Merge Statement + Replication difference for SQL Server 2012
Can you check the article property -->Statement Delivery --> Update delivery format -- what is it set to ? 

One more thing to add -- please verify if any column that is part of a unique constraint is updated. If this is true, this means SQL Server is implementing the Update as a Deferred Update, which means as a pair of DELETE/INSERT operations. This "deferred update" causes replication to send a pair of DELETE/INSERT statements to the subscribers. refer : here

To make sure that the Updates are NOT executed as a pair of Delete and Insert statements you can enable trace flag 8207 on Publisher Server.