology Lagevrio
350
110
460
392
203
595
640
193
1,428
-46
-42
-23
-18
Isentress/Isentress HD
111
89
200
123
136
259
119
105
483
-35
-31
-23
-19
Delstrigo
56
60
116
44
50
94
54
54
201
19
23
23
26
Pifeltro
42
39
81
34
38
72
37
33
142
3
4
13
13
Neuroscience Belsomra
46
53
99
56
63
119
58
54
231
-16
-8
-17
-10
Immunology Simponi
184
172
356
180
180
359
179
171
710
-4
-2
-1
-1
Remicade
39
35
74
51
48
99
45
43
187
-27
-20
-25
-21
Diabetes (7) Januvia
419
405
824
551
511
1,062
581
547
2,189
-21
-16
-22
-19
Janumet
251
224
475
329
354
683
255
240
1,177
-37
-32
-30
-26
Other Pharmaceutical (8)
576
573
1,151
626
560
1,187
568
576
2,333
2
6
-3
-1
ANIMAL HEALTH
1,511
1,482
2,993
1,491
1,456
2,947
1,400
1,278
5,625
2
6
2
5
Livestock
850
837
1,686
849
807
1,656
874
808
3,337
4
11
2
7
Companion Animal
661
645
1,307
642
649
1,291
526
470
2,288
-1
1
1
3
Other Revenues (9)
258
222
479
275
122
396
299
211
907
82
53
21
24
Sum of quarterly amounts may not equal
year-to-date amounts 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 $3,424
million and $3,656 million in the first and second quarter of 2024,
respectively, and $3,133 million and $3,557 million in the first
and second quarter of 2023, 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 $745 million
and $715 million in the first and second quarter of 2024,
respectively, and $950 million and $951 million in the first and
second quarter of 2023, 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 $61 million and
$15 million in the first and second quarter of 2024, respectively,
and $51 million and $3 million in the first and second quarter of
2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240730509685/en/
Media Contacts:
Robert Josephson (203) 914-2372 robert.josephson@merck.com
Michael Levey (215) 872-1462 michael.levey@merck.com
Investor Contacts:
Peter Dannenbaum (732) 594-1579 peter.dannenbaum@merck.com
Steven Graziano (732) 594-1583 steven.graziano@merck.com
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