What changed in this filing

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Item 1. Financial Statements

2025-11-05 compared with 2025-08-05 · 358 added, 189 removed, 1091 unchanged (33% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

26 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

1 unchanged sentence

$ 5,785 $ 3,157 $ 15,291 $ 13,374

Other Comprehensive Loss Net of Taxes:

Net unrealized (loss) gain on derivatives, net of reclassifications

Other Comprehensive Income (Loss) Net of Taxes:

Net unrealized gain (loss) on derivatives, net of reclassifications

170 ( 296 ) ( 457 ) ( 99 )

Benefit plan net loss and prior service cost, net of amortization

Benefit plan net gain (loss) and prior service credit (cost), net of amortization

74 ( 13 ) 48 ( 28 )

8 unchanged sentences

(Unaudited, $ in millions except per share amounts)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current Assets

49 unchanged sentences

(Unaudited, $ in millions)

Six Months Ended

Nine Months Ended

September 30,

Cash Flows from Operating Activities

5 unchanged sentences

( 563 ) ( 169 )

Charge for research and development asset acquisition

Charges for research and development asset acquisitions

Deferred income taxes ( 846 ) ( 633 )

7 unchanged sentences

Proceeds from sales of securities and other investments 1,632 370

Acquisition of Eyebiotech Limited, net of cash acquired

Acquisition of Elanco Animal Health Incorporated aqua business

Acquisition of Harpoon Therapeutics, Inc., net of cash acquired — ( 746 )

Acquisition of MK-1045 (formerly CN201) from Curon Pharmaceutical

Other 114 ( 70 )

11 unchanged sentences

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash 540 74

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

( 5,245 ) 4,464

Net Increase in Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash at Beginning of Year (includes restricted cash of

1 unchanged sentence

Cash, Cash Equivalents and Restricted Cash at End of Period (includes restricted cash of $ 91

and $ 69 at June 30, 2025 and 2024, respectively, included in Other current assets )

and $ 95 at September 30, 2025 and 2024, respectively, included in Other current assets )

$ 18,260 $ 14,688

17 unchanged sentences

The guidance, which can be applied on a prospective or retrospective basis, will result in incremental disclosures within the footnotes to the Company’s financial statements.

In September 2025, the FASB issued guidance intended to clarify and modernize the accounting for costs related to internal-use software.

The guidance removes all references to software development project stages and clarifies the criteria entities should apply to begin capitalizing costs.

The guidance is effective for 2028 annual and interim reporting and can be applied on a prospective, retrospective, or modified retrospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of adoption on its consolidated financial statements.

Acquisitions, Research Collaborations and Licensing Agreements

7 unchanged sentences

2025 Transactions

In July 2025, Merck entered into a definitive agreement to acquire Verona Pharma plc (Verona Pharma), a biopharmaceutical company focused on respiratory diseases, for $ 107 per American Depository Share (each of which represents eight Verona Pharma ordinary shares) for a total transaction value of approximately $ 10 billion.

Through this acquisition, Merck will acquire Ohtuvayre (ensifentrine), a first-in-class selective dual inhibitor of phosphodiesterases 3 and 4 (PDE3 and PDE4), which was approved in the U.S.

In November 2025, Merck reached an agreement with Dr.

Falk Pharma GmbH (Falk) to discontinue an existing contract concerning co-development and co-commercialization rights in certain territories for MK-8690 (formerly PRA-052), and for Merck to assume full responsibility for the development program going forward.

MK-8690 is an investigational anti-CD30 ligand monoclonal antibody being evaluated by the Company in an early-stage clinical trial.

Under the terms of the agreement, Merck and Falk have discontinued their collaboration based on their existing co-development contract resulting in Merck having secured global rights to MK-8690.

In exchange, Falk will receive a $ 150 million upfront payment, which the Company will record as a charge to Research and development expenses in the fourth quarter of 2025.

Falk is also eligible to receive a developmental milestone payment, as well as tiered low-single-digit royalties on sales in certain territories.

In October 2025, Merck acquired Verona Pharma plc (Verona Pharma), a biopharmaceutical company focused on respiratory diseases, for total consideration of approximately $ 10.5 billion (including payments to settle share-based equity awards).

Through this acquisition, Merck acquired Ohtuvayre (ensifentrine), a first-in-class selective dual inhibitor of phosphodiesterases 3 and 4 (PDE3 and PDE4), which was approved in the U.S.

in June 2024 for the maintenance treatment of chronic obstructive pulmonary disease (COPD) in adult patients and is also being evaluated in clinical trials for the treatment of non-cystic fibrosis bronchiectasis.

Closing of the acquisition is expected in the fourth quarter of 2025, but is subject to certain conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act, approval of Verona Pharma’s shareholders, sanction by the High Court of Justice of England and Wales and other customary conditions.

If the proposed transaction closes, the Company expects to capitalize most of the purchase price as an intangible asset for Ohtuvayre.

The Company is in the process of determining the fair value of assets acquired and liabilities assumed in this transaction;

however, it expects to capitalize most of the purchase price as an intangible asset for Ohtuvayre .

There are no future contingent payments associated with the acquisition.

Also in October 2025, Merck and Blackstone Life Sciences (Blackstone) entered into a funding arrangement under which Blackstone will pay Merck $ 700 million (which is non-refundable, subject to the termination provisions of the agreement) to

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

fund a portion of the Company’s development costs for MK-2870, sacituzumab tirumotecan (sac-TMT), expected to be incurred throughout 2026.

The funding will be recognized as a reduction to Research and development expenses as Merck incurs applicable development costs for the sac-TMT program.

Sac-TMT is an investigational trophoblast cell-surface antigen 2 (TROP2)-directed antibody drug conjugate (ADC) being developed as part of an exclusive license and collaboration agreement with Kelun-Biotech that is currently in clinical development for the treatment of a variety of cancers.

The agreement between Merck and Kelun-Biotech with respect to sac-TMT is unchanged by the new agreement with Blackstone.

Merck will retain decision-making authority and control over the development, manufacturing, and commercial activities relating to sac-TMT provided for in the agreement with Kelun-Biotech, and Blackstone will not receive any rights to sac-TMT.

Upon receipt of regulatory approval for an indication in the U.S.

for first-line triple-negative-breast cancer (TroFuse-011 trial), Blackstone will be eligible to receive low-to-mid single-digit royalties on net sales of sac-TMT subsequent to such approval across all approved indications in Merck’s marketing territories.

In July 2025, the technology transfer for MK-2010 (LM-299), a novel investigational PD-1/vascular endothelial growth factor (VEGF) bispecific antibody that was licensed from LaNova Medicines Ltd (LaNova) in 2024, was completed.

Accordingly, Merck made a $ 300 million payment to LaNova (which has been acquired by Sino Biopharmaceutical Limited) that was recorded as a charge to Research and development expenses in the third quarter and first nine months of 2025 .

In May 2025, Merck and Jiangsu Hengrui Pharmaceuticals Co., Ltd.

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Under the agreement, Hengrui Pharma granted Merck exclusive rights to develop, manufacture and commercialize MK-7262 (HRS-5346) worldwide, excluding the Greater China region.

The agreement provides for an upfront payment of $ 200 million, which was recorded as a charge to Research and development expenses in the second quarter of 2025.

The agreement provided for an upfront payment of $ 200 million, which was recorded as a charge to Research and development expenses in the first nine months of 2025.

Hengrui Pharma is also eligible to receive future contingent developmental milestone payments of up to $ 92.5 million, regulatory milestone payments of up to $ 177.5 million, and sales-based milestone payments of up to $ 1.5 billion, as well as tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales of MK-7262 (HRS-5346), if approved.

2 unchanged sentences

There are no future contingent payments associated with the acquisition.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

2024 Transactions

In September 2024, Merck acquired MK-1045 (formally CN201), a novel investigational clinical-stage bispecific antibody for the treatment of B-cell associated diseases, from Curon Biopharmaceutical (Curon) for an upfront payment of $ 700 million.

In addition, Curon is eligible to receive future contingent developmental milestone payments of up to $ 300 million and regulatory milestone payments of up to $ 300 million.

The transaction was accounted for as an asset acquisition.

Merck recorded a charge of $ 750 million (reflecting the upfront payment and other related costs) to Research and development expenses in the third quarter and first nine months of 2024 related to the execution of the transaction.

In connection with the agreement, Merck is also obligated to pay a third party future contingent developmental, regulatory and sales-based milestone payments of up to $ 128 million in the aggregate, as well as tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales of MK-1045, if approved.

In July 2024, Merck acquired the aqua business of Elanco Animal Health Incorporated (Elanco aqua business) for total consideration of $ 1.3 billion.

The Elanco aqua business consists of an innovative portfolio of medicines and vaccines, nutritionals and supplements for aquatic species;

two related aqua manufacturing facilities in Canada and Vietnam;

as well as a research facility in Chile.

The acquisition broadens Animal Health’s aqua portfolio with products, such as Clynav , a new generation DNA-based vaccine that protects Atlantic salmon against pancreas disease, and Imvixa , an anti-parasitic sea lice treatment.

This acquisition also brings a portfolio of water treatment products for warm water production, complementing Animal Health’s warm water vaccine portfolio.

In addition to these products, the DNA-based vaccine technology that is a part of the business has the potential to accelerate the development of novel vaccines to address the unmet needs of the aqua industry.

