What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-04 compared with 2025-11-05 · 304 added, 559 removed, 890 unchanged (49% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited, $ in millions except per share amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Sales $ 16,286 $ 15,529

5 unchanged sentences

Other (income) expense, net 138 ( 35 )

10,531 12,567 30,964 32,778

Income Before Taxes

6,745 4,090 17,647 15,766

Taxes on Income

(Loss) Income Before Taxes

( 3,534 ) 5,903

Income Tax Provision

Net (Loss) Income

( 4,243 ) 5,085

Net Income Attributable to Noncontrolling Interests 2 4 10 15

Net Income Attributable to Merck & Co., Inc.

Net (Loss) Income Attributable to Noncontrolling Interests

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

$ ( 4,240 ) $ 5,079

Basic Earnings per Common Share Attributable to Merck & Co., Inc.

Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc.

Common Shareholders

$ ( 1.72 ) $ 2.01

Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc.

(Loss) Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc.

Common Shareholders

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME

(Unaudited, $ in millions)

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net Income Attributable to Merck & Co., Inc.

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

$ ( 4,240 ) $ 5,079

1 unchanged sentence

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

170 ( 296 ) ( 457 ) ( 99 )

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

74 ( 13 ) 48 ( 28 )

Cumulative translation adjustment 6 215

219 ( 10 ) ( 257 ) ( 210 )

Comprehensive Income Attributable to Merck & Co., Inc.

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

$ ( 4,013 ) $ 5,059

4 unchanged sentences

(Unaudited, $ in millions except per share amounts)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Current Assets

49 unchanged sentences

(Unaudited, $ in millions)

Nine Months Ended

September 30,

Three Months Ended

Cash Flows from Operating Activities

Net (loss) income

$ ( 4,243 ) $ 5,085

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Amortization 931 597

1 unchanged sentence

Income from investments in equity securities, net ( 168 ) ( 90 )

( 563 ) ( 169 )

Charges for research and development asset acquisitions

Charge for research and development asset acquisition

Deferred income taxes ( 315 ) ( 186 )

Share-based compensation 185 195

Other 393 611

Net changes in assets and liabilities ( 1,613 ) ( 3,712 )

4 unchanged sentences

Proceeds from sales of securities and other investments — 456

Acquisition of Eyebiotech Limited, net of cash acquired

Acquisition of Elanco Animal Health Incorporated aqua business

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

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

Acquisition of Cidara Therapeutics, Inc., net of cash acquired

Other ( 66 ) ( 20 )

2 unchanged sentences

Net change in short-term borrowings

Proceeds from issuance of debt

Payments on debt ( 1,140 ) ( 2,500 )

6 unchanged sentences

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 19 ) 156

Net Increase in Cash, Cash Equivalents and Restricted Cash

Net Decrease in Cash, Cash Equivalents and Restricted Cash

( 9,292 ) ( 4,586 )

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

$ 125 and $ 76 at January 1, 2026 and 2025, respectively, included in Other current assets )

14,690 13,318

Cash, Cash Equivalents and Restricted Cash at End of Period (includes restricted cash of $ 71

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

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

$ 5,398 $ 8,732

10 unchanged sentences

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued guidance intended to improve the transparency of income tax disclosures by requiring consistent categories and disaggregation of information in the effective income tax rate reconciliation and income taxes paid disclosures by jurisdiction.

The guidance also includes other amendments to improve the effectiveness of income tax disclosures by removing certain previously required disclosures.

The guidance is effective for 2025 annual reporting and will result in incremental disclosures within the footnotes to the Company’s financial statements.

In November 2024, the FASB issued guidance intended to improve financial reporting by requiring entities to disclose additional information about specific expense categories at interim and annual reporting periods.

In November 2024, the Financial Accounting Standards Board (FASB) issued guidance intended to improve financial reporting by requiring entities to disclose additional information about specific expense categories for interim and annual reporting periods.

The guidance is effective for 2027 annual reporting and 2028 interim reporting.

1 unchanged sentence

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

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

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

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

Early adoption is permitted.

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.

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

Early adoption is permitted as of the beginning of an annual reporting period.

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

8 unchanged sentences

2026 Transactions

In November 2025, Merck reached an agreement with Dr.

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

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

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

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

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

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

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

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

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

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

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.

There are no future contingent payments associated with the acquisition.

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

In January 2026, Merck acquired Cidara Therapeutics, Inc.

(Cidara), a biotechnology company developing drug-Fc conjugate (DFC) therapeutics, for $ 9.2 billion (including $ 570 million of payments to settle share-based equity awards of which $ 406 million related to unvested equity awards).

Cidara’s lead DFC candidate, MK-1406 (formerly CD388), is a long-acting antiviral designed to prevent seasonal and pandemic influenza.

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.

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)

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

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

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

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

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

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.

