SECURITIES AND EXCHANGE COMMISSIONd18rn0p25nwr6d.cloudfront.net/CIK-0000310158/18e4af29... · 2017-05-02 · UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORTPursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 2, 2017

Merck & Co., Inc.(Exact Name of Registrant as Specified in Its Charter)

New Jersey

(State or Other Jurisdiction of Incorporation)

1-6571

22-1918501(Commission File Number)

(I.R.S. Employer Identification No.)

2000 Galloping Hill Road, Kenilworth, NJ

07033(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code (908) 740-4000

Not Applicable(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the followingprovisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) orRule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition . The following information, including the exhibits hereto, is being furnished pursuant to this Item 2.02. Incorporated by reference is a press release issued by the Registrant on May 2, 2017, regarding earnings for the first quarter of 2017, attached as Exhibit 99.1. Alsoincorporated by reference is certain supplemental information not included in the press release, attached as Exhibit 99.2. This information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), orotherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the ExchangeAct, except as expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1 Press release issued May 2, 2017, regarding earnings for the first quarter of 2017 Exhibit 99.2 Certain supplemental information not included in the press release

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the

undersigned hereunto duly authorized. Merck & Co., Inc.

Date:May 2, 2017 By: /s/ Karen L. Mealey

KAREN L. MEALEY

Assistant Secretary

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EXHIBIT INDEX

Exhibit

Number

Description 99.1

Press release issued May 2, 2017, regarding earnings for the first quarter of 2017 99.2

Certain supplemental information not included in the press release

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Exhibit 99.1

News Release

FOR IMMEDIATE RELEASE Media Contact:

Tracy Ogden

Investor Contacts:

Teri Loxam

(908) 740-1747

(908) 740-1986

Amy Klug

(908) 740-1898

Merck Announces First-Quarter 2017 Financial Results · First-Quarter 2017 Worldwide Sales Were $9.4 Billion, an Increase of 1 Percent, Including a 2 Percent Negative Impact from Foreign Exchange · First-Quarter 2017 GAAP EPS Was $0.56; First-Quarter Non-GAAP EPS Was $0.88 · Company Narrows and Raises 2017 Full-Year Revenue Range to be Between $39.1 Billion and $40.3 Billion, Including an Approximately 1.5 Percent

Negative Impact from Foreign Exchange · Company Narrows and Raises 2017 Full-Year GAAP EPS Range to be Between $2.51 and $2.63; Narrows and Raises 2017 Full-Year Non-GAAP EPS Range

to be Between $3.76 and $3.88, Including an Approximately 1.5 Percent Negative Impact from Foreign Exchange · KEYTRUDA Development Program Advances with Two Additional Regulatory Approvals and CHMP Positive Opinion; Four sBLAs Currently Under

Priority Review with PDUFA Action Dates in Second Quarter KENILWORTH, N.J., May 2, 2017 — Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the firstquarter of 2017.

“Merck delivered solid performance across our broad range of products that address major disease categories and the needs of global health,” saidKenneth C. Frazier, chairman and chief executive officer, Merck. “The continued momentum of KEYTRUDA in oncology, along with the strength of the vaccineand other franchises and animal health, helped to drive revenue growth in the quarter.”

Financial Summary

First Quarter

$ in millions, except EPS amounts

2017

2016

Sales

$9,434

$9,312

GAAP EPS

0.56

0.40

Non-GAAP EPS that excludes certain items *

0.88

0.89

GAAP net income

1,551

1,125

Non-GAAP net income that excludes certain items *

2,437

2,492

*Refer to table on page 7.

Worldwide sales were $9.4 billion for the first quarter of 2017, an increase of 1 percent compared with the first quarter of 2016, including a 2 percent

negative impact from foreign exchange.

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) were $0.56 for the first quarter of 2017. Non-GAAP EPS of$0.88 for the first quarter of 2017 excludes acquisition- and divestiture-related costs, restructuring costs and certain other items. Pipeline Highlights

Merck continued to deliver significant progress in the development program for KEYTRUDA (pembrolizumab), an anti-PD-1 therapy, receiving keyregulatory approvals or opinions and supplemental Biologics License Application (sBLA) acceptances.

