What changed in this filing

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Item 1. Financial Statements

2026-08-07 compared with 2026-05-04 · 356 added, 239 removed, 955 unchanged (38% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Sales $ 16,607 $ 15,806 $ 32,893 $ 31,335

5 unchanged sentences

Other (income) expense, net 99 ( 7 ) 237 ( 43 )

17,290 10,807 37,110 20,433

(Loss) Income Before Taxes

1 unchanged sentence

Income Tax Provision

654 571 1,363 1,388

Net (Loss) Income

1 unchanged sentence

Net (Loss) Income Attributable to Noncontrolling Interests

( 2 ) 1 ( 5 ) 8

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

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

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

2 unchanged sentences

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

75 ( 410 ) 291 ( 627 )

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

8 ( 8 ) 13 ( 26 )

Cumulative translation adjustment 35 ( 38 ) 41 177

118 ( 456 ) 345 ( 476 )

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

5 unchanged sentences

(Unaudited, $ in millions except per share amounts)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Current Assets

49 unchanged sentences

(Unaudited, $ in millions)

Three Months Ended

Six Months Ended

Cash Flows from Operating Activities

5 unchanged sentences

Income from investments in equity securities, net ( 411 ) ( 189 )

Charge for research and development asset acquisition

Charges for research and development asset acquisitions 13,811 —

Deferred income taxes ( 859 ) ( 634 )

Share-based compensation 483 411

Other ( 61 ) 444

Net changes in assets and liabilities ( 1,190 ) ( 5,971 )

5 unchanged sentences

Acquisition of Cidara Therapeutics, Inc., net of cash acquired ( 8,779 ) —

Acquisition of Terns Pharmaceuticals, Inc., net of cash acquired ( 5,842 ) —

Other ( 88 ) ( 15 )

1 unchanged sentence

Cash Flows from Financing Activities

Net change in short-term borrowings

Proceeds from term loan 6,000 —

Payments on term loan ( 6,000 ) —

Proceeds from issuance of debt

Payments on debt ( 1,145 ) ( 2,500 )

12 unchanged sentences

Cash, Cash Equivalents and Restricted Cash at End of Period (includes restricted cash of $ 42

and $ 103 at March 31, 2026 and 2025, respectively, included in Other current assets )

and $ 66 at June 30, 2026 and 2025, respectively, included in Other current assets )

$ 6,891 $ 8,073

14 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 December 2025, the FASB issued guidance that includes requirements for recognition of government grants in a company’s financial statements as well as disclosure requirements, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant.

In December 2025, the FASB issued guidance that includes requirements for the recognition of government grants in a company’s financial statements as well as disclosure requirements, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant.

The guidance is effective for 2029 interim and annual reporting on a modified prospective, modified retrospective or retrospective approach.

10 unchanged sentences

2026 Transactions

In March 2026, Merck entered into a definitive agreement to acquire Terns Pharmaceuticals, Inc.

(Terns), a clinical-stage oncology company, for $ 53 per share, for a total transaction value of approximately $ 6.7 billion.

Through this acquisition, Merck will acquire Terns’ lead candidate, TERN-701, a novel investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor (TKI) currently being evaluated in a Phase 1/2 trial for patients with Philadelphia chromosome-positive, chronic phase chronic myeloid leukemia previously treated with at least one prior TKI and who experienced treatment failure, suboptimal response or treatment intolerance.

The transaction has been approved by both Merck’s and Terns’ Boards of Directors.

The acquisition is subject to a majority of Terns’ stockholders tendering their shares in the tender offer initiated by Merck in April 2026.

The consummation of the proposed transaction is also subject to customary closing conditions.

Merck anticipates the transaction will be accounted for as an asset acquisition since TERN-701 is expected to account for substantially all of the fair value of the gross assets to be acquired (excluding cash and deferred income taxes).

Upon closing of the transaction, which is anticipated in May 2026, Merck expects to record a charge of approximately $ 5.8 billion to Research and development expenses.

In July 2026, Merck acquired TARGAN, a privately held company developing and commercializing biodevice solutions to improve performance outcomes for the poultry industry, for approximately $ 650 million.

The acquisition is expected to broaden Merck Animal Health’s portfolio in commercial poultry operations with WingScan, an automated solution that uses vision technology for gender identification.

This acquisition also brings the capability for a high-speed precision ocular spray technology, which administers respiratory and coccidiosis vaccines, among others, to day-old chicks.

In addition, TARGAN has the potential to develop additional biodevices within poultry and other livestock species.

Merck recorded an unrealized gain of $ 71 million to Other (income) expense, net in the second quarter and first six months of 2026 related to an existing investment that Merck held in TARGAN.

The Company expects to account for the transaction as a business combination.

There are no future contingent payments associated with the acquisition.

In June 2026, the U.S.

Food and Drug Administration (FDA) ap proved Welireg (belzutifan) in combination with Keytruda (pembrolizumab) or Keytruda Qlex (pembrolizumab and berahyaluronidase alfa) for the adjuvant treatment of certain adult patients with clear cell renal cell carcinoma following nephrectomy.

The approval of this combination therapy triggered a $ 50 million regulatory milestone payment to former Peloton Therapeutics, Inc.

(Peloton) shareholders, which was made in July 2026.

Additionally, following FDA approval, the Company determined that it was probable that sales of Welireg in the future would trigger a $ 100 million sales-based milestone payment from Merck to former Peloton shareholders.

Accordingly, in the second quarter of 2026, Merck recorded a $ 100 million non-current liability for the potential future sales-based milestone payment.

In addition, Merck recorded a $ 192 million increase to the intangible asset related to Welireg (included in Other Intangibles, Net ) associated with these milestones .

The intangible asset is being amortized over its estimated useful life through August 2031.

Merck also recorded $ 65 million of cumulative amortization catch-up expense to Cost of sales in the second quarter and first six months of 2026 related to the recognition of the sales-based milestone.

Former Peloton shareholders remain eligible to receive up to $ 900 million of sales-based milestones.

In May 2026, Merck acquired Terns Pharmaceuticals, Inc.

(Terns), a clinical-stage oncology company, for $ 6.8 billion (including $ 606 million of payments to settle share-based equity awards of which $ 433 million related to unvested equity awards).

Through this acquisition, Merck acquired Terns’ lead candidate, MK-4208 (formerly TERN-701), a novel investigational

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

oral allosteric BCR::ABL1 tyrosine kinase inhibitor (TKI) currently being evaluated in a Phase 1/2 trial for patients with Philadelphia chromosome-positive, chronic phase chronic myeloid leukemia previously treated with at least one prior TKI and who experienced treatment failure, suboptimal response or treatment intolerance.

The transaction was accounted for as an asset acquisition because MK-4208 accounted for substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes).

Merck recorded a charge of $ 5.7 billion to Research and development expenses (which primarily represented acquired in-process research and development [IPR&D] with no alternative future use) in the second quarter and first six months of 2026, as well as net assets of $ 1.1 billion, including cash of $ 505 million, investments of $ 487 million, deferred tax assets of $ 190 million, and other net liabilities of $ 105 million.

There are no future contingent payments associated with the acquisition.

In January 2026, Merck acquired Cidara Therapeutics, Inc.

2 unchanged sentences

MK-1406 is currently being evaluated in a Phase 3 trial among adult and adolescent participants who are at higher risk of developing complications from influenza.

The transaction was accounted for as an asset acquisition since MK-1406 accounted for substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes).

Merck recorded a charge of $ 9.0 billion to Research and development expenses (which primarily represented acquired in-process research and development with no alternative future use), as well as net assets of $ 332 million in the first quarter of 2026.

The transaction was accounted for as an asset acquisition because MK-1406 accounted for substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes).

Merck recorded a charge of $ 9.0 billion to Research and development expenses (which primarily represented acquired IPR&D with no alternative future use) in the first six months of 2026, as well as net assets of $ 332 million.