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

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

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

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

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

(Hengrui Pharma) closed an exclusive license agreement for MK-7262 (HRS-5346), an investigational oral small molecule Lipoprotein(a) inhibitor, which is currently being evaluated in a Phase 2 clinical trial in China.

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 first nine months of 2025.

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

(Kelun-Biotech) that is currently in clinical development for the treatment of a variety of cancers.

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

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 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.

1 unchanged sentence

There are no future contingent payments associated with the acquisition.

2024 Transactions

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

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

The transaction was accounted for as an asset acquisition.

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

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

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

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

two related aqua manufacturing facilities in Canada and Vietnam;

as well as a research facility in Chile.

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

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

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

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

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

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

($ in millions)

Property, plant and equipment

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

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

Deferred tax asset

Other assets and liabilities, net 23

Total identifiable net assets 891

Consideration transferred $ 1,303

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

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

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

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

This amount is expected to be deductible for tax purposes.

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

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

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

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

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

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

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

In March 2024, Merck acquired Harpoon Therapeutics, Inc.

(Harpoon), a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases, for $ 765 million and also incurred $ 56 million of transaction costs.

Harpoon’s lead candidate, gocatamig (MK-6070, formerly HPN328), is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small cell lung cancer and neuroendocrine tumors.

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

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

There are no future contingent payments associated with the acquisition.

In August 2024, Merck and Daiichi Sankyo expanded their existing global co-development and co-commercialization agreement to include gocatamig.

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

In February 2024, Merck and Alteogen Inc.

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

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

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

In September 2025, the U.S.

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

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

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

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

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

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

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

Collaborative Arrangements

11 unchanged sentences

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

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

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

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

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

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

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

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

In exchange, Merck received a $ 150 million upfront payment (which was recorded within Sales as alliance revenue in the third quarter of 2025) and $ 150 million in February 2026 (which was recorded within Sales as alliance revenue in the first quarter of 2026).

Merck may also receive $ 150 million in the first quarter of 2027 and $ 100 million in the first quarter of 2028, subject to an annual election by AstraZeneca in January of each year as discussed below.

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).

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

AstraZeneca has the option in January 2027 or January 2028 to revert back to the income and cost sharing terms of the original agreement (in which case any future annual, contingent milestone, and royalty payments referenced above would no longer be due) although Merck would retain any payments made by AstraZeneca prior to the exercise of that option and any amounts due from AstraZeneca would remain payable to Merck.

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

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

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

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

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

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.

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

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

The 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 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.

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

Summarized financial information related to this collaboration is as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

1 unchanged sentence

Alliance revenue - Koselugo (1)

214 39 301 114

Total alliance revenue $ 502 $ 356

Cost of sales (2)

84 82 253 245

Selling, general and administrative 24 32

Research and development 5 12

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

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

Receivables from AstraZeneca included in Other current assets (3)

Receivables from AstraZeneca included in Other assets (3)

Payables to AstraZeneca included in Accrued and other current liabilities

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

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

(2) Represents amortization of capitalized milestone payments.

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

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

(3) Includes milestone receivables.

Eisai Co., Ltd.

In 2018, Merck and Eisai Co., Ltd.

(Eisai) announced a strategic collaboration for the worldwide co-development and co-commercialization of Lenvima (lenvatinib), an orally available tyrosine kinase inhibitor discovered by Eisai.

(Eisai) announced a strategic collaboration for the worldwide co-development and co-commercialization of Lenvima (lenvatinib), an orally available TKI discovered by Eisai.

Under the agreement, Merck and Eisai are developing and commercializing Lenvima jointly, both as monotherapy and in combination with Keytruda .

5 unchanged sentences

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

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

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

There are no regulatory milestone payments remaining under the agreement.

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

The intangible asset balance related to Lenvima (which includes capitalized sales-based and regulatory milestone payments) was $ 188 million at March 31, 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

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

1 unchanged sentence

Cost of sales (1)

60 60 181 181

Selling, general and administrative 27 31

Research and development 2 5

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

($ in millions) March 31, 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).

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

Under the agreement, Bayer

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

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

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

For Verquvo, Merck commercializes in the U.S.

4 unchanged sentences

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

In addition, the agreement provided for contingent payments from Merck to Bayer related to the successful achievement of sales-based milestones.

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

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

The agreement provided for contingent payments from Merck to Bayer related to the successful achievement of sales-based milestones.

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

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

4 unchanged sentences

Cost of sales (1)

71 59 190 182

Selling, general and administrative 12 29

Research and development 17 24

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

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

Receivables from Bayer included in Other current assets

12 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

Net sales of Lagevrio recorded by Merck

$ 138 $ 383 $ 323 $ 843

Cost of sales (1)

81 204 178 491

Selling, general and administrative

Research and development

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

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

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

(2) Includes accrued royalties.

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

1 unchanged sentence

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

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

patritumab deruxtecan (MK-1022), ifinatamab deruxtecan (MK-2400) and raludotatug deruxtecan (MK-5909).

