8-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 1, 2024 (January 29, 2024)

Merck & Co., Inc.

(Exact name of registrant as specified in its charter)

New Jersey<br> <br>(State or other jurisdiction<br> <br>of incorporation)	1-6571<br> <br>(Commission<br> <br>File Number)	22-1918501<br> <br>(I.R.S. Employer<br> <br>Identification No.)

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126 East Lincoln Avenue, Rahway, NJ<br> <br>(Address of principal executive offices)	07065<br> <br>(Zip Code)

(Registrant’s telephone number, including area code)

(908) 740-4000

Not Applicable

(Former name, former address and former fiscal year, 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 following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	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) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ¨

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 or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common<br> Stock ($0.50 par value)	MRK	New York Stock Exchange
0.500% Notes due 2024	MRK 24	New York Stock Exchange
1.875% Notes due 2026	MRK/26	New York Stock Exchange
2.500% Notes due 2034	MRK/34	New York Stock Exchange
1.375% Notes due 2036	MRK 36A	New York Stock Exchange

Item2.02. 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 Merck & Co., Inc. on February 1, 2024, regarding earnings for the fourth quarter and year end of 2023, attached as Exhibit 99.1. Also incorporated 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”), or otherwise 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 Exchange Act, except as expressly set forth by specific reference in such filing.

Item 2.05. Costs Associated with Exit or

Disposal Activities.

On January 29, 2024, the Company approved a new restructuring program (the “2024 Restructuring Program”) intended to continue the optimization of the Company’s Human Health global manufacturing network as the future pipeline shifts to new modalities and also optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency.

The actions contemplated under the 2024 Restructuring Program are expected to be substantially completed by the end of 2031, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $4.0 billion. Approximately 60% of the $4.0 billion will be non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested; the remainder of the costs will result in cash outlays primarily relating to facility shutdown costs.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1	Press release issued<br> February 1, 2024, regarding earnings for the fourth quarter and year end of 2023
Exhibit 99.2	Certain supplemental information<br> not included in the press release
Exhibit 104	Cover Page Interactive<br> Data File (embedded within the Inline XBRL document)

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: February 1, 2024	By:	/s/ Kelly E. W. Grez
		Kelly E. W. Grez<br><br> Corporate Secretary

Exhibit 99.1

News Release

Merck Announces Fourth-Quarter and Full-Year 2023 Financial Results

-	Fourth-Quarter and Full-Year Sales Reflect Sustained Growth Across Oncology and Vaccines
-	Fourth-Quarter Worldwide Sales Were $14.6 Billion, an Increase of 6% From Fourth Quarter 2022; Excluding LAGEVRIO, Growth Was 11%;<br>Excluding LAGEVRIO and the Impact of Foreign Exchange, Growth Was 13%
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-	Fourth-Quarter GAAP Loss per Share Was $0.48; Non-GAAP EPS Was $0.03; GAAP Loss per Share and Non-GAAP EPS Include a Charge of $1.69<br>per Share for a Collaboration With Daiichi Sankyo
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-	Full-Year Worldwide Sales Were $60.1 Billion, an Increase of 1% From Full-Year 2022; Excluding LAGEVRIO, Growth Was 9%; Excluding<br>LAGEVRIO and the Impact of Foreign Exchange, Growth Was 12%
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o	KEYTRUDA Sales Grew 19% to $25.0 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 21%
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o	GARDASIL/GARDASIL 9 Sales Grew 29% to $8.9 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 33%
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o	LAGEVRIO Sales Declined 75% to $1.4 Billion; Excluding the Impact of Foreign Exchange, Sales Declined 74%
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-	Full-Year 2023 GAAP EPS Was $0.14; Non-GAAP EPS Was $1.51; GAAP and Non-GAAP EPS Include Charges of $6.21 per Share for Certain Business<br>Development Transactions
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-	Obtained FDA Priority Review of Biologics License Applications for V116, an Investigational Pneumococcal Conjugate Vaccine, as Well<br>as Merck and Daiichi Sankyo’s Patritumab Deruxtecan, in the Fourth Quarter
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-	Received Multiple FDA Approvals Across Oncology Portfolio in 2023
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-	Initiated More Than 20 Phase 3 Study Starts, Including the Progression of Eight Novel Assets Into Phase 3 in 2023
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-	Augmented Pipeline Through Acquisitions of Prometheus and Imago, and Collaboration Agreements With Daiichi Sankyo and Kelun-Biotech<br>in 2023
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-	Full-Year 2024 Financial Outlook
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o	Anticipates Worldwide Sales To Be Between $62.7 Billion and $64.2 Billion
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o	Expects Non-GAAP EPS To Be Between $8.44 and $8.59
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RAHWAY, N.J., Feb. 1, 2024 – Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the fourth quarter and full year of 2023.

“2023 was another very strong year for Merck. I am extremely pleased by the progress we’ve made to develop and deliver transformative therapies and vaccines that will help save and improve lives around the world. We reached more than 500 million people with our medicines last year alone, over half of which were donations, including through our program to treat river blindness,” said Robert M. Davis, chairman and chief executive officer, Merck. “We also made investments of approximately $30 billion in research and development in our ongoing effort to discover, develop and collaborate to propel the next generation of impactful innovations. As we move forward, I’m confident that our strong momentum will continue, underpinned by the unwavering dedication of our talented global team.”

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Financial Summary

	Fourth Quarter											Year Ended
$ in millions, <br><br>except EPS <br><br>amounts	2023			2022		Change			Change Ex-<br><br>Exchange			Dec. 31, 2023		Dec. 31, 2022		Change			Change Ex-<br><br>Exchange
Sales	$	14,630		$	13,830		6	%		7	%	$	60,115	$	59,283		1	%		4	%
GAAP net (loss) income^1^		(1,226	)		3,017		N/M			N/M			365		14,519		-97	%		-95	%
Non-GAAP net income that excludes certain items^1,2*^		66			4,129		-98	%		N/M			3,837		19,005		-80	%		-75	%
GAAP EPS		(0.48	)		1.18		N/M			N/M			0.14		5.71		-98	%		-95	%
Non-GAAP EPS that excludes certain items^2*^		0.03			1.62		-98	%		N/M			1.51		7.48		-80	%		-75	%

*Refer to table on page 9.

N/M - Not meaningful

Generally Accepted Accounting Principles (GAAP) loss/earnings per share (EPS) assuming dilution was a loss per share of $0.48 for the fourth quarter and EPS of $0.14 for the full year of 2023. Non-GAAP EPS was $0.03 for the fourth quarter and $1.51 for the full year of 2023. GAAP loss per share and non-GAAP EPS in the fourth quarter of 2023 include a charge of $1.69 per share related to the collaboration with Daiichi Sankyo. GAAP and non-GAAP EPS for the full years of 2023 and 2022 include charges of $6.21 and $0.22 per share, respectively, related to certain collaborations, licensing agreements and asset acquisitions.

Non-GAAP EPS excludes acquisition- and divestiture-related costs, including pretax intangible asset impairment research and development (R&D) charges of $779 million in the fourth quarter and full year of 2023 related to gefapixant, and $780 million and $1.7 billion in the fourth quarter and full year of 2022, respectively, primarily related to nemtabrutinib. Non-GAAP EPS also excludes restructuring costs, including costs for the recently approved 2024 Restructuring Program, as well as income and losses from investments in equity securities.

^1^ Net (loss) income attributable to Merck & Co., Inc.

^2^ Merck is providing certain 2023 and 2022 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.

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Fourth-Quarter Sales Performance

The following table reflects sales of the company’s top products and significant performance drivers.