Under a previous license agreement between Cidara and J&J Innovative Medicine (a Johnson & Johnson company, previously Janssen Pharmaceuticals, Inc.), which was assumed by Merck, J&J Innovative Medicine is eligible to receive up to $ 105 million in regulatory milestones and up to $ 455 million in sales-based milestones related to MK-1406.

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

2025 Transactions

In October 2025, Merck and Blackstone Life Sciences (Blackstone) entered into a funding arrangement under which Blackstone will pay Merck $ 700 million in the fourth quarter of 2026 (which is non-refundable, subject to the termination provisions of the agreement) to fund a portion of the Company’s development costs for MK-2870, sacituzumab tirumotecan (sac-TMT), expected to be incurred throughout 2026.

Under the terms of the agreement, Merck recognized $ 200 million of funding in the first quarter of 2026 as a reduction to Research and development expenses, and also recognized a corresponding receivable from Blackstone, which was recorded in Other current assets.

Under the terms of the agreement, Merck recognized $ 200 million and $ 400 million of funding in the second quarter and first six months of 2026, respectively, as a reduction to Research and development expenses, as well as a corresponding $ 400 million receivable from Blackstone, which is included in Other current assets.

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

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Merck retained 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 did not receive any rights to sac-TMT.

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

(Hengrui Pharma) closed an exclusive license agreement for MK-7262 (HRS-5346), an investigational oral small molecule Lipoprotein(a) inhibitor.

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 provided for an upfront payment of $ 200 million, which was recorded as a charge to Research and development expenses in the second quarter and first six 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.

In March 2025, Merck acquired the Dundalk, Ireland facility of WuXi Vaccines (a wholly owned subsidiary of WuXi Biologics), which was accounted for as an asset acquisition.

7 unchanged sentences

In 2017, Merck and AstraZeneca PLC (AstraZeneca) entered into a global strategic oncology collaboration to co-develop and co-commercialize AstraZeneca’s Lynparza (olaparib) for multiple cancer types.

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

Independently, Merck and AstraZeneca are developing and commercializing Lynparza in combinations with their respective PD-1 and PD-L1 medicines,

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

Keytruda and Imfinzi.

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.

8 unchanged sentences

Additionally, the amended agreement provided for Merck to receive contingent regulatory milestone payments of up to $ 175 million in the aggregate, all of which were triggered in 2025 and recorded within Sales as alliance revenue.

Of these milestone amounts, $ 50 million is due from AstraZeneca in the third quarter of 2026, $ 50 million is due in the third quarter of 2027, and $ 75 million is due in the third quarter of 2028.

The Company is also receiving mid-single-digit royalties on net sales (which are included within Sales as alliance revenue).

Of these milestone amounts, $ 50 million was received from AstraZeneca in the second quarter of 2026, $ 50 million is due in the third quarter of 2027, and $ 75 million is due in the third quarter of 2028.

The Company also receives tiered royalties ranging from 6 % to 7 % on net sales (which are included within Sales as alliance revenue).

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

1 unchanged sentence

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 quarter 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

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

been accrued as they are not deemed by the Company to be probable at this time.

In addition, the initial collaboration 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 (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.

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 $ 762 million and $ 36 million, respectively, at March 31, 2026 and are included in Other Intangibles, Net .

The intangible asset balances related to Lynparza and Koselugo (which reflect the capitalized sales-based and regulatory milestone payments attributed to each product) were $ 681 million and $ 33 million, respectively, at June 30, 2026 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.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

3 unchanged sentences

Cost of sales (2)

84 86 169 169

Selling, general and administrative 25 40 49 72

Research and development 9 16 15 28

($ in millions) March 31, 2026 December 31, 2025

($ in millions) June 30, 2026 December 31, 2025

Receivables from AstraZeneca included in Other current assets (3)

1 unchanged sentence

Payables to AstraZeneca included in Accrued and other current liabilities

(1) Amount in the first quarter of 2026 includes $ 150 million related to the amendment of the collaboration agreement noted above.

(1) Amount in the first six months of 2026 includes $ 150 million related to the amendment of the collaboration agreement noted above.

(2) Represents amortization of capitalized milestone payments.

(3) Includes milestone receivables.

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

Eisai Co., Ltd.

5 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, 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.

2 unchanged sentences

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 $ 188 million at March 31, 2026 and is included in Other Intangibles, Net .

The intangible asset balance related to Lenvima (which includes capitalized sales-based and regulatory milestone payments) was $ 175 million at June 30, 2026 and is included in Other Intangibles, Net .

The amount is being amortized over its estimated useful life through 2029 as supported by projected future cash flows, subject to impairment testing.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

3 unchanged sentences

Research and development — 3 2 7

($ in millions) March 31, 2026 December 31, 2025

($ in millions) June 30, 2026 December 31, 2025

Receivables from Eisai included in Other current assets

(1) Represents amortization of capitalized milestone payments.

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

In 2014, the Company entered into a worldwide clinical development collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators including Bayer’s Adempas (riociguat) and Verquvo (vericiguat).

9 unchanged sentences

There are no such 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 $ 239 million and $ 37 million, respectively, at March 31, 2026 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 $ 203 million and $ 35 million, respectively, at June 30, 2026 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.

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

Summarized financial information related to this collaboration is as follows:

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

4 unchanged sentences

Cost of sales (1)

67 61 134 120

Selling, general and administrative 11 29 23 58

Research and development 10 20 27 43

($ in millions) March 31, 2026 December 31, 2025

($ in millions) June 30, 2026 December 31, 2025

Receivables from Bayer included in Other current assets

4 unchanged sentences

Merck gained exclusive worldwide rights to develop and commercialize Lagevrio and related molecules.

Following initial authorizations in certain markets in 2021, Lagevrio has since received multiple additional authorizations.

Under the terms of the agreement, Ridgeback received an upfront payment and is eligible to receive future contingent payments dependent upon the achievement of certain developmental and regulatory approval milestones.

3 unchanged sentences

Reimbursements from Ridgeback for its share of research and development costs (deducted from Ridgeback’s share of profits) are reflected as decreases to Research and development expenses.

Following initial authorizations in certain markets in 2021, Lagevrio has since received multiple additional authorizations.

In the U.S., where Lagevrio remains in Phase 3 development and is marketed under an Emergency Use Authorization (EUA), the Secretary of the U.S.

Department of Health and Human Services provided advance notice on June 29, 2026 that the declaration supporting the EUAs pursuant to which Lagevrio and certain other COVID-19 drug and biologic products are marketed will terminate, effective June 29, 2027.

Based on the Secretary’s June 2026 determination and advance notice of termination, the Company is working with the FDA to develop a plan for disposition of Lagevrio in the U.S.

by June 29, 2027.

Summarized financial information related to this collaboration is as follows:

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

Net sales of Lagevrio recorded by Merck

$ 5 $ 83 $ 32 $ 185

Cost of sales (1)

2 unchanged sentences

(1) Includes cost of products sold by Merck, Ridgeback’s share of profits, royalty expense, amortization of capitalized milestone payments and inventory reserves.

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

Daiichi Sankyo

7 unchanged sentences

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.

Merck and Daiichi Sankyo equally share research and development costs, except for raludotatug deruxtecan, where Merck is responsible for 75 % of the first $ 2.0 billion of research and development expenses.

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

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.

Merck and Daiichi Sankyo equally share research and development costs, except for raludotatug deruxtecan, for which Merck is responsible for 75 % of the first $ 2.0 billion of research and development expenses.

Merck includes its share of development costs associated with the collaboration as part of Research and development expenses.

1 unchanged sentence

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

In July 2026, Merck and Daiichi Sankyo amended their agreement, whereby certain clinical development expenses may be incurred solely by Merck and are not shareable under the collaboration agreement, but may be partially reimbursed subject to certain conditions.

In 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 Therapeutics, Inc.

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.

