Merck & Co., Inc. | ||
Financial Highlights Package | ||
Third Quarter 2021 | ||
Table of Contents | ||
Table 1: | GAAP P&L.................................................................................... | 1 |
Table 1a: GAAP P&L - Current Year and Prior Year by Quarter................. | 2 | |
Table 2a: GAAP to Non-GAAP Reconciliation 3Q21 and Sept YTD 21....... | 3 | |
Table 2b: GAAP to Non-GAAP Reconciliation 3Q20 and Sept YTD 20...... | 4 | |
Table 3: Sales - Current Year and Prior Year by Quarter........................... | 5 | |
Table 3a: Sales - U.S. / Ex- U.S. 3Q21....................................................... | .6 | |
Table 3b: Sales - U.S. / Ex- U.S. Sept YTD 21............................................ | 7 | |
Table 3c: Sales - Pharmaceutical Geographic Split.................................... | 8 | |
Table 4: | Other (Income) Expense ............................................................. | 9 |
1
MERCK & CO., INC.
CONSOLIDATED STATEMENT OF INCOME - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1
On June 2, 2021, Merck completed the spinoff of products from its women's health, biosimilars and established brands businesses into a new, independent, publicly traded company named Organon & Co. (Organon) through a distribution of Organon's publicly traded stock to company shareholders. The historical results of the women's health, biosimilars and established brands businesses that were contributed to Organon in the spin-off are excluded from sales and expenses below and reflected as discontinued operations in the company's Consolidated Statements of Income provided below.
GAAP | GAAP | ||||||||||||
% Change | % Change | ||||||||||||
3Q21 | 3Q20 | Sep YTD | Sep YTD | ||||||||||
2021 | 2020 | ||||||||||||
Sales | $ | 13,154 | $ | 10,929 | 20% | $ | 35,183 | $ | 30,570 | 15% | |||
Costs, Expenses and Other | |||||||||||||
Cost of sales | 3,450 | 3,013 | 15% | 9,752 | 8,589 | 14% | |||||||
Selling, general and administrative | 2,336 | 2,060 | 13% | 6,804 | 6,336 | 7% | |||||||
Research and development | 2,445 | 3,349 | -27% | 9,177 | 7,609 | 21% | |||||||
Restructuring costs (1) | 107 | 113 | -5% | 487 | 265 | 84% | |||||||
Other (income) expense, net | (450) | (312) | 44% | (1,007) | (637) | 58% | |||||||
Income from Continuing Operations Before Taxes | 5,266 | 2,706 | 95% | 9,970 | 8,408 | 19% | |||||||
Income Tax Provision | 695 | 380 | 1,436 | 1,271 | |||||||||
Net Income from Continuing Operations | 4,571 | 2,326 | 97% | 8,534 | 7,137 | 20% | |||||||
Less: Net Income Attributable to Noncontrolling Interests | 4 | 2 | 9 | 1 | |||||||||
Net Income from Continuing Operations Attributable to Merck & Co., | $ | 4,567 | $ | 2,324 | 97% | $ | 8,525 | $ | 7,136 | 19% | |||
Inc. | |||||||||||||
Income from Discontinued Operations, Net of Taxes and Amounts | $ | - | $ | 617 | * | $ | 766 | $ | 2,025 | -62% | |||
Attributable to Noncontrolling Interests | |||||||||||||
Net Income Attributable to Merck & Co., Inc. | $ | 4,567 | $ | 2,941 | 55% | $ | 9,291 | $ | 9,161 | 1% | |||
Basic Earnings per Common Share Attributable to Merck & Co., Inc. | |||||||||||||
Common Shareholders: | |||||||||||||
Income from Continuing Operations | $ | 1.81 | $ | 0.92 | 97% | $ | 3.37 | $ | 2.82 | 20% | |||
Income from Discontinued Operations | $ | - | $ | 0.24 | * | $ | 0.30 | $ | 0.80 | -63% | |||
Net Income | $ | 1.81 | $ | 1.16 | 56% | $ | 3.67 | $ | 3.62 | 1% | |||
Earnings per Common Share Assuming Dilution Attributable to Merck | |||||||||||||
& Co., Inc. Common Shareholders: | |||||||||||||
Income from Continuing Operations | $ | 1.80 | $ | 0.92 | 96% | $ | 3.36 | $ | 2.81 | 20% | |||
Income from Discontinued Operations | $ | - | $ | 0.24 | * | $ | 0.30 | $ | 0.80 | -63% | |||
Net Income | $ | 1.80 | $ | 1.16 | 55% | $ | 3.66 | $ | 3.61 | 1% | |||
Average Shares Outstanding | 2,530 | 2,529 | 2,531 | 2,530 | |||||||||
Average Shares Outstanding Assuming Dilution | 2,536 | 2,538 | 2,539 | 2,541 | |||||||||
Tax Rate from Continuing Operations (2) | 13.2% | 14.0% | 14.4% | 15.1% |
- 100% or greater
- Represents separation and other related costs associated with restructuring activities under the company's formal restructuring programs.