	Fourth Quarter
$ in millions	2023		2022		Change			Change<br><br> Ex-<br><br>Exchange			Commentary
Total Sales	$	14,630	$	13,830		6	%		7	%
Pharmaceutical		13,141		12,180		8	%		8	%	Increase driven by growth in oncology, vaccines and hospital acute care, partially offset by a decline in virology, due to LAGEVRIO, and diabetes. Excluding LAGEVRIO and impact of foreign exchange, growth of 14%.
KEYTRUDA		6,608		5,450		21	%		22	%	Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer and renal cell carcinoma (RCC), and continued strong global demand from metastatic indications.
GARDASIL/ GARDASIL 9		1,871		1,470		27	%		27	%	Growth due to strong global demand, particularly in China, and public-sector buying patterns in the U.S.
JANUVIA/JANUMET		787		913		-14	%		-13	%	Decline primarily due to generic competition in several international markets, particularly in Europe, and lower demand in the U.S.
PROQUAD, M-M-R II and VARIVAX		545		526		4	%		3	%	Growth largely due to higher pricing in the U.S.
BRIDION		429		441		-3	%		-3	%	Decline primarily due to generic competition in certain ex-U.S. markets, particularly in Europe, partially offset by higher demand in the U.S.
Lynparza*		315		292		8	%		8	%	Growth driven primarily by higher pricing in the U.S.
Lenvima*		226		216		5	%		5	%	Growth primarily due to higher demand in the U.S., partially offset by timing of shipments in China.
LAGEVRIO		193		825		-77	%		-76	%	Decline due to nonrecurrence of sales in the U.K. and lower demand in Japan and Australia.
ROTATEQ		185		139		34	%		33	%	Growth primarily due to public-sector buying patterns in the U.S. and timing of shipments in China.
VAXNEUVANCE		176		138		28	%		26	%	Growth largely driven by launches in Europe and continued uptake for the pediatric indication in the U.S. Prior-year quarter benefited from inventory stocking in the U.S. in preparation for pediatric launch.
Animal Health		1,278		1,230		4	%		4	%	Growth primarily driven by higher demand for Companion Animal products.
Livestock		808		814		-1	%		0	%	Decline primarily due to timing of shipments for ruminant products, largely offset by higher pricing across the product portfolio and higher demand for swine products.

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	Fourth Quarter
$ in millions	2023		2022		Change			Change<br><br> Ex-<br><br>Exchange			Commentary
Companion Animal		470		416		13	%		12	%	Growth primarily due to higher demand and timing of shipments for BRAVECTO line of products, as well as higher pricing. Sales of BRAVECTO were $197 million and $168 million in the current and prior-year quarters, respectively, which represented growth of 18%, or 19% excluding the impact of foreign exchange.
Other Revenues**		211		420		-50	%		-1	%	Decline primarily due to impact of revenue hedging activities.

*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.

Full-Year Revenue Performance

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

	Year Ended
$ in millions	Dec. 31, 2023		Dec. 31, 2022		Change			Change Ex-<br> Exchange
Total Sales	$	60,115	$	59,283		1	%		4	%
Pharmaceutical		53,583		52,005		3	%		5	%
KEYTRUDA		25,011		20,937		19	%		21	%
GARDASIL/GARDASIL 9		8,886		6,897		29	%		33	%
JANUVIA/JANUMET		3,366		4,513		-25	%		-23	%
PROQUAD, M-M-R II and VARIVAX		2,368		2,241		6	%		6	%
BRIDION		1,842		1,685		9	%		11	%
LAGEVRIO		1,428		5,684		-75	%		-74	%
Lynparza*		1,199		1,116		7	%		9	%
Lenvima*		960		876		10	%		11	%
ROTATEQ		769		783		-2	%		-1	%
VAXNEUVANCE		665		170		N/M			N/M
Animal Health		5,625		5,550		1	%		3	%
Livestock		3,337		3,300		1	%		4	%
Companion Animal		2,288		2,250		2	%		3	%
Other Revenues**		907		1,728		-48	%		-15	%

*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.

N/M - Not meaningful

Full-year 2023 pharmaceutical sales grew 3% to $53.6 billion. Pharmaceutical sales growth was primarily driven by higher sales in oncology, particularly KEYTRUDA, higher sales of vaccines, reflecting strong growth of combined sales of GARDASIL/GARDASIL 9 and VAXNEUVANCE, as well as growth in hospital acute care products, including PREVYMIS and BRIDION. Pharmaceutical sales growth in 2023 was partially offset by lower sales of the COVID-19 medication LAGEVRIO, as well as lower sales of JANUVIA and JANUMET, primarily reflecting generic competition in many ex-U.S. markets and lower demand in the U.S., and lower sales of PNEUMOVAX 23 as the market continues to shift toward newer adult pneumococcal conjugate vaccines. Pharmaceutical sales growth for the full year of 2023 was 14% excluding LAGEVRIO and the unfavorable impact of foreign exchange.

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Full-year 2023 Animal Health sales grew 1% to $5.6 billion. Excluding the unfavorable impact of foreign exchange, Animal Health sales grew 3%, primarily due to higher pricing. Full-year sales growth was also driven by higher demand for livestock products, led by poultry and swine products, partially offset by lower demand for ruminant products. Sales of BRAVECTO were $1.1 billion in 2023, which represented growth of 4%, or 5% excluding the impact of foreign exchange, primarily reflecting higher pricing.

Fourth-Quarter and Full-Year Expense, EPS and Related Information

The table below presents selected expense information.

$ in millions	GAAP			Acquisition- and Divestiture- Related Costs^3^			Restructuring<br> Costs		(Income)<br> Loss From<br> Investments<br> in Equity<br> Securities			Non- GAAP^2^
Fourth Quarter 2023
Cost of sales	$	3,911		$	454		$	117	$	-		$	3,340
Selling, general and administrative		2,804			24			29		-			2,751
Research and development		9,628			790			-		-			8,838
Restructuring costs		255			-			255		-			-
Other (income) expense, net		78			(35	)		-		(61	)		174
Fourth Quarter 2022
Cost of sales	$	3,881		$	482		$	38	$	-		$	3,361
Selling, general and administrative		2,687			39			20		-			2,628
Research and development		3,775			740			-		-			3,035
Restructuring costs		49			-			49		-			-
Other (income) expense, net		(75	)		(69	)		-		80			(86	)

^3^ Includes expenses for the amortization of intangible assets and purchase accounting adjustments to inventories recognized as a result of acquisitions of businesses, intangible asset impairment charges and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. R&D expenses include intangible asset impairment charges of $779 million in both the fourth quarter and full year of 2023 related to gefapixant and $780 million and $1.7 billion in the fourth quarter and full year of 2022, respectively, largely related to nemtabrutinib. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements.

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$ in millions	GAAP		Acquisition- and Divestiture- Related Costs^3^			Restructuring<br> Costs		(Income)<br> Loss From<br> Investments<br> in Equity<br> Securities			Certain<br> Other <br> Items		Non- GAAP^2^
Year Ended Dec. 31, 2023
Cost of sales	$	16,126	$	2,018		$	211	$	-		$	-	$	13,897
Selling, general and administrative		10,504		86			122		-			-		10,296
Research and development		30,531		819			1		-			-		29,711
Restructuring costs		599		-			599		-			-		-
Other (income) expense, net		466		(47	)		-		(279	)		573		219
Year Ended Dec. 31, 2022
Cost of sales	$	17,411	$	2,059		$	205	$	-		$	-	$	15,147
Selling, general and administrative		10,042		176			94		-			-		9,772
Research and development		13,548		1,676			30		-			-		11,842
Restructuring costs		337		-			337		-			-		-
Other (income) expense, net		1,501		(207	)		-		1,348			-		360

GAAP Expense, EPS and Related Information

Gross margin was 73.3% for the fourth quarter of 2023 compared with 71.9% for the fourth quarter of 2022. The increase was primarily due to the favorable impacts of lower LAGEVRIO sales, which have a low gross margin, lower manufacturing facilities costs and product mix, partially offset by the unfavorable impacts of foreign exchange and higher restructuring costs. Gross margin was 73.2% for the full year of 2023 compared with 70.6% for the full year of 2022. The increase was primarily due to the favorable impacts of lower LAGEVRIO sales, product mix, lower manufacturing facilities costs, and lower revenue from third-party manufacturing arrangements, partially offset by the unfavorable impact of foreign exchange.