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

Merck received an upfront cash payment of $ 170 million from Daiichi Sankyo (recorded within Other (income) expense, net) and has also satisfied a contingent quid obligation from the original collaboration agreement.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

1 unchanged sentence

Research and development

($ in millions) March 31, 2026 December 31, 2025

181 193 341 321

($ in millions) June 30, 2026 December 31, 2025

Receivables from Daiichi Sankyo included in Other current assets

2 unchanged sentences

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 clinical trials.

Intismeran autogene is currently being evaluated in combination with Keytruda or Keytruda Qlex 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 a net $ 230 million of shared facility costs at March 31, 2026, primarily reflected within Other Assets .

Merck has also capitalized a net $ 226 million of shared facility costs at June 30, 2026, primarily reflected within Other Assets .

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

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

Summarized financial information related to this collaboration is as follows:

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

1 unchanged sentence

Research and development (1)

($ in millions) March 31, 2026 December 31, 2025

94 90 184 176

($ in millions) June 30, 2026 December 31, 2025

Receivables from Moderna included in Other current assets

1 unchanged sentence

(1) Includes amortization of shared facility costs.

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

Bristol-Myers Squibb Company

5 unchanged sentences

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 $ 148 million and $ 119 million in the first quarter of 2026 and 2025, respectively.

Alliance revenue related to this collaboration, consisting of royalties (recorded within Sales ), was $ 122 million and $ 270 million in the second quarter and first six months of 2026, respectively, compared with $ 107 million and $ 226 million in the second quarter and first six months of 2025, respectively.

Restructuring

6 unchanged sentences

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

The Company recorded total pretax costs of $ 318 million in the first quarter of 2026 related to the 2025 Restructuring Program.

Since inception of the 2025 Restructuring Program through March 31, 2026, Merck has incurred total cumulative pretax costs of $ 2.3 billion.

The Company recorded total pretax costs of $ 172 million and $ 490 million in the second quarter and first six months of 2026, respectively, and $ 649 million for both the second quarter and first six months of 2025, related to the 2025 Restructuring Program.

Since inception of the 2025 Restructuring Program through June 30, 2026, Merck has incurred total cumulative pretax costs of $ 2.5 billion.

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.

2 unchanged sentences

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

The Company recorded total pretax costs of $ 148 million and $ 105 million in the first quarter of 2026 and 2025, respectively, related to the 2024 Restructuring Program.

Since inception of the 2024 Restructuring Program through March 31, 2026, Merck has incurred total cumulative pretax costs of $ 1.8 billion.

The Company recorded total pretax costs of $ 162 million and $ 130 million in the second quarter of 2026 and 2025, respectively, and $ 310 million and $ 235 million in the first six months of 2026 and 2025, respectively, related to the 2024 Restructuring Program.

Since inception of the 2024 Restructuring Program through June 30, 2026, Merck has incurred total cumulative pretax costs of $ 1.9 billion.

For segment reporting, restructuring charges are unallocated expenses.

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

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

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026 Six Months Ended June 30, 2026

($ in millions) Accelerated Depreciation

1 unchanged sentence

Other Exit Costs

Total Accelerated

Separation Costs

Other Exit Costs

2025 Restructuring Program

7 unchanged sentences

39 ( 1 ) 124 162 135 ( 1 ) 176 310

Three Months Ended March 31, 2025

$ 115 $ 62 $ 157 $ 334 $ 223 $ 185 $ 392 $ 800

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

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

($ in millions) Accelerated Depreciation

1 unchanged sentence

Other Exit Costs

Total Accelerated

Separation Costs

Other Exit Costs

2025 Restructuring Program

Cost of sales $ — $ — $ 100 $ 100 $ — $ — $ 100 $ 100

Research and development — — 53 53 — — 53 53

Restructuring costs — 481 15 496 — 481 15 496

— 481 168 649 — 481 168 649

2024 Restructuring Program

Cost of sales 55 — 10 65 96 — 5 101

Selling, general and administrative — — 1 1 — — 1 1

Restructuring costs — 6 58 64 — 7 126 133

55 6 69 130 96 7 132 235

$ 55 $ 487 $ 237 $ 779 $ 96 $ 488 $ 300 $ 884

Accelerated depreciation costs primarily relate to manufacturing, research, and administrative facilities to be fully or partially closed or divested, and equipment to be disposed of, as part of the programs.

Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions.

All the sites will continue to operate up through the respective closure dates and, since future undiscounted cash flows are sufficient to recover the respective book values, Merck is recording accelerated depreciation over the revised useful life of the site assets.

All the sites will continue to operate up through the respective closure dates and, because future undiscounted cash flows are sufficient to recover the respective book values, Merck is recording accelerated depreciation over the revised useful life of the site assets.

Anticipated site closure dates, particularly related to manufacturing locations, have been and may continue to be adjusted to reflect changes resulting from regulatory or other factors.

2 unchanged sentences

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 three months ended March 31, 2026:

The following table summarizes the charges and spending related to restructuring program activities for the six months ended June 30, 2026:

($ in millions) Accelerated Depreciation

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Non-cash activity ( 88 ) ( 9 ) ( 145 ) ( 242 )

Restructuring reserves March 31, 2026

Restructuring reserves June 30, 2026

$ — $ 408 $ 148 $ 556

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Non-cash activity ( 135 ) 12 ( 55 ) ( 178 )

Restructuring reserves March 31, 2026

Restructuring reserves June 30, 2026

$ — $ 408 $ — $ 408

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

Financial Instruments

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The objectives of and accounting related to the Company’s foreign currency risk management program, as well as its interest rate risk management activities are discussed below.

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

Foreign Currency Risk Management

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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 first quarter of either 2026 or 2025.

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

In the second quarter of 2026, the Company implemented a non-qualified deferred compensation hedging program to reduce earnings volatility associated with certain deferred compensation obligations.

The Company utilizes total return swap contracts, which are not designated as hedges, to economically offset changes in the fair value of the related liabilities and the associated compensation expense.

The Company also uses forward exchange contracts to hedge a portion of its net investment in foreign operations against movements in foreign exchange rates.

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

Three Months Ended March 31, Three Months Ended March 31,

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

($ in millions) 2026 2025 2026 2025 2026 2025 2026 2025

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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 March 31, 2026, the Company was a party to ten 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.

March 31, 2026

At June 30, 2026, the Company was a party to ten 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, 2026

($ 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 February 2026, the Company entered into two forward starting swaps, each with a notional amount of $ 250 million.

In July 2026, the Company entered into an additional interest rate swap contract with a notional amount of $ 250 million related to its 5.20 % notes due 2036.

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)

March 31, 2026 December 31, 2025 March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025 June 30, 2026 December 31, 2025

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:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Fair Value of Derivative U.S.

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$ 31 $ — $ 1,750 $ 71 $ — $ 1,750

Interest rate contracts

8 — 500 — — —

Interest rate swap contracts Other Noncurrent Liabilities — 5 750 — — —

Foreign exchange contracts Other current assets 282 — 8,357 113 — 6,430

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Derivatives Not Designated as Hedging Instruments Balance Sheet Caption

Total return swap contracts Other current assets $ 8 $ — $ 486 $ — $ — $ —

Total return swap contracts Accrued and other current liabilities — 1 117 — — —

Foreign exchange contracts Other current assets 203 — 9,839 107 — 11,643

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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:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

($ in millions) Asset Liability Asset Liability

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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 March 31,

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

($ in millions) 2026 2025 2026 2025 2026 2025 2026 2025 2026 2025 2026 2025

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Hedges are Recorded Sales Other (income) expense, net (1)

Other comprehensive income (loss) Sales Other (income) expense, net (1)

Other comprehensive income (loss)

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— — ( 1 ) — — — — — ( 2 ) ( 1 ) — —

Amount of gain recognized in OCI on derivatives

Amount of gain (loss) recognized in OCI on derivatives

— — — — 19 — — — — — 26 ( 1 )

(1) Interest expense is a component of Other (income) expense, net.

