Full Press Release Details
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Organon Reports Results for the Second Quarter
Jersey City, N.J., August 8, 2023 - Organon (NYSE: OGN)
today announced its results for the second quarter ended June 30, 2023.
"During the second quarter of 2023, Organon continued to build
on its track record, delivering solid volume growth across all regions and franchises. The Women's Health and Biosimilars franchise revenue
grew 10% and 15% excluding the impact of foreign currency ("ex-FX"), respectively, and Established Brands continued to demonstrate
stability," said Kevin Ali, Organon's CEO. "Further, on July 1st we launched Hadlima (adalimumab-bwwd)
in the United States - so far our biggest commercial launch in the U.S. as a standalone company. Hadlima is emerging as one of
a few biosimilars offerings earning commercial success so far. We are encouraged by our early traction and remain confident in our strategy,
the attributes of our product and our collaborator's capabilities to deliver reliable supply."
Second Quarter 2023 Revenue
| in $ millions | Q2 2023 | Q2 2022 | VPY | VPY ex-FX | ||||||||||||
| Women's Health | $ | 438 | $ | 408 | 8 | % | 10 | % | ||||||||
| Biosimilars | 135 | 119 | 14 | % | 15 | % | ||||||||||
| Established Brands | 995 | 1,018 | (2 | )% | - | % | ||||||||||
| Other (1) | 40 | 40 | (2 | )% | (1 | )% | ||||||||||
| Revenues | $ | 1,608 | $ | 1,585 | 1 | % | 4 | % |
(1) Other includes manufacturing sales to Merck &
Co., Inc., Rahway, NJ, USA and other third parties.
For the second quarter of 2023, total revenue was $1,608 million, an
increase of 1% as-reported and an increase of 4% excluding the impact of foreign currency (ex-FX), compared with the second quarter of
Women's Health revenue increased 8% on an as-reported basis,
and increased 10% ex-FX in the second quarter of 2023 compared with the second quarter of 2022 driven primarily by a 12% ex-FX increase
in Nexplanon (etonogestrel implant), a long-acting reversible contraceptive. The Women's Health franchise also benefited from
17% ex-FX growth in the fertility portfolio during the quarter due to COVID-19 recovery in China
as well as strong demand in the LAMERA region and in the U.S. Growth in the Women's Health franchise was partially offset by a 3% ex-FX
decrease of NuvaRing (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition.
Biosimilars revenue increased
14% as-reported and 15% ex-FX in the second quarter of 2023, compared with the second quarter of 2022 primarily driven by Renflexis
(infliximab-abda) which grew 20% ex-FX due to continued demand and strong volume growth in United States and Canada. Growth in the biosimilars
franchise was partially offset by a 7% ex-FX decline in Ontruzant (trastuzumab-dttb) primarily related to ongoing competitive
pressures in Europe. On July 1, 2023, the company launched Hadlima, a biosimilar to Humira (adalimumab) (a trademark
of AbbVie Biotechnology Ltd.) in the United States. Organon already markets Hadlima in Canada and Australia.
Established Brands revenue decreased
2% as-reported and was flat ex-FX in the second quarter of 2023, despite the negative impact from Volume Based Procurement (VBP) initiatives
in China and the year over year impact of the company's market action taken in the first quarter of 2023 on select injectable steroids,
Diprospan (bethamethasone), and Celestone Chronodose (bethamethasone), and Celestone Soluspan
(bethamethasone). Offsetting factors included an 18% ex-FX year over year increase in Atozet (ezetimibe and atorvastatin
calcium) which was driven by increased demand in the EUCAN region, as well as 23% ex-FX growth in Arcoxia (etoricoxib)
which was driven by increased volume in the LAMERA region. Year to date, the Established Brands portfolio has grown 1% ex-FX, as 2% volume
growth has offset an approximate 1% decline in price across the portfolio. The company continues to expect the Established Brands franchise
to achieve flat revenue growth for the full year 2023.