There are no contingent payments associated with the acquisition, which was accounted for as a business combination.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The estimated fair values of assets acquired and liabilities assumed from the Elanco aqua business (inclusive of measurement period adjustments) are as follows:

($ in millions)

Property, plant and equipment

Product rights - Clynav (useful life 15 years) (1)

Other product rights (useful lives 15 years) (1)

Deferred tax asset

Other assets and liabilities, net 23

Total identifiable net assets 891

Consideration transferred $ 1,303

(1) The estimated fair values of Clynav and other product rights were determined using an income approach, specifically the multi-period excess earnings method.

The future probability-weighted net cash flows were discounted to present value utilizing a discount rate of 8.5 %.

Actual cash flows are likely to be different than those assumed.

(2) The goodwill recognized is largely attributable to anticipated synergies expected to arise after the acquisition and was allocated to the Animal Health segment.

This amount is expected to be deductible for tax purposes.

Also in July 2024, Merck acquired Eyebiotech Limited (EyeBio), a privately held ophthalmology-focused biotechnology company for $ 1.2 billion (including payments to settle share-based equity awards) and also incurred $ 207 million of transaction costs.

The acquisition agreement also provides for former EyeBio shareholders to receive contingent developmental milestone payments of up to $ 1.0 billion (of which $ 200 million has since been paid associated with the achievement of milestones as noted below), regulatory milestone payments of up to $ 200 million and sales-based milestone payments of up to $ 500 million.

EyeBio’s development work focused on candidates for the prevention and treatment of vision loss associated with retinal vascular leakage, a known risk factor for retinal diseases.

EyeBio’s lead candidate, MK-3000 (formerly EYE103), is an investigational, potentially first-in-class tetravalent, tri-specific antibody that acts as an agonist of the Wingless-related integration site signaling pathway, which is in clinical development for the treatment of diabetic macular edema and neovascular age-related macular degeneration.

The transaction was accounted for as an asset acquisition since MK-3000 accounted for substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes).

Merck recorded net assets of $ 21 million, as well as a charge of $ 1.35 billion to Research and development expenses in the third quarter and first nine months of 2024 related to the acquisition.

Additionally, a $ 100 million developmental milestone was recorded as a charge to Research and development expenses in the third quarter and first nine months of 2024 and an additional $ 100 million developmental milestone was charged to Research and development expenses in the first nine months of 2025.

In March 2024, Merck acquired Harpoon Therapeutics, Inc.

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The transaction was accounted for as an asset acquisition since gocatamig represented substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes).

Merck recorded net assets of $ 165 million, as well as a charge of $ 656 million to Research and development expenses in the first six months of 2024 related to the transaction.

Merck recorded net assets of $ 165 million, as well as a charge of $ 656 million to Research and development expenses in the first nine months of 2024 related to the transaction.

There are no future contingent payments associated with the acquisition.

1 unchanged sentence

See Note 3 for more information on Merck’s collaboration with Daiichi Sankyo.

In February 2024, Merck and Alteogen Inc.

(Alteogen) converted their existing non-exclusive license agreement into an exclusive license for the use of Alteogen’s proprietary berahyaluronidase alfa for the formulation of subcutaneous pembrolizumab.

Pursuant to the amended agreement, Alteogen is eligible to receive regulatory approval milestone payments of up to $ 51 million, as well as annual and cumulative sales-based milestone payments of up to $ 1.0 billion in the aggregate.

After the achievement of all sales-based milestones, a 2 % royalty on net sales is payable to Alteogen.

In September 2025, the U.S.

Food and Drug Administration (FDA) approved Keytruda Qlex (pembrolizumab and berahyaluronidase alfa-pmph) injection, which triggered regulatory milestone payments of $ 25 million in the aggregate from Merck to Alteogen.

Additionally, following FDA approval, the Company determined that it was probable that sales of Keytruda Qlex in the future would trigger $ 680 million of sales-based milestone payments from Merck to Alteogen.

Accordingly, in the third quarter of 2025, Merck recorded a $ 705 million liability for these regulatory and sales-based milestone payments and a corresponding intangible asset related to Keytruda Qlex included in Other Intangibles, Net.

The intangible asset will be amortized over its estimated useful life through December 2030.

The $ 25 million of regulatory milestone payments were made in October 2025;

the future sales-based milestone payments will be paid upon achievement of the corresponding milestone.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Collaborative Arrangements

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Independently, Merck and AstraZeneca are developing and commercializing Lynparza in combinations with their respective PD-1 and PD-L1 medicines, Keytruda (pembrolizumab) and Imfinzi.

The companies are also jointly developing and commercializing AstraZeneca’s Koselugo (selumetinib) for multiple indications.

Under the terms of the agreement, AstraZeneca and Merck share the development and commercialization costs for Lynparza and Koselugo monotherapy and non-PD-1/PD-L1 combination therapy opportunities.

Profits from Lynparza and Koselugo product sales generated through monotherapies or combination therapies are shared equally.

AstraZeneca is the principal on Lynparza and Koselugo sales transactions.

Merck records its share of Lynparza and Koselugo product sales, net of cost of sales and commercialization costs, as alliance revenue, and its share of development costs associated with the collaboration as part of Research and development expenses.

Under the terms of the agreement, AstraZeneca and Merck share the development and commercialization costs for Lynparza monotherapy and non-PD-1/PD-L1 combination therapy opportunities.

Profits from Lynparza product sales generated through monotherapies or combination therapies are shared equally.

AstraZeneca is the principal on Lynparza sales transactions.

Merck records its share of Lynparza product sales, net of cost of sales and commercialization costs, as alliance revenue, and its share of development costs associated with the collaboration as part of Research and development expenses.

Reimbursements received from AstraZeneca for research and development expenses are recognized as reductions to Research and development costs.

As part of the agreement, Merck made an upfront payment to AstraZeneca and also made payments over a multi-year period for certain license options.

In addition, the agreement provides for contingent payments from Merck to AstraZeneca related to the successful achievement of sales-based and regulatory milestones.

In the first six months of 2025, Merck made sales-based milestone payments aggregating $ 700 million to AstraZeneca of which $ 600 million related to Lynparza and $ 100 million related to Koselugo (both of which had been previously accrued for).

The initial collaboration agreement also included the joint development and commercialization of AstraZeneca’s Koselugo (selumetinib) for multiple indications, with revenues, costs and profits being accounted for similar to Lynparza.

In August 2025, Merck and AstraZeneca amended the terms of the original collaboration agreement, which resulted in the discontinuation of the revenue and cost sharing provisions of the collaboration and simplified the governance structure related to Koselugo.

In exchange, Merck received a $ 150 million upfront payment (which was recorded within Sales as alliance revenue) in the third quarter of 2025 and may receive future payments of $ 150 million in each of January 2026 and January 2027, and $ 100 million in January 2028, subject to an annual election by AstraZeneca.

Additionally, the amended agreement provides for Merck to receive contingent regulatory and sales-based milestone payments, as well as mid-single-digit royalties on future net sales.

Koselugo received a regulatory approval in August 2025 triggering a milestone payment (due from AstraZeneca in 2026) of $ 50 million (which was recorded within Sales as alliance revenue in the third quarter of 2025) and another regulatory approval in October 2025 triggering an additional milestone payment (due from AstraZeneca in 2027) of $ 50 million (which will be recorded within Sales as alliance revenue in the fourth quarter of 2025).

Merck remains eligible to receive future contingent payments for the achievement of regulatory milestones of up to $ 75 million and sales-based milestones of up to $ 235 million.

AstraZeneca has the option to revert back to the income and cost sharing terms of the original agreement (in which case any future annual, contingent milestone, and royalty payments referenced above would no longer be due) although Merck would retain any payments made by AstraZeneca prior to the exercise of that option and any amounts due from AstraZeneca would remain payable to Merck.

As part of the initial collaboration agreement, Merck made an upfront payment to AstraZeneca and also made payments over a multi-year period for certain license options.

In addition, the initial collaboration agreement provided for contingent payments from Merck to AstraZeneca related to the successful achievement of sales-based and regulatory milestones.

In the first nine months of 2025, Merck made sales-based milestone payments aggregating $ 700 million (related to the original collaboration agreement) to AstraZeneca of which $ 600 million related to Lynparza and $ 100 million related to Koselugo (both of which had been previously accrued for).

Potential future sales-based milestone payments of $ 2.0 billion have not yet been accrued as they are not deemed by the Company to be probable at this time.

Lynparza received a regulatory approval triggering a capitalized milestone payment from Merck to AstraZeneca of $ 245 million in the first six months of 2024 (which had been previously accrued for).

The partners have agreed that no future regulatory milestone payments from Merck to AstraZeneca are likely under the agreement.

The intangible asset balances related to Lynparza and Koselugo (which reflect the capitalized sales-based and regulatory milestone payments attributed to each product) were $ 1.0 billion and $ 44 million, respectively, at June 30, 2025 and are included in Other Intangibles, Net .

Lynparza received a regulatory approval triggering a capitalized milestone payment from Merck to AstraZeneca of $ 245 million in the first nine months of 2024 (which had been previously accrued for).

The partners have agreed that no future regulatory milestone payments from Merck to AstraZeneca are likely.

The intangible asset balances related to Lynparza and Koselugo (which reflect the capitalized sales-based and regulatory milestone payments attributed to each product) were $ 926 million and $ 41 million, respectively, at September 30, 2025 and are included in Other Intangibles, Net .