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Amount of Derivative Pretax Loss (Gain) Recognized in Income

Three Months Ended March 31,

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

($ in millions) 2026 2025 2026 2025

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Foreign exchange contracts (2)

Sales 7 17 20 34

Total return swap contracts (3)

Selling, general and administrative ( 7 ) — ( 7 ) —

(1) These derivative contracts primarily mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

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

At March 31, 2026, the Company estimates $ 69 million of pretax net unrealized gains 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 .

(3) These derivative contracts are utilized to offset changes in the fair value of certain deferred compensation.

At June 30, 2026, the Company estimates $ 152 million of pretax net unrealized gains 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:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Cost Gross Unrealized Fair

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Commercial paper $ 292 $ — $ — $ 292 $ — $ — $ — $ —

government and agency securities 100 — — 100 100 — — 100

Foreign government bonds

— — — — 1 — — 1

government and agency securities — — — — 100 — — 100

Total debt securities $ 292 $ — $ — $ 292 $ 101 $ — $ — $ 101

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Total debt and publicly traded equity securities $ 1,566 $ 1,493

(1) Unrealized net gains of $ 126 million were recorded in Other (income) expense, net in the first quarter of 2026 on equity securities still held at March 31, 2026.

Unrealized net gains of $ 115 million were recorded in Other (income) expense, net in the first quarter of 2025 on equity securities still held at March 31, 2025.

At March 31, 2026 and March 31, 2025, the Company also had $ 881 million and $ 872 million, respectively, of equity investments without readily determinable fair values included in Other Assets .

(1) Unrealized net losses of $ 41 million and unrealized net gains of $ 86 million were recorded in Other (income) expense, net in the second quarter and first six months of 2026, respectively, on equity securities still held at June 30, 2026.

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.

At June 30, 2026 and June 30, 2025, the Company also had $ 851 million and $ 870 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 quarter of 2026 , the Company recorded unrealized gains of $ 35 million related to certain of these equity investments still held at March 31, 2026.

During the first quarter of 2025 , the Company recorded unrealized losses of $ 11 million related to certain of these equity investments still held at March 31, 2025.

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 March 31, 2026 were $ 320 million and $ 164 million, respectively.

At March 31, 2026 and March 31, 2025, the Company also had $ 229 million and $ 249 million, respectively, recorded in Other Assets for equity securities held through ownership interests in investment funds.

(Gains) losses recorded in Other (income) expense, net relating to these investment funds were $( 3 ) million and $ 23 million for the first quarter of 2026 and 2025, respectively.

During the first six months of 2026 , the Company recorded unrealized gains of $ 111 million and unrealized losses of $ 30 million related to certain of these equity investments still held at June 30, 2026.

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.

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, 2026 were $ 395 million and $ 172 million, respectively.

At June 30, 2026 and June 30, 2025, the Company also had $ 248 million and $ 221 million, respectively, recorded in Other Assets for equity securities held through ownership interests in investment funds.

(Gains) losses recorded in Other (income) expense, net relating to these investment funds were $( 10 ) million and $ 27 million for the second quarter of 2026 and 2025, respectively, and were $( 13 ) million and $ 50 million for the first six months of 2026 and 2025, respectively.

Fair Value Measurements

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Level 3 - Unobservable inputs that are supported by little or no market activity.

Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation.

Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant

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

unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

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

($ in millions) March 31, 2026 December 31, 2025

($ in millions) June 30, 2026 December 31, 2025

Commercial paper $ — $ 292 $ — $ 292 $ — $ — $ — $ —

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Purchased currency options — 194 — 194 — 84 — 84

Interest rate swaps

— 58 — 58 — 71 — 71

Interest rate contracts

— 8 — 8 — — — —

Interest rate swap contracts — 31 — 31 — 71 — 71

Total return swap contracts — 8 — 8 — — — —

— 569 — 569 — 323 — 323

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Written currency options — 14 — 14 — 31 — 31

Interest rate swap contracts — 5 — 5 — — — —

Total return swap contracts — 1 — 1 — — — —

Total liabilities $ — $ 252 $ — $ 252 $ — $ 324 $ — $ 324

(1) Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.

(2) Balance at March 31, 2026 includes securities with a fair value of $ 17 million that are subject to a contractual sale restriction that expires in July 2026, and securities with a fair value of $ 18 million that are subject to a contractual sale restriction that expires in August 2026.

(2) Balance at June 30, 2026 includes securities with a fair value of $ 31 million that are subject to a contractual sale restriction that expired in July 2026, and securities with a fair value of $ 22 million that are subject to a contractual sale restriction that expires in August 2026.

(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 March 31, 2026 and December 31, 2025, Cash and cash equivalents included $ 4.4 billion and $ 13.8 billion of cash equivalents, respectively (which would be considered Level 2 in the fair value hierarchy).

As of June 30, 2026 and December 31, 2025, Cash and cash equivalents included $ 5.9 billion and $ 13.8 billion of cash equivalents, respectively (which would be considered Level 2 in the fair value hierarchy).

Other Fair Value Measurements

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 March 31, 2026, was $ 44.7 billion compared with a carrying value of $ 49.1 billion and at December 31, 2025, was $ 45.6 billion compared with a carrying value of $ 49.3 billion.

The estimated fair value of loans payable and long-term debt (including current portion) at June 30, 2026, was $ 49.9 billion compared with a carrying value of $ 53.9 billion and at December 31, 2025, was $ 45.6 billion compared with a carrying value of $ 49.3 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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The Company has accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable.

The Company factored $ 1.6 billion of accounts receivable as of both March 31, 2026 and December 31, 2025 under these factoring arrangements, which reduced outstanding accounts receivable.

The Company factored $ 1.6 billion of accounts receivable as of both June 30, 2026 and December 31,

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

2025 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 March 31, 2026 and

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

December 31, 2025, the Company had collected $ 39 million and $ 45 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 June 30, 2026 and December 31, 2025, the Company had collected $ 41 million and $ 45 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 received by the Company from various counterparties was $ 89 million and $ 1 million at March 31, 2026 and December 31, 2025, respectively.

Cash collateral received by the Company from various counterparties was $ 154 million and $ 1 million at June 30, 2026 and December 31, 2025, respectively.

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

Inventories consisted of:

($ in millions) March 31, 2026 December 31, 2025

($ in millions) June 30, 2026 December 31, 2025

Finished goods $ 2,186 $ 2,275

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

At March 31, 2026 and December 31, 2025, these amounts included $ 5.8 billion and $ 5.5 billion, respectively, of inventories not expected to be sold within one year.

In addition, these amounts included $ 360 million and $ 211 million at March 31, 2026 and December 31, 2025, respectively, of inventories produced in preparation for product launches.

Loans Payable

In April 2026, Merck entered into a delayed draw term loan credit agreement (Credit Agreement) pursuant to which the lenders have committed (subject to satisfaction of certain conditions set forth in the Credit Agreement) to provide Merck with financing under a 364-day term loan facility in an aggregate amount not to exceed $ 6.0 billion.

Borrowings under the Credit Agreement will bear interest at an annual rate of the SOFR rate plus 0.50 % from the date loans are borrowed (Funding Date) to the date that is 180 days from the Funding Date, and then the SOFR rate plus 0.75 % thereafter.

The Company has given required notice to the lenders of its intention to draw down the $ 6.0 billion of funds under the facility, which will be used to fund a portion of the approximately $ 6.7 billion cash consideration for the acquisition of Terns.

The Company intends to use the proceeds from a long-term debt financing to repay borrowings under the Credit Agreement.

At June 30, 2026 and December 31, 2025, these amounts included $ 5.9 billion and $ 5.5 billion, respectively, of inventories not expected to be sold within one year.

In addition, these amounts included $ 490 million and $ 211 million at June 30, 2026 and December 31, 2025, respectively, of inventories produced in preparation for product launches.