· The U.S. Food and Drug Administration (FDA) approved under its Accelerated Approval program KEYTRUDA for the treatment of patients withrefractory classical Hodgkin lymphoma (cHL) or for patients with cHL who have relapsed after three or more prior lines of therapy.

· The European Commission approved KEYTRUDA for the first-line treatment of non-small cell lung cancer (NSCLC) in adults whose tumors have high

PD-L1 expression (tumor proportion score of 50 percent or more) with no EGFR or ALK positive tumor mutations.

· The Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA) adopted a positive opinion recommending approval ofKEYTRUDA for the treatment of adult patients with relapsed or refractory cHL who have failed autologous

Merck is providing certain 2017 and 2016 non-GAAP information that excludes certain items because of the nature of these items and the impact they have onthe analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of thecompany’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning andforecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in partusing non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, informationprepared in accordance with GAAP. For a description of the items, see Table 2a attached to this release. Net income attributable to Merck & Co., Inc.

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stem cell transplant and brentuximab vedotin (BV), or who are transplant-ineligible and have failed BV.

· The FDA accepted for review under its Accelerated Approval program the sBLA for KEYTRUDA in combination with pemetrexed and carboplatin for

the treatment of patients with metastatic or advanced NSCLC regardless of PD-L1 expression. This is the first application for regulatory approval ofKEYTRUDA in combination with another treatment. The FDA granted Priority Review with a PDUFA action date of May 10, 2017.

· The FDA accepted and granted Priority Review for the sBLA for the treatment of patients with locally advanced or metastatic urothelial cancer, a type of

bladder cancer, for first-line use in patients who are ineligible for cisplatin-containing therapy. The application for second-line use was also accepted forPriority Review. The PDUFA action date for both applications is June 14, 2017.

· The company recently submitted additional data and analyses to the FDA for the pending sBLA application for the treatment of previously treated

patients with advanced microsatellite instability-high cancer. The PDUFA action date for this Priority Review has been extended to June 9, 2017.

The FDA and EMA accepted for review three New Drug Applications (NDAs) in the company’s diabetes franchise for medicines containing ertugliflozin,an investigational SGLT2 inhibitor in development to help improve glycemic control in adults with type 2 diabetes as part of Merck’s collaboration with Pfizer Inc.The PDUFA action date from the FDA is in December 2017 for the three NDAs.

Merck presented phase 3 data across our late-stage pipeline in studies that met their primary endpoints.

· At the Conference on Retroviruses and Opportunistic Infections in February, data were presented from the ongoing “DRIVE-FORWARD” phase 3clinical trial evaluating the safety and efficacy of doravirine (MK-1439), an investigational non-nucleoside reverse transcriptase inhibitor for previouslyuntreated adults with HIV-1 infection. The study met its primary efficacy endpoint, demonstrating the non-inferiority of once-daily doravirine to once-daily ritonavir-boosted darunavir.

· Positive results from a study of letermovir, an investigational antiviral medicine for the prevention of cytomegalovirus infection in high-risk bone marrow

transplant patients, were presented at the BMT Tandem Meetings in February.

· Merck presented data from a trial for V212, an investigational inactivated varicella zoster virus vaccine for the prevention of herpes zoster or HZ, alsoknown as shingles. The data demonstrated a reduction in the incidence of confirmed HZ cases by an estimated

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64 percent in immunocompromised patients and also were presented at the BMT Tandem Meetings.

First-Quarter Revenue Performance

The following table reflects sales of the company’s top pharmaceutical products, as well as total sales of Animal Health products.