The assets are being amortized over their estimated useful lives (through 2028 for Lynparza and through 2029 for Koselugo) as supported by projected future cash flows, subject to impairment testing.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

1 unchanged sentence

Alliance revenue - Koselugo (1)

214 39 301 114

Total alliance revenue $ 593 $ 376 $ 1,362 $ 1,061

3 unchanged sentences

Research and development 3 19 31 57

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Receivables from AstraZeneca included in Other current assets (3)

Payables to AstraZeneca included in Accrued and other current liabilities (4)

(1) Amounts in 2025 include the $ 150 million upfront payment and $ 50 million regulatory milestone triggered in the third quarter as a result of the amendment to the collaboration agreement noted above.

(2) Represents amortization of capitalized milestone payments.

(3) Balance at September 30, 2025 includes a milestone receivable.

(4) Balance at December 31, 2024 includes accrued milestone payments.

6 unchanged sentences

Expenses incurred during co-development are shared by the two companies in accordance with the collaboration agreement and reflected in Research and development expenses.

Certain expenses incurred solely by Merck or Eisai are not shareable under the collaboration agreement, including costs incurred in excess of agreed upon caps and costs related to certain combination studies of Keytruda and Lenvima.

Certain expenses incurred solely by Merck or Eisai are not shareable under the collaboration agreement, including costs incurred in excess of agreed upon caps, and costs related to certain combination studies of Keytruda and Lenvima, as well as Welireg (belzutifan) and Lenvima.

Under the agreement, Merck made an upfront payment to Eisai and also made payments over a multi-year period for certain option rights.

In addition, the agreement provides for contingent payments from Merck to Eisai related to the successful achievement of sales-based and regulatory milestones.

In the first six months of 2024, Merck made a $ 125 million sales-based milestone payment to Eisai (which had been previously accrued for).

In the first nine months of 2024, Merck made a $ 125 million sales-based milestone payment to Eisai (which had been previously accrued for).

Potential future sales-based milestone payments of $ 2.3 billion have not yet been accrued as they are not deemed by the Company to be probable at this time.

There are no regulatory milestone payments remaining under the agreement.

The intangible asset balance related to Lenvima (which includes capitalized sales-based and regulatory milestone payments) was $ 321 million at June 30, 2025 and is included in Other Intangibles, Net .

The intangible asset balance related to Lenvima (which includes capitalized sales-based and regulatory milestone payments) was $ 261 million at September 30, 2025 and is included in Other Intangibles, Net .

The amount is being amortized over its estimated useful life through 2026 as supported by projected future cash flows, subject to impairment testing.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

4 unchanged sentences

Research and development 2 4 10 18

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Receivables from Eisai included in Other current assets

2 unchanged sentences

The two companies have implemented a joint development and commercialization strategy.

Under the agreement, Bayer commercializes Adempas in the Americas, while Merck commercializes in the rest of the world.

Under the agreement, Bayer

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

commercializes Adempas in the Americas, while Merck commercializes in the rest of the world.

For Verquvo, Merck commercializes in the U.S.

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Merck records sales of Adempas and Verquvo in its marketing territories, as well as alliance revenue.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

revenue represents Merck’s share of profits from sales of Adempas and Verquvo in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs.

Alliance revenue represents Merck’s share of profits from sales of Adempas and Verquvo in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs.

Cost of sales includes Bayer’s share of profits from sales in Merck’s marketing territories.

1 unchanged sentence

There are no sales-based milestone payments remaining under this collaboration.

The intangible asset balances related to Adempas (which includes the acquired intangible asset balance, as well as capitalized sales-based milestone payments attributed to Adempas) and Verquvo (which reflects the portion of the final sales-based milestone payment that was attributed to Verquvo) were $ 348 million and $ 43 million, respectively, at June 30, 2025 and are included in Other Intangibles, Net .

The intangible asset balances related to Adempas (which includes the acquired intangible asset balance, as well as capitalized sales-based milestone payments attributed to Adempas) and Verquvo (which reflects the portion of the final sales-based milestone payment that was attributed to Verquvo) were $ 312 million and $ 41 million, respectively, at September 30, 2025 and are included in Other Intangibles, Net .

The assets are being amortized over their estimated useful lives (through 2027 for Adempas and through 2031 for Verquvo) as supported by projected future cash flows, subject to impairment testing.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

7 unchanged sentences

Research and development 11 27 55 82

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Receivables from Bayer included in Other current assets

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

2 unchanged sentences

Cost of sales (1)

81 204 178 491

Selling, general and administrative

Research and development

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Payables to Ridgeback included in Accrued and other current liabilities (2)

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Daiichi Sankyo

In 2023, Merck and Daiichi Sankyo entered into a global development and commercialization agreement for three of Daiichi Sankyo’s DXd antibody drug conjugate (ADC) candidates:

In 2023, Merck and Daiichi Sankyo entered into a global development and commercialization agreement for three of Daiichi Sankyo’s DXd ADC candidates:

patritumab deruxtecan (HER3-DXd) (MK-1022), ifinatamab deruxtecan (I-DXd) (MK-2400) and raludotatug deruxtecan (R-DXd) (MK-5909).

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These payments included $ 1.0 billion ($ 500 million each for patritumab deruxtecan and ifinatamab deruxtecan), which may be refundable on a pro-rated basis in the event of early termination of development with respect to either program.

In addition, the agreement provided for a continuation payment of $ 750 million related to patritumab deruxtecan, which Merck paid in October 2024, and a continuation payment of $ 750 million related to raludotatug deruxtecan due from Merck in October 2025.

If Merck does not make the remaining continuation payment for raludotatug deruxtecan, the rights for that program will revert to Daiichi Sankyo and the non-refundable upfront payments already paid will be retained by Daiichi Sankyo.

In addition, the agreement provided for a continuation payment of $ 750 million related to patritumab deruxtecan (which Merck paid in October 2024) and a continuation payment of $ 750 million related to raludotatug deruxtecan (which Merck paid in October 2025).

The agreement also provides for contingent payments from Merck to Daiichi Sankyo of up to an additional $ 5.5 billion for each DXd ADC upon the successful achievement of certain sales-based milestones.

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Merck will record its share of product sales, net of cost of sales and commercialization costs, as alliance revenue.

In August 2024, Merck and Daiichi Sankyo expanded their agreement to include gocatamig (MK-6070), an investigational delta-like ligand 3 (DLL3) targeting T-cell engager, which Merck obtained through its acquisition of Harpoon (see Note 2).

In August 2024, Merck and Daiichi Sankyo expanded their agreement to include gocatamig (MK-6070), an investigational DLL3 targeting T-cell engager, which Merck obtained through its acquisition of Harpoon (see Note 2).

The companies are planning to evaluate gocatamig in combination with ifinatamab deruxtecan in certain patients with small cell lung cancer, as well as other potential combinations.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

Cost of sales (1)

$ 67 $ — $ 67 $ —

Selling, general and administrative 8 5 21 21

1 unchanged sentence

110 94 379 227

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Receivables from Daiichi Sankyo included in Other current assets

Payables to Daiichi Sankyo included in Accrued and other current liabilities (2)

(1) Represents Merck’s share of certain inventory-related costs.

(2) Includes accrued continuation payment.

1 unchanged sentence

In 2022, Merck exercised its option to jointly develop and commercialize intismeran autogene (V940/mRNA-4157), an investigational individualized neoantigen therapy, pursuant to the terms of an existing collaboration and license agreement with Moderna, Inc.

Intismeran autogene is currently being evaluated in combination with Keytruda in multiple Phase 3 clinical trials.

Intismeran autogene is currently being evaluated in combination with Keytruda in multiple clinical trials.

Merck and Moderna share costs and will share any profits equally under this worldwide collaboration.

1 unchanged sentence

Any reimbursements received from Moderna for research and development expenses are recognized as reductions to Research and development costs.

Merck has also capitalized certain of the shared costs, mainly related to facility costs, which aggregated $ 232 million at June 30, 2025 and will be amortized over the assets’ estimated useful lives.

Merck has also capitalized a net $ 235 million of shared facility costs at September 30, 2025, primarily reflected within Other Assets .

These costs are amortized over the assets’ estimated useful lives.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

2 unchanged sentences

96 93 272 255

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Payables to Moderna included in Accrued and other current liabilities

(1) Includes amortization of shared facility costs.

Bristol-Myers Squibb Company

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Additionally, Merck is eligible to receive future contingent sales-based milestone payments of up to $ 80 million.

Alliance revenue related to this collaboration, consisting of royalties (recorded within Sales ), was $ 107 million and $ 226 million in the second quarter and first six months of 2025, respectively, compared with $ 90 million and $ 161 million in the second quarter and first six months of 2024, respectively.

Alliance revenue related to this collaboration, consisting of royalties (recorded within Sales ), was $ 136 million and $ 361 million in the third quarter and first nine months of 2025, respectively, compared with $ 100 million and $ 261 million in the third quarter and first nine months of 2024, respectively.

Restructuring

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The remainder of the costs will be non-cash, relating primarily to the accelerated depreciation of facilities.

The Company recorded total pretax costs of $ 649 million in the second quarter of 2025 related to the 2025 Restructuring Program.

The Company recorded total pretax costs of $ 302 million and $ 951 million in the third quarter and first nine months of 2025, respectively, related to the 2025 Restructuring Program.

In January 2024, the Company approved a 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 optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency.

