Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Merck & Co. Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Net income from continuing operations	18,263)	17,133)	377)	14,526)	12,358)
Amortization	2,793)	2,395)	2,044)	2,085)	1,636)
Depreciation	3,045)	2,104)	1,828)	1,824)	1,578)
Intangible asset impairment charges	55)	39)	792)	1,749)	302)
(Income) loss from investments in equity securities, net	(368)	(14)	(340)	1,419)	(1,940)
Charges for certain research and development asset acquisitions	—)	3,456)	11,409)	—)	1,556)
Deferred income taxes	(1,671)	(1,249)	(1,899)	(1,568)	187)
Share-based compensation	820)	761)	645)	541)	479)
Other	511)	510)	355)	1,301)	805)
Accounts receivable	(1,090)	(244)	(1,148)	(644)	(2,033)
Inventories	(1,180)	(835)	(816)	(161)	(674)
Trade accounts payable	110)	182)	(380)	(289)	405)
Accrued and other current liabilities	(1,841)	(2,328)	1,783)	(50)	277)
Income taxes payable	137)	1,023)	214)	380)	(540)
Noncurrent liabilities	195)	(49)	456)	(545)	484)
Other	(3,307)	(1,416)	(2,314)	(1,473)	(1,758)
Net changes in assets and liabilities	(6,976)	(3,667)	(2,205)	(2,782)	(3,839)
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities	(1,791)	4,335)	12,629)	4,569)	764)
Net cash provided by operating activities	16,472)	21,468)	13,006)	19,095)	13,122)
Capital expenditures	(4,112)	(3,372)	(3,863)	(4,388)	(4,448)
Purchases of securities and other investments	(1,207)	(519)	(955)	(1,204)	(1)
Proceeds from sales of securities and other investments	1,678)	377)	1,658)	721)	1,026)
Proceeds from sale of Seagen Inc. common stock	—)	—)	1,145)	—)	—)
Acquisition of Verona Pharma plc, net of cash acquired	(10,042)	—)	—)	—)	—)
Acquisition of Eyebiotech Limited, net of cash acquired	—)	(1,344)	—)	—)	—)
Acquisition of Elanco Animal Health Incorporated aqua business	—)	(1,303)	—)	—)	—)
Acquisition of Harpoon Therapeutics, Inc., net of cash acquired	—)	(746)	—)	—)	—)
Acquisition of MK-1045 from Curon Pharmaceutical	—)	(700)	—)	—)	—)
Acquisition of Prometheus Biosciences, Inc., net of cash acquired	—)	—)	(10,705)	—)	—)
Acquisition of Imago BioSciences Inc., net of cash acquired	—)	—)	(1,327)	—)	—)
Acquisition of Acceleron Pharma Inc., net of cash acquired	—)	—)	—)	—)	(11,174)
Acquisition of Pandion Therapeutics, Inc., net of cash acquired	—)	—)	—)	—)	(1,554)
Other	(58)	(127)	(36)	(89)	(270)
Net cash used in investing activities	(13,741)	(7,734)	(14,083)	(4,960)	(16,421)
Net change in short-term borrowings	—)	—)	—)	—)	(3,986)
Payments on debt	(2,503)	(1,290)	(1,755)	(2,251)	(2,319)
Proceeds from issuance of debt	13,880)	3,599)	5,939)	—)	7,936)
Distribution from Organon & Co.	—)	—)	—)	—)	9,000)
Purchases of treasury stock	(5,084)	(1,306)	(1,346)	—)	(840)
Dividends paid to stockholders	(8,176)	(7,840)	(7,445)	(7,012)	(6,610)
Proceeds from exercise of stock options	92)	177)	125)	384)	202)
Other	(131)	(372)	(328)	(240)	(286)
Net cash provided by (used in) financing activities	(1,922)	(7,032)	(4,810)	(9,119)	3,097)
Net cash provided by operating activities	—)	—)	—)	—)	987)
Net cash used in investing activities	—)	—)	—)	—)	(134)
Net cash used in financing activities	—)	—)	—)	—)	(504)
Net cash flows provided by discontinued operations	—)	—)	—)	—)	349)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	563)	(293)	23)	(410)	(133)
Net increase (decrease) in cash, cash equivalents and restricted cash	1,372)	6,409)	(5,864)	4,606)	14)
Cash, cash equivalents and restricted cash at beginning of year	13,318)	6,909)	12,773)	8,167)	8,153)
Cash, cash equivalents and restricted cash at end of year	14,690)	13,318)	6,909)	12,773)	8,167)

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The company demonstrates fluctuating cash flows over the five-year period. Operating activities consistently provide positive cash flow, though with significant variation. Investing activities consistently represent a cash outflow, largely driven by acquisitions, particularly in 2023 and 2025. Financing activities exhibit considerable volatility, shifting between providing and using cash, influenced by debt issuance, stock repurchases, and dividend payments.

Operating Activities: Net cash provided by operating activities generally increased from $13.122 billion in 2021 to $19.095 billion in 2022. A substantial decrease was observed in 2023 to $13.006 billion, followed by a rise to $21.468 billion in 2024. A decline to $16.472 billion occurred in 2025. This variability appears linked to adjustments reconciling net income to cash flow, which experienced a large positive swing in 2023 ($12.629 billion) and a negative swing in 2025 (-$1.791 billion). Net income from continuing operations also shows significant fluctuation, particularly the sharp decline in 2023 and subsequent recovery.
Investing Activities: Net cash used in investing activities is consistently negative, indicating ongoing investment. The outflow was most substantial in 2021 at -$16.421 billion, largely due to the acquisition of Acceleron Pharma Inc. and Pandion Therapeutics, Inc. Outflows remained significant in subsequent years, with a peak in 2025 at -$13.741 billion, primarily due to the acquisition of Verona Pharma plc. A pattern of frequent acquisitions is evident, with multiple acquisitions recorded in 2024 and 2025. Proceeds from sales of securities and other investments offer a partial offset to these outflows, but are considerably smaller in magnitude.
Financing Activities: Financing activities demonstrate considerable fluctuation. 2021 saw net cash provided by financing activities of $3.097 billion, largely driven by proceeds from the distribution related to Organon & Co. and debt issuance. 2022 and 2024 experienced significant net cash outflows, primarily due to stock repurchases and dividend payments. 2025 also showed a net cash outflow, driven by increased dividend payments and a substantial repurchase of treasury stock. Proceeds from debt issuance were a consistent, though varying, source of cash inflow.
Cash Position: The company maintained a healthy cash position throughout the period. Cash, cash equivalents, and restricted cash increased from $8.153 billion in 2021 to $14.690 billion in 2025, despite substantial investing and financing outflows. The largest increase occurred between 2023 and 2024, coinciding with a peak in operating cash flow and significant debt issuance.
Working Capital: Changes in accounts receivable, inventories, and trade accounts payable generally resulted in cash inflows, though with varying magnitudes. Accrued and other current liabilities exhibited significant volatility, contributing to both inflows and outflows. The net changes in assets and liabilities consistently represented a cash outflow, though the magnitude increased substantially in 2024 and 2025.

Overall, the company’s cash flow profile is characterized by strong operating cash generation, significant investment in acquisitions, and active management of financing activities, including debt and equity. The substantial acquisitions, particularly in 2023, 2024, and 2025, are a defining feature of the company’s financial activity during this period.

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Merck & Co. Inc. (NYSE:MRK)

Cash Flow Statement