All three potentially first-in-class DXd ADCs are in various stages of clinical development for the treatment of multiple solid tumors both as monotherapy and/or in combination with other treatments.

5 unchanged sentences

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.

In conjunction with this transaction, Merck recorded an aggregate pretax charge of $ 5.5 billion to Research and development expenses in 2023 for the $ 4.0 billion of upfront payments and the $ 1.5 billion of continuation payments.

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.

2 unchanged sentences

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

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

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.

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.

The companies will jointly develop and commercialize gocatamig worldwide and share research and development, as well as commercialization expenses.

The companies will jointly develop and commercialize gocatamig worldwide and share research and development costs, as well as commercialization expenses.

Research and development expenses related to gocatamig in combination with ifinatamab deruxtecan will be shared in a manner consistent with the original agreement for ifinatamab deruxtecan.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

Cost of sales (1)

$ 67 $ — $ 67 $ —

Selling, general and administrative $ 12 $ 9

Research and development

110 94 379 227

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

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

Receivables from Daiichi Sankyo included in Other current assets

Payables to Daiichi Sankyo included in Accrued and other current liabilities

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

(2) Includes accrued continuation payment.

Moderna, Inc.

4 unchanged sentences

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 $ 235 million of shared facility costs at September 30, 2025, primarily reflected within Other Assets .

Merck has also capitalized a net $ 230 million of shared facility costs at March 31, 2026, primarily reflected within Other Assets .

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

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

1 unchanged sentence

Research and development (1)

96 93 272 255

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

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

Receivables from Moderna included in Other current assets

Payables to Moderna included in Accrued and other current liabilities

4 unchanged sentences

BMS is the principal on sales transactions for Reblozyl.

however, Merck co-promotes Reblozyl (and may co-promote any future products approved under this collaboration) in North America, which is reimbursed by BMS.

Merck receives tiered royalties ranging from 20 % to 24 % based on sales levels.

1 unchanged sentence

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 $ 136 million and $ 361 million in the third quarter and first nine months of 2025, respectively, compared with $ 100 million and $ 261 million in the third quarter and first nine months of 2024, respectively.

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.

Restructuring

In July 2025, the Company approved a new restructuring program (2025 Restructuring Program) designed to position the Company for its next chapter of growth and to successfully advance its pipeline and launch new products across multiple therapeutic areas.

In July 2025, the Company approved a restructuring program (2025 Restructuring Program) designed to position the Company for its next chapter of growth and to successfully advance its pipeline and launch new products across multiple therapeutic areas.

As part of this program, the Company expects to eliminate certain positions in sales and administrative organizations, as well as research and development.

4 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 $ 302 million and $ 951 million in the third quarter and first nine months of 2025, respectively, related to the 2025 Restructuring Program.

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.

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

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

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.

For segment reporting, restructuring charges are unallocated expenses.

1 unchanged sentence

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

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

Three Months Ended March 31, 2026

($ in millions) Accelerated Depreciation

1 unchanged sentence

Other Exit Costs

Total Accelerated

Separation Costs

Other Exit Costs

2025 Restructuring Program

5 unchanged sentences

Cost of sales 96 — ( 3 ) 93

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

Restructuring costs — — 55 55

$ 108 $ 123 $ 235 $ 466

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

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

Three Months Ended March 31, 2025

($ in millions) Accelerated Depreciation

1 unchanged sentence

Other Exit Costs

Total Accelerated

Separation Costs

Other Exit Costs

2024 Restructuring Program

Cost of sales $ 41 $ — $ ( 5 ) $ 36

Selling, general and administrative — — 31 31 — — 67 67

Research and development — — — — — — 2 2

Restructuring costs — 1 68 69

7 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 nine months ended September 30, 2025:

The following table summarizes the charges and spending related to restructuring program activities for the three months ended March 31, 2026:

($ in millions) Accelerated Depreciation

6 unchanged sentences

Non-cash activity ( 12 ) ( 9 ) ( 117 ) ( 138 )

Restructuring reserves September 30, 2025

Restructuring reserves March 31, 2026

$ — $ 460 $ 188 $ 648

5 unchanged sentences

Non-cash activity ( 96 ) 12 1 ( 83 )

Restructuring reserves September 30, 2025

Restructuring reserves March 31, 2026

$ — $ 448 $ — $ 448

16 unchanged sentences

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 third quarter or first nine months of either 2025 or 2024.

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

23 unchanged sentences

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

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

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

($ in millions) 2026 2025 2026 2025

6 unchanged sentences

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

September 30, 2025

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

($ in millions)

5 unchanged sentences

4.75 % notes due 2035

5.00 % notes due 2053

The interest rate swap contracts are designated hedges of the fair value changes in the notes attributable to changes in the benchmark Secured Overnight Financing Rate (SOFR) swap rate.

1 unchanged sentence

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.

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

2 unchanged sentences

($ in millions)

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

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

Balance Sheet Caption

1 unchanged sentence

$ 2,539 $ 1,810 $ 57 $ 70

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

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:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Fair Value of Derivative U.S.