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The remainder of the costs will result in cash outlays, relating primarily to facility shut-down costs.

The Company recorded total pretax costs of $ 130 million and $ 177 million in the second quarter of 2025 and 2024, respectively, and $ 235 million and $ 422 million in the first six months of 2025 and 2024, respectively, related to the 2024 Restructuring Program.

Since inception of the 2024 Restructuring Program through June 30, 2025, Merck has incurred total cumulative pretax costs of $ 1.3 billion.

The Company recorded total pretax costs of $ 88 million and $ 279 million in the third quarter of 2025 and 2024, respectively, and $ 323 million and $ 701 million in the first nine months of 2025 and 2024, respectively, related to the 2024 Restructuring Program.

Since inception of the 2024 Restructuring Program through September 30, 2025, Merck has incurred total cumulative pretax costs of $ 1.4 billion.

For segment reporting, restructuring charges are unallocated expenses.

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The following tables summarize the charges related to restructuring program activities by type of cost:

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025

($ in millions) Accelerated Depreciation

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$ 56 $ 6 $ 328 $ 390 $ 152 $ 494 $ 628 $ 1,274

Three Months Ended June 30, 2024 Six Months Ended June 30, 2024

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

($ in millions) Accelerated Depreciation

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Additionally, other activity includes certain employee-related costs associated with pension and other postretirement benefit plans (see Note 10) and share-based compensation.

The following table summarizes the charges and spending related to restructuring program activities for the six months ended June 30, 2025:

The following table summarizes the charges and spending related to restructuring program activities for the nine months ended September 30, 2025:

($ in millions) Accelerated Depreciation

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$ — $ — $ — $ —

— 481 470 951

(Payments) receipts, net — ( 7 ) ( 2 ) ( 9 )

Non-cash activity — — ( 81 ) ( 81 )

Restructuring reserves June 30, 2025 $ — $ 481 $ 115 $ 596

Restructuring reserves September 30, 2025

$ — $ 474 $ 387 $ 861

2024 Restructuring Program

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Non-cash activity ( 152 ) — 3 ( 149 )

Restructuring reserves June 30, 2025

Restructuring reserves September 30, 2025

$ — $ 499 $ — $ 499

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For derivatives that are designated as cash flow hedges, the unrealized gains or losses on these contracts are recorded in Accumulated Other Comprehensive Loss ( AOCL) and reclassified into Sales when the hedged anticipated revenue is recognized.

The amount reclassified into earnings as a result of the discontinuation of cash flow hedges because it was no longer deemed probable the forecasted hedged transactions would occur was not material for the second quarter or first six months of either 2025 or 2024.

The amount reclassified into earnings as a result of the discontinuation of cash flow hedges because it was no longer deemed probable the forecasted hedged transactions would occur was not material for the third quarter or first nine months of either 2025 or 2024.

For those derivatives which are not designated as cash flow hedges, but serve as economic hedges of forecasted sales, unrealized gains or losses are recorded in Sales each period.

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The effects of the Company’s net investment hedges on OCI and the Condensed Consolidated Statement of Income are shown below:

Amount of Pretax Loss (Gain) Recognized in Other Comprehensive Income (1)

Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)

Amount of Pretax Gain Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing

Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2025 2024 2025 2024 2025 2024 2025 2024

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The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal at risk.

At June 30, 2025, the Company was a party to seven pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of a portion of fixed-rate notes as detailed in the table below.

June 30, 2025

At September 30, 2025, the Company was a party to seven pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of a portion of fixed-rate notes as detailed in the table below.

September 30, 2025

($ in millions)

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The cash flows from these contracts are reported as operating activities in the Condensed Consolidated Statement of Cash Flows.

In August 2025, the Company entered into several forward starting swaps, each with a notional amount of $ 250 million.

The table below presents the location of amounts recorded in the Condensed Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:

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($ in millions)

June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024 September 30, 2025 December 31, 2024

Balance Sheet Caption

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Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Fair Value of Derivative U.S.

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Foreign exchange contracts Other current assets $ 144 $ — $ 12,498 $ 323 $ — $ 12,544

Foreign exchange contracts Other Assets 1 — 475 — — —

Foreign exchange contracts Accrued and other current liabilities — 246 15,975 — 343 13,551

Foreign exchange contracts Other Noncurrent Liabilities — 1 475 — — —

$ 144 $ 246 $ 28,473 $ 323 $ 343 $ 26,095

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The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

($ in millions) Asset Liability Asset Liability

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Gross amounts subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet ( 246 ) ( 246 ) ( 299 ) ( 299 )

Cash collateral received/posted

Cash collateral received

( 1 ) — ( 165 ) —

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The table below provides information regarding the location and amount of pretax gains and losses of derivatives designated in fair value or cash flow hedging relationships:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024

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Foreign exchange contracts

Amount of (loss) gain recognized in OCI on derivatives

Amount of gain (loss) recognized in OCI on derivatives

— — — — 113 ( 325 ) — — — — ( 630 ) 22

4 unchanged sentences

— — — — — — — — ( 1 ) ( 1 ) — —

Amount of loss recognized in OCI on derivatives

Amount of gain (loss) recognized in OCI on derivatives

— — — — 18 — — — — — 17 ( 1 )

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The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments:

Amount of Derivative Pretax (Gain) Loss Recognized in Income

Three Months Ended June 30, Six Months Ended June 30,

Amount of Derivative Pretax Loss (Gain) Recognized in Income

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2025 2024 2025 2024

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(2) These derivative contracts serve as economic hedges of forecasted transactions .

At June 30, 2025, the Company estimates $ 473 million of pretax net unrealized losses on derivatives maturing within the next 12 months that hedge foreign currency denominated sales over that same period will be reclassified from AOCL to Sales .

At September 30, 2025, the Company estimates $ 298 million of pretax net unrealized losses on derivatives maturing within the next 12 months that hedge foreign currency denominated sales over that same period will be reclassified from AOCL to Sales .

The amount ultimately reclassified to Sales may differ as foreign exchange rates change.

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Information on investments in debt and equity securities is as follows:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Cost Gross Unrealized Fair

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($ in millions) Gains Losses Gains Losses

Commercial paper $ 416 $ — $ — $ 416 $ 348 $ — $ — $ 348

government and agency securities $ 99 $ — $ — $ 99 $ 188 $ — $ — $ 188

Commercial paper 45 — — 45 348 — — 348

Foreign government bonds

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Total debt and publicly traded equity securities $ 1,691 $ 1,456

(1) Unrealized net gains of $ 147 million and $ 262 million were recorded in Other (income) expense, net in the second quarter and first six months of 2025, respectively, on equity securities still held at June 30, 2025.

Unrealized net losses (gains) of $ 8 million and $( 125 ) million were recorded in Other (income) expense, net in the second quarter and first six months of 2024, respectively, on equity securities still held at June 30, 2024.

At June 30, 2025 and June 30, 2024, the Company also had $ 870 million and $ 936 million, respectively, of equity investments without readily determinable fair values included in Other Assets .

(1) Unrealized net gains of $ 367 million and $ 630 million were recorded in Other (income) expense, net in the third quarter and first nine months of 2025, respectively, on equity securities still held at September 30, 2025.

Unrealized net losses (gains) of $ 42 million and $( 82 ) million were recorded in Other (income) expense, net in the third quarter and first nine months of 2024, respectively, on equity securities still held at September 30, 2024.

At September 30, 2025 and September 30, 2024, the Company also had $ 834 million and $ 848 million, respectively, of equity investments without readily determinable fair values included in Other Assets .

The Company records unrealized gains on these equity investments based on favorable observable price changes from transactions involving similar investments of the same investee and records unrealized losses based on unfavorable observable price changes, which are included in Other (income) expense, net .

During the first six months of 2025 , the Company recorded unrealized losses of $ 33 million related to certain of these equity investments still held at June 30, 2025.

During the first six months of 2024 , the Company recorded unrealized gains of $ 61 million and unrealized losses of $ 5 million related to certain of these equity investments still held at June 30, 2024.

Cumulative unrealized gains and cumulative unrealized losses based on observable price changes for investments in equity investments without readily determinable fair values still held at June 30, 2025 were $ 307 million and $ 131 million, respectively.

At June 30, 2025 and June 30, 2024, the Company also had $ 221 million and $ 278 million, respectively, recorded in Other Assets for equity securities held through ownership interests in investment funds.

Losses (gains) recorded in Other (income) expense, net relating to these investment funds were $ 27 million and $( 7 ) million for the second quarter of 2025 and 2024, respectively, and were $ 50 million and $( 5 ) million for the first six months of 2025 and 2024, respectively.

During the first nine months of 2025 , the Company recorded unrealized gains of $ 1 million and unrealized losses of $ 33 million related to certain of these equity investments still held at September 30, 2025.

During the first nine months of 2024 , the Company recorded unrealized gains of $ 12 million and unrealized losses of $ 25 million related to certain of these equity investments still held at September 30, 2024.

Cumulative unrealized gains and cumulative unrealized losses based on observable price changes for investments in equity investments without readily determinable fair values still held at September 30, 2025 were $ 293 million and $ 131 million, respectively.

At September 30, 2025 and September 30, 2024, the Company also had $ 226 million and $ 328 million, respectively, recorded in Other Assets for equity securities held through ownership interests in investment funds.

Losses (gains) recorded in Other (income) expense, net relating to these investment funds were $ 2 million and $( 21 ) million for the third quarter of 2025 and 2024, respectively, and were $ 53 million and $( 26 ) million for the first nine months of 2025 and 2024, respectively.

