Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Organon Reports Results for the Third Quarter Ended September 30, 2023 By: Organon & Co. via Business Wire November 02, 2023 at 07:30 AM EDT Third quarter 2023 revenue of $1,519 million Third quarter 2023 diluted earnings per share of $0.23 and non-GAAP Adjusted diluted earnings per share of $0.87 Adjusted EBITDA of $447 million Board of Directors declares quarterly dividend of $0.28 per share Full year 2023 financial guidance ranges updated: Revenue range narrowed and lowered to $6.15 billion to $6.25 billion Adjusted EBITDA margin range narrowed and lowered to 30.5% to 31.5% Organon (NYSE: OGN) today announced its results for the third quarter ended September 30, 2023. "Since spin, we have given new life to Established Brands and have expanded our pipeline in both Biosimilars and Women's Health," said Kevin Ali, Organon's CEO. "Year to date, all three of our franchises have delivered growth on a constant currency basis. Over the medium term, we expect to deliver mid-single digit revenue growth with the power of our existing portfolio. As we move into 2024, we will be working to reduce leverage and continue to add products that could enhance that growth profile." Third Quarter 2023 Revenue in $ millions Q3 2023 Q3 2022 VPY VPY ex-FX Women’s Health $ 418 $ 454 (8 )% (7 )% Biosimilars 142 129 10 % 10 % Established Brands 935 915 2 % 3 % Other (1) 24 39 (36 )% (38 )% Revenues $ 1,519 $ 1,537 (1 )% (1 )% (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. For the third quarter of 2023, total revenue was $1,519 million, a decrease of 1% on an as-reported basis as well as excluding impact of foreign currency (ex-FX), compared with the third quarter of 2022. Women’s Health revenue decreased 8% on an as-reported basis, and decreased 7% ex-FX in the third quarter of 2023 compared with the third quarter of 2022 driven primarily by a 23% ex-FX decrease of NuvaRing® (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition. Together, the company's fertility products declined 10% ex-FX in the third quarter as unfavorable discount rates in the United States offset growth in demand. Nexplanon® (etonogestrel implant) decreased 3% ex-FX due unfavorable discount rates and a change in the go-to-market model for the product. These factors were partially offset by revenue from the Jada® system, which more than doubled year over year. Biosimilars revenue increased 10% on an as-reported basis as well as ex-FX in the third quarter of 2023, compared with the third quarter of 2022. Renflexis® (infliximab-abda) grew 15% ex-FX in the third quarter due to continued demand and strong volume growth in United States and Canada. Ontruzant® (trastuzumab-dttb) grew 34% ex-FX in the third quarter compared to the prior year period driven by the phasing of a tender in Brazil. Established Brands revenue increased 2% as-reported and increased 3% ex-FX in the third quarter of 2023, despite the impact of Volume Based Procurement (VBP) initiatives in China. Growth in the quarter was driven by Atozet™ (ezetimibe and atorvastatin calcium), particularly in France, strong demand for Nasonex® (mometasone) and favorable pricing for Dulera® (formoterol/fumarate dihydrate) in the United States. Year to date, the Established Brands franchise grew 1% ex-FX. The company expects the Established Brands franchise to achieve flat to slightly better revenue growth on a constant currency basis for the full year 2023. Third Quarter 2023 Profitability in $ millions, except per share amounts Q3 2023 Q3 2022 VPY Revenues $ 1,519 $ 1,537 (1 )% Cost of sales 612 551 11 % Gross profit 907 986 (8 )% Non-GAAP Adjusted gross profit (1) 951 1,032 (8 )% Adjusted EBITDA (1,2) 447 546 (18 )% Net income 58 227 (74 )% Non-GAAP Adjusted net income (1) 223 337 (34 )% Diluted Earnings per Share (EPS) 0.23 0.89 (74 )% Non-GAAP Adjusted diluted EPS (1) 0.87 1.32 (34 )% Acquired in-process research & development (IPR&D) and milestones — 10 NM Per share impact to diluted EPS from acquired IPR&D and milestones — (0.04 ) NM Q3 2023 Q3 2022 Gross margin 59.7 % 64.2 % Non-GAAP Adjusted gross margin (1) 62.6 % 67.1 % Adjusted EBITDA margin (1, 2) 29.4 % 35.5 % (1) See Tables 4 and 5 for reconciliations of GAAP to non-GAAP financial measures (2) Adjusted EBITDA and Adjusted EBITDA margin include $10 million in the third quarter of 2022 related to acquired IPR&D and milestones, no such expense was incurred in the third quarter of 2023 Gross margin was 59.7% as-reported and 62.6% on an adjusted basis in the third quarter of 2023 compared with 64.2% as-reported and 67.1% on an adjusted basis in the third quarter of 2022. The year-over-year decline in gross margin is primarily due to foreign exchange translation and inflationary manufacturing and distribution costs. Product mix and pricing erosion were also factors, but to a lesser extent. EBITDA margin was 29.4% in the third quarter of 2023 compared with 35.5% in the third quarter of 2022 primarily due to lower Adjusted gross profit and to a lesser extent an increase in non-GAAP SG&A expense and loss on foreign exchange translation. Net income for the third quarter of 2023 was $58 million, or $0.23 per diluted share, compared with $227 million, or $0.89 per diluted share, in the third quarter of 2022. Non-GAAP Adjusted net income was $223 million, or $0.87 per diluted share, compared with $337 million, or $1.32 per diluted share, in 2022. The year over year decrease in net income was a result of a lower Adjusted EBITDA, as well as higher interest expense. Capital Allocation Today, Organon’s Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of the company's common stock. The dividend is payable on December 14, 2023, to stockholders of record at the close of business on November 13, 2023. As of September 30, 2023, cash and cash equivalents were $414 million, and debt was $8.7 billion. Full Year Guidance Organon does not provide GAAP financial measures on a forward-looking basis because the company cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to Organon’s results computed in accordance with GAAP. The company is updating its full year 2023 guidance ranges previously provided on August 8, 2023. The range for full year 2023 revenue is narrowed and lowered to $6.15 billion to $6.25 billion, which primarily reflects current foreign currency exchange rates, changes to the go-to-market model for Nexplanon, a slower uptake of Hadlima™ (adalimumab-bwwd) and macroeconomic factors in China. The range for full year Adjusted EBITDA margin is now 30.5% to 31.5% to reflect a lower gross margin stemming from the impacts of foreign exchange on revenue, unfavorable product mix, and the timing of manufacturing costs. Organon's financial guidance does not assume an estimate for future IPR&D and milestone payments for business development transactions not yet executed. Full year 2023 financial guidance is presented below on a non-GAAP basis. Previous guidance as of August 8, 2023 Current guidance Revenues $6.250B-$6.450B $6.150B-$6.250B Adjusted gross margin Low-mid 60% range Low 60% range SG&A (as % of revenue) Mid 20% range Unchanged R&D (as % of revenue) Upper single-digit Unchanged Adjusted EBITDA margin 31.5%-33.0% 30.5%-31.5% Interest ~$525 million Unchanged Depreciation ~$120 million Unchanged Effective non-GAAP tax rate 17.5%-19.5% Unchanged Fully diluted weighted average shares outstanding ~257 million Unchanged Webcast Information Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its third quarter 2023 financial results. To listen to the event and view the presentation slides via webcast, join from the