4 unchanged sentences

$ 58 $ — $ 2,500 $ 71 $ — $ 1,750

Interest rate contracts

8 — 500 — — —

Foreign exchange contracts Other current assets 247 — 7,751 113 — 6,430

6 unchanged sentences

Foreign exchange contracts Accrued and other current liabilities — 180 11,919 — 191 13,579

Foreign exchange contracts

Other Noncurrent Liabilities

— — — — 1 357

$ 194 $ 180 $ 25,789 $ 107 $ 192 $ 25,579

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

$ 562 $ 229 $ 42,106 $ 323 $ 324 $ 40,291

As noted above, the Company records its derivatives on a gross basis in the Condensed Consolidated Balance Sheet.

1 unchanged sentence

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:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

($ in millions) Asset Liability Asset Liability

5 unchanged sentences

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2026 2025 2026 2025 2026 2025

1 unchanged sentence

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

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

Other comprehensive income (loss)

$ 16,286 $ 15,529 $ 138 $ ( 35 ) $ 227 $ ( 20 )

Loss (gain) on fair value hedging relationships:

(Gain) loss on fair value hedging relationships:

Interest rate swap contracts

10 unchanged sentences

— — ( 1 ) — — —

Amount of gain (loss) recognized in OCI on derivatives

— — — — 18 — — — — — 17 ( 1 )

Amount of gain recognized in OCI on derivatives

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

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

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

Amount of Derivative Pretax Loss (Gain) Recognized in Income

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

Three Months Ended March 31,

($ in millions) 2026 2025

3 unchanged sentences

Foreign exchange contracts (2)

Sales ( 8 ) 10 26 ( 10 )

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

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 .

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

Realized gains and losses are ultimately determined by actual foreign exchange rates at maturity.

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

Investments in Debt and Equity Securities

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

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Cost Gross Unrealized Fair

2 unchanged sentences

($ in millions) Gains Losses Gains Losses

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

Commercial paper $ 375 $ — $ — $ 375 $ — $ — $ — $ —

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

Foreign government bonds

3 unchanged sentences

Total debt and publicly traded equity securities $ 2,047 $ 1,493

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

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

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

(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 .

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

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

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

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

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

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.

Fair Value Measurements

6 unchanged sentences

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.

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.

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

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

2 unchanged sentences

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

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

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

Commercial paper $ — $ 375 $ — $ 375 $ — $ — $ — $ —

1 unchanged sentence

— 1 — 1 — 1 — 1

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

Publicly traded equity securities 1,104 — — 1,104 955 — — 955

7 unchanged sentences

Forward exchange contracts — 310 — 310 — 168 — 168

Purchased currency options — 186 — 186 — 84 — 84

Interest rate swaps

— 58 — 58 — 71 — 71

Purchased currency options — 67 — 67 — 213 — 213

Interest rate contracts

— 8 — 8 — — — —

— 562 — 562 — 323 — 323

Total assets $ 1,671 $ 938 $ — $ 2,609 $ 1,492 $ 324 $ — $ 1,816

Other liabilities

Contingent consideration $ — $ — $ — $ — $ — $ — $ 193 $ 193

Derivative liabilities (3)

1 unchanged sentence

Written currency options — 27 — 27 — 31 — 31

— 492 — 492 — 345 — 345

Total liabilities $ — $ 229 $ — $ 229 $ — $ 324 $ — $ 324

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

(2) Includes securities with an aggregate fair value of $ 81 million at December 31, 2024, which were subject to a contractual sale restriction that expired in April 2025.

(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.

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

Contingent Consideration

Summarized information about the changes in the fair value of liabilities for contingent consideration associated with business combinations is as follows:

($ in millions) 2025 2024

Fair value January 1 $ 193 $ 354

Changes in estimated fair value (1)

( 141 ) ( 148 )

Fair value September 30

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

Includes cumulative translation adjustments.

Amount in 2025 includes the reversal of $ 45 million for a Zerbaxa sales-based milestone as it was determined that payment was not probable.

(2) Amount in both periods reflects payments related to the 2016 termination of the Sanofi Pasteur MSD joint venture.

Amount in 2025 also includes a $ 25 million payment related to the achievement of a sales-based milestone for Zerbaxa .

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).

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 September 30, 2025, was $ 37.7 billion compared with a carrying value of $ 41.4 billion and at December 31, 2024, was $ 32.6 billion compared with a carrying value of $ 37.1 billion.

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.

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

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

Concentrations of Credit Risk

7 unchanged sentences

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

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

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

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 .

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

3 unchanged sentences

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 $ 1 million and $ 165 million at September 30, 2025 and December 31, 2024, respectively.

Cash collateral received by the Company from various counterparties was $ 89 million and $ 1 million at March 31, 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) September 30, 2025 December 31, 2024

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

Finished goods $ 2,211 $ 2,275

8 unchanged sentences

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

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

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

Long-Term Debt

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

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

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

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.