Selling, general and administrative (SG&A) expenses were $2.8 billion in the fourth quarter of 2023, an increase of 4% compared with the fourth quarter of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, partially offset by lower promotional spending. Full-year 2023 SG&A expenses were $10.5 billion, an increase of 5% compared with the full year of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, and higher promotional spending, partially offset by the favorable impact of foreign exchange and lower acquisition- and divestiture-related costs.

R&D expenses were $9.6 billion in the fourth quarter of 2023 compared with $3.8 billion in the fourth quarter of 2022. R&D expenses were $30.5 billion for the full year of 2023 compared with $13.5 billion for the full year of 2022. The increase in the fourth quarter and full year of 2023 reflects a $5.5 billion charge for the collaboration with Daiichi Sankyo, and higher development costs due to spending on clinical programs, including newly acquired programs, as well as higher compensation and benefit costs (reflecting in part increased headcount). The increase in R&D expenses for the full year was also due to charges of $11.4 billion in the aggregate for the acquisitions of Prometheus Biosciences, Inc. (Prometheus) and Imago BioSciences, Inc. (Imago). The increase in R&D expenses for the full year was partially offset by lower intangible asset impairment charges in 2023 and charges of $690 million in the aggregate in 2022 for collaboration and licensing agreements with Moderna, Inc. (Moderna), Orna Therapeutics (Orna) and Orion Corporation (Orion).

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Other (income) expense, net, was $78 million of expense in the fourth quarter of 2023 compared with $75 million of income in the fourth quarter of 2022, primarily due to higher exchange losses and higher net interest expense, partially offset by net gains from investments in equity securities for the fourth quarter of 2023 compared with net losses from investments in equity securities for the fourth quarter of 2022, and lower pension settlement costs. Other (income) expense, net, was $466 million of expense in the full year of 2023 compared with $1.5 billion of expense in the full year of 2022, primarily due to net gains from investments in equity securities in 2023 compared with net losses from investments in equity securities in 2022, and lower pension settlement costs, partially offset by a $572.5 million charge in 2023 related to settlements with certain plaintiffs in the Zetia antitrust litigation.

The effective tax rate was 40.1% for the fourth quarter of 2023 compared with 14.1% in the fourth quarter of 2022. The effective tax rate for the fourth quarter of 2023 includes a 29.2 percentage point impact resulting from the charge for the Daiichi Sankyo collaboration. The effective tax rate was 80.0% for the full year of 2023 compared with 11.7% for the full year of 2022. The full-year 2023 effective tax rate reflects an aggregate 65.6 percentage point unfavorable impact, resulting from charges for asset acquisitions (for which no tax benefits were recognized) as well as the charge for the Daiichi Sankyo collaboration.

GAAP loss per share was $0.48 for the fourth quarter of 2023 compared with EPS of $1.18 for the fourth quarter of 2022, primarily driven by the charge in 2023 related to the collaboration with Daiichi Sankyo, the unfavorable impact of foreign exchange and higher restructuring costs, partially offset by a beneficial impact from the tax rate and operational strength in the business. GAAP EPS was $0.14 for the full year of 2023 compared with EPS of $5.71 for the full year of 2022. The EPS decline in 2023 was primarily due to higher charges for certain business development transactions, the unfavorable impact of foreign exchange and the tax rate, as well as a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation, partially offset by the beneficial impacts of operational strength in the business, better performance from equity investments and lower intangible asset impairment charges.

Non-GAAP Expense, EPS and Related Information

Non-GAAP gross margin was 77.2% for the fourth quarter of 2023 compared with 75.7% for the fourth quarter of 2022. Non-GAAP gross margin was 76.9% for the full year of 2023 compared with 74.4% for the full year of 2022. The non-GAAP gross margin improvement in the fourth quarter and full year of 2023 was primarily due to the favorable impacts of lower LAGEVRIO sales, which have a low gross margin, product mix, and lower manufacturing facilities costs. The increase in non-GAAP gross margin for the full year was also due to lower revenue from third-party manufacturing arrangements. The non-GAAP gross margin improvement in the fourth quarter and full year of 2023 was partially offset by the unfavorable impact of foreign exchange.

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Non-GAAP SG&A expenses were $2.8 billion for the fourth quarter of 2023 compared with $2.6 billion for the fourth quarter of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, partially offset by lower promotional spending. Full-year 2023 non-GAAP SG&A expenses were $10.3 billion, an increase of 5% compared with the full year of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, and higher promotional spending, partially offset by the favorable impact of foreign exchange.

Non-GAAP R&D expenses were $8.8 billion in the fourth quarter of 2023 compared with $3.0 billion in the fourth quarter of 2022. Non-GAAP R&D expenses were $29.7 billion for the full year of 2023 compared with $11.8 billion for the full year of 2022. The increase in the fourth quarter and full year of 2023 reflects a $5.5 billion charge for the collaboration with Daiichi Sankyo, and higher development costs due to spending on clinical programs, including newly acquired programs, as well as higher compensation and benefit costs (reflecting in part increased headcount). The increase in non-GAAP R&D expenses for the full year was also due to charges of $11.4 billion in the aggregate for the acquisitions of Prometheus and Imago. The increase in R&D expenses for the full year was partially offset by charges of $690 million in the aggregate in 2022 for collaboration and licensing agreements with Moderna, Orna and Orion.

Non-GAAP other (income) expense, net, was $174 million of expense in the fourth quarter of 2023 compared with $86 million of income in the fourth quarter of 2022, primarily due to higher exchange losses and higher net interest expense, partially offset by lower pension settlement costs. Non-GAAP other (income) expense, net, was $219 million of expense in the full year of 2023 compared with $360 million of expense in the full year of 2022, primarily due to lower pension settlement costs.

The non-GAAP effective tax rate was 114.2% for the fourth quarter of 2023 compared with 15.6% in the fourth quarter of 2022. The non-GAAP effective tax rate for the fourth quarter of 2023 includes a 101.1 percentage point unfavorable impact resulting from the charge for the Daiichi Sankyo collaboration. The non-GAAP effective tax rate was 35.8% for the full year of 2023 compared with 14.2% for the full year of 2022. The full-year 2023 non-GAAP effective tax rate reflects an aggregate 21.2 percentage point unfavorable impact, resulting from charges for asset acquisitions (for which no benefits were recognized) as well as the charge for the Daiichi Sankyo collaboration.

Non-GAAP EPS was $0.03 for the fourth quarter of 2023 compared with $1.62 for the fourth quarter of 2022. The non-GAAP EPS decline in the fourth quarter was primarily due to the charge in 2023 related to the collaboration with Daiichi Sankyo and the unfavorable impact of foreign exchange, partially offset by a beneficial impact from the tax rate and operational strength in the business. Non-GAAP EPS was $1.51 for the full year of 2023 compared with $7.48 for the full year of 2022. The non-GAAP EPS decline for the full year was primarily due to higher charges for certain business development transactions, the unfavorable impact of foreign exchange and the tax rate, partially offset by operational strength in the business.

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A reconciliation of GAAP to non-GAAP net (loss) income and (loss) earnings per share is provided in the table that follows.