- The effective income tax rate for the first nine months of 2021 reflects the unfavorable impact of a charge for the acquisition of Pandion Therapeutics, Inc. for which no tax benefit was recognized and a net tax benefit of $207 million related to the settlement of certain federal income tax matters.
2
MERCK & CO., INC.
CONSOLIDATED STATEMENT OF INCOME - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1a
2021 | 2020 | % Change | ||||||||||||||||||||||
1Q | 2Q | 3Q | Sep YTD | 1Q | 2Q | 3Q | Sep YTD | 4Q | Full Year | 3Q | Sep YTD | |||||||||||||
Sales | ||||||||||||||||||||||||
$ | 10,627 | $ | 11,402 | $ | 13,154 | $ | 35,183 | $ | 10,288 | $ | 9,353 | $ | 10,929 | $ | 30,570 | $ | 10,948 | $ | 41,518 | 20% | 15% | |||
Costs, Expenses and Other | ||||||||||||||||||||||||
Cost of sales | 3,199 | 3,104 | 3,450 | 9,752 | 2,829 | 2,747 | 3,013 | 8,589 | 5,029 | 13,618 | 15% | 14% | ||||||||||||
Selling, general and administrative | 2,187 | 2,281 | 2,336 | 6,804 | 2,191 | 2,085 | 2,060 | 6,336 | 2,619 | 8,955 | 13% | 7% | ||||||||||||
Research and development | 2,412 | 4,321 | 2,445 | 9,177 | 2,175 | 2,085 | 3,349 | 7,609 | 5,788 | 13,397 | -27% | 21% | ||||||||||||
Restructuring costs | 297 | 82 | 107 | 487 | 70 | 82 | 113 | 265 | 310 | 575 | -5% | 84% | ||||||||||||
Other (income) expense, net | (455) | (103) | (450) | (1,007) | 62 | (387) | (312) | (637) | (253) | (890) | 44% | 58% | ||||||||||||
Income (Loss) from Continuing Operations Before Taxes | 2,987 | 1,717 | 5,266 | 9,970 | 2,961 | 2,741 | 2,706 | 8,408 | (2,545) | 5,863 | 95% | 19% | ||||||||||||
Income Tax Provision | 238 | 503 | 695 | 1,436 | 495 | 396 | 380 | 1,271 | 69 | 1,340 | ||||||||||||||
Net Income (Loss) from Continuing Operations | 2,749 | 1,214 | 4,571 | 8,534 | 2,466 | 2,345 | 2,326 | 7,137 | (2,614) | 4,523 | 97% | 20% | ||||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | 4 | 1 | 4 | 9 | (5) | 4 | 2 | 1 | 3 | 4 | ||||||||||||||
Net Income (Loss) from Continuing Operations Attributable to | 2,745 | 1,213 | 4,567 | 8,525 | 2,471 | 2,341 | 2,324 | 7,136 | (2,617) | 4,519 | 97% | 19% | ||||||||||||
Merck & Co., Inc. | ||||||||||||||||||||||||
Income from Discontinued Operations, Net of Taxes and | 434 | 332 | - | 766 | 748 | 661 | 617 | 2,025 | 523 | 2,548 | * | -62% | ||||||||||||
Amounts Attributable to Noncontrolling Interests | ||||||||||||||||||||||||
Net Income (Loss) Attributable to Merck & Co., Inc. | $ | 3,179 | $ | 1,545 | $ | 4,567 | $ | 9,291 | $ | 3,219 | $ | 3,002 | $ | 2,941 | $ | 9,161 | $ | (2,094) | $ | 7,067 | 55% | 1% | ||
Basic Earnings (Loss) per Common Share Attributable to Merck | ||||||||||||||||||||||||
& Co., Inc. Common Shareholders: | ||||||||||||||||||||||||
Income (Loss) from Continuing Operations | $ | 1.08 | $ | 0.48 | $ | 1.81 | $ | 3.37 | $ | 0.98 | $ | 0.93 | $ | 0.92 | $ | 2.82 | $ | (1.03) | $ | 1.79 | 97% | 20% | ||
Income from Discontinued Operations | 0.17 | 0.13 | - | 0.30 | 0.30 | 0.26 | 0.24 | 0.80 | 0.21 | 1.01 | * | -63% | ||||||||||||
Net Income (Loss) | 56% | 1% | ||||||||||||||||||||||
$ | 1.26 | $ | 0.61 | $ | 1.81 | $ | 3.67 | $ | 1.27 | $ | 1.19 | $ | 1.16 | $ | 3.62 | $ | (0.83) | $ | 2.79 | |||||
Earnings (Loss) per Common Share Assuming Dilution | ||||||||||||||||||||||||
Attributable to Merck & Co., Inc. Common Shareholders: | ||||||||||||||||||||||||
Income (Loss) from Continuing Operations | $ | 1.08 | $ | 0.48 | $ | 1.80 | $ | 3.36 | $ | 0.97 | $ | 0.92 | $ | 0.92 | $ | 2.81 | $ | (1.03) | $ | 1.78 | 96% | 20% | ||
Income from Discontinued Operations | 0.17 | 0.13 | - | 0.30 | 0.29 | 0.26 | 0.24 | 0.80 | 0.21 | 1.00 | * | -63% | ||||||||||||
Net Income (Loss) | 55% | 1% | ||||||||||||||||||||||
$ | 1.25 | $ | 0.61 | $ | 1.80 | $ | 3.66 | $ | 1.26 | $ | 1.18 | $ | 1.16 | $ | 3.61 | $ | (0.83) | $ | 2.78 | |||||
Average Shares Outstanding | ||||||||||||||||||||||||
2,531 | 2,533 | 2,530 | 2,531 | 2,533 | 2,527 | 2,529 | 2,530 | 2,530 | 2,530 | |||||||||||||||
Average Shares Outstanding Assuming Dilution (1) | 2,541 | 2,540 | 2,536 | 2,539 | 2,547 | 2,536 | 2,538 | 2,541 | 2,530 | 2,541 | ||||||||||||||
Tax Rate from Continuing Operations | 8.0% | 29.3% | 13.2% | 14.4% | 16.7% | 14.4% | 14.0% | 15.1% | -2.7% | 22.9% | ||||||||||||||
* 100% or greater
Sum of quarterly amounts may not equal year-to-date amounts due to rounding.
- Because the company recorded a net loss in the fourth quarter of 2020, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive. Income from discontinued operations was also computed using average common shares outstanding.
3
MERCK & CO., INC.
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2021 GAAP TO NON-GAAP RECONCILIATION - CONTINUING OPERATIONS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2a
The table below reflects a reconciliation of GAAP to non-GAAP financial information on a continuing operations basis. As Organon results are reflected within discontinued operations, they are excluded from the financial information provided below.
Third Quarter
Cost of sales
Selling, general and administrative Research and development Restructuring costs
Other (income) expense, net
Income From Continuing Operations Before Taxes Income Tax Provision (Benefit)
Net Income from Continuing Operations
Net Income from Continuing Operations Attributable to Merck & Co., Inc.