Contingencies

7 unchanged sentences

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.

6 unchanged sentences

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

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

As of March 31, 2026, approximately 735 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.

The Company anticipates that there will be additional trials in the Dr.

Scholl’s litigation in the future.

Gardasil/Gardasil 9

1 unchanged sentence

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

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

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.

7 unchanged sentences

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

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

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

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

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

On August 7, 2025, the U.S.

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

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

On May 30, 2025, Merck removed the case to federal court and has requested that the U.S.

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

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

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

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

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

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

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

1 unchanged sentence

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

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

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

exchange for the agreement to adjourn.

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

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

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.

3 unchanged sentences

Governmental Proceedings

Civil Investigative Demand

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

Civil Investigative Demands

As previously disclosed, in August 2025, the Company received a Civil Investigative Demand (CID) from the U.S.

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

1 unchanged sentence

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.

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.

The Company is cooperating with the investigation.

Other Matters

2 unchanged sentences

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.

6 unchanged sentences

Merck & Co., Inc., et al.

, purportedly on behalf of all purchasers of Merck common stock between February 2022 and February 2025.

Plaintiff alleges that Merck violated federal securities laws by making materially false and misleading statements and material omissions regarding demand for Gardasil/Gardasil 9 in China.

Plaintiff seeks unspecified monetary damages, pre-judgment and post-judgment interest, and fees and costs.

On April 7, 2025, the court entered a joint stipulation staying the defendants’ deadline to respond to the complaint until after a lead plaintiff is appointed and requiring the parties to confer and jointly propose deadlines for amending and responding to the complaint within 14 days of the lead plaintiff appointment.

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

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

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

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

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

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

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

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

Frazier, et al.

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

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

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

(i) dismissal of the securities class action;

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

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

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

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

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

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

Frazier, et al.

, against certain

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

current and former Merck officers and board members.

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

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

, purportedly on behalf of all purchasers of Merck common stock between October 26, 2023, and February 3, 2025.

Plaintiff alleges that Merck violated federal securities laws by making materially false and misleading statements and omissions regarding demand for Gardasil/Gardasil 9 in China.

On December 17, 2025, the court appointed AMF Tjänstepension AB, KBC Asset Management NV, and Wayne County Employees’ Retirement System as lead plaintiffs (Lead Plaintiffs).

Lead Plaintiffs filed an amended complaint on February 20, 2026, seeking unspecified damages allegedly caused by the purported false or misleading statements.

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.

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.

The derivative lawsuits assert claims under state and federal securities statutes, as well as New Jersey common law, based on the same allegations as those made in the putative securities class action.

These derivative lawsuits seek unspecified monetary damages, corporate governance reforms, injunctive relief, disgorgement of profits, restitution, fees, and costs.

All the derivative proceedings are stayed pending further developments in the class action.

Commercial and Other Litigation

Zetia Antitrust Litigation

As previously disclosed, Merck, MSD, Schering Corporation, Schering-Plough Corporation, and MSP Singapore Company LLC (collectively, the Merck Defendants) were defendants in a number of lawsuits filed in 2018 on behalf of direct and indirect purchasers of Zetia (ezetimibe) alleging violations of federal and state antitrust laws, as well as other state statutory and common law causes of action.

The cases were consolidated in a federal multidistrict litigation (Zetia MDL) before Judge Rebecca Beach Smith in the Eastern District of Virginia.

In April 2023, the Merck Defendants reached settlements with the direct purchaser and retailer plaintiffs, and a settlement with the indirect purchaser class that the court approved in October 2023.

As previously disclosed, in 2020 and 2021, United HealthCare Services, Inc.

(United HealthCare), Humana Inc.

(Humana), Centene Corporation and others (Centene), and Kaiser Foundation Health Plan, Inc.

(Kaiser) (collectively, the Insurer Plaintiffs), each filed a lawsuit in a jurisdiction outside of the Eastern District of Virginia against the Merck Defendants and others, making similar allegations as those made in the Zetia MDL, as well as additional allegations about Vytorin.

These cases were transferred to the Eastern District of Virginia to proceed with the Zetia MDL.

In December 2023, the U.S.

Judicial Panel on Multidistrict Litigation remanded the four Insurer Plaintiff cases to the transferor courts in the Northern District of California (Kaiser), the District of Minnesota (United HealthCare), and the District of New Jersey (Humana and Centene).

The Merck Defendants filed motions to dismiss in each of the Insurer Plaintiff cases.

In December 2024, the district court in the District of New Jersey granted in part and denied in part the motions to dismiss in the Humana and Centene cases and, on January 29, 2025, Humana and Centene filed amended complaints.

On March 5, 2025, the Merck Defendants filed motions to dismiss the amended complaints.

On March 24, 2025, the Merck Defendants filed a third-party complaint against AmerisourceBergen Drug Corp., AmerisourceBergen Corp., and Cencora, Inc., (collectively, Cencora) seeking indemnification and a declaration of rights for Humana’s direct purchaser claims.