Fair Value Measurements

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Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Commercial paper $ — $ 45 $ — $ 45 $ — $ 348 $ — $ 348

government and agency securities — 198 — 198 — 99 — 99

Foreign government bonds

— 1 — 1 — — — —

government and agency securities — — — — — 99 — 99

Publicly traded equity securities 1,116 — — 1,116 463 — — 463

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(3) The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

As of June 30, 2025 and December 31, 2024, Cash and cash equivalents included $ 7.3 billion and $ 12.3 billion of cash equivalents, respectively (which would be considered Level 2 in the fair value hierarchy).

As of September 30, 2025 and December 31, 2024, Cash and cash equivalents included $ 17.5 billion and $ 12.3 billion of cash equivalents, respectively (which would be considered Level 2 in the fair value hierarchy).

Contingent Consideration

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( 141 ) ( 148 )

Fair value June 30

Fair value September 30

(1) Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net .

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Some of the Company’s financial instruments, such as cash and cash equivalents, receivables and payables, are reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

The estimated fair value of loans payable and long-term debt (including current portion) at June 30, 2025, was $ 31.3 billion compared with a carrying value of $ 35.4 billion and at December 31, 2024, was $ 32.6 billion compared with a carrying value of $ 37.1 billion.

The estimated fair value of loans payable and long-term debt (including current portion) at September 30, 2025, was $ 37.7 billion compared with a carrying value of $ 41.4 billion and at December 31, 2024, was $ 32.6 billion compared with a carrying value of $ 37.1 billion.

Fair value was estimated using recent observable market prices and would be considered Level 2 in the fair value hierarchy.

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Cash and investments are placed in instruments that meet high credit quality standards as specified in the Company’s investment policy guidelines.

The majority of the Company’s accounts receivable arise from product sales in the U.S., Europe and China and are primarily due from drug wholesalers, distributors and retailers, hospitals and government agencies.

The majority of the Company’s accounts receivable arise from product sales in the U.S.

and Europe and are primarily due from drug wholesalers, distributors and retailers, hospitals and government agencies.

The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile.

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The Company has accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable.

The Company factored $ 1.6 billion and $ 2.1 billion of accounts receivable as of June 30, 2025 and December 31, 2024, respectively, under these factoring arrangements, which reduced outstanding accounts receivable.

The Company factored $ 1.7 billion and $ 2.1 billion of accounts receivable as of September 30, 2025 and December 31, 2024, respectively, under these factoring arrangements, which reduced outstanding accounts receivable.

The cash received from the financial institutions is reported within operating activities in the Condensed Consolidated Statement of Cash Flows.

In certain of these factoring arrangements, for ease of administration, the Company will collect customer payments related to the factored receivables, which it then remits to the financial institutions, generally within thirty days after receipt.

As of June 30, 2025 and December 31, 2024, the Company had collected $ 43 million and $ 55 million, respectively, on behalf of the financial institutions, which is reflected as restricted cash in Other current assets, and the related obligation to remit the cash is recorded in Accrued and other current liabilities .

As of September 30, 2025 and December 31, 2024, the Company had collected $ 35 million and $ 55 million, respectively, on behalf of the financial institutions, which is reflected as restricted cash in Other current assets, and the related obligation to remit the cash is recorded in Accrued and other current liabilities .

The net cash flows related to these collections are reported as financing activities in the Condensed Consolidated Statement of Cash Flows.

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These annexes contain provisions that require collateral to be exchanged depending on the value of the derivative assets and liabilities, the Company’s credit rating, and the credit rating of the counterparty.

Cash collateral advanced by the Company to counterparties was $ 97 million at June 30, 2025.

Cash collateral received by the Company from various counterparties was $ 4 million and $ 165 million at June 30, 2025 and December 31, 2024, respectively.

Cash collateral received by the Company from various counterparties was $ 1 million and $ 165 million at September 30, 2025 and December 31, 2024, respectively.

The obligation to return such collateral is recorded in Accrued and other current liabilities .

Inventories consisted of:

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Finished goods $ 2,249 $ 2,022

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Amounts recognized as Other Assets are comprised almost entirely of raw materials and work in process inventories.

At June 30, 2025 and December 31, 2024, these amounts included $ 4.3 billion and $ 3.8 billion, respectively, of inventories not expected to be sold within one year.

In addition, these amounts included $ 572 million and $ 412 million at June 30, 2025 and December 31, 2024, respectively, of inventories produced in preparation for product launches (primarily MK-3475A, subcutaneous pembrolizumab).

At September 30, 2025 and December 31, 2024, these amounts included $ 5.2 billion and $ 3.8 billion, respectively, of inventories not expected to be sold within one year.

In addition, these amounts included $ 167 million and $ 412 million at September 30, 2025 and December 31, 2024, respectively, of inventories produced in preparation for product launches.

Long-Term Debt

In September 2025, the Company issued $ 6.0 billion aggregate principal amount of senior unsecured notes consisting of $ 500 million of floating rate notes due 2027, $ 750 million of 3.85 % notes due 2027, $ 750 million of 4.15 % notes due 2030, $ 1.0 billion of 4.55 % notes due 2032, $ 1.75 billion of 4.95 % notes due 2035, and $ 1.25 billion of 5.70 % notes due 2055.

The Company used the net proceeds of the offering for general corporate purposes, including to fund a portion of the approximately $ 10.5 billion cash consideration and related fees and expenses payable in connection with Merck’s acquisition of Verona Pharma in October 2025 (see Note 2).

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Contingencies

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In the opinion of the Company, it is unlikely that the resolution of these matters will be material to the Company’s financial condition, results of operations or cash flows.

Given the nature of the litigation discussed below and the complexities involved in these matters, the Company is unable to reasonably estimate a possible loss or range of possible loss for such matters until the Company knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation.

The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated.

11 unchanged sentences

In these actions, plaintiffs allege that they were exposed to asbestos-contaminated talc and developed mesothelioma as a result.

As of June 30, 2025, approximately 575 cases were pending against Merck in various state courts.

As of September 30, 2025, approximately 605 cases were pending against Merck in various state courts.

Gardasil/Gardasil 9

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involving Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant) and Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant).

As of June 30, 2025, approximately 125 cases were filed and are pending against Merck in either federal or state court.

As of September 30, 2025, approximately 135 cases were filed and are pending against Merck in either federal or state court.

In these actions, plaintiffs allege, among other things, that they suffered various personal injuries after vaccination with Gardasil or Gardasil 9, with postural orthostatic tachycardia syndrome (POTS) as a predominate alleged injury.

6 unchanged sentences

The parties’ letter submissions on next steps in the Gardasil MDL proceeding in light of the court’s decision were submitted on April 8, 2025.

Expert discovery is set to commence on the remaining alleged conditions on September 2, 2025 with summary judgment briefing to follow.

Expert discovery on the remaining alleged conditions and summary judgment briefing are to follow.

On March 21, 2025, plaintiff’s co-lead counsel in the Gardasil MDL filed a seven -plaintiff complaint in New Jersey state court.

On March 24, 2025, Merck removed the case to federal court and has requested that the U.S.

On March 24, 2025, Merck removed the case to federal court and requested that the U.S.

Judicial Panel on Multidistrict Litigation transfer the case to the Gardasil MDL.

Plaintiffs have opposed transfer to the Gardasil MDL and have moved to have the case remanded to New Jersey state court.

Plaintiffs opposed transfer to the Gardasil MDL and moved to have the case remanded to New Jersey state court.

On August 7, 2025, the U.S.

Judicial Panel on Multidistrict Litigation issued an order transferring the case to the Gardasil MDL.

On May 1, 2025, plaintiff’s co-lead counsel in the Gardasil MDL filed a new six -plaintiff complaint in New Jersey state court.

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Plaintiffs have opposed transfer to the Gardasil MDL and have moved to have the case remanded to New Jersey state court.

On July 11, 2025, plaintiff’s co-lead counsel in the Gardasil MDL filed a new six -plaintiff complaint in New Jersey state court.

On July 11, 2025, Merck removed the case to federal court and has requested that the U.S.

Judicial Panel on Multidistrict Litigation transfer the case to the Gardasil MDL.

Plaintiffs have opposed transfer to the Gardasil MDL and have moved to have the case remanded to New Jersey state court.

On January 28, 2025, a trial commenced in California state court.

1 unchanged sentence

On February 14, 2025, after several weeks of trial and an opportunity to litigate plaintiff’s claims before a jury, plaintiff’s counsel approached Merck and proposed that the jury be discharged and the case adjourned.

Merck agreed, subject to an explicit stipulation that Merck would provide no financial or other consideration in exchange for the agreement to adjourn.

The case has thus been adjourned until a new trial date of September 15, 2025.

Merck agreed, subject to an explicit stipulation that Merck would provide no financial or other consideration in

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

exchange for the agreement to adjourn.

The case has thus been adjourned until a new trial date of February 2, 2026.

Merck is vigorously defending this case and believes that evidence presented in court will show that Gardasil had no role in causing any of plaintiff’s conditions.

In October 2025, Merck entered into a proposed agreement with plaintiffs’ counsel to substantially resolve the Gardasil product liability litigation.

The proposed agreement sets forth various terms and conditions under which Merck would resolve the bulk of all pending Gardasil product liability claims in the U.S.

in exchange for a total payment that is considerably less than Merck’s anticipated costs of defense in the litigation and that is not material to Merck.

