Full Press Release Details
| Media Contacts: | Karissa Peer | Investor Contacts: | Jennifer Halchak |
| (614) 314-8094 | (201) 275-2711 | ||
| Kate Vossen | Alex Arzeno | ||
| (732) 675-8448 | (203) 550-3972 |
Organon Reports Results for the Fourth Quarter
and Full Year Ended December 31, 2022
Jersey City, N.J., February 16, 2023 - Organon (NYSE: OGN)
today announced its results for the fourth quarter and full year ended December 31, 2022.
"We enter 2023 with momentum, building off the significant achievements
in our short history as an independent company", said Kevin Ali, Organon's CEO. "Since these products have been in our hands,
we have set three quarterly sales records for Nexplanon, delivered two consecutive years of double-digit revenue growth in Biosimilars
and demonstrated the durability of the Established Brands franchise. We have also continued to position the company for future growth
with active business development - adding seven assets in Women's Health and a second partner in Biosimilars. We remain committed to continuing
to deliver on the promise of our portfolio and advancing the innovation needed to improve women's health."
Fourth Quarter 2022 revenues
| in $ millions | Q4 2022 | Q4 2021 | VPY | VPY ex-FX | ||||||||||||
| Women's Health | $ | 433 | $ | 415 | 4 | % | 9 | % | ||||||||
| Biosimilars | 134 | 118 | 13 | % | 17 | % | ||||||||||
| Established Brands | 888 | 1,037 | (14 | )% | (4 | )% | ||||||||||
| Other (1) | 30 | 34 | (8 | )% | (9 | )% | ||||||||||
| Revenues | $ | 1,485 | $ | 1,604 | (7 | )% | 1 | % |
(1) Other includes manufacturing sales to Merck &
Co., Inc., Rahway, NJ, USA and other third parties.
For the fourth quarter of 2022, total revenue was $1,485 million, a
decrease of 7% as-reported and an increase of 1% excluding the impact of foreign currency (ex-FX), compared with the fourth quarter of
Women's Health revenue increased 4% as-reported, and 9% ex-FX
in the fourth quarter of 2022 compared with the fourth quarter of 2021, driven primarily by Nexplanon (etonogestrel implant)
a long-acting reversible contraceptive, which grew 8% ex-FX in the fourth quarter of 2022 compared with the fourth quarter of 2021. The
Women's Health franchise also benefited from 4% ex-FX growth in the fertility portfolio during the quarter, as well as from contributions
from recent business development activity including combined oral contraceptives Marvelon (ethinylestradiol, desogestrel)
and Mercilon (ethinylestradiol, desogestrel) which together grew 25% ex-FX in the fourth quarter of 2022. Growth in the
Women's Health franchise was partially offset by a 5% ex-FX decrease of NuvaRing (etonogestrel/ethinyl estradiol vaginal ring)
which continues to be impacted by generic competition.
Biosimilars revenue increased 13% as-reported and 17% ex-FX in the
fourth quarter 2022, compared with the fourth quarter of 2021 primarily driven by double-digit growth from Renflexis (infliximab-abda),
Ontruzant (trastuzumab-dttb), Hadlima (adalimumab-bwwd) and Aybintio (bevacizumab). This was offset
by a 13% ex-FX decline in Brenzys (etanercept) due to the timing of a tender in Brazil.
Established Brands revenue decreased 14% as-reported and 4% ex-FX in
the fourth quarter of 2022, compared with the fourth quarter of 2021. The year over year decline in the fourth quarter was primarily related
to the November 2022 inclusion of EzetrolTM (ezetimibe) in the seventh round of VBP (Volume Based Procurement)
in China. Additionally, In January 2023, Organon initiated a market action in certain
markets for betamethasone suspension injections sold under the trademarks DiprospanTM, Celestone
Chronodose TM, and Celestone Soluspan , related to a
non-conforming component of a manufacturing line at Organon's Heist, Belgium facility. This action resulted in a reduction of Established
Brands revenue of $8 million in the fourth quarter of 2022. No product quality complaints have been reported, and there have been no reported
adverse events attributable to the potentially impacted and distributed product batches.