On June 23, 2025, Cencora moved to dismiss the third-party complaint or, in the alternative, to transfer the third-party action to the Eastern District of Virginia.

On February 25, 2025, the district court in the District of Minnesota granted in part and denied in part the motion to dismiss in the United HealthCare case.

On March 11, 2025, the Merck Defendants filed an answer and affirmative defenses in response to United HealthCare’s complaint.

On March 24, 2025, the Merck Defendants filed a third-party complaint against Cardinal Health, Inc., Cardinal Health 110, LLC, and Cardinal Health 112, LLC (collectively, Cardinal), seeking indemnification and a declaration of rights for certain of United HealthCare’s direct and indirect purchaser claims.

On June 6, 2025, Cardinal filed a motion to dismiss the Merck Defendants’ third-party complaint on forum grounds, or in the alternative, to stay the Merck Defendants’ third-party claims pending arbitration.

On March 18, 2025, the district court in the Northern District of California granted in part and denied in part the motion to dismiss in the Kaiser case.

The court granted Kaiser leave to amend its complaint, and Kaiser filed its second amended complaint on April 15, 2025.

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

Qui Tam Litigation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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 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.

On January 20, 2026, plaintiff filed a motion to certify the proposed class.

On February 10, 2026, Merck filed an opposition to plaintiff’s motion to certify the proposed class and a motion to exclude plaintiff’s expert’s class certification opinions.

Plaintiff filed a reply in support of its request to certify the class and an opposition to the motion to exclude on March 17, 2026.

On March 31, 2026, Merck filed a reply in support of the motion to exclude plaintiff’s expert’s opinions.

Merck also filed a sur-reply to the class certification motion.

Patent Litigation

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

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

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

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

1 unchanged sentence

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

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

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

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 in the U.S.

District Courts for the District of New Jersey and the Northern District of West Virginia against those generic companies.

All actions in the District of New Jersey were consolidated.

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

The remaining defendants in the New Jersey action 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.

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.

In June 2023, the U.S.

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.

1 unchanged sentence

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 July 2023, the defendants filed a notice of appeal with the U.S.

Court of Appeals for the Federal Circuit.

Oral argument took place on February 4, 2025.

On March 13, 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.

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) or earlier under certain circumstances.

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

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.

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

6 unchanged sentences

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

In March 2021, the Company filed a patent infringement lawsuit in the U.S.

District Court for the District of Delaware against Zydus Worldwide DMCC, Zydus Pharmaceuticals (USA) Inc., and Cadila Healthcare Ltd.

(collectively, Zydus).

In that lawsuit, the Company alleged infringement of the salt/polymorph patent based on the filing of Zydus’s NDA seeking approval of a form of sitagliptin that is different from than that used in Januvia .

In December 2022, the parties reached settlement that included dismissal of the case without prejudice enabling Zydus to seek final approval of a non-automatically substitutable product.

In January 2023, the Company received a Paragraph IV Certification Letter under the Hatch-Waxman Act notifying the Company that Zydus filed an ANDA seeking approval of sitagliptin/metformin HCl tablets.

In March 2023, the parties reached settlement enabling Zydus to seek final approval of a non-automatically substitutable product containing a different form of sitagliptin than that used in Janumet.

In November 2023, the Company received a Paragraph IV Certification Letter under the Hatch-Waxman Act notifying the Company that Zydus filed an ANDA seeking approval of sitagliptin/metformin HCl Extended Release tablets.

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

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

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

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

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

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.

12 unchanged sentences

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

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 anhydrate form, which was approved in August 2023.

(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.

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

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

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

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

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

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

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

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

Subcutaneous Pembrolizumab — Halozyme, Inc.

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

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.

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

The district court’s stay is expected to continue until at least the issuance of the Federal Circuit decision.

Subcutaneous Pembrolizumab — As previously disclosed, Halozyme, Inc.

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

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

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

Since then, the PTAB also instituted ten additional petitions.

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

On April 24, 2025, Halozyme, Inc.

filed a complaint in the U.S.

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 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.

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

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, Inc.

in the UK, France, Germany and The Netherlands.

Halozyme, Inc.

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

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

under the ‘622 patent in Germany.

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

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

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.

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.

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.

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.

(Shilpa), Dr.

Reddy’s Laboratories (DRL), and Torrent Pharmaceuticals (Torrent) filed separate applications to the FDA seeking pre-patent expiry approval to sell generic versions of Lenvima (lenvatinib) tablets.

Between 2019 and 2024, Eisai and the Company filed a series of patent infringement lawsuits in the U.S.

District Court for the District of New Jersey against each generic company asserting several Orange-Book listed patents.

The Lenvima compound patent expired in April 2026 (including pediatric exclusivity) and was not challenged.

Eisai and the Company settled with Sun, DRL, and Torrent regarding the remaining asserted patents covering Lenvima.