The proposed agreement requires that several conditions be met within specified time periods, including participation thresholds, in order for the proposed agreement to result in a final resolution of any pending litigation.

As previously disclosed, there are fewer than 15 product liability cases pending outside the U.S.

Governmental Proceedings

Civil Investigative Demand

In August 2025, the Company received a Civil Investigative Demand (CID) from the U.S.

Department of Justice (DOJ), pursuant to a False Claims Act investigation, seeking documents, information, and testimony related to the Company’s programs and practices concerning diversity, equity, and inclusion.

The CID states that the DOJ is investigating whether, in connection with the Company’s claims for payments under its federal contracts, the Company falsely certified compliance with federal antidiscrimination laws.

The Company is cooperating with the investigation.

Other Matters

As previously disclosed, from time to time, the Company’s subsidiaries in China receive inquiries regarding their operations from various Chinese governmental agencies.

2 unchanged sentences

As previously disclosed, from time to time, the Company receives inquiries and is the subject of preliminary investigation activities from competition and other governmental authorities in markets outside the U.S.

These authorities may include regulators, administrative authorities, and law enforcement and other similar officials, and these preliminary investigation activities may include site visits, formal or informal requests or demands for documents or materials, inquiries or interviews and

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

similar matters.

Certain of these preliminary inquiries or activities may lead to the commencement of formal proceedings.

1 unchanged sentence

Securities Litigation

As previously disclosed, in February 2025, a putative class action was filed against Merck and certain of its officers in the U.S.

As previously disclosed, on February 12, 2025, a putative class action was filed against Merck and certain of its officers in the U.S.

District Court for the District of New Jersey, captioned Cronin v.

5 unchanged sentences

Lead plaintiff motions were filed on April 14, 2025, and remain pending.

On July 18, 2025, purported Merck stockholder Terence Collins filed a derivative lawsuit in the U.S.

As previously disclosed, on July 18, 2025, purported Merck stockholder Terence Collins filed a derivative lawsuit in the U.S.

District Court for the District of New Jersey, captioned Collins v.

Davis, et al ., against certain Merck officers and board members.

The complaint asserts claims of violation of the Exchange Act, breach of fiduciary duty, waste of corporate assets, and unjust enrichment based on the same allegations as in the putative securities class action.

The complaint asserts claims of violation of Section 14(a) of the Securities Act of 1934 (the Exchange Act), breach of fiduciary duty, waste of corporate assets, and unjust enrichment based on the same allegations as in the putative securities class action.

On behalf of the Company, the complaint seeks unspecified monetary damages, corporate governance reforms, injunctive relief, restitution, and fees and costs.

On September 2, 2025, purported Merck stockholders Robert Daniel and Daniel Gershen filed a derivative lawsuit in the U.S.

District Court for the District of New Jersey, captioned Daniel, et al.

Frazier, et al.

, against certain current and former Merck officers and board members for violations of Sections 10(b), 14(a), and 20(a) of the Exchange Act, breach of fiduciary duty, waste of corporate assets, and unjust enrichment based on the same allegations as the putative securities class action and the earlier-filed Collins derivative lawsuit.

On behalf of the Company, the complaint seeks unspecified monetary damages, corporate governance reforms, injunctive relief, restitution, and fees and costs.

On September 19, 2025, the parties to the Collins and Daniel lawsuits concurrently filed joint stipulations to stay the lawsuits pending the earliest of the following:

(i) dismissal of the securities class action;

(ii) any defendant filing an answer in the securities class action;

or (iii) any party to the stipulation giving 15 days’ notice that they no longer consent to the stay.

The parties also filed joint stipulations to consolidate the Collins and Daniel derivative lawsuits.

On October 1, 2025, the district court so-ordered the stay stipulations.

The court has not yet taken action in response to the consolidation stipulations.

On September 23, 2025, purported Merck shareholders Gary Weniger, Kathie McGinty, and Pamela Young filed a derivative lawsuit in the Superior Court of New Jersey (Union County), captioned Weniger, et al.

Frazier, et al.

, against certain

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

current and former Merck officers and board members.

The complaint asserts claims of breach of fiduciary duty, gross mismanagement, waste of corporate assets, unjust enrichment, insider trading, and a violation of New Jersey securities law based on the same allegations as the putative securities class action and the earlier-filed Collins and Daniel derivative lawsuits.

On behalf of the Company, the complaint seeks unspecified monetary damages, disgorgement of any illicitly gained proceeds, corporate governance reforms, injunctive relief, restitution, and fees and costs.

Commercial and Other Litigation

22 unchanged sentences

On May 20, 2025, the Merck Defendants moved to dismiss certain claims in the second amended complaint.

Qui Tam Litigation

As previously disclosed, in June 2012, the U.S.

District Court for the Eastern District of Pennsylvania unsealed a complaint that had been filed against the Company under the federal False Claims Act by two former employees alleging, among other things, that the Company defrauded the U.S.

government by falsifying data in connection with a clinical study conducted on the mumps component of the Company’s M-M-R II vaccine.

The complaint alleged the fraud took place between 1999 and 2001.

government had the right to participate in and take over the prosecution of this lawsuit but notified the court that it declined to exercise that right.

The two former employees pursued the lawsuit without the involvement of the U.S.

In July 2023, the court denied relators’ motion for summary judgment, granted two of the Company’s motions for summary judgment, and denied the Company’s remaining motions for summary judgment as moot.

The court entered judgment in favor of the Company and dismissed relators’ amended complaint in full with prejudice.

Relators appealed that decision, and in August 2024, the Third Circuit affirmed the district court’s decision.

In addition, as previously disclosed, two putative class action lawsuits on behalf of direct purchasers of the M‑M‑R II vaccine, which charge that the Company misrepresented the efficacy of the M-M-R II vaccine in violation of federal antitrust laws and various state consumer protection laws, are pending in the Eastern District of Pennsylvania.

The court granted the Company’s motion for summary judgment as to plaintiffs’ state law claims and denied the motion as to plaintiffs’ antitrust claim.

The Company appealed and, in October 2024, the Third Circuit reversed-in-part the district court’s order and remanded the case with instructions to enter summary judgment for the Company.

In November 2024, plaintiffs-appellees filed a petition for rehearing and rehearing en banc and, on February 10, 2025, the court denied the petition.

On October 20, 2025, the Supreme Court denied the plaintiffs’ certiorari petition, ending the matter.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Patent Litigation

From time to time, generic and biosimilar manufacturers of pharmaceutical products file abbreviated New Drug Applications (ANDAs) and Biologics License Applications, respectively, with the U.S.

Food and Drug Administration (FDA) seeking to market generic and biosimilar forms of the Company’s products prior to the expiration of relevant patents owned by the Company.

From time to time, generic and biosimilar manufacturers of pharmaceutical products file abbreviated New Drug Applications (ANDAs) and Biologics License Applications, respectively, with the FDA seeking to market generic and biosimilar forms of the Company’s products prior to the expiration of relevant patents owned by the Company.

To protect its patent rights, the Company may file patent infringement lawsuits against such generic and biosimilar companies.

Similar lawsuits defending the Company’s patent rights may exist in other countries.

The Company intends to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

to the expiration of such patents.

The Company intends to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior to the expiration of such patents.

As with any litigation, there can be no assurance of the outcomes, which, if adverse, could result in significantly shortened periods of exclusivity for these products and, with respect to products acquired through acquisitions accounted for as business combinations, potentially significant intangible asset impairment charges.

5 unchanged sentences

The West Virginia case was jointly dismissed with prejudice in August 2022 in favor of proceeding in New Jersey.

The remaining defendants in the New Jersey action have stipulated to infringement of the asserted claims and withdrew all remaining claims and defenses other than a defense seeking to shorten the patent term extension (PTE) of the sugammadex patent to December 2022.

The remaining defendants in the New Jersey action stipulated to infringement of the asserted claims and withdrew all remaining claims and defenses other than a defense seeking to shorten the patent term extension (PTE) of the sugammadex patent to December 2022.

District Court for the District of New Jersey held a one-day trial in December 2022 on this remaining PTE calculation defense.

10 unchanged sentences

The FDA has now granted Bridion six months of pediatric exclusivity.

Thus, the Federal Circuit’s decision secures Bridion ’s exclusivity in the U.S.

While the New Jersey action was pending, the Company settled with five generic companies providing that these generic companies can bring their generic versions of Bridion to the market in January 2026 (which were subject to delay by any applicable pediatric exclusivity) or earlier under certain circumstances.

The FDA has now granted Bridion six months of pediatric exclusivity.

Thus, the Federal Circuit’s decision and these settlements secure Bridion ’s exclusivity in the U.S.

through July 27, 2026.

While the New Jersey action was pending, the Company settled with five generic companies providing that these generic companies can bring their generic versions of Bridion to the market in January 2026 (which may be delayed by any applicable pediatric exclusivity) or earlier under certain circumstances.

Januvia, Janumet, Janumet XR — As previously disclosed, the FDA granted pediatric exclusivity with respect to Januvia (sitagliptin), Janumet (sitagliptin/metformin HCI), and Janumet XR (sitagliptin and metformin HCl extended-release), which provides a further six months of exclusivity in the U.S.

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In January 2024, the parties reached settlement enabling Zydus to seek final approval of a non-automatically substitutable version containing a different form of sitagliptin than that used in Janumet XR .