	Fourth Quarter						Year Ended
$ in millions, except EPS amounts	2023			2022			Dec. 31, 2023			Dec. 31, 2022
EPS
GAAP EPS	$	(0.48	)	$	1.18		$	0.14		$	5.71
Difference		0.51			0.44			1.37			1.77
Non-GAAP EPS that excludes items listed below^2^	$	0.03		$	1.62		$	1.51		$	7.48
Net (Loss) Income
GAAP net (loss) income^1^	$	(1,226	)	$	3,017		$	365		$	14,519
Difference		1,292			1,112			3,472			4,486
Non-GAAP net income that excludes items listed below^1,2^	$	66		$	4,129		$	3,837		$	19,005
Excluded Items:
Acquisition- and divestiture-related costs^3^	$	1,233		$	1,192		$	2,876		$	3,704
Restructuring costs		401			107			933			666
(Income) loss from investments in equity securities		(61	)		80			(279	)		1,348
Charge for Zetia antitrust litigation settlements		-			-			573			-
Increase to net loss/decrease to net income before taxes		1,573			1,379			4,103			5,718
Estimated income tax (benefit) expense		(281	)		(267	)		(631	)		(1,232	)
Increase to net loss/decrease to net income	$	1,292		$	1,112		$	3,472		$	4,486

2024 Restructuring Program

Merck recently approved a new restructuring program (2024 Restructuring Program) intended to continue the optimization of the company’s Human Health global manufacturing network as the future pipeline shifts to new modalities, and also to optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency. The company recorded charges in its GAAP results of $190 million related to the 2024 Restructuring Program for the fourth quarter and full year of 2023.

Pipeline and Portfolio Highlights

In the fourth quarter, Merck continued to make significant progress advancing its broad portfolio and pipeline across key therapeutic areas, representing continued momentum toward addressing patient needs.

In oncology, Merck received multiple U.S. Food and Drug Administration (FDA) approvals, including KEYTRUDA plus Padcev for the first-line treatment of adult patients with locally advanced or metastatic urothelial cancer and WELIREG for the treatment of certain patients with previously treated advanced RCC, among other approvals. The FDA also accepted and granted Priority Review to Merck and Daiichi Sankyo’s Biologics License Application (BLA) for patritumab deruxtecan for the treatment of certain patients with previously treated locally advanced or metastatic EGFR-mutated non-small cell lung cancer (NSCLC). The FDA set a Prescription Drug User Fee Act (PDUFA), or target action, date of June 26, 2024. In addition, Merck showed meaningful progress in its robust oncology pipeline, initiating Phase 3 trials for four investigational medicines, including bomedemstat (LSD1 inhibitor), nemtabrutinib (BTK inhibitor), MK-2870 (anti-TROP2 antibody-drug conjugate) and MK-5684 (CYP11A1 inhibitor).

- 10 -

In vaccines, Merck received Priority Review from the FDA for a BLA for V116, the company’s investigational, 21-valent pneumococcal conjugate vaccine specifically designed to protect adults, based on results from multiple Phase 3 trials. The FDA set a PDUFA date of June 17, 2024. If approved, V116 would be the first pneumococcal conjugate vaccine to include serotypes responsible for approximately 83 percent of adult invasive pneumococcal disease in individuals 65 and older, according to U.S. Centers for Disease Control and Prevention data from 2018-2021.

In hospital acute care, the European Commission (EC) approved PREVYMIS for prevention of cytomegalovirus (CMV) disease in high-risk adult kidney transplant recipients and extended 200-day dosing in adult hematopoietic stem cell transplant (HSCT) recipients who are at high risk for late CMV infection and disease.

Merck continued to augment its pipeline through business development, and in January 2024, entered into a definitive agreement to acquire Harpoon Therapeutics, Inc. (Harpoon), for an approximate total equity value of $680 million, further diversifying its oncology pipeline.

Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows.

****<br><br> <br>Oncology	FDA Approved Expanded Indication for KEYTRUDA Plus Padcev as First-Line Treatment for Adult Patients With Locally Advanced or Metastatic Urothelial Cancer, Based on Results From Phase 3 KEYNOTE-A39 Trial	(Read Announcement)
	FDA Approved Merck’s WELIREG as Treatment for Patients With Advanced RCC Following a PD-1 or PD-L1 Inhibitor and a VEGF-TKI, Based on Results From LITESPARK-005 Trial	(Read Announcement)
	FDA Approved Merck’s KEYTRUDA Plus Chemoradiotherapy as Treatment for Patients With FIGO 2014 Stage III-IVA Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial	(Read Announcement)
	FDA Approved Merck’s KEYTRUDA Plus Chemotherapy as First-Line Treatment for Locally Advanced Unresectable or Metastatic HER2-Negative Gastric or Gastroesophageal Junction (GEJ) Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-859 Trial	(Read Announcement)
	FDA Approved Merck’s KEYTRUDA Plus Gemcitabine and Cisplatin as Treatment for Patients With Locally Advanced Unresectable or Metastatic Biliary Tract Cancer, Based on Results From Phase 3 KEYNOTE-966 Trial	(Read Announcement)
	EC Approved KEYTRUDA Plus Chemotherapy for New First-Line Indications in Advanced HER2-Negative Gastric or GEJ Adenocarcinoma in Tumors Expressing PD-L1 (CPS ≥1) and Advanced Biliary Tract Cancer, Based on Results From Phase 3 KEYNOTE-859 and KEYNOTE-966 Trials	(Read Announcement)
	FDA Granted Priority Review to Merck and Daiichi Sankyo’s BLA for Patritumab Deruxtecan for the Treatment of Certain Patients With Previously Treated Locally Advanced or Metastatic EGFR-Mutated NSCLC, Based on Results From Phase 2 HERTHENA-Lung01 Trial; FDA Set PDUFA Date of June 26, 2024	(Read announcement)

- 11 -

	Merck Announced Phase 3 Trial Initiations for Bomedemstat, Nemtabrutinib, MK-2870 and MK-5684, Four Investigational Candidates From Promising Hematology and Oncology Pipeline	(Read announcement)
	Merck and Moderna Initiated INTerpath-002, a Phase 3 Study Evaluating V940 (mRNA-4157) in Combination With KEYTRUDA for Adjuvant Treatment of Patients With Certain Types of Resected NSCLC	(Read Announcement)
	KEYTRUDA Reduced the Risk of Death by 38% Versus Placebo as Adjuvant Therapy for Patients With RCC at an Increased Risk of Recurrence Following Nephrectomy, Based on Results From Phase 3 KEYNOTE-564 Trial	(Read Announcement)
	KEYTRUDA Significantly Improved Disease-Free Survival as Adjuvant Therapy Versus Observation in High-Risk Patients With Localized Muscle-Invasive and Locally Advanced Urothelial Carcinoma After Surgery, Based on Results From Phase 3 AMBASSADOR/KEYNOTE-123 Trial	(Read Announcement)
	Moderna and Merck Announced V940 (mRNA-4157) in Combination With KEYTRUDA Demonstrated Continued Improvement in Recurrence-Free Survival and Distant Metastasis-Free Survival in Patients With High-Risk Stage III/IV Melanoma Following Complete Resection Versus KEYTRUDA at Three Years, Based on Results From Phase 2b Randomized KEYNOTE-942/mRNA-4157-P201 Study	(Read Announcement)
Vaccines	FDA Granted Priority Review to Merck’s New BLA for V116, an Investigational, 21-valent Pneumococcal Conjugate Vaccine Specifically Designed to Protect Adults, Based on Results From Multiple Phase 3 Trials; FDA Set PDUFA Date of June 17, 2024	(Read Announcement)
	Merck’s V116, an Investigational, 21-valent Pneumococcal Conjugate Vaccine Specifically Designed to Protect Adults, Demonstrated Superior Immunogenicity for 10 of 11 Unique Serotypes Compared to PCV20 in Adults 50 Years of Age and Older, Based on Results From Phase 3 STRIDE-3 Trial	(Read Announcement)

Full-Year 2024 Financial Outlook

The following table summarizes the company’s full-year financial outlook.