Loans Payable and Long-Term Debt

In April 2026, Merck entered into a delayed draw term loan credit agreement (Credit Agreement) pursuant to which the lenders committed (subject to satisfaction of certain conditions set forth in the Credit Agreement) to provide Merck with financing under a 364-day term loan facility in an aggregate amount not to exceed $ 6.0 billion.

The Company drew down the full $ 6.0 billion of funds under the facility to fund a portion of the approximately $ 6.8 billion cash consideration for the acquisition of Terns.

The Company has since repaid borrowings under the Credit Agreement.

In May 2026, the Company issued $ 6.0 billion aggregate principal amount of senior unsecured notes consisting of $ 500 million of floating rate notes due 2028, $ 1.0 billion of 4.30 % notes due 2028, $ 500 million of 4.65 % notes due 2031, $ 1.0 billion of 4.95 % notes due 2033, $ 1.5 billion of 5.20 % notes due 2036, $ 500 million of 5.75 % notes due 2046, and $ 1.0 billion of 5.85 % notes due 2056.

The Company used the net proceeds from the offering to repay borrowings under the Credit Agreement as noted above.

Contingencies

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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 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.

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

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

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Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

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

The Company’s decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made.

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

As of March 31, 2026, approximately 735 cases were pending against Merck in various state courts.

As of June 30, 2026, approximately 800 cases were pending against Merck in various state courts.

The Company was recently the defendant in a trial in Chicago, Illinois, in which it was found to be not liable for the plaintiff’s mesothelioma.

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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 March 31, 2026, 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.

In August 2022, the U.S.

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In February 2024, the multidistrict litigation ( Gardasil MDL) was reassigned to Judge Kenneth D.

On March 11, 2025, the court granted Merck’s motion for summary judgment in 16 bellwether cases on implied preemption grounds;

plaintiffs have appealed to the Fourth Circuit.

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

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

Plaintiff claims that she suffers from POTS and fibromyalgia as a result of her Gardasil vaccinations.

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 been adjourned until a new trial date of July 27, 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 March 2025, the court granted Merck’s motion for summary judgment in 16 bellwether cases on implied preemption grounds;

plaintiffs appealed to the Fourth Circuit.

As previously disclosed, 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.

The 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.

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

Those conditions in the agreement have been met and the agreement is now final.

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

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The Company is cooperating with the investigation.

As previously disclosed, in June 2024, Merck received a CID from the DOJ, pursuant to a False Claims Act investigation, seeking documents and materials related to Steglatro , Januvia and certain related drugs.

As previously disclosed, in June 2024, Merck received a CID from the DOJ, pursuant to a False Claims Act investigation, seeking documents and materials related to Steglatro (ertugliflozin), Januvia (sitagliptin) and certain related drugs.

The CID states that it is investigating Merck’s price reporting under the Medicaid Drug Rebate Program as well as compliance with anti-kickback requirements in connection with patient assistance programs.

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The Company’s policy is to cooperate with these authorities and to provide responses as appropriate.

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

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 similar matters.

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.

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Defendants filed a motion to dismiss on May 1, 2026.

The opposition brief is due June 30, 2026 and the reply brief is due August 14, 2026.

The opposition brief was filed on June 30, 2026.

The reply brief is due on August 14, 2026.

As previously disclosed, various derivative lawsuits were filed in New Jersey state and federal court against certain current and former Merck officers and board members.

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RotaTeq Antitrust Litigation

As previously disclosed, in March 2023, the Mayor and City Council of Baltimore filed a putative class action against MSD in the Eastern District of Pennsylvania on behalf of all third-party payers in states that indirectly purchased, paid, and/or provided reimbursement for some or all of the purchase price of RotaTeq (Rotavirus Vaccine, Live Oral, Pentavalent), other than for resale, from March 3, 2019 to the present.

Plaintiff alleges that MSD violated federal and state antitrust laws and state consumer protection laws.

Plaintiff alleges that MSD has implemented an anticompetitive vaccine bundling scheme whereby MSD leverages its alleged monopoly power in certain pediatric vaccine markets to maintain its alleged monopoly power in the U.S.

As previously disclosed, in March 2023, the Mayor and City Council of Baltimore filed a putative class action against Merck in the Eastern District of Pennsylvania on behalf of all third-party payers in states that indirectly purchased, paid, and/or provided reimbursement for some or all of the purchase price of RotaTeq (Rotavirus Vaccine, Live Oral, Pentavalent), other than for resale, from March 3, 2019 to the present.

Plaintiff alleges that Merck violated federal and state antitrust laws and state consumer protection laws.

Plaintiff alleges that Merck has implemented an anticompetitive vaccine bundling scheme whereby Merck leverages its alleged monopoly power in certain pediatric vaccine markets to maintain its alleged monopoly power in the U.S.

market for rotavirus vaccines in order to charge supracompetitive prices for RotaTeq .

Plaintiff seeks permanent injunctive relief and unspecified monetary damages on purchases of RotaTeq , trebled, and fees and costs.

In May 2023, MSD moved to dismiss the complaint.

In May 2023, Merck moved to dismiss the complaint.

In November 2023, the court granted in part and denied in part the motion to dismiss, dismissing plaintiff’s Idaho and Utah consumer law claims and allowing all other claims to proceed.

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In addition to these matters, the Company may be involved in other litigation involving its intellectual property and intellectual property owned or licensed by other companies.

Bridion — As previously disclosed, between January and November 2020, the Company received multiple Paragraph IV Certification Letters under the Hatch-Waxman Act notifying the Company that generic drug companies had filed applications to the FDA seeking pre-patent expiry approval to sell generic versions of Bridion (sugammadex) Injection.

In March, April and December 2020, the Company filed patent infringement lawsuits against those generic companies.

The defendants in the New Jersey action referred to below 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.

As previously disclosed, in June 2023, the U.S.

District Court for the District of New Jersey ruled in Merck’s favor.

The court held that Merck’s calculation of PTE for the sugammadex patent covering the compound is not invalid and that the U.S.

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

Patent & Trademark Office correctly granted a full five-year extension.

Also in June 2023, the U.S.

District Court for the District of New Jersey issued a final judgment prohibiting the FDA from approving any of the pending or tentatively approved generic applications until January 27, 2026, except for any subsequent agreements between defendants and Merck or further order by the court.

In March 2025, the Federal Circuit affirmed the district court’s decision, holding that the patent term extension granted to the sugammadex patent covering Bridion was not invalid and that the patent is entitled to its full five-year patent term extension.

In addition, the FDA has now granted Bridion six months of pediatric exclusivity.

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 which has been granted) or earlier under certain circumstances.

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

through July 27, 2026.

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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However, Januvia , Janumet , and Janumet XR contain sitagliptin phosphate monohydrate and the Company has another patent covering certain phosphate salt and polymorphic forms of sitagliptin that expires in May 2027, including pediatric exclusivity (salt/polymorph patent).

As previously disclosed, beginning in 2019, a number of generic drug companies filed ANDAs seeking approval of generic forms of Januvia and Janumet along with Paragraph IV certifications challenging the validity of the salt/polymorph patent.

The Company has settled with over two dozen generic companies providing that these generic companies can bring their generic versions of Januvia and Janumet to the market in the U.S.

in May 2026, and their generic versions of Janumet XR to the market in July 2026 or earlier under certain circumstances.

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, Januvia and Janumet will lose market exclusivity in the U.S.

in May 2026 and Janumet XR will lose market exclusivity in the U.S.

in July 2026 , although the FDA has approved a non-automatically substitutable form of sitagliptin that differs from the form in the Company’s sitagliptin products .

In March 2024, the Company received another Paragraph IV Certification Letter under the Hatch-Waxman Act from Azurity Pharmaceuticals, Inc.

(Azurity) asserting that a different sitagliptin product subject to its ANDA does not infringe the salt/polymorph patent.

In May 2024, Merck filed a civil action in the U.S.

District Court of Delaware alleging infringement.

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.