Eisai has announced publicly, these generic companies can bring their generic versions of Lenvima to the market in the U.S.

in July 2030 or earlier under certain circumstances.

In May 2025, Eisai and the Company received a favorable trial decision against Shilpa from the U.S.

District Court for the District of New Jersey.

As a result of the decision, Shilpa is unable to receive approval from the FDA to sell its generic version of Lenvima until February 2036.

Shilpa has appealed the district court’s decision to the U.S.

Court of Appeals for the Federal Circuit, and the appeal is currently pending.

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.

5 unchanged sentences

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 expected in 2026.

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

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

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

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

11,058,757 (‘757 patent).

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

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

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.

Other Litigation

1 unchanged sentence

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

6 unchanged sentences

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

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

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;

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.

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

Three Months Ended September 30,

Three Months Ended March 31,

Common Stock Other

5 unchanged sentences

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

Balance at July 1, 2024

Balance at January 1, 2025

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

7 unchanged sentences

Net income attributable to noncontrolling interests — — — — — — — 6 6

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

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

Balance at July 1, 2025

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

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

Net income attributable to Merck & Co., Inc.

Net loss attributable to Merck & Co., Inc.

— — — ( 4,240 ) — — — — ( 4,240 )

5 unchanged sentences

Share-based compensation plans and other — — 147 — — ( 3 ) 177 — 324

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

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

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

Nine Months Ended September 30,

Common Stock Other

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, 2024

3,577 $ 1,788 $ 44,509 $ 53,895 $ ( 5,161 ) 1,045 $ ( 57,450 ) $ 54 $ 37,635

Net income attributable to Merck & Co., Inc.

— — — 13,374 — — — — 13,374

Other comprehensive loss, net of taxes — — — — ( 210 ) — — — ( 210 )

Cash dividends declared on common stock ($ 2.31 per share)

— — — ( 5,885 ) — — — — ( 5,885 )

Treasury stock shares purchased — — — — — 7 ( 817 ) — ( 817 )

Share-based compensation plans and other — — 21 — — ( 7 ) 438 1 460

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

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

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

Balance at January 1, 2025

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

Net income attributable to Merck & Co., Inc.

— — — 15,291 — — — — 15,291

Other comprehensive loss, net of taxes — — — — ( 257 ) — — — ( 257 )

Cash dividends declared on common stock ($ 2.43 per share)

Net loss attributable to noncontrolling interests

— — — — — — — ( 3 ) ( 3 )

Treasury stock shares purchased — — — — — 46 ( 3,832 ) — ( 3,832 )

Share-based compensation plans and other — — 128 — — ( 5 ) 336 — 464

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

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

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

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

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

Pension and Other Postretirement Benefit Plans

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

($ in millions) U.S.

International U.S.

International

4 unchanged sentences

— ( 4 ) — ( 4 )

Net loss amortization

Net loss (gain) amortization

27 ( 1 ) 13 3

Termination benefits 3 15 — —

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

$ 66 $ ( 22 ) $ 33 $ ( 19 )

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

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

4 unchanged sentences

Net gain amortization ( 8 ) ( 10 )

Terminations benefits

$ ( 3 ) $ ( 8 )

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

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

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

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

2 unchanged sentences

Exchange losses 38 90

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

Income from investments in equity securities, net (1)

( 168 ) ( 90 )

4 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.

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

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

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

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

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

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

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

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

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

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

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.

In April 2025, Merck received Notices of Proposed Adjustment (NOPAs) that would increase the amount of the one-time transition tax on certain undistributed earnings of foreign subsidiaries by approximately $ 1.3 billion.

2 unchanged sentences

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

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

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

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

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

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

Earnings Per Share

The calculations of earnings per share are as follows:

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

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

(Loss) Earnings Per Share

The calculations of (loss) earnings per share are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

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

Net Income Attributable to Merck & Co., Inc.

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

$ ( 4,240 ) $ 5,079

2 unchanged sentences

Average common shares outstanding assuming dilution 2,472 2,531

Basic Earnings per Common Share Attributable to Merck & Co., Inc.

Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc.

Common Shareholders

$ ( 1.72 ) $ 2.01

Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc.

(Loss) Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc.

Common Shareholders

1 unchanged sentence

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

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

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

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.

Other Comprehensive Income (Loss)

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

Three Months Ended September 30,

($ in millions) Derivatives Employee

Plans Foreign Currency

Adjustment Accumulated Other

Comprehensive

Balance July 1, 2024, net of taxes

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

Other comprehensive income (loss) before reclassification adjustments, pretax ( 325 ) — 279 ( 46 )

Tax 68 ( 3 ) 20 85

Other comprehensive income (loss) before reclassification adjustments, net of taxes ( 257 ) ( 3 ) 299 39

Reclassification adjustments, pretax ( 49 ) (1)

Tax 10 4 — 14

Reclassification adjustments, net of taxes ( 39 )

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

Balance September 30, 2024, net of taxes

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

Balance July 1, 2025, net of taxes

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

Other comprehensive income (loss) before reclassification adjustments, pretax 113 93 ( 64 ) 142

Tax ( 24 ) 1 39 16

Other comprehensive income (loss) before reclassification adjustments, net of taxes 89 94 ( 25 ) 158

Reclassification adjustments, pretax 103 (1)

Tax ( 22 ) 2 — ( 20 )

Reclassification adjustments, net of taxes 81

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

Balance September 30, 2025, net of taxes

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

Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) Derivatives Employee

11 unchanged sentences

Other comprehensive income (loss), net of taxes ( 217 ) ( 18 ) 215 ( 20 )

Balance September 30, 2024, net of taxes

Balance March 31, 2025, net of taxes

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

8 unchanged sentences

Other comprehensive income (loss), net of taxes 216 5 6 227

Balance September 30, 2025, net of taxes

Balance March 31, 2026, net of taxes

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

1 unchanged sentence

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

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

Segment Reporting

4 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.

5 unchanged sentences

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 September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Three Months Ended March 31,

($ in millions) U.S.

Int’l Total U.S.

Pharmaceutical:

Keytruda $ 4,599 $ 3,307 $ 7,906 $ 4,308 $ 2,897 $ 7,205

Keytruda Qlex

106 21 128 — — —

Alliance revenue-Lynparza (1)

9 unchanged sentences

409 129 538 423 116 539

Vaxneuvance 134 91 226 137 103 239 409 276 685 397 251 647

RotaTeq 165 42 206 164 64 228

Vaxneuvance 123 78 202 139 92 230

118 23 142 106 1 107

Cardiometabolic and Respiratory

477 48 525 268 12 280

Hospital Acute Care

Bridion 392 47 439 339 81 420 1,181 161 1,341 1,020 296 1,315

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

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

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

Cardiovascular

131 — 131 — — —

2 unchanged sentences

Adempas — 78 78 — 68 68

Lagevrio 24 114 138 84 299 383 90 233 323 144 699 843

Isentress/Isentress HD

44 37 82 54 48 102 144 114 258 147 155 302

Infectious Diseases

Bridion 427 45 472 378 63 441

Prevymis 135 138 272 102 106 208

Zerbaxa 52 30 82 42 28 70

10 65 75 15 52 67

Isentress/Isentress HD

35 24 59 51 39 90

Belsomra 28 19 47 20 58 78 59 77 137 53 124 177

Simponi — — — — 189 189 — — — — 545 545

Remicade — — — — 41 41 — — — — 115 115

Dificid 24 10 34 72 11 83

Lagevrio 16 12 28 35 67 102

Januvia 252 116 367 344 204 549

15 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 $ 214 million and $ 39 million in the third quarter of 2025 and 2024, respectively, and $ 301 million and $ 114 million in the first nine months of 2025 and 2024, respectively (see Note 3).

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

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

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)

1 unchanged sentence

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

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

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

Consolidated sales by geographic area where derived are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2026 2025

7 unchanged sentences

$ 16,286 $ 15,529

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

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

2025 2024 2025 2024

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

Three Months Ended March 31,

($ in millions)

Total Pharma-

Total Pharma-ceutical Animal

Segment sales $ 14,349 $ 1,791 $ 16,140 $ 13,638 $ 1,588 $ 15,226

3 unchanged sentences

Research and development (2)

— 118 — 95 — 323 — 276

Other segment items (3)

13 unchanged sentences

(3) Includes equity (income) loss from affiliates and other miscellaneous non-operating expenses.

Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as selling, general and administrative expenses directly incurred by the segment.

Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as selling, general and administrative expenses and research and development costs directly incurred by the segment.

The chief operating decision maker (Merck’s Chief Executive Officer) uses segment profit to allocate resources predominately during the planning and forecasting process.

Pharmaceutical segment profits consist of segment sales less standard costs, as well as selling, general and administrative expenses directly incurred by the segment.

Animal Health segment profits consist of segment sales, less all cost of sales, as well as selling, general and administrative expenses and research and development costs directly incurred by the segment.

The chief operating decision maker (Merck’s Chief Executive Officer) uses segment profit for the purpose of evaluating performance, allocating resources, informing incentive compensation targets and setting strategic Company goals during the planning and forecasting process.

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.

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.

In addition, costs related to restructuring activities, as well as the amortization of intangible assets and amortization of purchase accounting adjustments are not allocated to segments.

In addition, costs related to restructuring activities, as well as the amortization of intangible assets and the recognition of fair value step-up of inventories are not allocated to segments.

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

2 unchanged sentences

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

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

2025 2024 2025 2024

Three Months Ended March 31,

($ in millions) Pharma-

Total Pharma-

Total Pharma-ceutical Animal

Equity income from affiliates

3 unchanged sentences

($ in millions)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

United States $ 15,097 $ 15,021

7 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements