Summary
Merck & Co., Inc. (MRK) filed an 8-K on April 20, 2022, primarily announcing a change in its non-GAAP financial reporting. Starting in 2022, Merck will no longer exclude expenses related to upfront and milestone payments from collaborations and licensing agreements, as well as charges for pre-approval assets acquired through asset acquisitions, from its non-GAAP results. This adjustment aligns the company with guidance from the U.S. Securities and Exchange Commission (SEC) staff. While this change will not impact the first quarter of 2022 or previously reported first quarter 2021 non-GAAP results (due to the absence of significant charges in those periods), it will affect previously reported non-GAAP results for other periods in 2021 and for 2020. The company has provided recast historical non-GAAP financial information for these periods as an exhibit to this filing, allowing investors to analyze trends under the new reporting methodology. This is a technical accounting change that impacts how certain development-related costs are presented in adjusted earnings, rather than a change in underlying operational performance.
Key Highlights
- 1Merck is changing its non-GAAP reporting methodology to exclude fewer items.
- 2Expenses for upfront/milestone payments from collaborations and licensing will now be included in non-GAAP results.
- 3Charges related to pre-approval assets from asset acquisitions will also be included in non-GAAP results.
- 4This change is made to align with views expressed by the SEC staff.
- 5The change impacts historical non-GAAP results for 2020 and parts of 2021, with recast financials provided.
- 6The change does not affect reported non-GAAP results for Q1 2022 or Q1 2021.
- 7No other significant operational or financial results were disclosed in this specific 8-K filing.