As a result of these settlement agreements related to the later expiring 2027 salt/polymorph patent directed to the specific sitagliptin salt form of the products, the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

until May 2026 and Janumet XR will not lose market exclusivity in the U.S.

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District Court of Delaware alleging infringement.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

was dismissed without prejudice in July 2024.

The case was dismissed without prejudice in July 2024.

Following the dismissal, the Company granted Azurity a covenant not to assert the salt/polymorph patent against the Azurity product that is the subject of such ANDA.

4 unchanged sentences

Thus, additional proceedings in certain countries where generic companies were prevented from launching products during the SPC period may be necessary to determine whether the SPCs are valid and if not, whether damages are appropriate.

Those countries include Belgium, Czech Republic, Ireland, Finland, France, Slovakia and Switzerland.

Those countries include Belgium, Czech Republic, Finland, and France.

If the Janumet SPCs are ultimately upheld, the Company has reserved its rights related to the pursuit of damages for those countries where a generic launched prior to expiry of the Janumet SPC.

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In June 2024, the district court granted Merck’s motion to stay the case in its entirety pending the outcome of the PTAB proceeding instituted in June 2024.

On June 9, 2025, the PTAB issued its final decision finding all claims of the first challenged JHU Patent (e.g., U.S.

11,591,393) unpatentable.

JHU has filed a request asking for the Director of the United States Patent & Trademark Office to review that decision.

Because the PTAB institution decisions for the nine different JHU patents were staggered between June 2024 and October 2024, the decision issued on June 9, 2025 is only with respect to the first challenged patent.

The Company expects subsequent final decisions in the eight remaining proceedings in the fall.

The district court’s stay is expected to continue until at least the issuance of all subsequent final decisions.

Between June and October of 2025, the PTAB issued Final Written Decisions finding all claims of the first six patents challenged unpatentable.

JHU has filed notices of appeal to the Federal Circuit Court of Appeals for two of the patents invalidated by the PTAB.

Director Review Requests and/or Appeals are still possible for the four additional patents invalidated by the PTAB.

The remaining three patents are expected to have Final Written Decisions issued by the PTAB in mid to late November 2025 .

The district court’s stay is expected to continue until at least the issuance of Final Written Decisions for the three remaining patents.

Subcutaneous Pembrolizumab — Halozyme, Inc.

has publicly alleged that certain patents in its modified hyaluronidase (MDASE) portfolio cover the Company’s subcutaneous pembrolizumab candidate, which is currently under review by the FDA.

has publicly alleged that certain patents in its modified hyaluronidase (MDASE) portfolio cover an ingredient in the Company’s subcutaneous pembrolizumab product.

In November 2024, the Company began filing a series of post grant review (PGR) petitions before the PTAB alleging that certain patents in the MDASE portfolio are invalid.

On June 2, 2025, the PTAB instituted the first petition filed by the Company.

Since then, the PTAB also instituted three additional petitions.

Institution decisions on 10 additional patents in the MDASE portfolio are still pending.

Since then, the PTAB also instituted ten additional petitions.

Institution decisions on three additional patents in the MDASE portfolio are still pending.

On April 24, 2025, Halozyme, Inc.

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Although there are three patents that were not and cannot be challenged using the PGR process, the Company believes those patents are invalid and suffer from the same defects as the patents currently being challenged and those patents can be challenged in court proceedings if required.

Between August and September 2025, the Company filed revocation actions against EP Patent No.

2 797 622 (the ‘622 patent) owned by Halozyme, Inc.

in the UK, France, Germany and The Netherlands.

Halozyme, Inc.

counterclaimed for an injunction in the UK under the ‘622 patent as well as an additional patent but have undertaken not to enforce any injunction there until the validity of both patents, which is in dispute, is finally determined.

On October 2, 2025, the Company accepted service of a preliminary injunction filed by Halozyme, Inc.

under the ‘622 patent in Germany.

A preliminary injunction hearing is scheduled to occur on December 4, 2025.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Lynparza — As previously disclosed, between December 2022 and November 2024, AstraZeneca Pharmaceuticals LP received Paragraph IV Certification Letters under the Hatch-Waxman Act notifying AstraZeneca that Natco Pharma Limited, Sandoz Inc., Cipla USA, Inc and Cipla Limited (collectively Cipla), and Zydus Pharmaceuticals (USA) Inc.

6 unchanged sentences

All cases have been consolidated and a trial is expected in 2026.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Capvaxive — On September 5, 2025, Pogona, LLC filed a complaint in the U.S.

District Court for the District of New Jersey alleging that the Company’s activities related to Capvaxive infringe U.S.

Pogona, LLC is asserting the Company’s infringement is willful and is seeking monetary damages.

The Company believes the asserted patent is invalid and not infringed.

Other Litigation

9 unchanged sentences

and the most current information regarding anticipated timing, progression, and related costs of pre-trial activities and trials in the associated litigation.

The amount of legal defense reserves as of June 30, 2025 and December 31, 2024 of approximately $ 255 million and $ 225 million, respectively, represents the Company’s best estimate of the minimum amount of defense costs to be incurred in connection with its outstanding litigation;

The amount of legal defense reserves as of September 30, 2025 and December 31, 2024 of approximately $ 220 million and $ 225 million, respectively, represents the Company’s best estimate of the minimum amount of defense costs to be incurred in connection with its outstanding litigation;

however, events such as additional trials and other events that could arise in the course of its litigation could affect the ultimate amount of legal defense costs to be incurred by the Company.

The Company will continue to monitor its legal defense costs and review the adequacy of the associated reserves and may determine to increase the reserves at any time in the future if, based upon the factors set forth, it believes it would be appropriate to do so.

Three Months Ended June 30,

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Three Months Ended September 30,

Common Stock Other

5 unchanged sentences

($ and shares in millions except per share amounts) Shares Par Value Shares Cost

Balance at April 1, 2024

Balance at July 1, 2024

3,577 $ 1,788 $ 44,362 $ 60,187 $ ( 5,361 ) 1,041 $ ( 57,394 ) $ 66 $ 43,648

7 unchanged sentences

Net income attributable to noncontrolling interests — — — — — — — 4 4

Balance at June 30, 2024 3,577 $ 1,788 $ 44,362 $ 60,187 $ ( 5,361 ) 1,041 $ ( 57,394 ) $ 66 $ 43,648

Balance at April 1, 2025

Distributions attributable to noncontrolling interests — — — — — — — ( 12 ) ( 12 )

Balance at September 30, 2024 3,577 $ 1,788 $ 44,530 $ 61,384 $ ( 5,371 ) 1,045 $ ( 57,829 ) $ 58 $ 44,560

Balance at July 1, 2025

3,577 $ 1,788 $ 44,644 $ 68,477 $ ( 5,421 ) 1,074 $ ( 60,495 ) $ 67 $ 49,060

1 unchanged sentence

— — — 5,785 — — — — 5,785

Other comprehensive loss, net of taxes

Other comprehensive income, net of taxes

— — — — 219 — — — 219

4 unchanged sentences

Net income attributable to noncontrolling interests — — — — — — — 2 2

Balance at June 30, 2025 3,577 $ 1,788 $ 44,644 $ 68,477 $ ( 5,421 ) 1,074 $ ( 60,495 ) $ 67 $ 49,060

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Six Months Ended June 30,

Distributions attributable to noncontrolling interests — — — — — — — ( 12 ) ( 12 )

Balance at September 30, 2025 3,577 $ 1,788 $ 44,832 $ 72,231 $ ( 5,202 ) 1,090 $ ( 61,799 ) $ 57 $ 51,907

Nine Months Ended September 30,

Common Stock Other

15 unchanged sentences

Net income attributable to noncontrolling interests — — — — — — — 15 15

Balance at June 30, 2024 3,577 $ 1,788 $ 44,362 $ 60,187 $ ( 5,361 ) 1,041 $ ( 57,394 ) $ 66 $ 43,648

Distributions attributable to noncontrolling interests — — — — — — — ( 12 ) ( 12 )

Balance at September 30, 2024 3,577 $ 1,788 $ 44,530 $ 61,384 $ ( 5,371 ) 1,045 $ ( 57,829 ) $ 58 $ 44,560

Balance at January 1, 2025

8 unchanged sentences

Net income attributable to noncontrolling interests — — — — — — — 10 10

Balance at June 30, 2025 3,577 $ 1,788 $ 44,644 $ 68,477 $ ( 5,421 ) 1,074 $ ( 60,495 ) $ 67 $ 49,060

Distributions attributable to noncontrolling interests — — — — — — — ( 12 ) ( 12 )

Balance at September 30, 2025 3,577 $ 1,788 $ 44,832 $ 72,231 $ ( 5,202 ) 1,090 $ ( 61,799 ) $ 57 $ 51,907

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Pension and Other Postretirement Benefit Plans

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

12 unchanged sentences

Termination benefits — — 1 — 1 — 5 —

Curtailments 9 ( 16 ) — — 8 ( 16 ) — —

$ 58 $ ( 41 ) $ 41 $ ( 7 ) $ 125 $ ( 78 ) $ 90 $ ( 20 )

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

6 unchanged sentences

In connection with restructuring actions (see Note 4), termination charges were recorded on pension plans related to expanded eligibility for certain employees exiting Merck.

Also, in connection with these restructuring activities, curtailments were recorded on certain pension plans.