	Full Year 2024
Sales^*^	$62.7 to $64.2 billion
Non-GAAP gross margin^2^	Approximately 80.5%
Non-GAAP operating expenses^2**^	$25.1 to $26.1 billion
Non-GAAP other (income) expense, net^2^	Approximately $200 million expense
Non-GAAP effective tax rate^2^	14.5% to 15.5%
Non-GAAP EPS^2***^	$8.44 to $8.59
Share count (assuming dilution)	Approximately 2.54 billion

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

**Includes approximately $650 million of R&D expense related to the recently announced Harpoon acquisition, which is expected to close in the first half of 2024. Outlook does not assume any additional significant potential business development transactions.

***Includes a one-time charge of approximately $0.26 per share related to the Harpoon acquisition.

Merck has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and income and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the company’s future GAAP results.

- 12 -

Merck anticipates full-year 2024 sales to be between $62.7 billion and $64.2 billion, including a negative impact of foreign exchange of approximately 2% at mid-January 2024 exchange rates. The negative impact is primarily due to the devaluation of the Argentine peso, which the company expects will largely be offset by inflation-related price increases, consistent with market practice.

The outlook for operating expenses reflects incremental R&D spending expected to be incurred to advance the development of promising programs related to the acquisitions of Prometheus, Imago and Harpoon, as well as the collaborations with Daiichi Sankyo and Kelun-Biotech.

Merck’s full-year non-GAAP effective income tax rate is expected to be between 14.5% and 15.5%.

Merck expects full-year 2024 non-GAAP EPS to be between $8.44 and $8.59, including a negative impact of foreign exchange of approximately $0.25 per share. In 2023, non-GAAP EPS of $1.51 was negatively impacted by charges of $6.21 per share related to certain acquisitions and collaboration agreements.

In early January 2024, Merck announced the acquisition of Harpoon, which is expected to close in the first half of 2024, and result in a non-tax deductible charge of approximately $650 million of R&D expense included in non-GAAP results. The impact of the transaction on expected full-year non-GAAP EPS is approximately $0.26 per share, which is included in the 2024 outlook.

Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions.

Earnings Conference Call

Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, Feb. 1, at 9 a.m. ET via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures, prepared remarks and slides highlighting the results, will be available at www.merck.com.

All participants may join the call by dialing (800) 779-6561 (U.S. and Canada Toll-Free) or (773) 756-4619 and using the access code 5958465.

About Merck

At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. For more information, visit www.merck.com and connect with us on X (formerly Twitter), Facebook, Instagram, YouTube and LinkedIn.

- 13 -

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, 2022, and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

- 14 -

Appendix

Generic product names are provided below.

Pharmaceutical

BRIDION (sugammadex)

GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11,16 and 18] Vaccine, Recombinant)

GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant)

JANUMET (sitagliptin and metformin HCl)

JANUVIA (sitagliptin)

KEYTRUDA (pembrolizumab)

LAGEVRIO (molnupiravir)

Lenvima (lenvatinib)

Lynparza (olaparib)

M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live)

PNEUMOVAX 23 (Pneumococcal Vaccine Polyvalent)

PREVYMIS (letermovir)

PROQUAD (Measles, Mumps, Rubella and Varicella Virus VaccineLive)

ROTATEQ (Rotavirus Vaccine, Live, Oral, Pentavalent)

VARIVAX (Varicella Virus Vaccine Live)

VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine)

WELIREG (belzutifan)

Animal Health

BRAVECTO (fluralaner)

Media Contacts:	Investor Contacts:
Robert Josephson<br><br> <br>(203) 914-2372<br><br> <br>robert.josephson@merck.com<br><br> <br><br><br> <br>Michael Levey<br><br> <br>(215) 872-1462<br><br> <br>michael.levey@merck.com	Peter Dannenbaum<br><br> <br>(732) 594-1579<br><br> <br>peter.dannenbaum@merck.com<br><br> <br><br><br> <br>Steven Graziano<br><br> <br>(732) 594-1583<br><br> <br>steven.graziano@merck.com

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF OPERATIONS - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1

	GAAP									GAAP
****	4Q23		****	4Q22		****	% Change		****	Full Year 2023		****	Full Year 2022		****	% Change		****
Sales	$	14,630		$	13,830			6	%	$	60,115		$	59,283			1	%
Costs, Expenses and Other
Cost of sales		3,911			3,881			1	%		16,126			17,411			-7	%
Selling, general and administrative		2,804			2,687			4	%		10,504			10,042			5	%
Research and development		9,628			3,775			*			30,531			13,548			*
Restructuring costs		255			49			*			599			337			78	%
Other (income) expense, net		78			(75	)		*			466			1,501			-69	%
(Loss) Income Before Taxes		(2,046	)		3,513			*			1,889			16,444			-89	%
Income Tax (Benefit) Provision		(821	)		495						1,512			1,918
Net (Loss) Income		(1,225	)		3,018			*			377			14,526			-97	%
Less: Net Income Attributable to Noncontrolling Interests		1			1						12			7
Net (Loss) Income Attributable to Merck & Co., Inc.	$	(1,226	)	$	3,017			*		$	365		$	14,519			-97	%
(Loss) Earnings per Common Share Assuming Dilution ^(1)^	$	(0.48	)	$	1.18			*		$	0.14		$	5.71			-98	%
Average Shares Outstanding Assuming Dilution ^(1)^		2,533			2,548						2,547			2,542
Tax Rate		40.1	%		14.1	%					80.0	%		11.7	%

* 100% or greater

^(1)^Because the company recorded a net loss in the fourth quarter of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive.

MERCK & CO., INC.

FOURTH QUARTER AND FULL YEAR 2023 GAAP TO NON-GAAP RECONCILIATION

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2a

****	GAAP		****	Acquisition and Divestiture- Related Costs ^(1)^		****	Restructuring Costs ^(2)^		****	(Income) Loss from Investments in Equity Securities		****	Certain Other Items		****	Adjustment Subtotal		****	Non-GAAP		****
Fourth Quarter
Cost of sales	$	3,911			454			117									571		$	3,340
Selling, general and administrative		2,804			24			29									53			2,751
Research and development		9,628			790												790			8,838
Restructuring costs		255						255									255			–
Other (income) expense, net		78			(35	)					(61	)					(96	)		174
Loss Before Taxes		(2,046	)		(1,233	)		(401	)		61						(1,573	)		(473	)
Income Tax Provision (Benefit)		(821	)		(227	)^(4)^		(67	)^(4)^		13	^(4)^					(281	)		(540	)
Net (Loss) Income		(1,225	)		(1,006	)		(334	)		48						(1,292	)		67
Net (Loss) Income Attributable to Merck & Co., Inc.		(1,226	)		(1,006	)		(334	)		48						(1,292	)		66
(Loss)<br> Earnings per Common Share Assuming Dilution ^(5)^	$	(0.48	)		(0.40	)		(0.13	)		0.02						(0.51	)	$	0.03
Tax Rate		40.1	%																	114.2	%
Full Year
Cost of sales	$	16,126			2,018			211									2,229		$	13,897
Selling, general and administrative		10,504			86			122									208			10,296
Research and development		30,531			819			1									820			29,711
Restructuring costs		599						599									599			–
Other (income) expense, net		466			(47	)					(279	)		573	^(3)^		247			219
Income Before Taxes		1,889			(2,876	)		(933	)		279			(573	)		(4,103	)		5,992
Income Tax Provision (Benefit)		1,512			(476	)^(4)^		(155	)^(4)^		60	^(4)^		(60	)^(4)^		(631	)		2,143
Net Income		377			(2,400	)		(778	)		219			(513	)		(3,472	)		3,849
Net Income Attributable to Merck & Co., Inc.		365			(2,400	)		(778	)		219			(513	)		(3,472	)		3,837
Earnings per Common Share Assuming<br> Dilution	$	0.14			(0.94	)		(0.31	)		0.08			(0.20	)		(1.37	)	$	1.51
Tax Rate		80.0	%																	35.8	%

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 a $779 million in-process research and development (IPR&D) impairment charge related to gefapixant, which was obtained as part of the 2016 Afferent Pharmaceuticals acquisition, and expenses for the amortization of intangible assets.  Amounts included in other (income) expense, net, primarily reflect royalty income related to the prior termination of the Sanofi-Pasteur MSD joint venture.   Additionally, other (income) expense, net, for the full year includes a $37 million loss on the sale of a business.