Supplementary Protection Certificates (SPCs) for Janumet expired in April 2023 for the majority of European countries.

Prior to expiration, generic companies sought revocation of the Janumet SPCs in a number of European countries.

In February 2022, a Finnish court referred certain questions to the Court of Justice of the European Union that could impact the validity of the Janumet SPCs in Europe.

A decision rendered in December 2024 provides guidance on points of law and does not directly apply to the Janumet SPCs.

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, 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.

In October 2023, the Company filed a patent infringement lawsuit against Sawai Pharmaceuticals Co., Ltd.

(Sawai) and Medisa Shinyaku Co., Ltd (collectively, Defendants) in the Tokyo District Court seeking an injunction to stop the manufacture, sale and offer for sale of the Defendants’ sitagliptin dihydrogen phosphate product, while the Company’s patents and patent term extensions are in force.

The lawsuit is in response to the Defendants’ application for marketing authorization to sell a generic sitagliptin dihydrogen phosphate product, in the anhydride form, which was approved in August 2023.

Merck asserts that the Defendants’ activity infringes a patent term extension associated with Merck’s patent directed to the sitagliptin compound patent.

In January 2026, the Tokyo District Court orally indicated its view that the extended patent covers Sawai’s tablets.

Following this, Sawai conceded to all of the Company’s claims;

thus, the case was concluded without a written decision.

The relevant PTE for Januvia in Japan expired on March 30, 2026.

As a result of settlement agreements with generic drug companies related to the later expiring 2027 salt/polymorph patent directed to the specific sitagliptin salt form of the products, Januvia and Janumet lost market exclusivity in the U.S.

in May 2026 and Janumet XR lost market exclusivity in the U.S.

in July 2026.

Keytruda — As previously disclosed, in November 2022, the Company filed a complaint against The Johns Hopkins University (JHU) in the U.S.

District Court of Maryland.

This action concerns a joint research collaboration between Merck and JHU regarding the use of Keytruda in certain indications.

This action concerns a joint research collaboration between Merck and

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

JHU regarding the use of Keytruda in certain indications.

Merck and JHU partnered to design and conduct a clinical study administering Keytruda to cancer patients having tumors that had the genetic biomarker known as microsatellite instability-high (MSI-H) (the Joint Clinical Study).

5 unchanged sentences

patents, including a demand for damages.

Between November 30, 2023, and March 13, 2024, the Company filed inter partes review petitions with the U.S.

Between November 30, 2023, and March 13, 2024, the Company filed inter partes review (IPR) petitions with the U.S.

Patent Office’s Patent Trial and Appeal Board (PTAB), challenging the patentability of all nine patents asserted in the district court.

Between June 2024 and October 2024, the PTAB instituted a review of all nine challenged patents.

In June 2024,

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

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.

As previously disclosed, between June and November 2025, the PTAB issued Final Written Decisions finding all challenged claims of the nine patents unpatentable.

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.

As previously disclosed, between June and November 2025, the PTAB issued Final Written Decisions (FWDs) finding all challenged claims of the nine patents unpatentable.

JHU has filed notices of appeal to the Federal Circuit Court of Appeals.

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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.

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

Since then, the PTAB also instituted 13 additional petitions.

An institution decision on one additional patent in the MDASE portfolio is still pending.

In June 2025, the PTAB instituted the first petition filed by the Company, and in the following months instituted 13 additional petitions.

The PTAB has since issued FWDs regarding four of the instituted PGR petitions finding every challenged claim unpatentable.

Director Review requests filed by Halozyme to date have been denied.

Separately, the PTAB denied institution of one PGR petition against a patent not asserted by Halozyme in the district court litigation discussed below due to discretionary and non-merit considerations.

In April 2025, Halozyme filed a complaint in the U.S.

District Court for the District of New Jersey alleging that the Company’s activities related to subcutaneous pembrolizumab infringe or will infringe 15 patents belonging to the MDASE portfolio, 12 of which are the subject of the Company’s already filed PGR petitions.

The Company believes the three patents not challenged via PGR petitions are invalid and suffer from at least the same defects as the patents currently being challenged by the PGR process.

In March 2026, the Company filed inter partes review (IPR) petitions against those three patents.

The Company expects that the U.S.

Patent and Trademark Office will issue an institution decision on these IPR petitions by late-September 2026.

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

2 797 622 (the ‘622 patent) owned by Halozyme in the UK, France, Germany and The Netherlands.

Halozyme 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.

District Court for the District of New Jersey alleging that the Company’s activities related to subcutaneous pembrolizumab infringe or will infringe 15 patents belonging to the MDASE portfolio, all of which are the subject of either the Company’s already filed PGR petitions or separately filed IPR petitions.

Institution decisions regarding the IPR petitions are pending.

The Company believes the three patents challenged via IPR petitions are invalid and suffer from at least the same defects as the patents currently being challenged by the PGR process.

Between August and June 2026, the Company filed revocation actions against EP Patent No.

2 797 622 (the ‘622 patent) owned by Halozyme in the UK, France, Germany, The Netherlands, Denmark, Sweden, and Switzerland.

Halozyme counterclaimed for an injunction in the UK under the ‘622 patent as well as EP Patent No.

3 130 347 (the ‘347 patent) but have undertaken not to enforce any injunction there until the validity of both patents, which is in dispute, is finally determined.

In May 2026, Halozyme consented to revocation of the ‘622 patent in the UK.

In October 2025, the Company accepted service of a preliminary injunction filed by Halozyme under the ‘622 patent in Germany.

Following a one day hearing in December 2025, a preliminary injunction was awarded against the Company, prohibiting sales in Germany.

The Company has appealed the preliminary injunction decision and expects a decision on the appeal in the second or third quarter of 2026.

The Company has appealed the preliminary injunction decision, and the appeal hearing is set for November 19, 2026.

In the Dutch action, in February 2026, Halozyme counterclaimed for infringement including also Belgium, Denmark, France, Ireland, Italy, Sweden and Switzerland.

The Dutch action will be heard at the end of July 2026 with a decision expected within three months thereof.

The Dutch action was heard at the end of July 2026 with a decision expected within three months thereof.

Lenvima — As previously disclosed, between 2019 and 2024, Eisai Inc (Eisai) received Paragraph IV Certification Letters under the Hatch-Waxman Act, providing notice that Sun Pharmaceuticals (Sun), Shilpa Medicare Ltd.

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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.

have filed separate applications to the FDA seeking pre-patent expiry approval to sell generic versions of Lynparza (olaparib) tablet.

have filed separate applications to the FDA seeking pre-patent expiry approval to sell generic versions of Lynparza (olaparib) tablets.

Between February 2023 and January 2025, AstraZeneca and the Company filed a series of patent infringement lawsuits in the U.S.

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Thus, the earliest date the FDA can approve any of the currently pending generic applications is September 2027.

All cases have been consolidated and a trial is now expected in early 2027.

All cases have been consolidated and are awaiting a trial date.

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

On June 12, 2026, AstraZeneca and the Company received a second Paragraph IV notice from Cipla stating that it is seeking pre-patent expiry approval to sell generic versions of Lynparza tablets based on a second ANDA filing and asserting that certain patents covering Lynparza are invalid or will not be infringed.

The Company and AstraZeneca filed a patent infringement lawsuit in the U.S.

District Court for the District of New Jersey in July 2026 asserting a number of Orange-Book listed patents.

The FDA will stay approval of Cipla’s second ANDA for 30 months from the date of the Paragraph IV notice unless an adverse court decision is received earlier than that date.

Capvaxive — As previously disclosed, in September 2025, Pogona, LLC filed a complaint in the U.S.

3 unchanged sentences

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

On January 26, 2026, the Company filed an inter-partes review petition with the U.S.

Patent Trial and Appeal Board, challenging the validity of Pogona’s ‘757 patent, which is currently pending.

On January 26, 2026, the Company filed an IPR petition with the PTAB, challenging the validity of Pogona’s ‘757 patent.

That petition was denied institution for discretionary and non-merits based reasons.

The Company, however, has filed a motion requesting to join an already instituted IPR proceeding filed by a third party.

The Company has filed a motion to stay the district court proceedings pending the outcome of the third party IPR petition.

Other Litigation

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While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial condition, results of operations or cash flows either individually or in the aggregate.

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

Legal Defense Reserves

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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 March 31, 2026 and December 31, 2025 of approximately $ 270 million and $ 245 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 June 30, 2026 and December 31, 2025 of approximately $ 275 million and $ 245 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 March 31,

Three Months Ended June 30,

Common Stock Other

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

Balance at January 1, 2025

Balance at April 1, 2025

3,577 $ 1,788 $ 44,816 $ 66,097 $ ( 4,965 ) 1,061 $ ( 59,401 ) $ 65 $ 48,400

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Net income attributable to noncontrolling interests — — — — — — — 1 1

Balance at March 31, 2025 3,577 $ 1,788 $ 44,816 $ 66,097 $ ( 4,965 ) 1,061 $ ( 59,401 ) $ 65 $ 48,400

Balance at January 1, 2026

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

Balance at April 1, 2026

3,577 $ 1,788 $ 45,176 $ 66,721 $ ( 4,060 ) 1,107 $ ( 63,747 ) $ 53 $ 45,931

9 unchanged sentences

— — — — — — — ( 2 ) ( 2 )

Balance at March 31, 2026 3,577 $ 1,788 $ 45,176 $ 66,721 $ ( 4,060 ) 1,107 $ ( 63,747 ) $ 53 $ 45,931

Balance at June 30, 2026 3,577 $ 1,788 $ 44,950 $ 63,269 $ ( 3,942 ) 1,108 $ ( 64,132 ) $ 51 $ 41,984

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

Six Months Ended June 30,

Common Stock Other

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Non-

Interests Total

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

Balance at January 1, 2025

3,577 $ 1,788 $ 44,704 $ 63,069 $ ( 4,945 ) 1,049 $ ( 58,303 ) $ 59 $ 46,372

Net income attributable to Merck & Co., Inc.

— — — 9,506 — — — — 9,506

Other comprehensive loss, net of taxes — — — — ( 476 ) — — — ( 476 )

Cash dividends declared on common stock ($ 1.62 per share)

— — — ( 4,098 ) — — — — ( 4,098 )

Treasury stock shares purchased — — — — — 29 ( 2,509 ) — ( 2,509 )

Share-based compensation plans and other — — ( 60 ) — — ( 4 ) 317 — 257

Net income attributable to noncontrolling interests — — — — — — — 8 8

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

Balance at January 1, 2026

3,577 $ 1,788 $ 45,029 $ 73,075 $ ( 4,287 ) 1,102 $ ( 62,999 ) $ 56 $ 52,662

Net loss attributable to Merck & Co., Inc.

— — — ( 5,575 ) — — — — ( 5,575 )

Other comprehensive income, net of taxes — — — — 345 — — — 345

Cash dividends declared on common stock ($ 1.70 per share)

— — — ( 4,231 ) — — — — ( 4,231 )

Treasury stock shares purchased — — — — — 14 ( 1,637 ) — ( 1,637 )

Share-based compensation plans and other — — ( 79 ) — — ( 8 ) 504 — 425

Net loss attributable to noncontrolling interests — — — — — — — ( 5 ) ( 5 )

Balance at June 30, 2026 3,577 $ 1,788 $ 44,950 $ 63,269 $ ( 3,942 ) 1,108 $ ( 64,132 ) $ 51 $ 41,984

Pension and Other Postretirement Benefit Plans

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

($ in millions) U.S.

International U.S.

International

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$ 65 $ ( 35 ) $ 34 $ ( 19 ) $ 129 $ ( 56 ) $ 67 $ ( 38 )

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

The Company provides medical benefits, principally to its eligible U.S.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

4 unchanged sentences

Net gain amortization ( 8 ) ( 10 ) ( 15 ) ( 20 )

Terminations benefits

Termination benefits — — 1 —

$ ( 4 ) $ ( 8 ) $ ( 6 ) $ ( 16 )

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

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

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

($ in millions) 2026 2025 2026 2025

9 unchanged sentences

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.

Interest paid for the three months ended March 31, 2026 and 2025 was $ 342 million and $ 233 million, respectively.

The income tax provision of $ 709 million for the first quarter of 2026 on a pretax loss of $ 3.5 billion, resulted in an effective income tax rate of ( 20.1 )%.

The first quarter 2026 effective income tax rate reflects a 33.1 percentage point unfavorable impact of the charge for the acquisition of Cidara, which had no tax benefit, partially offset by the favorable impacts of jurisdictional mix of income and expense.

The effective income tax rate of 13.9 % for the first quarter of 2025 reflects the favorable impacts of jurisdictional mix of income and expense, as well as certain discrete items.

Interest paid for the six months ended June 30, 2026 and 2025 was $ 996 million and $ 616 million, respectively.

The income tax provision of $ 654 million for the second quarter of 2026 on a pretax loss of $ 683 million, resulted in an effective income tax rate of ( 95.9 )%.

The second quarter 2026 effective income tax rate reflects a 108.9 percentage point unfavorable impact of the charge for the acquisition of Terns, which had no tax benefit, partially offset by the favorable impacts of jurisdictional mix of income and expense.

The income tax provision of $ 1.4 billion for the first six months of 2026 on a pretax loss of $ 4.2 billion, resulted in an effective income tax rate of ( 32.3 )%.

The effective income tax rate for the first six months of 2026 reflects a 45.3 percentage point combined unfavorable impact of the charges for the acquisitions of Cidara and Terns, which had no tax benefits, partially offset by the favorable impacts of jurisdictional mix of income and expense.

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 reserve adjustments.

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

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.

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These amounts are exclusive of any interest that may be due.

The Company disagrees with the proposed adjustments and will vigorously contest the NOPAs through all available administrative and, if necessary, judicial proceedings.

It may take a number of years to reach resolution of this matter.

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

The Company disagrees with the proposed adjustments and is vigorously contesting the NOPAs through available administrative proceedings.

However, it remains uncertain whether a resolution can be reached during this phase of the audit, and judicial proceedings may be necessary.

If the Company is ultimately unsuccessful in resolving or 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.

1 unchanged sentence

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

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

(Loss) Earnings Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

($ and shares in millions except per share amounts) 2026 2025 2026 2025

11 unchanged sentences

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

The Company recorded a net loss for the first quarter of 2026;

therefore, no potential dilutive common shares were used in the computation of loss per common share assuming dilution because the effect would have been antidilutive.

For the first quarter of 2025, 10 million of common shares issuable under share-based compensation plans were excluded from the computation of earnings per common share assuming dilution because the effect would have been antidilutive.

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

The Company recorded a net loss for both the second quarter and first six months of 2026;

therefore, no potential dilutive common shares were used in the computations of loss per common share assuming dilution because the effects would have been antidilutive.

For the second quarter and first six months of 2025, 19 million and 12 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 effects would have been antidilutive.