The components of net periodic benefit cost (credit) other than the service cost component are included in Other (income) expense, net (see Note 11), with the exception of certain amounts for termination benefits which are recorded in Restructuring costs if the event giving rise to the termination benefits related to restructuring actions.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Other (Income) Expense, Net

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

2 unchanged sentences

Exchange losses 56 33 224 177

Income from investments in equity securities, net (1)

(Income) loss from investments in equity securities, net (1)

( 373 ) 31 ( 563 ) ( 169 )

3 unchanged sentences

(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.

Interest paid for the six months ended June 30, 2025 and 2024 was $ 616 million and $ 581 million, respectively.

The effective income tax rates of 11.4 % and 12.7 % for the second quarter and first six months of 2025, respectively, reflect a 2.9 percentage point favorable impact and a 1.4 percentage point favorable impact, respectively, due to $ 146 million of tax benefits resulting primarily from favorable audit adjustments.

The effective income tax rates in both the second quarter and first six months of 2025 also reflect the favorable impacts of geographical mix of income and expense, as well as certain discrete items.

The effective income tax rates of 9.1 % and 12.4 % for the second quarter and first six months of 2024, respectively, reflect a 4.3 percentage point favorable impact and a 2.2 percentage point favorable impact, respectively, due to a $ 259 million reduction in reserves for unrecognized income tax benefits resulting from the expiration in June 2024 of the statute of limitations for assessments related to the 2019 federal tax return year.

The effective income tax rate for the first six months of 2024 also reflects a 0.7 percentage point unfavorable impact of a charge for the acquisition of Harpoon for which no tax benefit was recognized.

Unrealized gains and losses from investments that are owned directly 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.

Other, net (as reflected in the table above) in the third quarter and first nine months of 2024 includes $ 170 million of income related to the expansion of the existing development and commercialization agreement with Daiichi Sankyo (see Note 3).

Interest paid for the nine months ended September 30, 2025 and 2024 was $ 849 million and $ 822 million, respectively.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The effective income tax rates of 14.2 % and 13.3 % for the third quarter and first nine months of 2025, respectively, reflect the favorable impacts of geographical mix of income and expense, as well as certain discrete items.

The effective income tax rate of 22.7 % for the third quarter of 2024 reflects a 7.2 percentage point combined unfavorable impact of charges related to the acquisitions of EyeBio and MK-1045, which had minimal tax benefits.

The effective income tax rate of 15.1 % for the first nine months of 2024 reflects a 2.1 percentage point combined unfavorable impact of charges related to the acquisitions of Harpoon, EyeBio and MK-1045, which had minimal tax benefits.

The effective income tax rate for the first nine months of 2024 also reflects a 1.6 percentage point favorable impact due to a $ 259 million reduction in reserves for unrecognized income tax benefits resulting from the expiration in June 2024 of the statute of limitations for assessments related to the 2019 federal tax return year.

While many jurisdictions in which Merck operates have adopted the global minimum tax provision of the Organization for Economic Cooperation and Development (OECD) Pillar 2, effective for tax years beginning in January 2024, it resulted in a minimal impact to the Company’s 2024 effective income tax rate due to the accounting for the tax effects of intercompany transactions.

The Company expects the impact of the global minimum tax to be approximately 2 % for full year 2025.

In addition, in July 2025, H.R.1 - One Big Beautiful Bill Act (OBBBA) was enacted into law.

The Company is currently evaluating the effects of the OBBBA but does not expect a material tax impact.

In addition, in July 2025, H.R.1 - One Big Beautiful Bill Act (OBBBA) was enacted into law, which had an immaterial impact to the effective tax rates for the third quarter and first nine months of 2025.

The Internal Revenue Service (IRS) is currently conducting examinations of the Company’s tax returns for the years 2017 and 2018, including the one-time transition tax enacted under the Tax Cuts and Jobs Act of 2017 (TCJA).

5 unchanged sentences

If the Company is ultimately unsuccessful in defending its position, the impact could be material to its financial statements.

The statute of limitations for assessments with respect to the 2019 and 2020 federal tax return years expired in June 2024 and October 2024, respectively.

The statute of limitations for assessments with respect to the 2019 and 2020 federal tax return years expired in June 2024 (as noted above) and October 2024, respectively.

The IRS is also currently conducting examinations of the Company’s tax returns for the years 2021 and 2022.

In addition, various state and foreign examinations are in progress.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Earnings Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ and shares in millions except per share amounts) 2025 2024 2025 2024

11 unchanged sentences

(1) Issuable primarily under share-based compensation plans.

For the second quarter of 2025 and 2024, 19 million and 7 million, respectively, and for the first six months of 2025 and 2024, 12 million and 5 million, respectively, of common shares issuable under share-based compensation plans were excluded from the computations of earnings per common share assuming dilution because the effect would have been antidilutive.

For the third quarter of 2025 and 2024, 15 million and 7 million, respectively, and for the first nine months of 2025 and 2024, 12 million and 6 million, respectively, of common shares issuable under share-based compensation plans were excluded from the computations of earnings per common share assuming dilution because the effect would have been antidilutive.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Other Comprehensive Income (Loss)

Changes in each component of other comprehensive income (loss) are as follows:

Three Months Ended June 30,

Three Months Ended September 30,

($ in millions) Derivatives Employee

2 unchanged sentences

Comprehensive

Balance April 1, 2024, net of taxes

Balance July 1, 2024, net of taxes

$ 173 $ ( 2,808 ) $ ( 2,726 ) $ ( 5,361 )

6 unchanged sentences

Other comprehensive income (loss), net of taxes ( 296 ) ( 13 ) 299 ( 10 )

Balance June 30, 2024, net of taxes

Balance September 30, 2024, net of taxes

$ ( 123 ) $ ( 2,821 ) $ ( 2,427 ) $ ( 5,371 )

Balance April 1, 2025, net of taxes

Balance July 1, 2025, net of taxes

$ ( 385 ) $ ( 2,353 ) $ ( 2,683 ) $ ( 5,421 )

6 unchanged sentences

Other comprehensive income (loss), net of taxes 170 74 ( 25 ) 219

Balance June 30, 2025, net of taxes

Balance September 30, 2025, net of taxes

$ ( 215 ) $ ( 2,279 ) $ ( 2,708 ) $ ( 5,202 )

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Six Months Ended June 30,

Nine Months Ended September 30,

($ in millions) Derivatives Employee

11 unchanged sentences

Other comprehensive income (loss), net of taxes ( 99 ) ( 28 ) ( 83 ) ( 210 )

Balance June 30, 2024, net of taxes

Balance September 30, 2024, net of taxes

$ ( 123 ) $ ( 2,821 ) $ ( 2,427 ) $ ( 5,371 )

8 unchanged sentences

Other comprehensive income (loss), net of taxes ( 457 ) 48 152 ( 257 )

Balance June 30, 2025, net of taxes

Balance September 30, 2025, net of taxes

$ ( 215 ) $ ( 2,279 ) $ ( 2,708 ) $ ( 5,202 )

1 unchanged sentence

(2) Includes net amortization of prior service cost, actuarial gains and losses, settlements and curtailments included in net periodic benefit cost (see Note 10).

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Segment Reporting

13 unchanged sentences

Sales of the Company’s products were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

23 unchanged sentences

Prevymis 128 138 266 101 107 208 345 357 702 265 305 570

Dificid 83 13 96 79 12 92 155 24 179 147 17 165

Zerbaxa 49 32 81 39 26 64 136 89 225 106 77 182

Dificid 30 13 43 83 13 96 185 37 222 231 30 261

Cardiovascular

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(4) Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.

(5) Other is primarily comprised of miscellaneous c orpor ate revenue, including revenue hedging activities which increa se d sales by $ 16 million and $ 118 million for the six months ended June 30, 2025 and 2024, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon & Co.).

Other for the six months ended June 30, 2025 and 2024 also includes $ 100 million and $ 76 million, respectively, related to upfront and milestone payments received by Merck for out-licensing arrangements.

Also reflects total alliance revenue for Koselugo of $ 214 million and $ 39 million in the third quarter of 2025 and 2024, respectively, and $ 301 million and $ 114 million in the first nine months of 2025 and 2024, respectively (see Note 3).

(5) Other is primarily comprised of miscellaneous c orpor ate revenue, including revenue hedging activities which (decreased) increa se d sales by $( 61 ) million and $ 156 million for the nine months ended September 30, 2025 and 2024, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon & Co.).

Other for the nine months ended September 30, 2025 and 2024 also includes $ 111 million and $ 91 million, respectively, related to upfront and milestone payments received by Merck for out-licensing arrangements.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

1 unchanged sentence

These discounts, in the aggregate, reduced U.S.

sales by $ 2.5 billion and $ 3.3 billion for the three months ended June 30, 2025 and 2024, respectively, and $ 4.7 billion and $ 6.6 billion for the six months ended June 30, 2025 and 2024, respectively.

sales by $ 2.6 billion and $ 3.6 billion for the three months ended September 30, 2025 and 2024, respectively, and $ 7.2 billion and $ 10.1 billion for the nine months ended September 30, 2025 and 2024, respectively.

Consolidated sales by geographic area where derived are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024 2025 2024

8 unchanged sentences

A reconciliation of segment profits to Income Before Taxes is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

34 unchanged sentences

Equity income from affiliates and depreciation included in segment profits is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

8 unchanged sentences

($ in millions)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

United States $ 15,482 $ 14,724

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements