- Merck Delivers Robust Sales Growth and Important Clinical
Advancements in Second Quarter
- Second-Quarter 2022 Worldwide Sales Were $14.6 Billion, an
Increase of 28% From Second Quarter 2021; LAGEVRIO Sales Were $1.2
Billion, Growth Excluding LAGEVRIO Was 18%; Growth Excluding
LAGEVRIO and the Impact From Foreign Exchange Was 20%; Sales Growth
Favorably Impacted by COVID-19 Recovery
- KEYTRUDA Sales Grew 26% to $5.3 Billion; Excluding the Impact
From Foreign Exchange, Sales Grew 30%
- GARDASIL/GARDASIL 9 Sales Grew 36% to $1.7 Billion; Excluding
the Impact From Foreign Exchange, Sales Grew 40%
- Second-Quarter 2022 GAAP EPS From Continuing Operations Was
$1.55; Second-Quarter 2022 Non-GAAP EPS Was $1.87
- Advanced and Expanded Pipeline:
- The U.S. Food and Drug Administration (FDA) Approved Merck’s
VAXNEUVANCE for the Prevention of Invasive Pneumococcal Disease in
Infants and Children
- The U.S. Centers for Disease Control and Prevention (CDC)
Advisory Committee on Immunization Practices Unanimously Voted to
Provisionally Recommend Use of Merck’s VAXNEUVANCE as an Option for
Pneumococcal Vaccination in Infants and Children
- Merck Announced Positive Results From a Phase 1/2 Study for
V116, Merck’s Investigational Pneumococcal 21-Valent Conjugate
Vaccine for Adults, and Enrolled the First Patient Into the Phase 3
STRIDE-3 Trial Evaluating V116 in Vaccine-Naïve Adults
- The European Commission (EC) Approved Four Indications for
KEYTRUDA
- 2022 Continuing Operations Financial Outlook:
- Company Raises and Narrows Expected Full-Year 2022 Worldwide
Sales Range To Be Between $57.5 Billion and $58.5 Billion,
Reflecting Full-Year Growth of 18% to 20%, Including Negative
Impact From Foreign Exchange of Approximately 3%
- Company Expects Full-Year 2022 GAAP EPS To Be Between $5.89 and
$5.99; Company Narrows Expected Full-Year 2022 Non-GAAP EPS Range
To Be Between $7.25 and $7.35, Including Negative Impact From
Foreign Exchange of Approximately 3%
Merck (NYSE: MRK), known as MSD outside the United States and
Canada, today announced financial results for the second quarter of
2022.
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the full release here:
https://www.businesswire.com/news/home/20220728005295/en/
“I continue to be immensely proud of how the Merck team is
performing in all facets of our business — scientifically,
commercially and operationally,” said Robert M. Davis, chief
executive officer and president. “Our strategy is working and our
future is bright. I am very confident that we are well-positioned
to achieve our near- and long-term goals, anchored by our
commitment to deliver innovative medicines and vaccines to patients
and value to all of our stakeholders, including shareholders.”
Financial Summary
Financial information presented in this release reflects Merck’s
results on a continuing operations basis, which excludes Organon
& Co. that was spun-off on June 2, 2021.
$ in millions, except EPS amounts
Second Quarter
2022
2021
Change
Change Ex- Exchange
Sales
$14,593
$11,402
28%
31%
GAAP net income1
3,944
1,213
N/M**
N/M
Non-GAAP net income that excludes certain
items1,2*
4,743
1,559
N/M
N/M
GAAP EPS
1.55
0.48
N/M
N/M
Non-GAAP EPS that excludes certain
items2*
1.87
0.61
N/M
N/M
*Refer to table on page 10
**Not meaningful
Generally accepted accounting principles (GAAP) earnings per
share (EPS) assuming dilution was $1.55 for the second quarter of
2022. Non-GAAP EPS of $1.87 for the second quarter of 2022 excludes
acquisition- and divestiture-related costs, restructuring costs, as
well as income and losses from investments in equity securities. In
2022, the company changed the treatment of certain items for
purposes of its non-GAAP reporting. Results for 2021 have been
recast to conform to the new presentation, which reduced previously
reported second-quarter 2021 non-GAAP EPS of $1.31, resulting in
revised non-GAAP EPS of $0.61. For more information, refer to the
Form 8-K filed by the company on April 21, 2022.
Year-to-date results can be found in the attached tables.
Vaccines Program Highlights
- The FDA approved an expanded indication for VAXNEUVANCE
(Pneumococcal 15-valent Conjugate Vaccine) to include infants and
children. VAXNEUVANCE is now indicated to help prevent invasive
pneumococcal disease caused by the serotypes in the vaccine in
individuals six weeks and older.
- The CDC Advisory Committee on Immunization Practices
unanimously voted to provisionally recommend use of VAXNEUVANCE as
an option to the currently available 13-valent pneumococcal
conjugate vaccine (PCV13) for children under 19 years according to
currently recommended PCV13 dosing and schedules. These provisional
recommendations will be reviewed by the director of the CDC and the
Department of Health and Human Services, and final recommendations
will become official when published in the CDC’s Morbidity and
Mortality Weekly Report.
- Merck presented positive results from the Phase 1/2 study for
V116, Merck’s investigational Pneumococcal 21-Valent Conjugate
Vaccine designed to target serotypes that account for 85% of all
invasive pneumococcal diseases in U.S. adults 65 years and older as
of 20193, and enrolled the first patient into the Phase 3 STRIDE-3
trial evaluating V116 in vaccine-naïve adults. V116 contains eight
serotypes not included in any currently licensed pneumococcal
vaccine.
Oncology Program Highlights
- Merck announced the following regulatory milestones for
KEYTRUDA (pembrolizumab):
- The FDA accepted an application seeking approval for KEYTRUDA
as adjuvant therapy for stage IB (>4 centimeters), II or IIIA
non-small cell lung cancer (NSCLC) following complete surgical
resection based on data from the Phase 3 KEYNOTE-091 trial. The FDA
has set a Prescription Drug User Fee Act date of January 29, 2023,
however further data may be provided during the review process that
may delay this date.
- The EC approved four indications for KEYTRUDA:
- Approved as monotherapy for the adjuvant treatment of adult and
adolescent patients (>12 years of age) with stage IIB or IIC
melanoma and who have undergone complete resection, based on
results from the KEYNOTE-716 trial. The EC also approved expanding
the indication for KEYTRUDA in advanced and stage III melanoma to
include adolescent patients 12 years and older.
- Approved in combination with chemotherapy as neoadjuvant
treatment, and then continued as adjuvant monotherapy after
surgery, for adults with locally advanced or early-stage
triple-negative breast cancer (TNBC) at high risk of recurrence,
based on results from the KEYNOTE-522 trial.
- Approved as monotherapy for the treatment of certain adult
patients with microsatellite instability-high (MSI-H) or mismatch
repair deficient (dMMR) tumors for five types of cancer:
unresectable or metastatic colorectal, gastric, small intestine or
biliary cancer, as well as advanced or recurrent MSI-H/dMMR
endometrial cancer, based on results from the KEYNOTE-164 and
KEYNOTE-158 trials.
- Approved in combination with chemotherapy, with or without
bevacizumab, for patients with persistent, recurrent or metastatic
cervical cancer whose tumors express PD-L1 (Combined Positive Score
≥ 1), based on results from the KEYNOTE 826 trial.
- The European Medicines Agency Committee for Medicinal Products
for Human Use adopted a positive opinion for Lynparza (olaparib),
an oral poly (ADP-ribose) polymerase (PARP) inhibitor being
co-developed and co-commercialized with AstraZeneca, as adjuvant
treatment for patients with germline BRCA-mutated, human epidermal
growth factor 2-negative high-risk early breast cancer who have
been treated with neoadjuvant or adjuvant chemotherapy, based on
results from the Phase 3 OlympiA trial.
- At the 2022 American Society of Clinical Oncology Annual
Meeting, Merck presented new data in more than 25 types of cancer
and held an investor event to highlight key data and provide
updates from its late-stage development programs and diverse
early-stage pipeline.
Global Pharmaceuticals Program Highlight
- Merck, in collaboration with Ridgeback Biotherapeutics,
announced data from a pre-specified exploratory analysis for
LAGEVRIO (molnupiravir) from the Phase 3 MOVe-OUT study indicating
that a lower proportion of participants treated with LAGEVRIO had
an acute care visit or COVID-19-related acute care visit versus
placebo. Additionally, in a post-hoc subgroup analysis, fewer
LAGEVRIO-treated patients who were hospitalized post-randomization
in MOVe-OUT required respiratory interventions (including invasive
mechanical ventilation) compared to those who received
placebo.
Second-Quarter Revenue Performance
The following table reflects sales of the company’s top
pharmaceutical products, as well as sales of Animal Health
products.
Second Quarter
$ in millions
2022
2021
Change
Change Ex- Exchange
Total Sales
$14,593
$11,402
28%
31%
Pharmaceutical
12,756
9,980
28%
33%
KEYTRUDA
5,252
4,176
26%
30%
GARDASIL / GARDASIL 9
1,674
1,234
36%
40%
JANUVIA / JANUMET
1,233
1,261
-2%
3%
LAGEVRIO
1,177
0
-
-
PROQUAD, M-M-R II and
VARIVAX
578
516
12%
14%
BRIDION
Lynparza*
426
275
387
248
10%
11%
15%
17%
Lenvima*
231
181
28%
33%
SIMPONI
ROTATEQ
181
173
202
208
-10%
-17%
1%
-14%
Animal Health
1,467
1,472
0%
5%
Livestock
826
821
1%
6%
Companion Animals
641
651
-2%
3%
Other Revenues**
370
(50)
N/M***
N/M
*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 third-party manufacturing sales
and miscellaneous corporate revenues, including revenue-hedging
activities. The revenue-hedging activities resulted in negative
revenue in the second quarter of 2021. ***Not meaningful
Pharmaceutical Revenue
Second-quarter pharmaceutical sales increased 28% to $12.8
billion. Pharmaceutical sales growth in the second quarter was 16%
excluding LAGEVRIO sales, and was primarily driven by oncology,
vaccines and hospital acute care products. The COVID-19 pandemic
unfavorably affected sales in the second quarter of 2021 by
approximately $400 million, which favorably impacted the growth
rate in the second quarter of 2022.
LAGEVRIO sales totaled $1.2 billion for the second quarter,
primarily consisting of sales in Japan and the U.K. The initial
commitment of LAGEVRIO to the U.S. was fulfilled in the first
quarter of 2022.
Growth in oncology was largely driven by higher sales of
KEYTRUDA, which rose 26% to $5.3 billion in the quarter. Global
sales growth of KEYTRUDA reflects continued strong momentum from
metastatic indications including certain types of NSCLC, renal cell
carcinoma, head and neck squamous cell carcinoma, TNBC and MSI-H
cancers, and increased uptake across recent earlier-stage launches
including certain types of neoadjuvant/adjuvant TNBC in the
U.S.
Also contributing to higher sales in oncology was a 28% increase
in Lenvima (lenvatinib) alliance revenue driven primarily by higher
demand in the U.S., and an 11% increase in Lynparza alliance
revenue reflecting continued demand globally, particularly in the
U.S. driven by strong uptake in earlier-stage breast cancer.
Growth in vaccines was primarily driven by higher combined sales
of GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and
18] Vaccine, Recombinant) and GARDASIL 9 (Human Papillomavirus
9-valent Vaccine, Recombinant) vaccines to prevent certain cancers
and other diseases caused by human papillomavirus (HPV).
Second-quarter GARDASIL/GARDASIL 9 sales grew 36% to $1.7 billion
primarily driven by strong demand outside of the U.S., particularly
in China, which also benefited from increased supply.
Growth in hospital acute care reflects higher demand globally
for BRIDION (sugammadex) injection 100 mg/mL, a medicine for the
reversal of neuromuscular blockade induced by rocuronium bromide or
vecuronium bromide in adults and pediatric patients aged 2 years
and older undergoing surgery. Sales increased 10% to $426 million,
primarily due to an increase in its share among neuromuscular
blockade reversal agents and an increase in surgical procedures
during the second quarter. Growth in hospital acute care also
reflects higher sales of ZERBAXA (ceftolozane and tazobactam), a
combination cephalosporin antibacterial and beta-lactamase
inhibitor for the treatment of adults with certain bacterial
infections. Sales of $46 million resulted from the phased resupply
initiated in the fourth quarter of 2021 that is being expanded to
additional markets during 2022.
Pharmaceutical sales growth was partially offset by lower
combined sales of ISENTRESS/ISENTRESS HD (raltegravir), an HIV
integrase inhibitor used in combination with other antiretroviral
agents for the treatment of HIV-1 infection, which declined 24% to
$147 million reflecting lower global demand. Pharmaceutical sales
growth was also partially offset by lower combined sales of JANUVIA
(sitagliptin) and JANUMET (sitagliptin and metformin HCI), which
declined 2% to $1.2 billion, primarily reflecting the unfavorable
effect of foreign exchange and lower pricing in certain
international markets, partially offset by the impact of a prior
year unfavorable adjustment to rebate reserves in the U.S. The
company lost market exclusivity for JANUVIA and JANUMET in China in
July and will lose market exclusivity in the European Union in
September.
Animal Health Revenue
Animal Health sales totaled $1.5 billion for the second quarter
of 2022, flat compared to the second quarter of 2021. Excluding the
unfavorable effect from foreign exchange, Animal Health sales grew
5%. Sales were driven primarily by livestock products reflecting
higher demand globally for ruminant and poultry products. Sales in
companion animal products were primarily driven by the BRAVECTO
(fluralaner) parasiticide line of products.
Second-Quarter Expense, EPS and Related Information
The tables below present selected expense information.
$ in millions
Second Quarter 2022
GAAP
Acquisition- and Divestiture-
Related Costs4
Restructuring Costs
(Income) Loss from Investments
in Equity Securities
Certain Other Items
Non- GAAP2
Cost of sales
$4,216
$451
$67
$-
$-
$3,698
Selling, general and administrative
2,512
65
27
-
-
2,420
Research and development
2,798
12
22
-
-
2,764
Restructuring costs
142
-
142
-
-
-
Other (income) expense, net
438
2
-
234
-
202
Second Quarter 2021
Cost of sales
$3,104
$345
$38
$-
$37
$2,684
Selling, general and administrative
2,281
25
2
-
-
2,254
Research and development
4,321
16
6
-
-
4,299
Restructuring costs
82
-
82
-
-
-
Other (income) expense, net
(103)
117
-
(258)
-
38
GAAP Expense, EPS and Related Information
Gross margin was 71.1% for the second quarter of 2022 compared
to 72.8% for the second quarter of 2021. The decrease primarily
reflects impacts from LAGEVRIO, which has a lower gross margin due
to profit sharing with Ridgeback, as well as higher inventory
write-offs, higher manufacturing costs and higher acquisition- and
divestiture-related costs. The gross margin decline was partially
offset by the favorable effects of product mix.
Selling, general and administrative (SG&A) expenses were
$2.5 billion in the second quarter of 2022, an increase of 10%
compared to the second quarter of 2021. The increase primarily
reflects higher promotion and administrative costs, including
compensation and benefit costs, as well as higher acquisition- and
divestiture-related costs, partially offset by the favorable impact
of foreign exchange.
Research and development (R&D) expenses were $2.8 billion in
the second quarter of 2022 compared to $4.3 billion in the second
quarter of 2021. The decrease was primarily driven by a $1.7
billion charge in the prior year for the acquisition of Pandion
Therapeutics, Inc. (Pandion). The decline was partially offset by
higher clinical development spending, higher compensation and
benefits, and higher investments in technology in support of the
digital enablement of Merck’s research operations.
Other (income) expense, net, was $438 million of expense in the
second quarter of 2022 compared to $103 million of income in the
second quarter of 2021, primarily due to net unrealized losses from
investments in equity securities in the second quarter of 2022,
compared to net unrealized income from investments in equity
securities in the second quarter of 2021. Other (income) expense,
net, in the second quarter of 2022 also reflects higher pension
settlement costs of approximately $100 million compared to the
second quarter of 2021.
The effective income tax rate was 12.0% for the second quarter
of 2022 compared to 29.3% in the second quarter of 2021. The
effective income tax rate in the second quarter of 2021 reflects no
tax benefit recognized on the charge for the acquisition of
Pandion.
GAAP EPS was $1.55 for the second quarter of 2022 compared to
$0.48 for the second quarter of 2021.
Non-GAAP Expense, EPS and Related Information
Non-GAAP gross margin was 74.7% for the second quarter of 2022
compared to 76.5% for the second quarter of 2021. The decrease in
non-GAAP gross margin primarily reflects impacts from LAGEVRIO,
which has a lower gross margin due to profit sharing with
Ridgeback, as well as higher inventory write-offs and manufacturing
costs. The gross margin decline was partially offset by the
favorable effects of product mix.