First Quarter

$ in millions

2017

2016

Change

Change Ex-Exchange

Total Sales

$9,434

$9,312

1% 3%Pharmaceutical

8,185

8,104

1% 2%JANUVIA / JANUMET

1,335

1,412

-5% -5%KEYTRUDA

584

249

134% 137%ZETIA / VYTORIN

575

889

-35% -35%GARDASIL / GARDASIL 9

532

378

41% 41%ZEPATIER

378

50

*

*

PROQUAD, M-M-R II and VARIVAX

355

357

0% 1%ISENTRESS

305

340

-10% -10%REMICADE

229

349

-34% -31%ROTATEQ

224

188

19% 19%Animal Health

939

829

13% 14%Other Revenues

310

379

-18% -5%

*Growth comparison not meaningful due to ongoing product launch. Pharmaceutical Revenue

First-quarter pharmaceutical sales increased 1 percent to $8.2 billion, including a 1 percent negative impact from foreign exchange. The growth wasdriven by oncology, hepatitis C and vaccines, largely offset by the loss of market exclusivity for several products, as well as lower sales in the diabetes franchise.

Growth in oncology was due to higher sales of KEYTRUDA as the company continues to launch the product with new indications globally.

Growth in hepatitis C was driven by ZEPATIER (elbasvir and grazoprevir), a medicine for the treatment of chronic hepatitis C virus genotypes 1 or 4infection, due to ongoing launches globally. Sales in the United States also reflect an approximately $40 million favorable adjustment to rebate accruals due to mixof business.

Growth in vaccines was primarily driven by higher 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 HPV,in the United States reflecting the timing of public sector purchases, underlying demand and increased price, as well as higher sales of PNEUMOVAX 23

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(pneumococcal vaccine polyvalent) largely driven by demand in the United States. Growth in vaccines also reflects incremental sales of approximately $65 million,of which approximately $50 million relates to GARDASIL and GARDASIL 9, due to Merck now recording vaccine sales in the 19 European countries previouslypart of the Sanofi Pasteur MSD vaccines joint venture, which was terminated on Dec. 31, 2016.

Pharmaceutical sales reflect a decrease in the diabetes franchise of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCl), medicines thathelp lower blood sugar in adults with type 2 diabetes, primarily due to the timing of customer purchases in the United States as anticipated for the quarter.

Sales growth also was offset by the loss of U.S. market exclusivity in 2016 for ZETIA (ezetimibe), a medicine for lowering LDL cholesterol; CUBICIN(daptomycin for injection), an I.V. antibiotic; and NASONEX (mometasone furoate monohydrate), an inhaled nasal corticosteroid for the treatment of nasal allergysymptoms; as well as by the ongoing impact of biosimilar competition in the company’s marketing territories in Europe for REMICADE (infliximab), a treatmentfor inflammatory diseases. In the aggregate, sales of these products declined $686 million during the first quarter of 2017 compared to the first quarter of 2016. Animal Health Revenue

Animal Health sales totaled $939 million for the first quarter of 2017, an increase of 13 percent compared with the first quarter of 2016, including a 1percent negative impact from foreign exchange. Growth was primarily due to sales increases in companion animal products, driven by the BRAVECTO (fluralaner)line of products that kill fleas and ticks in dogs and cats for up to 12 weeks, as well as in ruminants, poultry and swine products. In March, Animal Healthcompleted the acquisition of Vallée S.A., a leading privately held producer of animal health products in Brazil.

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First-Quarter Expense, EPS and Related Information

The table below presents selected expense information.

$ in millions

GAAP

Acquisition- and Divestiture- Related Costs

Restructuring Costs

Certain Other Items

Non-GAAP

First-Quarter 2017

Materials and production

$3,015

$855

$63

$—

$2,097

Marketing and administrative

2,411

20

1

—

2,390

Research and development

1,796

11

—

—

1,785

Restructuring costs

151

—

151

—

—

Other (income) expense, net

58

(3) —

(9) 70

First-Quarter 2016


$3,572

$1,386

$47

$—

$2,139


2,318

2

3

—

2,313


1,659

35

55

—

1,569

Restructuring costs

91

—

91

—

—


48

—

—

—

48

GAAP Expense, EPS and Related Information

On a GAAP basis, the gross margin was 68.0 percent for the first quarter of 2017 compared to 61.6 percent for the first quarter of 2016. The increase ingross margin for the first quarter of 2017 was primarily driven by a lower net impact from acquisition- and divestiture-related costs and restructuring costs whichreduced gross margin by 9.8 percentage points in the first quarter of 2017 as compared with 15.4 percentage points in the first quarter of 2016. The increase ingross margin also reflects the favorable effects of foreign exchange and lower inventory write-offs.

Marketing and administrative expenses were $2.4 billion in the first quarter of 2017, a 4 percent increase compared to the first quarter of 2016. Theincrease primarily reflects higher health care reform fee expenses, administrative costs, and promotion and direct selling expenses.

Research and development (R&D) expenses were $1.8 billion in the first quarter of 2017, an 8 percent increase compared to the first quarter of 2016. Theincrease reflects higher clinical development spending, partially offset by lower restructuring costs.

GAAP EPS was $0.56 for the first quarter of 2017 compared with $0.40 for the first quarter of 2016.

Includes expenses for the amortization of intangible assets and purchase accounting adjustments to inventories recognized as a result of acquisitions, intangibleasset impairment charges and expense or income related to changes in the estimated fair value measurement of contingent consideration. Also includesintegration, transaction and certain other costs related to business acquisitions and divestitures.

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Non-GAAP Expense, EPS and Related Information

The non-GAAP gross margin was 77.8 percent for the first quarter of 2017 compared to 77.0 percent for the first quarter of 2016. The increase in non-GAAP gross margin was largely driven by the favorable effects of foreign exchange and lower inventory write-offs.

Non-GAAP marketing and administrative expenses were $2.4 billion in the first quarter of 2017, an increase of 3 percent compared to the first quarter of2016. The increase was driven primarily by higher health care reform fee expenses, administrative costs, and promotion and direct selling expenses.

Non-GAAP R&D expenses were $1.8 billion in the first quarter of 2017, a 14 percent increase compared to the first quarter of 2016. The increaseprimarily reflects higher clinical development spending.

Non-GAAP EPS was $0.88 for the first quarter of 2017 compared with $0.89 for the first quarter of 2016.

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.

First Quarter


2017

2016

EPS

GAAP EPS

$0.56

$0.40

Difference

0.32

0.49

Non-GAAP EPS that excludes items listed below

$0.88

$0.89

Net Income

GAAP net income

$1,551

$1,125

Difference

886

1,367

Non-GAAP net income that excludes items listed below

$2,437

$2,492

Decrease (Increase) in Net Income Due to Excluded Items:

Acquisition- and divestiture-related costs

$883

$1,423

Restructuring costs

215

196

Other

(9) —

Net decrease (increase) in income before taxes

1,089

1,619

Estimated income tax (benefit) expense

(203) (252)Decrease (increase) in net income

$886

$1,367

Financial Outlook

Merck has narrowed and raised its full-year 2017 GAAP EPS range to be between $2.51 and $2.63. Merck has narrowed and raised its full-year 2017 non-GAAP EPS range to be between $3.76 and $3.88, including an approximately 1.5 percent negative impact from foreign exchange at mid-April 2017 exchange rates.The non-GAAP range excludes acquisition- and divestiture-related costs, costs related to restructuring programs and certain other items.

Represents the difference between calculated GAAP EPS and calculated non-GAAP EPS, which may be different than the amount calculated by dividing theimpact of the excluded items by the weighted-average shares for the period.

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Merck has narrowed and raised its full-year 2017 revenue range to be between $39.1 billion and $40.3 billion , including an approximately 1.5 percent

negative impact from foreign exchange at mid-April 2017 exchange rates.

The following table summarizes the company’s 2017 financial guidance.

GAAP

Non-GAAP

Revenue

$39.1 to $40.3 billion

$39.1 to $40.3 billion**

Operating expenses

Lower than 2016

Higher than 2016 by a low-single digit rate

Effective tax rate

22.0% to 23.0%

21.0% to 22.0%

EPS

$2.51 to $2.63

$3.76 to $3.88

**The company does not have any non-GAAP adjustments to revenue.

A reconciliation of anticipated 2017 GAAP EPS to non-GAAP EPS and the items excluded from non-GAAP EPS are provided in the table below.


Full-Year 2017

GAAP EPS

$2.51 to $2.63

Difference

1.25

Non-GAAP EPS that excludes items listed below

$3.76 to $3.88

Acquisition- and divestiture-related costs

$3,600

Restructuring costs

600

Net decrease (increase) in income before taxes

4,200

Estimated income tax (benefit) expense

(750)Decrease (increase) in net income

$3,450

The expected full-year 2017 GAAP effective tax rate of 22.0 to 23.0 percent reflects an unfavorable impact of approximately 1 percentage point from the

above items. Total Employees

As of March 31, 2017, Merck had approximately 69,000 employees worldwide. 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 at http://investors.merck.com/events-and-presentations/default.aspx. Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877)381-5782 and using ID code number 91134398. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using IDcode number 91134398. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.

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About Merck

For more than a century, Merck, a leading global biopharmaceutical company known as MSD outside of the United States and Canada, has beeninventing for life, bringing forward medicines and vaccines for many of the world’s most challenging diseases. Through our prescription medicines, vaccines,biologic therapies and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We alsodemonstrate our commitment to increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at theforefront of research to advance the prevention and treatment of diseases that threaten people and communities around the world - including cancer, cardio-metabolic diseases, emerging animal diseases, Alzheimer’s disease and infectious diseases including HIV and Ebola. For more information, visit www.merck.comand connect with us on Twitter , Facebook , YouTube and LinkedIn. You can also follow our Twitter conversation at $MRK. Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safeharbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of thecompany’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products willreceive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks oruncertainties 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 andcurrency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; globaltrends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new productdevelopment, 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 innovativeproducts; 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 orotherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be

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found in the company’s 2016 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at theSEC’s Internet site ( www.sec.gov ).

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MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)Table 1

GAAP

1Q17

1Q16

% Change

Sales

$ 9,434

$ 9,312

1% Costs, Expenses and Other


3,015

3,572

-16%Marketing and administrative

2,411

2,318

4%Research and development

1,796

1,659

8%Restructuring costs

151

91

66%Other (income) expense, net

58

48

21%Income Before Taxes

2,003

1,624

23%Taxes on Income

447

494

Net Income

1,556

1,130

38%Less: Net Income Attributable to Noncontrolling Interests

5

5

Net Income Attributable to Merck & Co., Inc.

$ 1,551

$ 1,125

38%Earnings per Common Share Assuming Dilution

$ 0.56

$ 0.40

40% Average Shares Outstanding Assuming Dilution

2,766

2,795

Tax Rate

22.3% 30.4%

(1) Amounts include the impact of acquisition and divestiture-related costs, restructuring costs and certain other items. See accompanying tables for details. (2) Represents separation and other related costs associated with restructuring activities under the company’s formal restructuring programs.

(1)

(1)

(1)

(2)

(1)

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATIONFIRST QUARTER 2017

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)(UNAUDITED)

Table 2a

GAAP

Acquisition and Divestiture-Related

Costs

Restructuring Costs

Certain Other Items

Adjustment Subtotal

Non-GAAP


$ 3,015

855

63

918

$ 2,097


2,411

20

1

21

2,390


1,796

11

11

1,785

Restructuring costs

151

151

151

—


58

(3)

(9) (12) 70

Income Before Taxes

2,003

(883) (215) 9

(1,089) 3,092

Income Tax Provision (Benefit)

447

(158) (48) 3 (203) 650

Net Income

1,556

(725) (167) 6

(886) 2,442

Net Income Attributable to Merck &Co., Inc.

1,551

(725) (167) 6

(886) 2,437

Earnings per Common Share AssumingDilution

$ 0.56

(0.26) (0.06) —

(0.32) $ 0.88

Tax Rate

22.3%

21.0% 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 ofunderlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as itpermits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and tomeasure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. (1) Amounts included in materials and production costs primarily reflect $773 million of expenses for the amortization of intangible assets recognized as a result ofacquisitions, as well as intangible asset impairment charges of $76 million. Amounts included in marketing and administrative expenses reflect integration,transaction and certain other costs related to business acquisitions, including severance costs which are not part of the company’s formal restructuring programs, aswell as transaction and certain other costs related to business divestitures. Amounts included in research and development expenses primarily reflect changes in theestimated fair value measurement of liabilities for contingent consideration. (2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities underthe company’s formal restructuring programs. (3) Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

(1) (2)

(3) (3) (3)

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS)

Table 3

2017

2016

% Change

1Q

1Q

2Q

3Q

4Q

Full Year

1Q

TOTAL SALES

$ 9,434

$ 9,312

$ 9,844

$ 10,536

$ 10,115

$ 39,807

1

PHARMACEUTICAL

8,185

8,104

8,700

9,443

8,904

35,151

1

Primary Care and Women’s Health

Cardiovascular

Zetia

334

612

702

671

575

2,560

-46

Vytorin

241

277

293

273

299

1,141

-13

Liptruzet

49

23

33

39

50

146

114

Adempas

84

33

40

48

49

169

158

Diabetes

Januvia

839

906

1,064

1,006

932

3,908

-7

Janumet

496

506

569

548

577

2,201

-2

General Medicine & Women’s Health

Implanon / Nexplanon

170

134

164

148

160

606

27

NuvaRing

160

175

200

195

207

777

-9

Follistim AQ

81

94

73

101

87

355

-14

Hospital and Specialty

Hepatitis

Zepatier

378

50

112

164

229

555

*

HIV

Isentress

305

340

338

372

337

1,387

-10

Hospital Acute Care

Bridion

148

90

113

139

139

482

63

Noxafil

141

145

143

147

161

595

-3

Invanz

136

114

143

152

152

561

20

Cancidas

121

133

131

142

152

558

-9

Cubicin

96

292

357

320

119

1,087

-67

Primaxin

62

73

81

77

66

297

-15

Immunology

Remicade

229

349

339

311

269

1,268

-34

Simponi

184

188

199

193

186

766

-2

Oncology

Keytruda

584

249

314

356

483

1,402

134

Emend

133

126

143

137

144

549

6

Temodar

66

66

73

78

67

283

0

Diversified Brands

Respiratory

Singulair

186

237

229

239

210

915

-22

Nasonex

139

229

101

94

112

537

-40

Dulera

82

113

121

97

105

436

-27

Other

Cozaar / Hyzaar

112

126

132

131

121

511

-11

Arcoxia

103

111

117

114

108

450

-7

Fosamax

61

75

73

68

68

284

-19

Vaccines

Gardasil / Gardasil 9

532

378

393

860

542

2,173

41

ProQuad / M-M-R II / Varivax

355

357

383

496

405

1,640

0

RotaTeq

224

188

130

171

162

652

19

Pneumovax 23

163

107

120

175

238

641

52

Zostavax

154

125

149

190

221

685

23

Other Pharmaceutical

1,037

1,083

1,128

1,191

1,172

4,574

-4

ANIMAL HEALTH

939

829

900

865

884

3,478

13

Other Revenues

310

379

244

228

327

1,178

-18

200% or greater

Sum of quarterly amounts may not equal year-to-date amounts due to rounding. Only select products are shown.

Vaccine sales in 2017 include sales in the European markets that were previously part of the Sanofi Pasteur MSD (SPMSD) joint venture that was terminated on December 31, 2016.

Amounts for 2016 include supply sales to SPMSD. Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $88 million in the first quarter of 2017 and $103 million, $91

million, $135 million and $126 million for the first, second, third and fourth quarters of 2016, respectively. Other Revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

(1)

(2)

(3)

(4)

*

(1)

(2)

(3)

(4)

Exhibit 99.2

MERCK & CO., INC.CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)(UNAUDITED)

Table 1a

2017

2016

% Change

1Q

1Q

2Q

3Q

4Q

Full Year

1Q

Sales

$ 9,434

$ 9,312

$ 9,844

$ 10,536

$ 10,115

$ 39,807

1% Costs, Expenses and Other


3,015

3,572

3,578

3,409

3,332

13,891

-16%Marketing and administrative

2,411

2,318

2,458

2,393

2,593

9,762

4%Research and development

1,796

1,659

2,151

1,664

4,650

10,124

8%Restructuring costs

151

91

134

161

265

651

66%Other (income) expense, net

58

48

19

22

631

720

21%Income (Loss) Before Taxes

2,003

1,624

1,504

2,887

(1,356) 4,659

23%Income Tax Provision (Benefit)

447

494

295

699

(769) 718

Net Income (Loss)

1,556

1,130

1,209

2,188

(587) 3,941

38%Less: Net Income Attributable toNoncontrolling Interests

5

5

4

4

7

21

Net Income (Loss) Attributable to Merck &Co., Inc.

