Merck(MRK) - 2025 Q2 - Quarterly Results

Financial Performance Overview Consolidated Statement of Income (GAAP) Merck's Q2 and YTD 2025 GAAP results show declining sales and net income, with increased R&D expenses | Metric | 2Q 2025 (Millions) | 2Q 2024 (Millions) | % Change (2Q) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $15,806 | $16,112 | -2% | $31,335 | $31,887 | -2% | | Net Income Attributable to Merck & Co., Inc. | $4,427 | $5,455 | -19% | $9,506 | $10,217 | -7% | | Earnings per Common Share Assuming Dilution | $1.76 | $2.14 | -18% | $3.77 | $4.02 | -6% | | Cost of sales | $3,557 | $3,745 | -5% | $6,976 | $7,285 | -4% | | Research and development | $4,048 | $3,500 | 16% | $7,669 | $7,492 | 2% | | Income Before Taxes | $4,999 | $6,006 | -17% | $10,902 | $11,675 | -7% | | Tax Rate | 11.4% | 9.1% | - | 12.7% | 12.4% | - - Research and development expenses increased by 16% in Q2 2025 to $4,048 million and by 2% YTD 2025 to $7,669 million, indicating continued investment in innovation despite overall sales decline[2] GAAP to Non-GAAP Reconciliation This section reconciles GAAP to non-GAAP measures, excluding specific items to highlight core business performance, with non-GAAP figures generally higher due to adjustments | Metric | GAAP 2Q 2024 (Millions) | Non-GAAP 2Q 2024 (Millions) | GAAP YTD 2024 (Millions) | Non-GAAP YTD 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Merck & Co., Inc. | $5,455 | $5,809 | $10,217 | $11,087 | | Earnings per Common Share Assuming Dilution | $2.14 | $2.28 | $4.02 | $4.36 | | Tax Rate | 9.1% | 14.1% | 12.4% | 15.0% | - Non-GAAP adjustments primarily exclude expenses for amortization of intangible assets in cost of sales and R&D, integration/transaction costs in SG&A, employee separation costs, and accelerated depreciation from restructuring programs[6][7] - A significant tax benefit was recognized due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year[8] Product and Segment Sales Analysis Franchise / Key Product Sales - Second Quarter 2025 Q2 2025 global sales decreased by 2% due to international declines, despite strong U.S. growth and Keytruda's performance, while Gardasil/Gardasil 9 sales significantly dropped | Product/Segment | Global 2Q 2025 (Millions) | Global 2Q 2024 (Millions) | % Change (Global) | U.S. 2Q 2025 (Millions) | U.S. 2Q 2024 (Millions) | % Change (U.S.) | International 2Q 2025 (Millions) | International 2Q 2024 (Millions) | % Change (International) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL SALES | $15,806 | $16,112 | -2% | $8,836 | $7,876 | 12% | $6,969 | $8,236 | -15% | | PHARMACEUTICAL | $14,050 | $14,408 | -2% | $8,328 | $7,399 | 13% | $5,722 | $7,009 | -18% | | Keytruda | $7,956 | $7,270 | 9% | $4,749 | $4,412 | 8% | $3,207 | $2,858 | 12% | | Gardasil/Gardasil 9 | $1,126 | $2,478 | -55% | $545 | $536 | 2% | $581 | $1,941 | -70% | | Winrevair | $336 | $70 | * | $323 | $70 | * | $12 | - | - | | ANIMAL HEALTH | $1,646 | $1,482 | 11% | $499 | $455 | 9% | $1,147 | $1,027 | 12% | | Other Revenues | $110 | $222 | -50% | $9 | $22 | -59% | $100 | $200 | -50% | - Winrevair, a new cardiovascular product, showed exceptional growth, increasing from $70 million in Q2 2024 to $336 million in Q2 2025 globally[10] - The significant decline in Gardasil/Gardasil 9 sales, particularly internationally (-70%), was a major factor in the overall pharmaceutical sales decrease[10] Franchise / Key