Non-GAAP SG&A expenses were $2.4 billion in the second
quarter of 2022, an increase of 7% compared to the second quarter
of 2021. The increase primarily reflects higher promotion and
administrative costs, including compensation and benefit costs,
partially offset by the favorable impact of foreign exchange.
Non-GAAP R&D expenses were $2.8 billion in the second
quarter of 2022 compared to $4.3 billion in the second quarter of
2021. The decrease primarily reflects a $1.7 billion charge in the
prior year for the acquisition of Pandion. The decline was
partially offset by higher clinical development spending, higher
compensation and benefits, and higher investments in technology in
support of the digital enablement of Merck’s research
operations.
Non-GAAP other (income) expense, net, was $202 million of
expense in the second quarter of 2022 compared to $38 million of
expense in the second quarter of 2021 reflecting higher pension
settlement costs of approximately $100 million.
The non-GAAP effective income tax rate was 13.8% for the second
quarter of 2022 compared to 26.7% in the second quarter of 2021.
The non-GAAP effective income tax rate in the second quarter of
2021 reflects no tax benefit recognized on the charge for the
acquisition of Pandion.
Non-GAAP EPS was $1.87 for the second quarter of 2022 compared
to $0.61 for the second quarter of 2021.
A reconciliation of GAAP to non-GAAP net income and EPS is
provided in the table that follows.
Second Quarter
$ in millions, except EPS amounts
2022
2021
EPS
GAAP EPS
$1.55
$0.48
Difference
0.32
0.13
Non-GAAP EPS that excludes items listed
below2
$1.87
$0.61
Net Income
GAAP net income1
$3,944
$1,213
Difference
799
346
Non-GAAP net income that excludes items
listed below1,2
$4,743
$1,559
Decrease (Increase) in Net Income Due
to Excluded Items:
Acquisition- and divestiture-related
costs4
$530
$503
Restructuring costs
258
128
Loss (income) from investments in equity
securities
234
(258)
Charge for the discontinuation of COVID-19
development programs
-
37
Net decrease (increase) in income before
taxes
1,022
410
Estimated income tax (benefit) expense
(223)
(64)
Decrease (increase) in net income
$799
$346
Financial Outlook
Beginning in 2022, Merck no longer excludes expenses for upfront
and milestone payments related to collaborations and licensing
agreements, or charges related to pre-approval assets obtained in
transactions accounted for as asset acquisitions from its non-GAAP
results. Historically, the company excluded these charges to the
extent they were considered by the company to be significant to the
results of a particular period. These changes were made to align
with views expressed by the U.S. Securities and Exchange
Commission. Prior periods have been recast to reflect this change.
For 2021, non-GAAP results have been recast to include $1.7 billion
of incremental R&D expense, resulting in revised full-year 2021
EPS of $5.37.
Business development continues to be a priority for Merck, as
demonstrated by the company’s recent collaboration with Orion
announced in July for the development and commercialization of
ODM-208, an investigational steroid synthesis inhibitor for the
treatment of metastatic castration-resistant prostate cancer. The
GAAP and non-GAAP financial outlooks include the upfront payment of
$290 million, which will have an estimated $0.09 negative impact on
full-year EPS.
As an on-going practice, the financial outlook will not include
significant potential business development transactions.
Merck continues to experience strong global underlying demand
across its key pillars of growth, particularly in oncology and
vaccines. As a result, Merck is raising and narrowing its full-year
guidance for sales.
At mid-July 2022 exchange rates, Merck expects sales growth of
18% to 20% in 2022, with full-year sales estimated to be between
$57.5 billion and $58.5 billion, including a negative impact from
foreign exchange of approximately 3%, a greater than 1% incremental
negative impact from prior sales guidance.
Merck’s estimated full-year non-GAAP effective income tax rate
is unchanged and expected to be between 13.5% and 14.5%.
Merck expects its estimated full-year 2022 GAAP EPS to be
between $5.89 and $5.99.
Merck is narrowing its expected full-year 2022 non-GAAP EPS
range to be between $7.25 and $7.35, including a negative impact
from foreign exchange of approximately 3% at mid-July exchange
rates. Operational strength of approximately $0.25 that would have
resulted in an increase from the previous guidance range is being
offset by the following negative impacts:
- The upfront payment of $290 million to Orion
- A greater than 1% incremental negative impact from foreign
exchange
- Higher U.S. pension settlement expense
The non-GAAP range excludes acquisition- and divestiture-related
costs and costs related to restructuring programs as well as income
and losses from investments in equity securities.
The company continues to expect sales of $5.0 billion to $5.5
billion from LAGEVRIO for full-year 2022. Merck shares profits
equally with its partner, Ridgeback, which is reflected in cost of
sales.
The following table summarizes the company’s full-year 2022
financial guidance.
GAAP
Non-GAAP2
Sales
$57.5 to $58.5 billion
$57.5 to $58.5 billion*
Operating expenses
$21.0 to $22.0 billion
$20.5 to $21.5 billion
Effective tax rate
12% to 13%
13.5% to 14.5%
EPS**
$5.89 to $5.99
$7.25 to $7.35
*The company does not have any
non-GAAP adjustments to sales. **EPS guidance for 2022 assumes a
share count (assuming dilution) of approximately 2.54 billion
shares.
A reconciliation of anticipated 2022 GAAP EPS to non-GAAP EPS
and the items excluded from non-GAAP EPS are provided in the table
below.
$ in millions, except EPS amounts
Full-Year 2022
GAAP EPS
$5.89 to $5.99
Difference
$1.36
Non-GAAP EPS that excludes items listed
below2
$7.25 to $7.35
Acquisition- and divestiture-related
costs
Restructuring costs
(Income) loss from investments in equity
securities
$2,750
550
1,050
Net decrease (increase) in income before
taxes
4,350
Estimated income tax (benefit) expense
(900)
Decrease (increase) in net income
$3,450
Earnings Conference Call
Investors, journalists and the general public may access a live
audio webcast of the call today at 8:00 a.m. EDT on Merck’s
website.
Participants may join the call by dialing 877-692-8955 (USA
Toll-Free) or 234-720-6979. If you are calling from other
countries, visit this weblink. All dial-in participants can use the
access code 1857604. Journalists who wish to ask questions are
requested to contact a member of Merck’s Media Relations team.
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 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 the global outbreak of novel coronavirus disease
(COVID-19); 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, 2021 and the
company’s other filings with the Securities and Exchange Commission
(SEC) available at the SEC’s Internet site (www.sec.gov).
1 Net income from continuing operations attributable to Merck
& Co., Inc. 2 Merck is providing certain 2022 and 2021 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, senior
management’s annual compensation is derived in part using a
non-GAAP pre-tax 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.
Non-GAAP results for 2021 have been recast to conform to
presentation changes implemented in 2022. 3 Centers for Disease
Control and Prevention, IPD serotype data 2019, as compiled from
data provided through Active Bacterial Core surveillance (ABCs). 4
Includes expenses for the amortization of intangible assets and
purchase accounting adjustments to inventories recognized as a
result of acquisitions, 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 related
to acquisitions and divestitures.
CONSOLIDATED STATEMENT OF INCOME - GAAP (AMOUNTS IN
MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table
1
On June 2, 2021, Merck completed the spin-off of products from
its women’s health, biosimilars and established brands businesses
into a new, independent, publicly traded company named Organon
& Co. (Organon). The historical results of the businesses that
were contributed to Organon in the spin-off are excluded from sales
and expenses and reflected as discontinued operations in the
company’s Consolidated Statement of Income provided below.
GAAP % Change GAAP % Change
2Q22
2Q21
June YTD2022 June YTD2021 Sales
$
14,593
$
11,402
28%
$
30,494
$
22,029
38%
Costs, Expenses and Other
Cost of sales
4,216
3,104
36%
9,596
6,303
52%
Selling, general and administrative
2,512
2,281
10%
4,834
4,468
8%
Research and development
2,798
4,321
-35%
5,374
6,732
-20%
Restructuring costs
142
82
73%
194
380
-49%
Other (income) expense, net
438
(103)
*
1,148
(558)
*
Income from Continuing Operations Before Taxes
4,487
1,717
*
9,348
4,704
99%
Income Tax Provision
538
503
1,092
741
Net Income from Continuing Operations
3,949
1,214
*
8,256
3,963
*
Less: Net Income Attributable to Noncontrolling Interests
5
1
2
5
Net Income from Continuing Operations Attributable to Merck &
Co., Inc.
3,944
1,213
*
8,254
3,958
*
Income from Discontinued Operations, Net of Taxes and Amounts
Attributable to Noncontrolling Interests
-
332
*
-
766
*
Net Income Attributable to Merck & Co., Inc.
$
3,944
$
1,545
*
$
8,254
$
4,724
75%
Basic Earnings per Common Share Attributable to Merck & Co.,
Inc. Common Shareholders:
Income from Continuing Operations
$
1.56
$
0.48
*
$
3.26
$
1.56
*
Income from Discontinued Operations
-
0.13
*
-
0.30
*
Net Income
$
1.56
$
0.61
*
$
3.26
$
1.87
74%
Earnings per Common Share Assuming Dilution Attributable to Merck
& Co., Inc. Common Shareholders:
Income from Continuing Operations
$
1.55
$
0.48
*
$
3.25
$
1.56
*
Income from Discontinued Operations
-
0.13
*
-
0.30
*
Net Income
$
1.55
$
0.61
*
$
3.25
$
1.86
75%
Average Shares Outstanding
2,531
2,533
2,529
2,532
Average Shares Outstanding Assuming Dilution
2,540
2,540
2,538
2,540
Tax Rate from Continuing Operations
12.0%
29.3%
11.7%
15.8%
* 100% or greater
MERCK & CO., INC.
SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2022 GAAP TO
NON-GAAP RECONCILIATION - CONTINUING OPERATIONS (AMOUNTS IN
MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table
2a GAAP Acquisition
andDivestiture-RelatedCosts (1) Restructuring Costs (2)
(Income) Loss fromInvestments inEquity Securities
AdjustmentSubtotal Non-GAAP Second
Quarter Cost of sales
$
4,216
451
67
518
$
3,698
Selling, general and administrative
2,512
65
27
92
2,420
Research and development
2,798
12
22
34
2,764
Restructuring costs
142
142
142
-
Other (income) expense, net
438
2
234
236
202
Income from Continuing Operations Before Taxes
4,487
(530)
(258)
(234)
(1,022)
5,509
Income Tax Provision (Benefit)
538
(131)
(3)
(40)
(3)
(52)
(3)
(223)
761
Net Income from Continuing Operations
3,949
(399)
(218)
(182)
(799)
4,748
Net Income from Continuing Operations Attributable to Merck &
Co., Inc.
3,944
(399)
(218)
(182)
(799)
4,743
Earnings per Common Share Assuming Dilution from Continuing
Operations
$
1.55
(0.16)
(0.09)
(0.07)
(0.32)
$
1.87
Tax Rate
12.0%
13.8%
June YTD Cost of sales
$
9,596
1,131
113
1,244
$
8,352
Selling, general and administrative
4,834
115
48
163
4,671
Research and development
5,374
34
29
63
5,311
Restructuring costs
194
-
194
194
-
Other (income) expense, net
1,148
(112)
918
806
342
Income from Continuing Operations Before Taxes
9,348
(1,168)
(384)
(918)
(2,470)
11,818
Income Tax Provision (Benefit)
1,092
(286)
(3)
(62)
(3)
(204)
(3)
(552)
1,644
Net Income from Continuing Operations
8,256
(882)
(322)
(714)
(1,918)
10,174
Net Income from Continuing Operations Attributable to Merck &
Co., Inc.
8,254
(882)
(322)
(714)
(1,918)
10,172
Earnings per Common Share Assuming Dilution from Continuing
Operations
$
3.25
(0.35)
(0.13)
(0.28)
(0.76)
$
4.01
Tax Rate
11.7%
13.9%
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
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. Amounts included in research and development expenses
primarily reflect expenses for the amortization of intangible
assets. Amount included in other (income) expense, net, for the six
month period primarily reflects royalty income and a decrease in
the estimated fair value measurement of liabilities for contingent
consideration 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.
MERCK & CO., INC.
FRANCHISE / KEY PRODUCT SALES - CONTINUING OPERATIONS
(AMOUNTS IN MILLIONS) (UNAUDITED) Table 3
2022
2021
2Q June YTD 1Q 2Q June YTD
1Q 2Q June YTD 3Q 4Q Full
Year Nom % Ex-Exch % Nom % Ex-Exch
% TOTAL SALES (1)
$
15,901
$
14,593
$
30,494
$
10,627
$
11,402
$
22,029
$
13,154
$
13,521
$
48,704
28
31
38
41
PHARMACEUTICAL
14,107
12,756
26,863
9,238
9,980
19,218
11,496
12,039
42,754
28
33
40
45
Oncology Keytruda
4,809
5,252
10,061
3,899
4,176
8,076
4,534
4,577
17,186
26
30
25
29
Alliance Revenue – Lynparza (2)
266
275
541
228
248
475
246
268
989
11
17
14
18
Alliance Revenue – Lenvima (2)
227
231
459
130
181
310
188
206
704
28
33
48
51
Alliance Revenue – Reblozyl (3)
52
33
86
17
17
* * * *
Vaccines (4) Gardasil / Gardasil 9
1,460
1,674
3,133
917
1,234
2,151
1,993
1,528
5,673
36
40
46
48
ProQuad / M-M-R II / Varivax
470
578
1,047
449
516
965
661
509
2,135
12
14
9
10
RotaTeq
216
173
389
158
208
366
227
213
807
-17
-14
6
8
Pneumovax 23
173
153
325
171
152
323
277
292
893
1
4
1
3
Vaqta
36
35
71
34
56
90
48
41
179
-38
-38
-21
-21
Hospital Acute Care Bridion
395
426
821
340
387
727
369
436
1,532
10
15
13
17
Prevymis
94
103
197
82
93
174
96
100
370
11
18
13
19
Primaxin
58
64
122
65
60
125
70
65
259
6
8
-2
-2
Dificid
52
66
119
27
34
61
54
60
175
95
95
95
95
Noxafil
57
60
118
67
66
133
64
62
259
-8
-3
-11
-7
Invanz
52
46
99
57
48
104
53
45
202
-3
1
-5
-2
Cancidas
53
42
95
57
54
111
56
45
212
-23
-20
-15
-13
Zerbaxa
30
46
76
(8)
(1)
(9)
(2)
10
(1)
* * * *
Cardiovascular Alliance Revenue - Adempas/Verquvo
(5)
72
98
170
74
74
149
100
94
342
33
33
14
15
Adempas (6)
61
63
124
55
74
129
59
63
252
-14
-5
-4
6
Virology Lagevrio
3,247
1,177
4,424
952
952
* * * * Isentress / Isentress HD
158
147
305
209
192
401
189
178
769
-24
-19
-24
-20
Neuroscience Belsomra
69
69
137
79
78
157
81
80
318
-12
-2
-13
-5
Immunology Simponi
186
181
366
214
202
416
203
206
825
-10
1
-12
-3
Remicade
61
53
114
85
75
160
73
67
299
-29
-19
-29
-20
Diabetes (7) Januvia
779
756
1,535
809
784
1,593
852
878
3,324
-4
1
-4
-
Janumet
454
476
931
486
477
962
487
514
1,964
0
6
-3
2
Other Pharmaceutical (8)
520
479
998
554
512
1,069
518
533
2,118
-6
-3
-7
-3
ANIMAL HEALTH
1,482
1,467
2,949
1,418
1,472
2,890
1,417
1,261
5,568
-
5
2
7
Livestock
832
826
1,658
819
821
1,640
864
791
3,295
1
6
1
7
Companion Animals
650
641
1,291
599
651
1,250
553
470
2,273
-2
3
3
7
Other Revenues (9)
312
370
682
(29)
(50)
(79)
241
221
382
* * * * * 200% or greater
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 and a milestone payment. (4)
Total Vaccines sales were $2,481 million and $2,709 million in the
first and second quarter of 2022, respectively, and $1,809 million,
$2,293 million, $3,315 million and $2,715 million in the first,
second, third and fourth quarter of 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 $1,305
million and $1,300 million in the first and second quarter of 2022,
respectively, and $1,363 million, $1,330 million, $1,417 million
and $1,475 million in the first, second, third and fourth quarter
of 2021, respectively. (8) Includes Pharmaceutical products not
individually shown above. (9) Other Revenues are comprised
primarily of third-party manufacturing sales and miscellaneous
corporate revenues, including revenue hedging activities. Other
Revenues related to the receipt of upfront and milestone payments
for out-licensed products were $114 million and $32 million in the
first and second quarter of 2022, respectively, and $56 million,
$135 million and $27 million in the first, third and fourth quarter
of 2021, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005295/en/
Media Contacts: Johanna Herrmann (617) 216-6029 Melissa Moody
(215) 407-3536 Investor Contacts: Peter Dannenbaum (908) 740-1037
Steven Graziano (908) 740-6582
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