Fourth Quarter 2022 Profitability
| in $ millions, except per share amounts | Q4 2022 | Q4 2021 | VPY | |||||||||
| Revenues | $ | 1,485 | $ | 1,604 | (7 | )% | ||||||
| Gross profit | 891 | 1,005 | (11 | )% | ||||||||
| Non-GAAP Adjusted Gross Profit (1) | 937 | 1,059 | (12 | )% | ||||||||
| Adjusted EBITDA (1,2) | 380 | 470 | (19 | )% | ||||||||
| Net Income, continuing operations | 108 | 202 | (47 | )% | ||||||||
| Non-GAAP adjusted net income, continuing operations (1) | 208 | 287 | (28 | )% | ||||||||
| Diluted Earnings per Share (EPS), continuing operations | 0.42 | 0.79 | (47 | )% | ||||||||
| Non-GAAP adjusted diluted EPS, continuing operations (1) | 0.81 | 1.13 | (28 | )% | ||||||||
| Acquired IPR&D (in-process research and development) and milestones | - | 79 | NM | |||||||||
| Per share impact to diluted EPS from acquired IPR&D and milestones | - | (0.24 | ) | NM | ||||||||
| Q4 2022 | Q4 2021 | |||||||||||
| Gross margin | 60.0 | % | 62.7 | % | ||||||||
| Non-GAAP Adjusted Gross Margin (1) | 63.1 | % | 66.0 | % | ||||||||
| Adjusted EBITDA margin (1,2) | 25.6 | % | 29.3 | % |
Gross margin in the fourth quarter of 2022 was 60.0% as-reported, compared
with 62.7% in the prior year period. Adjusted Gross Margin was 63.1% in the fourth quarter of 2022 compared with 66.0% on an adjusted
basis in the fourth quarter of 2021. The year over year decline in gross margin is primarily due to inventory charges of $36 million recognized
in Cost of sales and an $8 million sales return reserve related to the market action associated with the Heist plant.
Adjusted EBITDA margin was 25.6% in the fourth quarter of 2022 compared
with 29.3% in the fourth quarter of 2021. Together with the costs associated with the market action at Heist, expenses related to positioning
the company for future growth - higher selling and promotional costs as well as research and development
spend associated with the company's prior acquisitions - contributed to the decline in Adjusted EBITDA margin in the fourth quarter.
Net income from continuing operations for the fourth quarter of 2022
was $108 million, or $0.42 per diluted share, compared with $202 million, or $0.79 per diluted share, in the fourth quarter of 2021. Non-GAAP
Adjusted net income from continuing operations was $208 million, or $0.81 per diluted share, compared with $287 million, or $1.13 per
diluted share, in 2021.
| in $ millions | FY 2022 | FY 2021 | VPY | VPY ex-FX | ||||||||||||
| Women's Health | $ | 1,673 | $ | 1,612 | 4 | % | 7 | % | ||||||||
| Biosimilars | 481 | 424 | 13 | % | 17 | % | ||||||||||
| Established Brands | 3,874 | 4,068 | (5 | )% | 3 | % | ||||||||||
| Other (1) | 146 | 200 | (27 | )% | (29 | )% | ||||||||||
| Revenue | $ | 6,174 | $ | 6,304 | (2 | )% | 4 | % |
Total revenue was $6.2 billion for full year 2022, a decrease of 2%
as-reported and an increase of 4% ex-FX, compared with the full year 2021. With approximately 75% of the company's revenue outside of
the United States, foreign exchange translation represented an approximate 600 bps headwind to total revenue in 2022. On a constant currency
basis, all three of the company's franchises grew for the full year 2022.
Women's Health revenue increased 4% as-reported and 7% ex-FX
for full year 2022 compared with 2021, driven by Nexplanon which increased 11% ex-FX. Nexplanon's growth was primarily due
to demand uptake and favorable pricing in the United States, as well as volume growth in the company's LAMERA region (Latin America, Middle-East,
Russia and Africa). Additionally, within Women's Health, the fertility portfolio grew approximately 9% ex-FX for the full year 2022, and
the reacquisition of rights to Marvelon and Mercilon in certain Asian markets contributed about two points of constant currency
growth to Women's Health in 2022. Performance was partially offset by a 6% ex-FX decline in NuvaRing for full year 2022.
Biosimilars revenue grew 13% as-reported and 17% ex-FX for full year
2022 compared with 2021, driven primarily by continued demand growth in the United States for Renflexis and Ontruzant as
well as strong performance across the biosimilars portfolio in Canada. Hadlima was up 57% ex-FX in 2022, reflecting its successful
2021 launch in Canada and Australia.