Product Sales - June Year-to-Date 2025 YTD 2025 global sales decreased by 2%, driven by international declines, while U.S. sales and Keytruda grew, and Winrevair showed strong performance despite Gardasil/Gardasil 9's significant drop | Product/Segment | Global YTD 2025 (Millions) | Global YTD 2024 (Millions) | % Change (Global) | U.S. YTD 2025 (Millions) | U.S. YTD 2024 (Millions) | % Change (U.S.) | International YTD 2025 (Millions) | International YTD 2024 (Millions) | % Change (International) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL SALES | $31,335 | $31,887 | -2% | $17,359 | $15,354 | 13% | $13,977 | $16,533 | -15% | | PHARMACEUTICAL | $27,688 | $28,415 | -3% | $16,254 | $14,336 | 13% | $11,434 | $14,079 | -19% | | Keytruda | $15,161 | $14,217 | 7% | $9,057 | $8,531 | 6% | $6,104 | $5,686 | 7% | | Gardasil/Gardasil 9 | $2,453 | $4,727 | -48% | $1,082 | $1,024 | 6% | $1,371 | $3,702 | -63% | | Winrevair | $615 | $70 | * | $591 | $70 | * | $24 | - | - | | ANIMAL HEALTH | $3,234 | $2,993 | 8% | $1,001 | $929 | 8% | $2,233 | $2,064 | 8% | | Other Revenues | $413 | $479 | -14% | $104 | $89 | 17% | $310 | $390 | -21% | - Winrevair's year-to-date sales reached $615 million, demonstrating continued strong performance since its introduction[20] - Total Vaccines sales globally decreased by 29.7% YTD 2025 ($4,977 million) compared to YTD 2024 ($7,080 million), primarily due to the decline in Gardasil/Gardasil 9[24] Pharmaceutical Geographic Sales Global pharmaceutical sales declined in Q2 and YTD 2025, with strong U.S. growth offset by a dramatic 77% drop in China, primarily due to Gardasil/Gardasil 9 sales | Region | 2Q 2025 (Millions) | 2Q 2024 (Millions) | % Change (2Q) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL PHARMACEUTICAL | $14,050 | $14,408 | -2% | $27,688 | $28,415 | -3% | | United States | $8,328 | $7,399 | 13% | $16,254 | $14,336 | 13% | | China | $407 | $1,790 | -77% | $1,075 | $3,534 | -70% | | Eastern Europe/Middle East/Africa | $451 | $353 | 28% | $886 | $747 | 19% | - The decline in China's pharmaceutical sales is largely attributed to Gardasil/Gardasil 9 sales, which were $0 in Q2 2025 compared to $1,312 million in Q2 2024[31] - The U.S. market's share of pharmaceutical sales increased from 51.4% in Q2 2024 to 59.3% in Q2 2025, highlighting its growing importance[30] Other Financial Details Other (Income) Expense, Net (GAAP) Other (income) expense, net, shifted to a net expense in Q2 and YTD 2025, driven by increased exchange losses and reduced miscellaneous income | Item | 2Q 2025 (Millions) | 2Q 2024 (Millions) | YTD 2025 (Millions) | YTD 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Interest income | $(69) | $(69) | $(178) | $(141) | | Interest expense | $305 | $310 | $618 | $613 | | Exchange losses | $78 | $60 | $167 | $144 | | Income from investments in equity securities, net | $(100) | $(56) | $(189) | $(200) | | Net periodic defined benefit plan (credit) cost other than service cost | $(152) | $(159) | $(300) | $(319) | | Other, net | $(69) | $(44) | $(161) | $(85) | | Total | $(7) | $42 | $(43) | $12 | - Exchange losses increased from $60 million in Q2 2024 to $78 million in Q2 2025, and from $144 million YTD 2024 to $167 million YTD 2025[33] - Net income from investments in equity securities decreased from $(56) million in Q2 2024 to $(100) million in Q2 2025, indicating a decline in investment performance[33]