Other Comprehensive Income (Loss)

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

Three Months Ended March 31,

Three Months Ended June 30,

($ in millions) Derivatives Employee

2 unchanged sentences

Comprehensive

Balance April 1, 2025, net of taxes

$ 25 $ ( 2,345 ) $ ( 2,645 ) $ ( 4,965 )

Other comprehensive income (loss) before reclassification adjustments, pretax ( 542 ) ( 1 ) 134 ( 409 )

Tax 114 ( 1 ) ( 172 ) ( 59 )

Other comprehensive income (loss) before reclassification adjustments, net of taxes ( 428 ) ( 2 ) ( 38 ) ( 468 )

Reclassification adjustments, pretax 23 (1)

Tax ( 5 ) 2 — ( 3 )

Reclassification adjustments, net of taxes 18

Other comprehensive income (loss), net of taxes ( 410 ) ( 8 ) ( 38 ) ( 456 )

Balance June 30, 2025, net of taxes

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

Balance April 1, 2026, net of taxes

$ 111 $ ( 1,494 ) $ ( 2,677 ) $ ( 4,060 )

Other comprehensive income (loss) before reclassification adjustments, pretax 41 1 56 98

Tax ( 9 ) — ( 21 ) ( 30 )

Other comprehensive income (loss) before reclassification adjustments, net of taxes 32 1 35 68

Reclassification adjustments, pretax 54 (1)

Tax ( 11 ) 1 — ( 10 )

Reclassification adjustments, net of taxes 43

Other comprehensive income (loss), net of taxes 75 8 35 118

Balance June 30, 2026, net of taxes

$ 186 $ ( 1,486 ) $ ( 2,642 ) $ ( 3,942 )

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

Six Months Ended June 30,

($ in millions) Derivatives Employee

Plans Foreign Currency

Adjustment Accumulated Other

Comprehensive

Balance January 1, 2025, net of taxes

7 unchanged sentences

Other comprehensive income (loss), net of taxes ( 627 ) ( 26 ) 177 ( 476 )

Balance March 31, 2025, net of taxes

Balance June 30, 2025, net of taxes

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

8 unchanged sentences

Other comprehensive income (loss), net of taxes 291 13 41 345

Balance March 31, 2026, net of taxes

Balance June 30, 2026, net of taxes

$ 186 $ ( 1,486 ) $ ( 2,642 ) $ ( 3,942 )

7 unchanged sentences

Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines.

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

The Company sells these human health vaccines primarily to physicians, wholesalers, distributors and government entities.

2 unchanged sentences

Additionally, the Company sells vaccines to the Federal government for placement into vaccine stockpiles.

As a result of changes to the Company’s internal reporting structure, certain costs (including IT related costs) that were previously included in the Pharmaceutical segment are now being included as part of non-segment unallocated expenses within corporate support functions.

Prior period Pharmaceutical segment profits have been recast to reflect these changes on a comparable basis.

The Animal Health segment discovers, develops, manufactures and markets a wide range of veterinary pharmaceutical and vaccine products, as well as health management solutions and services, for the prevention, treatment and control of disease in all major livestock and companion animal species.

1 unchanged sentence

The Company sells its products to veterinarians, distributors, animal producers, farmers and pet owners.

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

Sales of the Company’s products were as follows:

Three Months Ended March 31,

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

2026 2025 2026 2025

($ in millions) U.S.

Int’l Total U.S.

Pharmaceutical:

1 unchanged sentence

Keytruda Qlex 395 68 463 — — — 501 89 590 — — —

106 21 128 — — —

Alliance revenue-Lynparza (1)

9 unchanged sentences

438 154 592 481 128 609 847 283 1,130 903 245 1,148

RotaTeq 165 42 206 164 64 228

Vaxneuvance 69 80 148 136 93 229 192 158 350 275 184 459

118 23 142 106 1 107

RotaTeq 84 50 134 60 61 121 249 91 340 225 125 349

Capvaxive 138 45 184 129 — 129 256 69 325 235 1 236

Cardiometabolic and Respiratory

477 48 525 268 12 280

131 — 131 — — —

Winrevair 522 66 588 323 12 336 999 114 1,114 591 24 615

Ohtuvayre 204 — 204 — — — 335 — 335 — — —

Alliance revenue-Adempas/Verquvo (3)

4 unchanged sentences

Prevymis 147 148 295 115 113 228 282 285 568 217 219 436

Delstrigo 13 88 101 14 70 83 23 153 176 29 121 150

Zerbaxa 44 34 77 45 29 74 95 64 159 87 57 145

10 65 75 15 52 67

Isentress/Isentress HD

19 unchanged sentences

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

Also reflects total alliance revenue for Koselugo of $ 161 million and $ 44 million in the first quarter of 2026 and 2025, 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 $( 110 ) million and $ 58 million for the three months ended March 31, 2026 and 2025, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon & Co.).

Other for the three months ended March 31, 2026 and 2025 also includes $ 132 million and $ 95 million, respectively, related to milestone payments received by Merck for out-licensing arrangements.

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

Also reflects total alliance revenue for Koselugo of $ 10 million and $ 43 million in the second quarter of 2026 and 2025, respectively, and $ 171 million and $ 87 million in the first six months of 2026 and 2025, 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 $( 153 ) million and $ 16 million for the six months ended June 30, 2026 and 2025, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon & Co.).

Other for the six months ended June 30, 2026 and 2025 also includes $ 132 million and $ 100 million, respectively, related to milestone payments received by Merck for out-licensing arrangements.

Product sales are recorded net of the provision for discounts, including chargebacks, which are customer discounts that occur when a contracted customer purchases through an intermediary wholesale purchaser, and rebates that are owed based upon definitive contractual agreements or legal requirements with private sector and public sector (Medicaid and Medicare Part D) benefit providers, after the final dispensing of the product by a pharmacy to a benefit plan participant.

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

sales by $ 2.5 billion and $ 2.1 billion for the three months ended March 31, 2026 and 2025, respectively.

sales by $ 2.5 billion for both the three months ended June 30, 2026 and 2025, and $ 5.0 billion and $ 4.7 billion for the six months ended June 30, 2026 and 2025, respectively.

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

Consolidated sales by geographic area where derived are as follows:

Three Months Ended

June 30, Six Months Ended

($ in millions) 2026 2025 2026 2025

United States $ 9,164 $ 8,522

$ 9,367 $ 8,836 $ 18,532 $ 17,359

Europe, Middle East and Africa 3,920 3,659 7,806 7,109

6 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

($ in millions)

Total Pharma-

Total Pharma-ceutical Animal

Segment sales $ 14,760 $ 1,775 $ 16,535 $ 14,050 $ 1,646 $ 15,696 $ 29,109 $ 3,566 $ 32,675 $ 27,688 $ 3,234 $ 30,922

3 unchanged sentences

Research and development (2)

— 120 — 110 — 232 — 205

Other segment items (3)

17 unchanged sentences

On a quarterly basis, the CEO considers forecast-to-actual variances in segment profit when assessing performance of the segments and making decisions about allocating resources to the segments.

For internal management reporting presented to the chief operating decision maker, Merck does not allocate the remaining cost of sales not included in segment profits as described above, research and development expenses incurred by Merck Research Laboratories, the Company’s research and development division that focuses on human health-related activities, or general and administrative expenses not directly incurred by the segments, nor the cost of financing these activities.

For internal management reporting presented to the CEO, Merck does not allocate the remaining cost of sales not included in segment profits as described above, research and development expenses incurred by Merck Research Laboratories, the Company’s research and development division that focuses on human health-related activities, or general and administrative expenses not directly incurred by the segments, nor the cost of financing these activities.

Separate divisions maintain responsibility for monitoring and managing these costs, including depreciation related to fixed assets utilized by these divisions and, therefore, they are not included in segment profits.

1 unchanged sentence

Other profits are primarily comprised of miscellaneous corporate profits, as well as operating profits (losses) related to third-party manufacturing arrangements.

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

Other unallocated, net, includes expenses from corporate and manufacturing cost centers, intangible asset impairment charges, gains or losses on sales of businesses, expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration, and other miscellaneous income or expense items.

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

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

Three Months Ended March 31,

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

2026 2025 2026 2025

($ in millions) Pharma-

Total Pharma-

Total Pharma-ceutical Animal

Equity income from affiliates

3 unchanged sentences

($ in millions)

March 31, 2026 December 31, 2025

United States $ 15,097 $ 15,021

June 30, 2026 December 31, 2025

$ 15,291 $ 15,021

Europe, Middle East and Africa 9,076 8,856

1 unchanged sentence

China 210 218

Japan 136 144

Latin America 131 128

Japan 129 144

$ 25,737 $ 25,316

1 unchanged sentence

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