$ 1,551

$ 1,125

$ 1,205

$ 2,184

$ (594) $ 3,920

38%Earnings (Loss) per Common Share AssumingDilution

$ 0.56

$ 0.40

$ 0.43

$ 0.78

$ (0.22) $ 1.41

40% Average Shares Outstanding AssumingDilution

2,766

2,795

2,789

2,786

2,755

2,787

Tax Rate

22.3% 30.4% 19.6% 24.2% 56.7% 15.4%

Sum of quarterly amounts may not equal year-to-date amounts due to rounding. (1) Because the company recorded a net loss in the fourth quarter of 2016, no potential dilutive common shares were used in the computation of loss per commonshare assuming dilution as the effect would have been anti-dilutive.

(1)

(1)

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION FIRST QUARTER 2016

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED)

Table 2b

GAAP

Acquisition and Divestiture-

Related Costs

Restructuring Costs

Adjustment Subtotal

Non-GAAP


$ 3,572

1,386

47

1,433

$ 2,139


2,318

2

3

5

2,313


1,659

35

55

90

1,569

Restructuring costs

91

91

91

—


48

48

Income Before Taxes

1,624

(1,423) (196) (1,619) 3,243

Income Tax Provision (Benefit)

494

(209) (43) (252) 746

Net Income

1,130

(1,214) (153) (1,367) 2,497

Net Income Attributable to Merck & Co., Inc.

1,125

(1,214) (153) (1,367) 2,492

Earnings per Common Share Assuming Dilution

$ 0.40

(0.43) (0.06) (0.49) $ 0.89

Tax Rate

30.4%

23.0% 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 ofunderlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as itpermits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and tomeasure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. (1) Amounts included in materials and production costs reflect $1.1 billion of expenses for the amortization of intangible assets recognized as a result ofacquisitions, as well as $24 million of amortization of purchase accounting adjustments to inventories related to the 2015 acquisition of CubistPharmaceuticals, Inc., and $252 million of intangible asset impairment charges. Amounts included in marketing and administrative expenses reflect integration,transaction and certain other costs related to business acquisitions, including severance costs which are not part of the company’s formal restructuring programs, aswell as transaction and certain other costs related to business divestitures. Amounts included in research and development expenses primarily reflect in-processresearch and development (IPR&D) impairment charges. (2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities underthe company’s formal restructuring programs. (3) Represents the estimated tax impact of the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

(1) (2)

(3) (3)

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES FIRST QUARTER 2017

(AMOUNTS IN MILLIONS) Table 3a

Global

U.S.