^(2)^Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

^(3)^Reflects a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation.

^(4)^Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

^(5)^Because the company recorded a net loss in the fourth quarter of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive.

MERCK & CO., INC.

FRANCHISE/ KEY PRODUCT SALES

(AMOUNTSIN MILLIONS)

(UNAUDITED)

Table3

	2023										2022										4Q				Full<br> Year
		1Q		2Q		3Q		4Q		Full<br> Year		1Q		2Q		3Q		4Q		Full<br> Year	Nom<br> %		Ex-Exch<br> %			Nom<br> %		Ex-Exch<br> %
TOTAL SALES ^(1)^	$	14,487	$	15,035	$	15,962	$	14,630	$	60,115	$	15,901	$	14,593	$	14,959	$	13,830	$	59,283		6		7			1		4
PHARMACEUTICAL		12,721		13,457		14,263		13,141		53,583		14,107		12,756		12,963		12,180		52,005		8		8			3		5
Oncology
Keytruda		5,795		6,271		6,338		6,608		25,011		4,809		5,252		5,426		5,450		20,937		21		22			19		21
Alliance<br> Revenue – Lynparza ^(2)^		275		310		299		315		1,199		266		275		284		292		1,116		8		8			7		9
Alliance<br> Revenue – Lenvima ^(2)^		232		242		260		226		960		227		231		202		216		876		5		5			10		11
Welireg		42		50		54		72		218		18		27		38		40		123		79		78			77		77
Alliance<br> Revenue – Reblozyl ^(3)^		43		47		52		70		212		52		33		39		41		166		69		69			28		28
Vaccines ^(4)^
Gardasil<br> / Gardasil 9		1,972		2,458		2,585		1,871		8,886		1,460		1,674		2,294		1,470		6,897		27		27			29		33
ProQuad<br> / M-M-R II / Varivax		528		582		713		545		2,368		470		578		668		526		2,241		4		3			6		6
RotaTeq		297		131		156		185		769		216		173		256		139		783		34		33			-2		-1
Vaxneuvance		106		168		214		176		665		5		12		16		138		170		28		26			*		*
Pneumovax 23		96		92		140		85		412		173		153		131		145		602		-42		-43			-32		-31
Vaqta		40		42		69		29		180		36		35		64		39		173		-24		-25			4		4
Hospital<br> Acute Care
Bridion		487		502		424		429		1,842		395		426		423		441		1,685		-3		-3			9		11
Prevymis		129		143		157		175		605		94		103		114		118		428		49		49			41		43
Dificid		65		76		74		87		302		52		66		77		67		263		30		30			15		15
Zerbaxa		50		54		53		61		218		30		46		43		49		169		25		23			29		30
Noxafil		60		55		51		46		213		57		60		62		58		238		-21		-16			-11		-4
Primaxin		80		53		41		39		213		58		64		63		54		239		-28		-28			-11		-6
Cardiovascular
Alliance<br> Revenue - Adempas/Verquvo ^(5)^		99		68		92		108		367		72		98		88		82		341		31		31			8		8
Adempas<br> ^(6)^		59		65		65		66		255		61		63		57		57		238		15		11			7		8
Virology
Lagevrio		392		203		640		193		1,428		3,247		1,177		436		825		5,684		-77		-76			-75		-74
Isentress<br> / Isentress HD		123		136		119		105		483		158		147		161		167		633		-37		-37			-24		-23
Neuroscience
Belsomra		56		63		58		54		231		69		69		62		59		258		-8		-6			-11		-6
Immunology
Simponi		180		180		179		171		710		186		181		173		166		706		3		-2			1		-
Remicade		51		48		45		43		187		61		53		49		44		207		-1		-2			-9		-8
Diabetes ^(7)^
Januvia		551		511		581		547		2,189		779		756		717		561		2,813		-2		-2			-22		-20
Janumet		329		354		255		240		1,177		454		476		417		353		1,700		-32		-32			-31		-29
Other Pharmaceutical ^(8)^		584		553		549		595		2,283		602		528		603		583		2,319		2		2			-2		-
ANIMAL<br> HEALTH		1,491		1,456		1,400		1,278		5,625		1,482		1,467		1,371		1,230		5,550		4		4			1		3
Livestock		849		807		874		808		3,337		832		826		829		814		3,300		-1		-			1		4
Companion<br> Animal		642		649		526		470		2,288		650		641		542		416		2,250		13		12			2		3
Other Revenues ^(9)^		275		122		299		211		907		312		370		625		420		1,728		-50		-1			-48		-15

*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 of $20 million received in the first quarter of 2022.

^(4)^Total Vaccines sales were $3,133 million, $3,557 million, $4,002 million and $2,962 million in the first, second, third and fourth quarter of 2023, respectively, and $2,481 million, $2,709 million, $3,552 million and $2,554 million in the first, second, third and fourth quarter of 2022, 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 $950 million, $951 million, $924 million and $876 million in the first, second, third and fourth quarter of 2023, respectively, and $1,305 million, $1,300 million, $1,231 million and $1,012 million in the first, second, third and fourth quarter of 2022, respectively.

^(8)^Includes Pharmaceutical products not individually shown above.

^(9)^Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.  Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $51 million, $3 million and $65 million in the first, second and third quarter of 2023, respectively, and $114 million, $32 million, $10 million and $10 million in the first, second, third and fourth quarter of 2022, respectively.

Exhibit99.2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF OPERATIONS - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

	2023															2022															% Change
****	1Q		****	2Q		****	3Q		****	4Q		****	Full Year		****	1Q		****	2Q		****	3Q		****	4Q		****	Full Year		****	4Q		****	Full Year		****
Sales	$	14,487		$	15,035		$	15,962		$	14,630		$	60,115		$	15,901		$	14,593		$	14,959		$	13,830		$	59,283			6	%		1	%
Costs, Expenses and Other
Cost of sales		3,926			4,024			4,264			3,911			16,126			5,380			4,216			3,934			3,881			17,411			1	%		-7	%
Selling, general and administrative		2,479			2,702			2,519			2,804			10,504			2,323			2,512			2,520			2,687			10,042			4	%		5	%
Research and development		4,276			13,321			3,307			9,628			30,531			2,576			2,798			4,399			3,775			13,548			*			*
Restructuring costs		67			151			126			255			599			53			142			94			49			337			*			78	%
Other (income) expense, net		89			172			126			78			466			708			438			429			(75	)		1,501			*			-69	%
Income (Loss) Before Taxes		3,650			(5,335	)		5,620			(2,046	)		1,889			4,861			4,487			3,583			3,513			16,444			*			-89	%
Income Tax Provision (Benefit)		825			637			870			(821	)		1,512			554			538			330			495			1,918
Net Income (Loss)		2,825			(5,972	)		4,750			(1,225	)		377			4,307			3,949			3,253			3,018			14,526			*			-97	%
Less: Net Income (Loss) Attributable to Noncontrolling Interests		4			3			5			1			12			(3	)		5			5			1			7
Net Income (Loss) Attributable to Merck & Co., Inc.	$	2,821		$	(5,975	)	$	4,745		$	(1,226	)	$	365		$	4,310		$	3,944		$	3,248		$	3,017		$	14,519			*			-97	%
Earnings (Loss) per Common Share Assuming Dilution ^(1)^	$	1.11		$	(2.35	)	$	1.86		$	(0.48	)	$	0.14		$	1.70		$	1.55		$	1.28		$	1.18		$	5.71			*			-98	%
Average Shares Outstanding Assuming Dilution ^(1)^		2,551			2,539			2,546			2,533			2,547			2,537			2,540			2,542			2,548			2,542
Tax Rate		22.6	%		-11.9	%		15.5	%		40.1	%		80.0	%		11.4	%		12.0	%		9.2	%		14.1	%		11.7	%

*100% or greater

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

^(1)^Because the company recorded a net loss in the second and fourth quarters of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive.

MERCK & CO., INC.

FOURTHQUARTER AND FULL YEAR 2022 GAAP TO NON-GAAP RECONCILIATION

(AMOUNTSIN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table2b

	GAAP			Acquisition and Divestiture- Related Costs ^(1)^			Restructuring Costs ^(2)^			(Income)<br> Loss from<br><br> Investments in Equity <br><br> Securities			Adjustment<br> Subtotal			Non-GAAP
Fourth<br> Quarter
Cost<br> of sales	$	3,881			482			38						520		$	3,361
Selling,<br> general and administrative		2,687			39			20						59			2,628
Research<br> and development		3,775			740									740			3,035
Restructuring<br> costs		49						49						49			–
Other<br> (income) expense, net		(75	)		(69	)					80			11			(86	)
Income<br> Before Taxes		3,513			(1,192	)		(107	)		(80	)		(1,379	)		4,892
Income<br> Tax Provision (Benefit)		495			(222	)^(3)^		(32	)^(3)^		(13	)^(3)^		(267	)		762
Net<br> Income		3,018			(970	)		(75	)		(67	)		(1,112	)		4,130
Net<br> Income Attributable to Merck & Co., Inc.		3,017			(970	)		(75	)		(67	)		(1,112	)		4,129
Earnings<br> per Common Share Assuming Dilution	$	1.18			(0.38	)		(0.03	)		(0.03	)		(0.44	)	$	1.62
Tax<br> Rate		14.1	%														15.6	%
Full<br> Year
Cost<br> of sales	$	17,411			2,059			205						2,264		$	15,147
Selling,<br> general and administrative		10,042			176			94						270			9,772
Research<br> and development		13,548			1,676			30						1,706			11,842
Restructuring<br> costs		337						337						337			–
Other<br> (income) expense, net		1,501			(207	)					1,348			1,141			360
Income<br> Before Taxes		16,444			(3,704	)		(666	)		(1,348	)		(5,718	)		22,162
Income<br> Tax Provision (Benefit)		1,918			(809	)^(3)^		(129	)^(3)^		(294	)^(3)^		(1,232	)		3,150
Net<br> Income		14,526			(2,895	)		(537	)		(1,054	)		(4,486	)		19,012
Net<br> Income Attributable to Merck & Co., Inc.		14,519			(2,895	)		(537	)		(1,054	)		(4,486	)		19,005
Earnings<br> per Common Share Assuming Dilution	$	5.71			(1.14	)		(0.21	)		(0.42	)		(1.77	)	$	7.48
Tax<br> Rate		11.7	%														14.2	%

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 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 for the fourth quarter and full year primarily reflect $780 million and $1.7 billion, respectively, of intangible asset impairment charges largely related to nemtabrutinib, which was obtained as part of the 2020 ArQule, Inc. acquisition, and expenses for the amortization of intangible assets, partially offset by a reduction in expenses related to changes in the estimated fair value of liabilities for contingent consideration.  Amounts included in other (income) expense, net, reflect royalty income and decreases 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

FOURTH QUARTER 2023

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

	Global						U.S.						International
	4Q<br> 2023		4Q<br> 2022		%<br> Change		4Q<br> 2023		4Q<br> 2022		%<br> Change		4Q<br> 2023		4Q<br> 2022		%<br> Change
TOTAL<br> SALES ^(1)^	$	14,630	$	13,830		6	$	7,088	$	6,279		13	$	7,542	$	7,551		-
PHARMACEUTICAL		13,141		12,180		8		6,698		5,871		14		6,443		6,309		2
Oncology
Keytruda		6,608		5,450		21		3,972		3,378		18		2,636		2,071		27
Alliance<br> Revenue – Lynparza ^(2)^		315		292		8		168		157		7		147		135		9
Alliance<br> Revenue – Lenvima ^(2)^		226		216		5		181		154		18		45		62		-28
Welireg		72		40		79		68		40		70		4				-
Alliance<br> Revenue – Reblozyl ^(3)^		70		41		69		60		36		68		10		6		74
Vaccines<br> ^(4)^
Gardasil<br> / Gardasil 9		1,871		1,470		27		365		262		39		1,506		1,207		25
ProQuad /<br> M-M-R II / Varivax		545		526		4		402		387		4		143		139		3
RotaTeq		185		139		34		112		82		37		73		57		28
Vaxneuvance		176		138		28		138		132		5		38		6		*
Pneumovax<br> 23		85		145		-42		22		66		-66		62		79		-21
Vaqta		29		39		-24		28		23		24		1		16		-94
Hospital<br> Acute Care
Bridion		429		441		-3		315		257		22		113		183		-38
Prevymis		175		118		49		78		52		49		98		65		50
Dificid		87		67		30		75		57		32		12		10		17
Zerbaxa		61		49		25		33		25		31		28		24		18
Noxafil		46		58		-21		4		13		-72		43		46		-7
Primaxin		39		54		-28				1		N/M		39		53		-27
Cardiovascular
Alliance<br> Revenue - Adempas/Verquvo ^(5)^		108		82		31		102		85		20		6		-2		*
Adempas<br> ^(6)^		66		57		15								66		57		15
Virology
Lagevrio		193		825		-77		10				-		183		825		-78
Isentress<br> / Isentress HD		105		167		-37		50		78		-36		56		89		-38
Neuroscience
Belsomra		54		59		-8		21		19		10		33		39		-17
Immunology
Simponi		171		166		3								171		166		3
Remicade		43		44		-1								43		44		-1
Diabetes<br> ^(7)^
Januvia		547		561		-2		309		290		6		239		271		-12
Janumet		240		353		-32		41		97		-58		198		255		-22
Other<br> Pharmaceutical ^(8)^		595		583		2		144		180		-20		450		406		11
ANIMAL<br> HEALTH		1,278		1,230		4		387		396		-2		891		834		7
Livestock		808		814		-1		158		188		-16		649		626		4
Companion<br> Animal		470		416		13		229		208		10		242		208		16
Other<br> Revenues ^(9)^		211		420		-50		3		12		-75		208		408		-49

*200% or greater

N/M - Not Meaningful

Sum of U.S. plus international may not equal global due to rounding.

^(1)^Only select products are shown.

^(2)^Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

^(3)^Alliance Revenue represents royalties.

^(4)^Total Vaccines sales were $2,962 million in the fourth quarter of 2023 and $2,554 million in the fourth quarter of 2022.

^(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 $876 million in the fourth quarter of 2023 and $1,012 million in the fourth quarter of 2022.

^(8)^Includes Pharmaceutical products not individually shown above.

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

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

FULL YEAR 2023

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	Global						U.S.						International
	Full<br> Year<br><br> 2023		Full<br> Year<br><br> 2022		%<br> Change		Full<br> Year<br><br> 2023		Full<br> Year<br><br> 2022		%<br> Change		Full<br> Year<br><br> 2023		Full<br> Year<br><br> 2022		%<br> Change
TOTAL<br> SALES ^(1)^	$	60,115	$	59,283		1	$	28,480	$	27,206		5	$	31,635	$	32,077		-1
PHARMACEUTICAL		53,583		52,005		3		26,539		24,989		6		27,044		27,016		-
Oncology
Keytruda		25,011		20,937		19		15,114		12,686		19		9,897		8,251		20
Alliance<br> Revenue – Lynparza ^(2)^		1,199		1,116		7		607		584		4		592		532		11
Alliance<br> Revenue – Lenvima ^(2)^		960		876		10		657		579		13		303		297		2
Welireg		218		123		77		209		123		70		10				-
Alliance<br> Revenue – Reblozyl ^(3)^		212		166		28		168		123		37		43		43		1
Vaccines<br> ^(4)^
Gardasil<br> / Gardasil 9		8,886		6,897		29		2,083		2,065		1		6,803		4,832		41
ProQuad /<br> M-M-R II / Varivax		2,368		2,241		6		1,837		1,724		7		531		518		3
RotaTeq		769		783		-2		493		508		-3		276		275		-
Vaxneuvance		665		170		*		561		163		*		103		7		*
Pneumovax<br> 23		412		602		-32		127		346		-63		285		256		11
Vaqta		180		173		4		119		95		25		61		78		-21
Hospital<br> Acute Care
Bridion		1,842		1,685		9		1,156		922		25		686		762		-10
Prevymis		605		428		41		264		188		40		341		240		42
Dificid		302		263		15		274		241		14		28		22		25
Zerbaxa		218		169		29		119		89		33		100		79		25
Noxafil		213		238		-11		32		51		-37		181		187		-3
Primaxin		213		239		-11		1		1		-6		211		238		-11
Cardiovascular
Alliance<br> Revenue - Adempas/Verquvo ^(5)^		367		341		8		350		329		6		16		12		41
Adempas<br> ^(6)^		255		238		7								255		238		7
Virology
Lagevrio		1,428		5,684		-75		10		1,523		-99		1,418		4,161		-66
Isentress<br> / Isentress HD		483		633		-24		215		274		-21		268		359		-25
Neuroscience
Belsomra		231		258		-11		81		79		3		150		179		-16
Immunology
Simponi		710		706		1								710		706		1
Remicade		187		207		-9								187		207		-9
Diabetes<br> ^(7)^
Januvia		2,189		2,813		-22		1,151		1,248		-8		1,039		1,565		-34
Janumet		1,177		1,700		-31		223		355		-37		954		1,344		-29
Other<br> Pharmaceutical ^(8)^		2,283		2,319		-2		688		693		-1		1,596		1,628		-2
ANIMAL<br> HEALTH		5,625		5,550		1		1,804		1,822		-1		3,821		3,728		2
Livestock		3,337		3,300		1		700		710		-1		2,637		2,590		2
Companion<br> Animal		2,288		2,250		2		1,104		1,112		-1		1,184		1,138		4
Other<br> Revenues ^(9)^		907		1,728		-48		137		395		-65		770		1,333		-42

*200% or greater

Sum of U.S. plus international may not equal global due to rounding.

^(1)^ Only select products are shown.

^(2)^ Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

^(3)^ Alliance Revenue represents royalties and a milestone payment of $20 million received in the first quarter of 2022.

^(4)^ Total Vaccines sales were $13,654 million and $11,297 million on a global basis for December YTD 2023 and 2022, 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 $3,701 million and $4,848 million on a global basis for December YTD 2023 and 2022, respectively.

^(8)^ Includes Pharmaceutical products not individually shown above.

^(9)^ Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.  Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $118 million and $165 million on a global basis for December YTD 2023 and 2022, respectively.

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

****	2023														****	2022													****	% Change
	1Q			2Q			3Q			4Q			Full Year			1Q			2Q			3Q			4Q		Full Year			4Q		Full Year
TOTAL PHARMACEUTICAL	$	12,721		$	13,457		$	14,263		$	13,141		$	53,583		$	14,107		$	12,756		$	12,963		$	12,180	$	52,005			8		3
United States		6,117			6,570			7,153			6,698			26,539			6,773			5,726			6,620			5,871		24,989			14		6
% Pharmaceutical Sales		48.1	%		48.8	%		50.1	%		51.0	%		49.5	%		48.0	%		44.9	%		51.1	%		48.2%		48.1	%
Europe ^(1)^		2,326			2,401			2,497			2,491			9,715			3,309			2,677			2,427			2,494		10,906			-		-11
% Pharmaceutical Sales		18.3	%		17.8	%		17.5	%		19.0	%		18.1	%		23.5	%		21.0	%		18.7	%		20.5%		21.0	%
China		1,694			1,887			1,674			1,456			6,710			1,113			1,355			1,419			1,216		5,102			20		32
% Pharmaceutical Sales		13.3	%		14.0	%		11.7	%		11.1	%		12.5	%		7.9	%		10.6	%		10.9	%		10.0%		9.8	%
Japan		737			652			1,062			629			3,081			965			1,092			653			832		3,542			-24		-13
% Pharmaceutical Sales		5.8	%		4.8	%		7.4	%		4.8	%		5.7	%		6.8	%		8.6	%		5.0	%		6.8%		6.8	%
Asia Pacific (other than China and Japan)		703			705			636			616			2,661			786			854			702			691		3,034			-11		-12
% Pharmaceutical Sales		5.5	%		5.2	%		4.5	%		4.7	%		5.0	%		5.6	%		6.7	%		5.4	%		5.7%		5.8	%
Latin America		470			566			696			596			2,328			435			453			511			472		1,871			26		24
% Pharmaceutical Sales		3.7	%		4.2	%		4.9	%		4.5	%		4.3	%		3.1	%		3.6	%		3.9	%		3.9%		3.6	%
Eastern Europe/Middle East/Africa		381			370			301			299			1,351			450			339			360			320		1,469			-7		-8
% Pharmaceutical Sales		3.0	%		2.7	%		2.1	%		2.3	%		2.5	%		3.2	%		2.7	%		2.8	%		2.6%		2.8	%
Canada		141			127			133			138			540			189			166			166			158		678			-12		-20
% Pharmaceutical Sales		1.1	%		0.9	%		0.9	%		1.1	%		1.0	%		1.3	%		1.3	%		1.3	%		1.3%		1.3	%
Other		152			179			111			218			658			87			94			105			126		414			73		59
% Pharmaceutical Sales		1.2	%		1.6	%		0.9	%		1.5	%		1.4	%		0.6	%		0.6	%		0.9	%		1.0%		0.8	%

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

^(1)^Europe represents all European Union countries, the European Union accession markets and the United Kingdom.

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

OTHER (INCOME) EXPENSE, NET

	4Q23			4Q22			Full Year <br><br>2023			Full Year <br><br>2022
Interest income	$	(70	)	$	(95	)	$	(365	)	$	(157	)
Interest expense		310			235			1,146			962
Exchange losses		162			17			370			237
(Income) loss from investments in equity securities, net ^(1)^		(99	)		59			(340	)		1,419
Net periodic defined benefit plan (credit) cost other than service cost		(134	)		(71	)		(498	)		(279	)
Other, net		(91	)		(220	)		153			(681	)
Total	$	78		$	(75	)	$	466		$	1,501

^(1)^Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds.  Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.