Earnings per Common Share Assuming Dilution from Continuing Operations
Tax Rate
Sep YTD
Cost of sales
Selling, general and administrative Research and development Restructuring costs
Other (income) expense, net
Income From Continuing Operations Before Taxes Income Tax Provision (Benefit)
Net Income from Continuing Operations
Net Income from Continuing Operations Attributable to Merck & Co., Inc.
Earnings per Common Share Assuming Dilution from Continuing Operations
Tax Rate
Acquisition and Divestiture- | Restructuring Costs (2) | (Income) Loss from | ||||||||||||
GAAP | Investments in Equity | Certain Other Items | Adjustment Subtotal | Non-GAAP | ||||||||||
Related Costs (1) | ||||||||||||||
Securities | ||||||||||||||
48 | 394 | |||||||||||||
$ | 3,450 | 346 | $ | 3,056 | ||||||||||
2,336 | 61 | 5 | (87) (4) | 66 | 2,270 | |||||||||
2,445 | 48 | 8 | (31) | 2,476 | ||||||||||
107 | 107 | 107 | - | |||||||||||
(450) | (10) | (684) | (694) | 244 | ||||||||||
5,266 | (445) | (5) | (168) | (5) | 684 | (5) | 87 | (5) | 158 | 5,108 | ||||
695 | (96) | (26) | 151 | 1 | 30 | 665 | ||||||||
4,571 | (349) | (142) | 533 | 86 | 128 | 4,443 | ||||||||
4,567 | (349) | (142) | 533 | 86 | 128 | 4,439 | ||||||||
$ | 1.80 | (0.14) | (0.06) | 0.21 | 0.04 | 0.05 | $ | 1.75 | ||||||
13.2% | 13.0% |
$ | 9,752 | 1,188 | 113 | 225 | (3) | 1,526 | $ | 8,226 | ||||
6,804 | 96 | 9 | (4) | 105 | 6,699 | |||||||
9,177 | 82 | 21 | 1,678 | 1,781 | 7,396 | |||||||
487 | 487 | 487 | - | |||||||||
(1,007) | 79 | (1,503) | (1,424) | 417 | ||||||||
9,970 | (1,445) | (5) | (630) | (5) | 1,503 | (5) | (1,903) | (5) | (2,475) | 12,445 | ||
1,436 | (283) | (82) | 331 | (259) | (293) | 1,729 | ||||||
8,534 | (1,162) | (548) | 1,172 | (1,644) | (2,182) | 10,716 | ||||||
8,525 | (1,162) | (548) | 1,172 | (1,644) | (2,182) | 10,707 | ||||||
$ | 3.36 | (0.46) | (0.22) | 0.46 | (0.65) | (0.86) | $ | 4.22 | ||||
14.4% | 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 this information enhances investors' understanding of the company's results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management's annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.
- Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect acquisition and divestiture-related costs. Amounts included in research and development expenses primarily reflect expenses for the amortization of intangible assets. Amounts included in other (income) expense, net, for the third quarter and nine months period primarily reflect an increase in the estimated fair value measurement of liabilities for contingent consideration related to the termination of the Sanofi-Pasteur MSD joint venture. Additionally, the first nine months also includes a loss on a forward exchange contract entered into in conjunction with the Organon spinoff. Amount included in other (income) expense, net, for the nine month period is partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.
- 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.
- Represents charges for the discontinuation of COVID-19 development programs.
- Amounts included in the third quarter and first nine months reflect a $90 million adjustment to deferred tax assets identified in conjunction with the VelosBio Inc. acquisition. Additionally, the first nine months includes a $1.7 billion charge for the acquisition of Pandion Therapeutics, Inc.
- Represent the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Certain other items for the nine month period also includes a $207 million net tax benefit related to the settlement of certain federal income tax matters.
4
MERCK & CO., INC.