International

1Q 2017

1Q 2016

% Change

1Q 2017

1Q 2016

% Change

1Q 2017

1Q 2016

% Change

TOTAL SALES

$ 9,434

$ 9,312

1

$ 4,195

$ 4,222

-1

$ 5,239

$ 5,090

3

PHARMACEUTICAL

8,185

8,104

1

3,761

3,913

-4

4,424

4,191

6

Primary Care and Women’s

Health

Cardiovascular

Zetia

334

612

-46

111

386

-71

222

226

-2

Vytorin

241

277

-13

90

109

-18

151

168

-10

Liptruzet

49

23

114

49

23

114

Adempas

84

33

158

84

33

158

Diabetes

Januvia

839

906

-7

507

549

-8

332

357

-7

Janumet

496

506

-2

195

226

-14

302

280

8

General Medicine &Women’s Health

Implanon / Nexplanon

170

134

27

132

99

32

39

35

12

NuvaRing

160

175

-9

113

128

-12

47

48

-1

Follistim AQ

81

94

-14

42

53

-21

40

42

-4

Hospital and Specialty

Hepatitis

Zepatier

378

50

*

200

49

*

178

1

*

HIV

Isentress

305

340

-10

143

162

-12

162

178

-9

Hospital Acute Care

Bridion

148

90

63

45

5

*

102

86

19

Noxafil

141

145

-3

65

71

-8

76

74

3

Invanz

136

114

20

82

65

26

54

49

10

Cancidas

121

133

-9

5

4

20

116

128

-10

Cubicin

96

292

-67

54

255

-79

41

37

13

Primaxin

62

73

-15

1

-57

62

73

-14

Immunology

Remicade

229

349

-34

229

349

-34

Simponi

184

188

-2

184

188

-2

Oncology

Keytruda

584

249

134

361

133

172

223

116

92

Emend

133

126

6

86

82

5

47

44

7

Temodar

66

66

1

4

-78

65

62

6

Diversified Brands

Respiratory

Singulair

186

237

-22

6

17

-66

180

220

-18

Nasonex

139

229

-40

18

112

-84

121

117

3

Dulera

82

113

-27

75

107

-29

7

6

18

Other

Cozaar / Hyzaar

112

126

-11

3

6

-48

109

121

-9

Arcoxia

103

111

-7

103

111

-7

Fosamax

61

75

-19

1

1

62

60

74

-20

Vaccines

Gardasil / Gardasil 9

532

378

41

398

320

25

134

58

130

ProQuad / M-M-R II /Varivax

355

357

298

310

-4

57

47

21

RotaTeq

224

188

19

178

149

20

45

39

16

Pneumovax 23

163

107

52

114

67

70

49

40

22

Zostavax

154

125

23

109

109

45

16

174

Other Pharmaceutical

1,037

1,083

-4

329

334

-1

709

745

-5

ANIMAL HEALTH

939

829

13

283

233

22

656

596

10

Other Revenues

310

379

-18

151

76

99

159

303

-48

* 200% or greater Only select products are shown.

Vaccine sales in 2017 include sales in the European markets that were previously part of the Sanofi Pasteur MSD (SPMSD) joint venture that was terminated on December 31, 2016. Amounts

for 2016 include supply sales to SPMSD. Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $88 million and $103 million on a global basis for first quarter

2017 and 2016, respectively. Other Revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

(1)

(2)

(3)

(4)

(1)

(2)

(3)

(4)

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES(AMOUNTS IN MILLIONS)

(UNAUDITED)Table 3b

2017

2016

% Change

1Q

1Q

2Q

3Q

4Q

Full Year

1Q

TOTAL PHARMACEUTICAL

$ 8,185

$ 8,104

$ 8,700

$ 9,443

$ 8,904

$ 35,151

1

United States

3,761

3,913

4,169

4,710

4,282

17,073

-4

% Pharmaceutical Sales

45.9% 48.3% 47.9% 49.9% 48.1% 48.6%

Europe

1,977

1,914

1,997

1,935

1,843

7,689

3


24.2% 23.6% 23.0% 20.5% 20.7% 21.9%

Japan

688

620

673

812

659

2,764

11


8.4% 7.7% 7.7% 8.6% 7.4% 7.9%

Asia Pacific

889

806

890

914

912

3,522

10


10.9% 9.9% 10.2% 9.7% 10.2% 10.0%

China

328

337

353

350

333

1,374

-3

Latin America

375

359

430

448

538

1,776

5


4.6% 4.4% 4.9% 4.7% 6.0% 5.1%

Eastern Europe/Middle East Africa

255

272

314

364

429

1,379

-6


3.1% 3.4% 3.6% 3.9% 4.8% 3.9%

Canada

182

147

170

184

180

682

23


2.2% 1.8% 2.0% 1.9% 2.0% 1.9%

Other

58

73

57

76

61

266

-21


0.7% 0.9% 0.7% 0.8% 0.7% 0.8%

Europe primarily represents all European Union countries and the European Union accession markets.

(1)

(1)

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP(AMOUNTS IN MILLIONS)

(UNAUDITED) Table 4

OTHER (INCOME) EXPENSE, NET

1Q17

1Q16

INTEREST INCOME

$ (97) $ (79)INTEREST EXPENSE

182

172

EXCHANGE (GAINS) LOSSES

(8) 38

EQUITY LOSS (INCOME) FROM AFFILIATES

13

(34)Other, net

(32) (49)TOTAL

$ 58

$ 48

Documents

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