Revenue for Established Brands declined 5% as-reported and increased
3% ex-FX for the full year 2022. In 2022, volume growth of greater than 6% more than offset mandated price decreases in certain markets.
Full year performance benefited from a temporary supply issue that impacted several competitors
in the Japanese market as well as from strong performance in Atozet (ezetimibe and atorvastatin), and the respiratory portfolio.
Still, with loss of exclusivity risk largely behind the portfolio, together with continued focus on maximizing the potential of these
well-known brands, Organon expects the Established Brands franchise to achieve flat performance in 2023 at constant currency.
Full Year 2022 Profitability
| in $ millions, except per share amounts | 2022 | 2021 | VPY | |||||||||
| Revenues | $ | 6,174 | $ | 6,304 | (2 | )% | ||||||
| Cost of sales | 2,294 | 2,382 | (4 | )% | ||||||||
| Gross profit | 3,880 | 3,922 | (1 | )% | ||||||||
| Non-GAAP Adjusted Gross Profit (1) | 4,058 | 4,081 | (1 | )% | ||||||||
| Adjusted EBITDA (1,2) | 2,085 | 2,275 | (8 | )% | ||||||||
| Net Income, continuing operations | 917 | 1,351 | (32 | )% | ||||||||
| Non-GAAP adjusted net income, continuing operations (1) | 1,284 | 1,577 | (19 | )% | ||||||||
| Diluted Earnings per Share (EPS), continuing operations | 3.59 | 5.31 | (32 | )% | ||||||||
| Non-GAAP adjusted diluted EPS, continuing operations (1) | 5.03 | 6.20 | (19 | )% | ||||||||
| Acquired in-process research & development (IPR&D) and milestones | 107 | 104 | 3 | % | ||||||||
| Per share impact to diluted EPS from acquired IPR&D and milestones | (0.33 | ) | (0.33 | ) | NM | |||||||
| 2022 | 2021 | |||||||||||
| Gross margin | 62.8 | % | 62.2 | % | ||||||||
| Non-GAAP Adjusted Gross Margin (1) | 65.7 | % | 64.7 | % | ||||||||
| Adjusted EBITDA margin (1,2) | 33.8 | % | 36.1 | % |
Gross margin was 62.8% as-reported and 65.7% on an adjusted basis for
full year 2022 compared with 62.2% as-reported and 64.7% on an adjusted basis in 2021. The year-over-year
increase in Adjusted Gross Margin reflects the impact of lower supply sales (which carry lower margins) compared with the prior year,
pre-spin allocated costs related to the separation in the prior year and a $24 million charge pertaining to unavoidable losses associated
with a long-term vendor supply contract also incurred during the prior year, offset by the aforementioned inventory charges of
$36 million recognized in Cost of sales in the fourth quarter of 2022 relating to the company's
EBITDA margin was 33.8% for the full year 2022 compared with 36.1% for the full year 2021. Together with the costs associated with
the market action at Heist, expenses related to positioning the company for future growth - higher
selling and promotional costs as well as continued R&D spend associated with the company's recent acquisitions of clinical stage assets
- contributed to the decline in Adjusted EBITDA margin year over year.
Net income from continuing operations for 2022 was $917 million, or
$3.59 per diluted share, compared with $1.4 billion, or $5.31 per diluted share in 2021. Non-GAAP Adjusted net income from continuing
operations was $1.3 billion, or $5.03 per diluted share, compared with $1.6 billion, or $6.20 per diluted share in 2021.
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 March 16, 2023 to stockholders of record at the close of business on February 27, 2023.
As of December 31, 2022, cash and cash equivalents were $706 million,
and debt was $8.9 billion.
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 presenting its 2023 financial guidance ranges below.
| 2023 Full Year guidance | ||
| Revenues | $6.150 billion - $6.450 billion | |
| Adjusted Gross Margin | Low-mid 60% range | |
| SG&A (as % of revenue) | Mid 20% range | |
| R&D 1 (as % of revenue) | Upper single-digit | |
| Adjusted EBITDA Margin | 31.0%-33.0% | |
| Interest | ~$510 million | |
| Depreciation | ~$130 million | |
| Effective Non-GAAP Tax Rate | 19.0% - 21.0% | |
| Fully Diluted Weighted Average Shares Outstanding | ~$255 million |
host a conference call at 8:30 a.m. Eastern Time today to discuss its fourth quarter and full year 2022 financial results. To listen