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2020 GAAP TO NON-GAAP RECONCILIATION - CONTINUING OPERATIONS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2b
The table below reflects a reconciliation of GAAP to non-GAAP financial information on a continuing operations basis. As Organon results are reflected within discontinued operations, they are excluded from the financial information provided below.
Third Quarter
Cost of sales
Selling, general and administrative Research and development Restructuring costs
Other (income) expense, net
Income From Continuing Operations Before Taxes Income Tax Provision (Benefit)
Net Income from Continuing Operations
Net Income from Continuing Operations Attributable to Merck & Co., Inc.
Earnings per Common Share Assuming Dilution from Continuing Operations
Tax Rate
Sep YTD
Cost of sales
Selling, general and administrative Research and development Restructuring costs
Other (income) expense, net
Income From Continuing Operations Before Taxes Income Tax Provision (Benefit)
Net Income from Continuing Operations
Net Income from Continuing Operations Attributable to Merck & Co., Inc.
Earnings per Common Share Assuming Dilution from Continuing Operations
Tax Rate
Acquisition and Divestiture- | Restructuring Costs (2) | (Income) Loss from | ||||||||||||
GAAP | Investments in Equity | Certain Other Items | Adjustment Subtotal | Non-GAAP | ||||||||||
Related Costs (1) | ||||||||||||||
Securities | ||||||||||||||
38 | 441 | |||||||||||||
$ | 3,013 | 403 | $ | 2,572 | ||||||||||
2,060 | 25 | 15 | (3) | 40 | 2,020 | |||||||||
3,349 | 19 | 19 | 1,082 | 1,120 | 2,229 | |||||||||
113 | 113 | 113 | - | |||||||||||
(312) | (346) | (1) | (347) | 35 | ||||||||||
2,706 | (447) | (4) | (185) | (4) | 346 | (4) | (1,081) | (4) | (1,367) | 4,073 | ||||
380 | (9) | (25) | 76 | (247) | (205) | 585 | ||||||||
2,326 | (438) | (160) | 270 | (834) | (1,162) | 3,488 | ||||||||
2,324 | (438) | (160) | 270 | (834) | (1,162) | 3,486 | ||||||||
$ | 0.92 | (0.17) | (0.06) | 0.11 | (0.33) | (0.45) | $ | 1.37 | ||||||
14.0% | 14.4% |
$ | 8,589 | 1,370 | 131 | 1,501 | $ | 7,088 | ||||||
6,336 | 182 | 37 | (3) | 219 | 6,117 | |||||||
7,609 | (4) | 67 | 1,082 | 1,145 | 6,464 | |||||||
265 | 265 | 265 | - | |||||||||
(637) | 52 | (944) | (17) | (909) | 272 | |||||||
8,408 | (1,600) | (4) | (500) | (4) | 944 | (4) | (1,065) | (4) | (2,221) | 10,629 | ||
1,271 | (251) | (59) | 208 | (242) | (344) | 1,615 | ||||||
7,137 | (1,349) | (441) | 736 | (823) | (1,877) | 9,014 | ||||||
7,136 | (1,349) | (441) | 736 | (823) | (1,877) | 9,013 | ||||||
$ | 2.81 | (0.54) | (0.17) | 0.29 | (0.32) | (0.74) | $ | 3.55 | ||||
15.1% | 15.2% |
Only the line items that are affected by non-GAAP adjustments are shown.
Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management's annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.
- Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative (SG&A) expenses reflect acquisition and divestiture-related costs, including $95 million of transaction costs in the nine month period related to the acquisition of Arqule, Inc. Amounts included in research and development expenses primarily reflect a reduction in expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amounts included in other (income) expense, net, primarily reflect costs related to increases in the estimated fair value measurement of liabilities for contingent consideration, partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.
- 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.
- Represents expenses for upfront payments related to license and collaboration agreements.
- Represent the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Acquisition and divestiture-related costs also includes a tax cost of $67 million, representing an adjustment to the tax benefits recorded in conjunction with the 2015 Cubist Pharmaceuticals, Inc. acquisition.
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Merck & Co. Inc. published this content on 28 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2021 10:52:06 UTC.