Organon Investor Relations website at https://www.organon.com/investor-relations/events-and-presentations/. A replay of the webcast will be available approximately two hours after the conclusion of the live event on the company’s website. Institutional investors and analysts interested in participating in the call must register in advance by clicking on this link: https://conferencingportals.com/event/VfCOQYEG Following registration, participants will receive a confirmation email containing details on how to join the conference call, including dial-in information and a unique passcode and registrant ID. Pre-registration will allow participants to bypass an operator and be placed directly into the call. About Organon Organon is a global healthcare company formed to focus on improving the health of women throughout their lives. Organon offers more than 60 medicines and products in women’s health in addition to a growing biosimilars business and a large franchise of established medicines across a range of therapeutic areas. Organon’s existing products produce strong cash flows that support investments in innovation and future growth opportunities in women’s health and biosimilars. In addition, Organon is pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging its scale and presence in fast growing international markets. Organon has a global footprint with significant scale and geographic reach, world-class commercial capabilities, and approximately 10,000 employees with headquarters located in Jersey City, New Jersey. For more information, visit http://www.organon.com and connect with us on LinkedIn, Instagram, X (formerly known as Twitter) and Facebook. Cautionary Note Regarding Non-GAAP Financial Measures This press release contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are correspondingly not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the company makes use of the non-GAAP financial measures Adjusted EBITDA, Adjusted gross margin, Adjusted gross profit, Adjusted net income, and Adjusted diluted EPS, which are not recognized terms under GAAP and are presented only as a supplement to the company’s GAAP financial statements. This press release also provides certain measures that exclude the impact of foreign exchange. We calculate foreign exchange by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. The company believes that these non-GAAP financial measures help to enhance an understanding of the company’s financial performance. However, the presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies. You should refer to Table 4 and Table 5 of this press release for relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures. In addition, the company’s full-year 2023 guidance measures (other than revenue) are provided on a non-GAAP basis because the company is unable to reasonably predict certain items contained in the GAAP measures. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, stock-based compensation, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts and other items not reflective of the company's ongoing operations. The company uses non-GAAP financial measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful representation of the underlying operating performance of the business. Cautionary Note Regarding Forward-Looking Statements Except for historical information, this press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about management’s expectations about Organon’s future financial performance and prospects, including full-year 2023 guidance estimates and predictions regarding other financial information and metrics, franchise and product performance and strategy expectations for the remainder of 2023 and for future periods, expectations regarding the impact of VBP and developments in China. Forward-looking statements may be identified by words such as "foresees" “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include, but are not limited to, an inability to fully execute on our product development and commercialization plans within the United States or internationally; an inability to adapt to the industry-wide trend toward highly discounted channels; changes in tax laws or other tax guidance which could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; an inability to execute on our business development strategy or realize the benefits of our planned acquisitions; efficacy, safety, or other quality concerns with respect to marketed products, including market actions such as recalls, withdrawals, or declining sales; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; general economic factors, including recessionary pressures, interest rate and currency exchange rate fluctuations; general industry conditions and competition; the impact of the ongoing COVID-19 pandemic and emergence of variant strains; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances; new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict its future financial results and performance; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; difficulties developing and sustaining relationships with commercial counterparties; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s filings with the Securities and Exchange Commission ("SEC"), including the company’s Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent SEC filings, available at the SEC’s Internet site (www.sec.gov). TABLE 1 Organon & Co. Condensed Consolidated Statement of Income (Unaudited, $ in millions except shares in thousands and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues $ 1,519 $ 1,537 $ 4,665 $ 4,689 Costs, Expenses and Other Cost of sales 612 551 1,832 1,700 Selling, general and administrative 538 440 1,424 1,234 Research and development 137 127 394 329 Acquired in-process research and development and milestones — 10 8 107 Restructuring costs — 11 4 11 Interest expense 134 108 398 303 Exchange losses (gains) 14 4 25 (21 ) Other expense, net 4 4 11 15 1,439 1,255 4,096 3,678 Income Before Income Taxes 80 282 569 1,011 Taxes on income 22 55 92 202 Net Income 58 227 477 809 Earnings per Share: Basic $ 0.23 $ 0.89 $ 1.87 $ 3.19 Diluted $ 0.23 $ 0.89 $ 1.86 $ 3.17 Weighted Average Shares Outstanding: Basic 255,588 254,348 255,112 253,986 Diluted 256,349 255,067 256,162 255,094 TABLE 2 Organon & Co. Sales by top products (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total Women’s Health Nexplanon/Implanon NXT $ 146 $ 74 $ 220 $ 151 $ 78 $ 229 $ 418 $ 181 $ 599 $ 401 $ 194 $ 595 Follistim AQ 22 32 54 27 33 60 74 105 179 79 100 179 NuvaRing 18 20 37 27 23 50 50 67 117 65 68 133 Ganirelix Acetate Injection 4 21 25 6 30 36 15 74 88 20 77 97 Marvelon/Mercilon — 30 30 — 31 31 — 97 97 — 85 85 Jada 12 — 13 5 — 5 30 — 31 12 — 12 Other Women's Health (1) 16 22 39 19 23 42 52 74 126 68 70 138 Biosimilars Renflexis 57 12 69 54 7 60 172 29 201 145 20 166 Ontruzant 11 28 40 15 14 29 36 57 93 35 52 87 Brenzys — 13 13 — 24 24 — 45 45 — 52 52 Aybintio — 12 12 — 10 10 — 34 34 — 29 29 Hadlima 2 6 8 — 6 6 2 18 20 — 14 14 Established Brands Cardiovascular Zetia 2 65 66 2 85 87 5 234 239 7 280 287 Vytorin 2 31 33 1 30 31 5 95 100 6 98 104 Atozet — 126 126 — 109 109 — 397 397 — 350 350 Rosuzet — 17 17 — 17 17 — 52 52 — 55 55 Cozaar/Hyzaar 3 65 68 2 68 70 8 217 225 11 244 256 Other Cardiovascular (1) 1 42 44 1 34 35 2 124 126 3 117 120 Respiratory Singulair 3 88 91 3 92 94 8 282 290 8 308 316 Nasonex — 54 55 — 49 49 — 187 188 9 173 182 Dulera 40 9 49 31 9 40 116 28 144 98 30 127 Clarinex 2 26 28 — 25 26 4 103 107 3 96 99 Other Respiratory (1) 17 9 25 11 10 21 42 20 61 34 32 66 Non-Opioid Pain, Bone and Arcoxia — 64 64 — 64 64 — 207 207 — 185 185 Fosamax 1 40 41 1 35 36 2 121 123 2 115 117 Diprospan — 31 31 — 28 28 — 58 58 — 91 91 Other Non-Opioid Pain, Bone and Dermatology (1) 4 70 74 2 63 65 11 196 207 10 200 210 Other Proscar — 25 25 — 26 27 1 76 77 1 76 77 Propecia 2 21 22 2 28 30 5 86 92 5 90 95 Other (1) 5 72 76 6 81 87 10 231 240 21 230 251 Other (2) — 24 24 — 39 39 (1 ) 103 102 — 115 116 Revenues $ 370 $ 1,149 $ 1,519 $ 366 $ 1,171 $ 1,537 $ 1,067 $ 3,598 $ 4,665 $ 1,043 $ 3,646 $ 4,689 Totals may not foot due to rounding. Trademarks appearing above in italics are trademarks of, or are used under license by, the Organon group of companies. (1) Includes sales of products not listed separately. Revenues from Marvelon and Mercilon and Jada were previously reported as part of Other Women's Health. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health. (2) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 3 Organon & Co. Sales by geographic area (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Europe and Canada $ 392 $ 363 $ 1,259 $ 1,243 United States 370 366 1,067 1,043 Asia Pacific and Japan 284 283 869 888 China 202 241 661 721 Latin America, Middle East, Russia, and Africa 239 236 687 665 Other (1) 32 48 122 129 Revenues $ 1,519 $ 1,537 $ 4,665 $ 4,689 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 4 Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Three Months Ended September 30, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,519 $ 1,519 Cost of sales 612 (10 ) — (5 ) (29 ) — 568 Gross profit 907 951 Gross margin 59.7 % 62.6 % Selling, general and administrative 538 (41 ) — (18 ) — (87 ) 392 Research and development 137 (4 ) — (4 ) — — 129 Acquired in-process research and development and milestones — — — — — — — Restructuring costs — — — — — — — Interest expense 134 — — — — — 134 Exchange losses 14 — — — — — 14 Other expense (income), net 4 (3 ) — — — — 1 1,439 1,238 Income before income taxes 80 281 Taxes on income 22 16 — 4 5 11 58 Net income $ 58 $ 223 Earnings per share - Diluted $ 0.23 $ 0.87 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. Three Months Ended September 30, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,537 $ 1,537 Cost of sales 551 (8 ) — (3 ) (32 ) (3 ) 505 Gross profit 986 1,032 Gross margin 64.2 % 67.1 % Selling, general and administrative 440 (33 ) — (12 ) — (17 ) 378 Research and development 127 (2 ) — (3 ) — (1 ) 121 Acquired in-process research and development and 10 — — — — — 10 Restructuring costs 11 — (11 ) — — — — Interest expense 108 — — — — — 108 Exchange gains 4 — — — — — 4 Other expense (income), net 4 (6 ) — — — — (2 ) 1,255 1,124 Income before income taxes 282 413 Taxes on income 55 10 2 2 6 1 76 Net income $ 227 $ 337 Earnings per share - Diluted $ 0.89 $ 1.32 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. TABLE 4 (Continued) Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Nine Months Ended September 30, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 4,665 $ 4,665 Cost of sales 1,832 (30 ) — (13 ) (88 ) (2 ) 1,699 Gross profit 2,833 2,966 Gross margin 60.7 % 63.6 % Selling, general and administrative 1,424 (131 ) — (50 ) — (88 ) 1,155 Research and development 394 (10 ) — (11 ) — — 373 Acquired in-process research and development and milestones 8 — — — — — 8 Restructuring costs 4 — (4 ) — — — — Interest expense 398 — — — — — 398 Exchange losses 25 — — — — — 25 Other expense (income), net 11 (13 ) — — — — (2 ) 4,096 3,656 Income before income taxes 569 1,009 Taxes on income 92 42 1 12 16 11 174 Net income $ 477 $ 835 Earnings per share - Diluted $ 1.86 $ 3.26 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. Nine Months Ended September 30, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 4,689 $ 4,689 Cost of sales 1,700 (18 ) — (9 ) (88 ) (17 ) 1,568 Gross profit 2,989 3,121 Gross margin 63.7 % 66.6 % Selling, general and administrative 1,234 (86 ) — (35 ) — (17 ) 1,096 Research and development 329 (8 ) — (8 ) — (2 ) 311 Acquired in-process research and development and 107 — — — — — 107 Restructuring costs 11 — (11 ) — — — — Interest expense 303 — — — — — 303 Exchange gains (21 ) — — — — — (21 ) Other expense (income), net 15 (20 ) — — — — (5 ) 3,678 3,359 Income before income taxes 1,011 1,330 Taxes on income 202 24 2 7 15 4 254 Net income $ 809 $ 1,076 Earnings per share - Diluted $ 3.17 $ 4.22 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. TABLE 5 Organon & Co. Reconciliation of GAAP Income Before Income Taxes to Adjusted EBITDA (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income before income taxes $ 80 $ 282 $ 569 $ 1,011 Depreciation 32 25 88 72 Amortization 29 32 88 88 Interest expense 134 108 398 303 EBITDA $ 275 $ 447 $ 1,143 $ 1,474 Restructuring costs — 11 4 11 One-time costs (1) 145 70 274 168 Stock-based compensation 27 18 74 52 Adjusted EBITDA $ 447 $ 546 $ 1,495 $ 1,705 Adjusted EBITDA margin 29.4 % 35.5 % 32.0 % 36.4 % (1) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments, impairment charges and legal reserves. 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Organon Reports Results for the Third Quarter Ended September 30, 2023 By: Organon & Co. via Business Wire November 02, 2023 at 07:30 AM EDT Third quarter 2023 revenue of $1,519 million Third quarter 2023 diluted earnings per share of $0.23 and non-GAAP Adjusted diluted earnings per share of $0.87 Adjusted EBITDA of $447 million Board of Directors declares quarterly dividend of $0.28 per share Full year 2023 financial guidance ranges updated: Revenue range narrowed and lowered to $6.15 billion to $6.25 billion Adjusted EBITDA margin range narrowed and lowered to 30.5% to 31.5% Organon (NYSE: OGN) today announced its results for the third quarter ended September 30, 2023. "Since spin, we have given new life to Established Brands and have expanded our pipeline in both Biosimilars and Women's Health," said Kevin Ali, Organon's CEO. "Year to date, all three of our franchises have delivered growth on a constant currency basis. Over the medium term, we expect to deliver mid-single digit revenue growth with the power of our existing portfolio. As we move into 2024, we will be working to reduce leverage and continue to add products that could enhance that growth profile." Third Quarter 2023 Revenue in $ millions Q3 2023 Q3 2022 VPY VPY ex-FX Women’s Health $ 418 $ 454 (8 )% (7 )% Biosimilars 142 129 10 % 10 % Established Brands 935 915 2 % 3 % Other (1) 24 39 (36 )% (38 )% Revenues $ 1,519 $ 1,537 (1 )% (1 )% (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. For the third quarter of 2023, total revenue was $1,519 million, a decrease of 1% on an as-reported basis as well as excluding impact of foreign currency (ex-FX), compared with the third quarter of 2022. Women’s Health revenue decreased 8% on an as-reported basis, and decreased 7% ex-FX in the third quarter of 2023 compared with the third quarter of 2022 driven primarily by a 23% ex-FX decrease of NuvaRing® (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition. Together, the company's fertility products declined 10% ex-FX in the third quarter as unfavorable discount rates in the United States offset growth in demand. Nexplanon® (etonogestrel implant) decreased 3% ex-FX due unfavorable discount rates and a change in the go-to-market model for the product. These factors were partially offset by revenue from the Jada® system, which more than doubled year over year. Biosimilars revenue increased 10% on an as-reported basis as well as ex-FX in the third quarter of 2023, compared with the third quarter of 2022. Renflexis® (infliximab-abda) grew 15% ex-FX in the third quarter due to continued demand and strong volume growth in United States and Canada. Ontruzant® (trastuzumab-dttb) grew 34% ex-FX in the third quarter compared to the prior year period driven by the phasing of a tender in Brazil. Established Brands revenue increased 2% as-reported and increased 3% ex-FX in the third quarter of 2023, despite the impact of Volume Based Procurement (VBP) initiatives in China. Growth in the quarter was driven by Atozet™ (ezetimibe and atorvastatin calcium), particularly in France, strong demand for Nasonex® (mometasone) and favorable pricing for Dulera® (formoterol/fumarate dihydrate) in the United States. Year to date, the Established Brands franchise grew 1% ex-FX. The company expects the Established Brands franchise to achieve flat to slightly better revenue growth on a constant currency basis for the full year 2023. Third Quarter 2023 Profitability in $ millions, except per share amounts Q3 2023 Q3 2022 VPY Revenues $ 1,519 $ 1,537 (1 )% Cost of sales 612 551 11 % Gross profit 907 986 (8 )% Non-GAAP Adjusted gross profit (1) 951 1,032 (8 )% Adjusted EBITDA (1,2) 447 546 (18 )% Net income 58 227 (74 )% Non-GAAP Adjusted net income (1) 223 337 (34 )% Diluted Earnings per Share (EPS) 0.23 0.89 (74 )% Non-GAAP Adjusted diluted EPS (1) 0.87 1.32 (34 )% Acquired in-process research & development (IPR&D) and milestones — 10 NM Per share impact to diluted EPS from acquired IPR&D and milestones — (0.04 ) NM Q3 2023 Q3 2022 Gross margin 59.7 % 64.2 % Non-GAAP Adjusted gross margin (1) 62.6 % 67.1 % Adjusted EBITDA margin (1, 2) 29.4 % 35.5 % (1) See Tables 4 and 5 for reconciliations of GAAP to non-GAAP financial measures (2) Adjusted EBITDA and Adjusted EBITDA margin include $10 million in the third quarter of 2022 related to acquired IPR&D and milestones, no such expense was incurred in the third quarter of 2023 Gross margin was 59.7% as-reported and 62.6% on an adjusted basis in the third quarter of 2023 compared with 64.2% as-reported and 67.1% on an adjusted basis in the third quarter of 2022. The year-over-year decline in gross margin is primarily due to foreign exchange translation and inflationary manufacturing and distribution costs. Product mix and pricing erosion were also factors, but to a lesser extent. EBITDA margin was 29.4% in the third quarter of 2023 compared with 35.5% in the third quarter of 2022 primarily due to lower Adjusted gross profit and to a lesser extent an increase in non-GAAP SG&A expense and loss on foreign exchange translation. Net income for the third quarter of 2023 was $58 million, or $0.23 per diluted share, compared with $227 million, or $0.89 per diluted share, in the third quarter of 2022. Non-GAAP Adjusted net income was $223 million, or $0.87 per diluted share, compared with $337 million, or $1.32 per diluted share, in 2022. The year over year decrease in net income was a result of a lower Adjusted EBITDA, as well as higher interest expense. Capital Allocation Today, Organon’s Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of the company's common stock. The dividend is payable on December 14, 2023, to stockholders of record at the close of business on November 13, 2023. As of September 30, 2023, cash and cash equivalents were $414 million, and debt was $8.7 billion. Full Year Guidance Organon does not provide GAAP financial measures on a forward-looking basis because the company cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to Organon’s results computed in accordance with GAAP. The company is updating its full year 2023 guidance ranges previously provided on August 8, 2023. The range for full year 2023 revenue is narrowed and lowered to $6.15 billion to $6.25 billion, which primarily reflects current foreign currency exchange rates, changes to the go-to-market model for Nexplanon, a slower uptake of Hadlima™ (adalimumab-bwwd) and macroeconomic factors in China. The range for full year Adjusted EBITDA margin is now 30.5% to 31.5% to reflect a lower gross margin stemming from the impacts of foreign exchange on revenue, unfavorable product mix, and the timing of manufacturing costs. Organon's financial guidance does not assume an estimate for future IPR&D and milestone payments for business development transactions not yet executed. Full year 2023 financial guidance is presented below on a non-GAAP basis. Previous guidance as of August 8, 2023 Current guidance Revenues $6.250B-$6.450B $6.150B-$6.250B Adjusted gross margin Low-mid 60% range Low 60% range SG&A (as % of revenue) Mid 20% range Unchanged R&D (as % of revenue) Upper single-digit Unchanged Adjusted EBITDA margin 31.5%-33.0% 30.5%-31.5% Interest ~$525 million Unchanged Depreciation ~$120 million Unchanged Effective non-GAAP tax rate 17.5%-19.5% Unchanged Fully diluted weighted average shares outstanding ~257 million Unchanged Webcast Information Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its third quarter 2023 financial results. To listen to the event and view the presentation slides via webcast, join from the Organon Investor Relations website at https://www.organon.com/investor-relations/events-and-presentations/. A replay of the webcast will be available approximately two hours after the conclusion of the live event on the company’s website. Institutional investors and analysts interested in participating in the call must register in advance by clicking on this link: https://conferencingportals.com/event/VfCOQYEG Following registration, participants will receive a confirmation email containing details on how to join the conference call, including dial-in information and a unique passcode and registrant ID. Pre-registration will allow participants to bypass an operator and be placed directly into the call. About Organon Organon is a global healthcare company formed to focus on improving the health of women throughout their lives. Organon offers more than 60 medicines and products in women’s health in addition to a growing biosimilars business and a large franchise of established medicines across a range of therapeutic areas. Organon’s existing products produce strong cash flows that support investments in innovation and future growth opportunities in women’s health and biosimilars. In addition, Organon is pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging its scale and presence in fast growing international markets. Organon has a global footprint with significant scale and geographic reach, world-class commercial capabilities, and approximately 10,000 employees with headquarters located in Jersey City, New Jersey. For more information, visit http://www.organon.com and connect with us on LinkedIn, Instagram, X (formerly known as Twitter) and Facebook. Cautionary Note Regarding Non-GAAP Financial Measures This press release contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are correspondingly not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the company makes use of the non-GAAP financial measures Adjusted EBITDA, Adjusted gross margin, Adjusted gross profit, Adjusted net income, and Adjusted diluted EPS, which are not recognized terms under GAAP and are presented only as a supplement to the company’s GAAP financial statements. This press release also provides certain measures that exclude the impact of foreign exchange. We calculate foreign exchange by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. The company believes that these non-GAAP financial measures help to enhance an understanding of the company’s financial performance. However, the presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies. You should refer to Table 4 and Table 5 of this press release for relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures. In addition, the company’s full-year 2023 guidance measures (other than revenue) are provided on a non-GAAP basis because the company is unable to reasonably predict certain items contained in the GAAP measures. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, stock-based compensation, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts and other items not reflective of the company's ongoing operations. The company uses non-GAAP financial measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful representation of the underlying operating performance of the business. Cautionary Note Regarding Forward-Looking Statements Except for historical information, this press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about management’s expectations about Organon’s future financial performance and prospects, including full-year 2023 guidance estimates and predictions regarding other financial information and metrics, franchise and product performance and strategy expectations for the remainder of 2023 and for future periods, expectations regarding the impact of VBP and developments in China. Forward-looking statements may be identified by words such as "foresees" “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include, but are not limited to, an inability to fully execute on our product development and commercialization plans within the United States or internationally; an inability to adapt to the industry-wide trend toward highly discounted channels; changes in tax laws or other tax guidance which could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; an inability to execute on our business development strategy or realize the benefits of our planned acquisitions; efficacy, safety, or other quality concerns with respect to marketed products, including market actions such as recalls, withdrawals, or declining sales; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; general economic factors, including recessionary pressures, interest rate and currency exchange rate fluctuations; general industry conditions and competition; the impact of the ongoing COVID-19 pandemic and emergence of variant strains; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances; new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict its future financial results and performance; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; difficulties developing and sustaining relationships with commercial counterparties; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s filings with the Securities and Exchange Commission ("SEC"), including the company’s Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent SEC filings, available at the SEC’s Internet site (www.sec.gov). TABLE 1 Organon & Co. Condensed Consolidated Statement of Income (Unaudited, $ in millions except shares in thousands and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues $ 1,519 $ 1,537 $ 4,665 $ 4,689 Costs, Expenses and Other Cost of sales 612 551 1,832 1,700 Selling, general and administrative 538 440 1,424 1,234 Research and development 137 127 394 329 Acquired in-process research and development and milestones — 10 8 107 Restructuring costs — 11 4 11 Interest expense 134 108 398 303 Exchange losses (gains) 14 4 25 (21 ) Other expense, net 4 4 11 15 1,439 1,255 4,096 3,678 Income Before Income Taxes 80 282 569 1,011 Taxes on income 22 55 92 202 Net Income 58 227 477 809 Earnings per Share: Basic $ 0.23 $ 0.89 $ 1.87 $ 3.19 Diluted $ 0.23 $ 0.89 $ 1.86 $ 3.17 Weighted Average Shares Outstanding: Basic 255,588 254,348 255,112 253,986 Diluted 256,349 255,067 256,162 255,094 TABLE 2 Organon & Co. Sales by top products (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total Women’s Health Nexplanon/Implanon NXT $ 146 $ 74 $ 220 $ 151 $ 78 $ 229 $ 418 $ 181 $ 599 $ 401 $ 194 $ 595 Follistim AQ 22 32 54 27 33 60 74 105 179 79 100 179 NuvaRing 18 20 37 27 23 50 50 67 117 65 68 133 Ganirelix Acetate Injection 4 21 25 6 30 36 15 74 88 20 77 97 Marvelon/Mercilon — 30 30 — 31 31 — 97 97 — 85 85 Jada 12 — 13 5 — 5 30 — 31 12 — 12 Other Women's Health (1) 16 22 39 19 23 42 52 74 126 68 70 138 Biosimilars Renflexis 57 12 69 54 7 60 172 29 201 145 20 166 Ontruzant 11 28 40 15 14 29 36 57 93 35 52 87 Brenzys — 13 13 — 24 24 — 45 45 — 52 52 Aybintio — 12 12 — 10 10 — 34 34 — 29 29 Hadlima 2 6 8 — 6 6 2 18 20 — 14 14 Established Brands Cardiovascular Zetia 2 65 66 2 85 87 5 234 239 7 280 287 Vytorin 2 31 33 1 30 31 5 95 100 6 98 104 Atozet — 126 126 — 109 109 — 397 397 — 350 350 Rosuzet — 17 17 — 17 17 — 52 52 — 55 55 Cozaar/Hyzaar 3 65 68 2 68 70 8 217 225 11 244 256 Other Cardiovascular (1) 1 42 44 1 34 35 2 124 126 3 117 120 Respiratory Singulair 3 88 91 3 92 94 8 282 290 8 308 316 Nasonex — 54 55 — 49 49 — 187 188 9 173 182 Dulera 40 9 49 31 9 40 116 28 144 98 30 127 Clarinex 2 26 28 — 25 26 4 103 107 3 96 99 Other Respiratory (1) 17 9 25 11 10 21 42 20 61 34 32 66 Non-Opioid Pain, Bone and Arcoxia — 64 64 — 64 64 — 207 207 — 185 185 Fosamax 1 40 41 1 35 36 2 121 123 2 115 117 Diprospan — 31 31 — 28 28 — 58 58 — 91 91 Other Non-Opioid Pain, Bone and Dermatology (1) 4 70 74 2 63 65 11 196 207 10 200 210 Other Proscar — 25 25 — 26 27 1 76 77 1 76 77 Propecia 2 21 22 2 28 30 5 86 92 5 90 95 Other (1) 5 72 76 6 81 87 10 231 240 21 230 251 Other (2) — 24 24 — 39 39 (1 ) 103 102 — 115 116 Revenues $ 370 $ 1,149 $ 1,519 $ 366 $ 1,171 $ 1,537 $ 1,067 $ 3,598 $ 4,665 $ 1,043 $ 3,646 $ 4,689 Totals may not foot due to rounding. Trademarks appearing above in italics are trademarks of, or are used under license by, the Organon group of companies. (1) Includes sales of products not listed separately. Revenues from Marvelon and Mercilon and Jada were previously reported as part of Other Women's Health. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health. (2) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 3 Organon & Co. Sales by geographic area (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Europe and Canada $ 392 $ 363 $ 1,259 $ 1,243 United States 370 366 1,067 1,043 Asia Pacific and Japan 284 283 869 888 China 202 241 661 721 Latin America, Middle East, Russia, and Africa 239 236 687 665 Other (1) 32 48 122 129 Revenues $ 1,519 $ 1,537 $ 4,665 $ 4,689 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 4 Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Three Months Ended September 30, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,519 $ 1,519 Cost of sales 612 (10 ) — (5 ) (29 ) — 568 Gross profit 907 951 Gross margin 59.7 % 62.6 % Selling, general and administrative 538 (41 ) — (18 ) — (87 ) 392 Research and development 137 (4 ) — (4 ) — — 129 Acquired in-process research and development and milestones — — — — — — — Restructuring costs — — — — — — — Interest expense 134 — — — — — 134 Exchange losses 14 — — — — — 14 Other expense (income), net 4 (3 ) — — — — 1 1,439 1,238 Income before income taxes 80 281 Taxes on income 22 16 — 4 5 11 58 Net income $ 58 $ 223 Earnings per share - Diluted $ 0.23 $ 0.87 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. Three Months Ended September 30, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,537 $ 1,537 Cost of sales 551 (8 ) — (3 ) (32 ) (3 ) 505 Gross profit 986 1,032 Gross margin 64.2 % 67.1 % Selling, general and administrative 440 (33 ) — (12 ) — (17 ) 378 Research and development 127 (2 ) — (3 ) — (1 ) 121 Acquired in-process research and development and 10 — — — — — 10 Restructuring costs 11 — (11 ) — — — — Interest expense 108 — — — — — 108 Exchange gains 4 — — — — — 4 Other expense (income), net 4 (6 ) — — — — (2 ) 1,255 1,124 Income before income taxes 282 413 Taxes on income 55 10 2 2 6 1 76 Net income $ 227 $ 337 Earnings per share - Diluted $ 0.89 $ 1.32 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. TABLE 4 (Continued) Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Nine Months Ended September 30, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 4,665 $ 4,665 Cost of sales 1,832 (30 ) — (13 ) (88 ) (2 ) 1,699 Gross profit 2,833 2,966 Gross margin 60.7 % 63.6 % Selling, general and administrative 1,424 (131 ) — (50 ) — (88 ) 1,155 Research and development 394 (10 ) — (11 ) — — 373 Acquired in-process research and development and milestones 8 — — — — — 8 Restructuring costs 4 — (4 ) — — — — Interest expense 398 — — — — — 398 Exchange losses 25 — — — — — 25 Other expense (income), net 11 (13 ) — — — — (2 ) 4,096 3,656 Income before income taxes 569 1,009 Taxes on income 92 42 1 12 16 11 174 Net income $ 477 $ 835 Earnings per share - Diluted $ 1.86 $ 3.26 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. Nine Months Ended September 30, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 4,689 $ 4,689 Cost of sales 1,700 (18 ) — (9 ) (88 ) (17 ) 1,568 Gross profit 2,989 3,121 Gross margin 63.7 % 66.6 % Selling, general and administrative 1,234 (86 ) — (35 ) — (17 ) 1,096 Research and development 329 (8 ) — (8 ) — (2 ) 311 Acquired in-process research and development and 107 — — — — — 107 Restructuring costs 11 — (11 ) — — — — Interest expense 303 — — — — — 303 Exchange gains (21 ) — — — — — (21 ) Other expense (income), net 15 (20 ) — — — — (5 ) 3,678 3,359 Income before income taxes 1,011 1,330 Taxes on income 202 24 2 7 15 4 254 Net income $ 809 $ 1,076 Earnings per share - Diluted $ 3.17 $ 4.22 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. TABLE 5 Organon & Co. Reconciliation of GAAP Income Before Income Taxes to Adjusted EBITDA (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income before income taxes $ 80 $ 282 $ 569 $ 1,011 Depreciation 32 25 88 72 Amortization 29 32 88 88 Interest expense 134 108 398 303 EBITDA $ 275 $ 447 $ 1,143 $ 1,474 Restructuring costs — 11 4 11 One-time costs (1) 145 70 274 168 Stock-based compensation 27 18 74 52 Adjusted EBITDA $ 447 $ 546 $ 1,495 $ 1,705 Adjusted EBITDA margin 29.4 % 35.5 % 32.0 % 36.4 % (1) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments, impairment charges and legal reserves. View source version on businesswire.com: https://www.businesswire.com/news/home/20231102429565/en/Contacts Media Contacts: Karissa Peer (614) 314-8094 Kate Vossen (732) 675-8448 Investor Contacts: Jennifer Halchak (201) 275-2711 Alex Arzeno (203) 550-3972
Third quarter 2023 revenue of $1,519 million Third quarter 2023 diluted earnings per share of $0.23 and non-GAAP Adjusted diluted earnings per share of $0.87 Adjusted EBITDA of $447 million Board of Directors declares quarterly dividend of $0.28 per share Full year 2023 financial guidance ranges updated: Revenue range narrowed and lowered to $6.15 billion to $6.25 billion Adjusted EBITDA margin range narrowed and lowered to 30.5% to 31.5%
Organon (NYSE: OGN) today announced its results for the third quarter ended September 30, 2023. "Since spin, we have given new life to Established Brands and have expanded our pipeline in both Biosimilars and Women's Health," said Kevin Ali, Organon's CEO. "Year to date, all three of our franchises have delivered growth on a constant currency basis. Over the medium term, we expect to deliver mid-single digit revenue growth with the power of our existing portfolio. As we move into 2024, we will be working to reduce leverage and continue to add products that could enhance that growth profile." Third Quarter 2023 Revenue in $ millions Q3 2023 Q3 2022 VPY VPY ex-FX Women’s Health $ 418 $ 454 (8 )% (7 )% Biosimilars 142 129 10 % 10 % Established Brands 935 915 2 % 3 % Other (1) 24 39 (36 )% (38 )% Revenues $ 1,519 $ 1,537 (1 )% (1 )% (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. For the third quarter of 2023, total revenue was $1,519 million, a decrease of 1% on an as-reported basis as well as excluding impact of foreign currency (ex-FX), compared with the third quarter of 2022. Women’s Health revenue decreased 8% on an as-reported basis, and decreased 7% ex-FX in the third quarter of 2023 compared with the third quarter of 2022 driven primarily by a 23% ex-FX decrease of NuvaRing® (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition. Together, the company's fertility products declined 10% ex-FX in the third quarter as unfavorable discount rates in the United States offset growth in demand. Nexplanon® (etonogestrel implant) decreased 3% ex-FX due unfavorable discount rates and a change in the go-to-market model for the product. These factors were partially offset by revenue from the Jada® system, which more than doubled year over year. Biosimilars revenue increased 10% on an as-reported basis as well as ex-FX in the third quarter of 2023, compared with the third quarter of 2022. Renflexis® (infliximab-abda) grew 15% ex-FX in the third quarter due to continued demand and strong volume growth in United States and Canada. Ontruzant® (trastuzumab-dttb) grew 34% ex-FX in the third quarter compared to the prior year period driven by the phasing of a tender in Brazil. Established Brands revenue increased 2% as-reported and increased 3% ex-FX in the third quarter of 2023, despite the impact of Volume Based Procurement (VBP) initiatives in China. Growth in the quarter was driven by Atozet™ (ezetimibe and atorvastatin calcium), particularly in France, strong demand for Nasonex® (mometasone) and favorable pricing for Dulera® (formoterol/fumarate dihydrate) in the United States. Year to date, the Established Brands franchise grew 1% ex-FX. The company expects the Established Brands franchise to achieve flat to slightly better revenue growth on a constant currency basis for the full year 2023. Third Quarter 2023 Profitability in $ millions, except per share amounts Q3 2023 Q3 2022 VPY Revenues $ 1,519 $ 1,537 (1 )% Cost of sales 612 551 11 % Gross profit 907 986 (8 )% Non-GAAP Adjusted gross profit (1) 951 1,032 (8 )% Adjusted EBITDA (1,2) 447 546 (18 )% Net income 58 227 (74 )% Non-GAAP Adjusted net income (1) 223 337 (34 )% Diluted Earnings per Share (EPS) 0.23 0.89 (74 )% Non-GAAP Adjusted diluted EPS (1) 0.87 1.32 (34 )% Acquired in-process research & development (IPR&D) and milestones — 10 NM Per share impact to diluted EPS from acquired IPR&D and milestones — (0.04 ) NM Q3 2023 Q3 2022 Gross margin 59.7 % 64.2 % Non-GAAP Adjusted gross margin (1) 62.6 % 67.1 % Adjusted EBITDA margin (1, 2) 29.4 % 35.5 % (1) See Tables 4 and 5 for reconciliations of GAAP to non-GAAP financial measures (2) Adjusted EBITDA and Adjusted EBITDA margin include $10 million in the third quarter of 2022 related to acquired IPR&D and milestones, no such expense was incurred in the third quarter of 2023 Gross margin was 59.7% as-reported and 62.6% on an adjusted basis in the third quarter of 2023 compared with 64.2% as-reported and 67.1% on an adjusted basis in the third quarter of 2022. The year-over-year decline in gross margin is primarily due to foreign exchange translation and inflationary manufacturing and distribution costs. Product mix and pricing erosion were also factors, but to a lesser extent. EBITDA margin was 29.4% in the third quarter of 2023 compared with 35.5% in the third quarter of 2022 primarily due to lower Adjusted gross profit and to a lesser extent an increase in non-GAAP SG&A expense and loss on foreign exchange translation. Net income for the third quarter of 2023 was $58 million, or $0.23 per diluted share, compared with $227 million, or $0.89 per diluted share, in the third quarter of 2022. Non-GAAP Adjusted net income was $223 million, or $0.87 per diluted share, compared with $337 million, or $1.32 per diluted share, in 2022. The year over year decrease in net income was a result of a lower Adjusted EBITDA, as well as higher interest expense. Capital Allocation Today, Organon’s Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of the company's common stock. The dividend is payable on December 14, 2023, to stockholders of record at the close of business on November 13, 2023. As of September 30, 2023, cash and cash equivalents were $414 million, and debt was $8.7 billion. Full Year Guidance Organon does not provide GAAP financial measures on a forward-looking basis because the company cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to Organon’s results computed in accordance with GAAP. The company is updating its full year 2023 guidance ranges previously provided on August 8, 2023. The range for full year 2023 revenue is narrowed and lowered to $6.15 billion to $6.25 billion, which primarily reflects current foreign currency exchange rates, changes to the go-to-market model for Nexplanon, a slower uptake of Hadlima™ (adalimumab-bwwd) and macroeconomic factors in China. The range for full year Adjusted EBITDA margin is now 30.5% to 31.5% to reflect a lower gross margin stemming from the impacts of foreign exchange on revenue, unfavorable product mix, and the timing of manufacturing costs. Organon's financial guidance does not assume an estimate for future IPR&D and milestone payments for business development transactions not yet executed. Full year 2023 financial guidance is presented below on a non-GAAP basis. Previous guidance as of August 8, 2023 Current guidance Revenues $6.250B-$6.450B $6.150B-$6.250B Adjusted gross margin Low-mid 60% range Low 60% range SG&A (as % of revenue) Mid 20% range Unchanged R&D (as % of revenue) Upper single-digit Unchanged Adjusted EBITDA margin 31.5%-33.0% 30.5%-31.5% Interest ~$525 million Unchanged Depreciation ~$120 million Unchanged Effective non-GAAP tax rate 17.5%-19.5% Unchanged Fully diluted weighted average shares outstanding ~257 million Unchanged Webcast Information Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its third quarter 2023 financial results. To listen to the event and view the presentation slides via webcast, join from the Organon Investor Relations website at https://www.organon.com/investor-relations/events-and-presentations/. A replay of the webcast will be available approximately two hours after the conclusion of the live event on the company’s website. Institutional investors and analysts interested in participating in the call must register in advance by clicking on this link: https://conferencingportals.com/event/VfCOQYEG Following registration, participants will receive a confirmation email containing details on how to join the conference call, including dial-in information and a unique passcode and registrant ID. Pre-registration will allow participants to bypass an operator and be placed directly into the call. About Organon Organon is a global healthcare company formed to focus on improving the health of women throughout their lives. Organon offers more than 60 medicines and products in women’s health in addition to a growing biosimilars business and a large franchise of established medicines across a range of therapeutic areas. Organon’s existing products produce strong cash flows that support investments in innovation and future growth opportunities in women’s health and biosimilars. In addition, Organon is pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging its scale and presence in fast growing international markets. Organon has a global footprint with significant scale and geographic reach, world-class commercial capabilities, and approximately 10,000 employees with headquarters located in Jersey City, New Jersey. For more information, visit http://www.organon.com and connect with us on LinkedIn, Instagram, X (formerly known as Twitter) and Facebook. Cautionary Note Regarding Non-GAAP Financial Measures This press release contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are correspondingly not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the company makes use of the non-GAAP financial measures Adjusted EBITDA, Adjusted gross margin, Adjusted gross profit, Adjusted net income, and Adjusted diluted EPS, which are not recognized terms under GAAP and are presented only as a supplement to the company’s GAAP financial statements. This press release also provides certain measures that exclude the impact of foreign exchange. We calculate foreign exchange by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. The company believes that these non-GAAP financial measures help to enhance an understanding of the company’s financial performance. However, the presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies. You should refer to Table 4 and Table 5 of this press release for relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures. In addition, the company’s full-year 2023 guidance measures (other than revenue) are provided on a non-GAAP basis because the company is unable to reasonably predict certain items contained in the GAAP measures. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, stock-based compensation, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts and other items not reflective of the company's ongoing operations. The company uses non-GAAP financial measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful representation of the underlying operating performance of the business. Cautionary Note Regarding Forward-Looking Statements Except for historical information, this press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about management’s expectations about Organon’s future financial performance and prospects, including full-year 2023 guidance estimates and predictions regarding other financial information and metrics, franchise and product performance and strategy expectations for the remainder of 2023 and for future periods, expectations regarding the impact of VBP and developments in China. Forward-looking statements may be identified by words such as "foresees" “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include, but are not limited to, an inability to fully execute on our product development and commercialization plans within the United States or internationally; an inability to adapt to the industry-wide trend toward highly discounted channels; changes in tax laws or other tax guidance which could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; an inability to execute on our business development strategy or realize the benefits of our planned acquisitions; efficacy, safety, or other quality concerns with respect to marketed products, including market actions such as recalls, withdrawals, or declining sales; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; general economic factors, including recessionary pressures, interest rate and currency exchange rate fluctuations; general industry conditions and competition; the impact of the ongoing COVID-19 pandemic and emergence of variant strains; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances; new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict its future financial results and performance; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; difficulties developing and sustaining relationships with commercial counterparties; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s filings with the Securities and Exchange Commission ("SEC"), including the company’s Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent SEC filings, available at the SEC’s Internet site (www.sec.gov). TABLE 1 Organon & Co. Condensed Consolidated Statement of Income (Unaudited, $ in millions except shares in thousands and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues $ 1,519 $ 1,537 $ 4,665 $ 4,689 Costs, Expenses and Other Cost of sales 612 551 1,832 1,700 Selling, general and administrative 538 440 1,424 1,234 Research and development 137 127 394 329 Acquired in-process research and development and milestones — 10 8 107 Restructuring costs — 11 4 11 Interest expense 134 108 398 303 Exchange losses (gains) 14 4 25 (21 ) Other expense, net 4 4 11 15 1,439 1,255 4,096 3,678 Income Before Income Taxes 80 282 569 1,011 Taxes on income 22 55 92 202 Net Income 58 227 477 809 Earnings per Share: Basic $ 0.23 $ 0.89 $ 1.87 $ 3.19 Diluted $ 0.23 $ 0.89 $ 1.86 $ 3.17 Weighted Average Shares Outstanding: Basic 255,588 254,348 255,112 253,986 Diluted 256,349 255,067 256,162 255,094 TABLE 2 Organon & Co. Sales by top products (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total Women’s Health Nexplanon/Implanon NXT $ 146 $ 74 $ 220 $ 151 $ 78 $ 229 $ 418 $ 181 $ 599 $ 401 $ 194 $ 595 Follistim AQ 22 32 54 27 33 60 74 105 179 79 100 179 NuvaRing 18 20 37 27 23 50 50 67 117 65 68 133 Ganirelix Acetate Injection 4 21 25 6 30 36 15 74 88 20 77 97 Marvelon/Mercilon — 30 30 — 31 31 — 97 97 — 85 85 Jada 12 — 13 5 — 5 30 — 31 12 — 12 Other Women's Health (1) 16 22 39 19 23 42 52 74 126 68 70 138 Biosimilars Renflexis 57 12 69 54 7 60 172 29 201 145 20 166 Ontruzant 11 28 40 15 14 29 36 57 93 35 52 87 Brenzys — 13 13 — 24 24 — 45 45 — 52 52 Aybintio — 12 12 — 10 10 — 34 34 — 29 29 Hadlima 2 6 8 — 6 6 2 18 20 — 14 14 Established Brands Cardiovascular Zetia 2 65 66 2 85 87 5 234 239 7 280 287 Vytorin 2 31 33 1 30 31 5 95 100 6 98 104 Atozet — 126 126 — 109 109 — 397 397 — 350 350 Rosuzet — 17 17 — 17 17 — 52 52 — 55 55 Cozaar/Hyzaar 3 65 68 2 68 70 8 217 225 11 244 256 Other Cardiovascular (1) 1 42 44 1 34 35 2 124 126 3 117 120 Respiratory Singulair 3 88 91 3 92 94 8 282 290 8 308 316 Nasonex — 54 55 — 49 49 — 187 188 9 173 182 Dulera 40 9 49 31 9 40 116 28 144 98 30 127 Clarinex 2 26 28 — 25 26 4 103 107 3 96 99 Other Respiratory (1) 17 9 25 11 10 21 42 20 61 34 32 66 Non-Opioid Pain, Bone and Arcoxia — 64 64 — 64 64 — 207 207 — 185 185 Fosamax 1 40 41 1 35 36 2 121 123 2 115 117 Diprospan — 31 31 — 28 28 — 58 58 — 91 91 Other Non-Opioid Pain, Bone and Dermatology (1) 4 70 74 2 63 65 11 196 207 10 200 210 Other Proscar — 25 25 — 26 27 1 76 77 1 76 77 Propecia 2 21 22 2 28 30 5 86 92 5 90 95 Other (1) 5 72 76 6 81 87 10 231 240 21 230 251 Other (2) — 24 24 — 39 39 (1 ) 103 102 — 115 116 Revenues $ 370 $ 1,149 $ 1,519 $ 366 $ 1,171 $ 1,537 $ 1,067 $ 3,598 $ 4,665 $ 1,043 $ 3,646 $ 4,689 Totals may not foot due to rounding. Trademarks appearing above in italics are trademarks of, or are used under license by, the Organon group of companies. (1) Includes sales of products not listed separately. Revenues from Marvelon and Mercilon and Jada were previously reported as part of Other Women's Health. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health. (2) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 3 Organon & Co. Sales by geographic area (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Europe and Canada $ 392 $ 363 $ 1,259 $ 1,243 United States 370 366 1,067 1,043 Asia Pacific and Japan 284 283 869 888 China 202 241 661 721 Latin America, Middle East, Russia, and Africa 239 236 687 665 Other (1) 32 48 122 129 Revenues $ 1,519 $ 1,537 $ 4,665 $ 4,689 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 4 Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Three Months Ended September 30, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,519 $ 1,519 Cost of sales 612 (10 ) — (5 ) (29 ) — 568 Gross profit 907 951 Gross margin 59.7 % 62.6 % Selling, general and administrative 538 (41 ) — (18 ) — (87 ) 392 Research and development 137 (4 ) — (4 ) — — 129 Acquired in-process research and development and milestones — — — — — — — Restructuring costs — — — — — — — Interest expense 134 — — — — — 134 Exchange losses 14 — — — — — 14 Other expense (income), net 4 (3 ) — — — — 1 1,439 1,238 Income before income taxes 80 281 Taxes on income 22 16 — 4 5 11 58 Net income $ 58 $ 223 Earnings per share - Diluted $ 0.23 $ 0.87 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. Three Months Ended September 30, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,537 $ 1,537 Cost of sales 551 (8 ) — (3 ) (32 ) (3 ) 505 Gross profit 986 1,032 Gross margin 64.2 % 67.1 % Selling, general and administrative 440 (33 ) — (12 ) — (17 ) 378 Research and development 127 (2 ) — (3 ) — (1 ) 121 Acquired in-process research and development and 10 — — — — — 10 Restructuring costs 11 — (11 ) — — — — Interest expense 108 — — — — — 108 Exchange gains 4 — — — — — 4 Other expense (income), net 4 (6 ) — — — — (2 ) 1,255 1,124 Income before income taxes 282 413 Taxes on income 55 10 2 2 6 1 76 Net income $ 227 $ 337 Earnings per share - Diluted $ 0.89 $ 1.32 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. TABLE 4 (Continued) Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Nine Months Ended September 30, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 4,665 $ 4,665 Cost of sales 1,832 (30 ) — (13 ) (88 ) (2 ) 1,699 Gross profit 2,833 2,966 Gross margin 60.7 % 63.6 % Selling, general and administrative 1,424 (131 ) — (50 ) — (88 ) 1,155 Research and development 394 (10 ) — (11 ) — — 373 Acquired in-process research and development and milestones 8 — — — — — 8 Restructuring costs 4 — (4 ) — — — — Interest expense 398 — — — — — 398 Exchange losses 25 — — — — — 25 Other expense (income), net 11 (13 ) — — — — (2 ) 4,096 3,656 Income before income taxes 569 1,009 Taxes on income 92 42 1 12 16 11 174 Net income $ 477 $ 835 Earnings per share - Diluted $ 1.86 $ 3.26 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. Nine Months Ended September 30, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 4,689 $ 4,689 Cost of sales 1,700 (18 ) — (9 ) (88 ) (17 ) 1,568 Gross profit 2,989 3,121 Gross margin 63.7 % 66.6 % Selling, general and administrative 1,234 (86 ) — (35 ) — (17 ) 1,096 Research and development 329 (8 ) — (8 ) — (2 ) 311 Acquired in-process research and development and 107 — — — — — 107 Restructuring costs 11 — (11 ) — — — — Interest expense 303 — — — — — 303 Exchange gains (21 ) — — — — — (21 ) Other expense (income), net 15 (20 ) — — — — (5 ) 3,678 3,359 Income before income taxes 1,011 1,330 Taxes on income 202 24 2 7 15 4 254 Net income $ 809 $ 1,076 Earnings per share - Diluted $ 3.17 $ 4.22 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization, impairment charges and legal reserves. TABLE 5 Organon & Co. Reconciliation of GAAP Income Before Income Taxes to Adjusted EBITDA (Unaudited, $ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income before income taxes $ 80 $ 282 $ 569 $ 1,011 Depreciation 32 25 88 72 Amortization 29 32 88 88 Interest expense 134 108 398 303 EBITDA $ 275 $ 447 $ 1,143 $ 1,474 Restructuring costs — 11 4 11 One-time costs (1) 145 70 274 168 Stock-based compensation 27 18 74 52 Adjusted EBITDA $ 447 $ 546 $ 1,495 $ 1,705 Adjusted EBITDA margin 29.4 % 35.5 % 32.0 % 36.4 % (1) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments, impairment charges and legal reserves. 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