Second Quarter 2023 Profitability
| in $ millions, except per share amounts | Q2 2023 | Q2 2022 | VPY | |||||||||
| Revenues | $ | 1,608 | $ | 1,585 | 1 | % | ||||||
| Cost of sales | 640 | 588 | 9 | % | ||||||||
| Gross profit | 968 | 997 | (3 | )% | ||||||||
| Non-GAAP Adjusted gross profit (1) | 1,012 | 1,047 | (3 | )% | ||||||||
| Adjusted EBITDA (1,2) | 530 | 512 | 4 | % | ||||||||
| Net income | 242 | 234 | 3 | % | ||||||||
| Non-GAAP Adjusted net income (1) | 336 | 319 | 5 | % | ||||||||
| Diluted Earnings per Share (EPS) | 0.95 | 0.92 | 3 | % | ||||||||
| Non-GAAP Adjusted diluted EPS (1) | 1.31 | 1.25 | 5 | % | ||||||||
| Acquired in-process research & development (IPR&D) and milestones | - | 97 | NM | |||||||||
| Per share impact to diluted EPS from acquired IPR&D and milestones | - | (0.30 | ) | NM |
| Q2 2023 | Q2 2022 | |||||||
| Gross margin | 60.2 | % | 62.9 | % | ||||
| Non-GAAP Adjusted gross margin (1) | 62.9 | % | 66.1 | % | ||||
| Adjusted EBITDA margin (1,2) | 33.0 | % | 32.3 | % |
Gross margin was 60.2% as-reported and 62.9% on an adjusted basis in
the second quarter of 2023 compared to 62.9% as-reported and 66.1% on an adjusted basis in the second quarter of 2022. The
year-over-year decline in gross margin is primarily due to product mix as well as employee-related costs and distribution related
costs, which increased as a result of inflationary pressures in 2023.
Adjusted EBITDA margin was 33.0%
in the second quarter of 2023 compared to 32.3%
in the second quarter of 2022. The increase in Adjusted EBITDA margin was primarily a result
of $97 million of IPR&D and milestones in the second quarter of 2022; no such costs were incurred in the second quarter of 2023.
Net income for the second quarter of 2023 was $242 million, or $0.95
per diluted share, compared with $234 million, or $0.92 per diluted share, in the second quarter of 2022. Non-GAAP Adjusted net income
was $336 million, or $1.31 per diluted share, compared with $319 million, or $1.25 per diluted share, in 2022. The year over year increase
in net income was a result of higher Adjusted EBITDA compared with the second quarter of 2022 as well as a tax benefit in the second quarter
of 2023 related to earnings outside of the U.S., partially offset by higher interest expense associated with the company's variable rate
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 September 14, 2023, to stockholders of record at the close of business on August 18, 2023.
As of June 30, 2023, cash and cash equivalents were $326 million,
and debt was $8.7 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 updating its full year 2023 guidance ranges previously
provided on May 4, 2023. The range for full year 2023 revenue is narrowed to $6.25 billion to $6.45 billion, which primarily reflects
current foreign currency exchange rates. The range for full year Adjusted EBITDA margin is now 31.5% to 33.0% to incorporate the company's
current visibility of IPR&D and milestone expenses expected to be incurred in 2023. 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
| Previous guidance as of May 4, 2023 | Current guidance | |||
| Revenues | $6.150B - $6.450B | $6.250B-$6.450B | ||
| Adjusted gross margin | Low-mid 60% range | Unchanged | ||
| SG&A (as % of revenue) | Mid 20% range | Unchanged | ||
| R&D (as % of revenue) | Upper single-digit | Unchanged | ||
| Adjusted EBITDA margin | 31.0%-33.0% | 31.5%-33.0% | ||
| Interest | ~$515 million | ~$525 million | ||
| Depreciation | ~$130 million | ~$120 million | ||
| Effective non-GAAP tax rate | 19.0% - 21.0% | 17.5% - 19.5% | ||
| Fully diluted weighted average shares outstanding | ~257 million | Unchanged |
Organon will host a conference call at 8:30 a.m. Eastern Time
today to discuss its second 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:
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.
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, 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