Full Press Release Details
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Organon Reports Results for the Second Quarter
Jersey City, N.J., August 6, 2024 - Organon (NYSE: OGN)
today announced its results for the second quarter ended June 30, 2024.
"We are very pleased with our year to date results," said
Kevin Ali, Organon's Chief Executive Officer. "We are tracking well to our 2024 objectives of delivering revenue growth at constant
currency, driving year-over-year EBITDA improvement and generating approximately $1 billion of free cash flow before spin-related, one-time
Second Quarter 2024 Revenue
| in $ millions | Q2 2024 | Q2 2023 | VPY | VPY ex-FX | ||||||||||||
| Women's Health | $ | 449 | $ | 438 | 3 | % | 3 | % | ||||||||
| Biosimilars | 164 | 135 | 22 | % | 22 | % | ||||||||||
| Established Brands | 963 | 995 | (3 | )% | (1 | )% | ||||||||||
| Other (1) | 31 | 40 | (20 | )% | (20 | )% | ||||||||||
| Revenues | $ | 1,607 | $ | 1,608 | - | % | 2 | % |
Totals may not foot due to rounding and percentages
are computed using unrounded amounts.
(1) Other includes manufacturing sales to third parties.
For the second quarter of 2024, total revenue
was $1.607 billion, flat year-over-year on an as-reported basis and an increase of 2% excluding the impact of foreign currency (ex-FX).
Health revenue increased 3% on both an as-reported basis and ex-FX basis in the second quarter of 2024 compared with the second quarter
of 2023 primarily driven by 13% ex-FX growth in Nexplanon (etonogestrel
implant). Nexplanon's strong performance was primarily due to favorable discount rates in the United States, an increase
in demand in the company's institutional business in Africa, and increased demand in certain international markets. Sales of MarvelonTM
(desogestrel and ethinyl estradiol pill) and MercilonTM (desogestrel and ethinyl estradiol pill), combined oral
hormonal daily contraceptive pills also grew strongly, up 42% ex-FX compared to prior year as a result of increased demand in various
markets outside the U.S.
Performance in the Women's Health franchise was partially offset by
sales of NuvaRing (etonogestrel / ethinyl
estradiol vaginal ring), a vaginal contraceptive product, which declined 35% ex-FX during the period due to ongoing generic competition.
The company's fertility portfolio was down 8% ex-FX in the second quarter, primarily due to a difficult comparison to a stronger prior
period for the China fertility business, which benefited from volume recovery post-COVID 19 lockdowns coupled with a buy-out of Follistim
AQ (follitropin beta injection) in the U.S. following a significant buy-in during
the fourth quarter of 2023 related to the exit of a temporary spin-off related commercial arrangement and the onboarding of a large customer.
revenue grew 22% on both an as-reported basis and ex-FX basis in the second quarter of 2024, compared with the second quarter of 2023,
primarily due to the uptake of Hadlima (adalimumab-bwwd)
since its July 2023 launch in the U.S. Ontruzant (trastuzumab-dttb) grew 46% ex-FX
during the quarter driven by increased demand associated with a government tender in Brazil partially offset by the negative impact
of unfavorable discount rates in the U.S and lower demand in Europe. Performance was partially offset by a 2% ex-FX decline in Renflexis
(infliximab-abda) which was driven primarily by an increase in discount rates
Brands revenue was down 3% on an as-reported basis and declined 1% ex-FX
in the second quarter of 2024. Contribution from the recent licensing of Emgality (galcanezumab) and RayvowTM (lasmiditan)(1,
2), together with a recovery in certain injectable steroid products following last year's market action partially offset the impacts
of Volume Based Procurement initiatives in China, expected mandatory pricing revisions in Japan and phasing of shipments for certain
products in select markets related to the implementation of the company's enterprise resource planning system. The
company expects revenue growth in the Established Brands franchise to be about flat for full year 2024 on an ex-FX basis.
a trademark registered in the United States in the name of Eli Lilly and Company (used under license).
registered trademark of Eli Lilly in the European Union and other countries (used under license).
Second Quarter 2024 Profitability
| in $ millions, except per share amounts | Q2 2024 | Q2 2023 | VPY | |||||||||
| Revenues | $ | 1,607 | $ | 1,608 | - | % | ||||||
| Cost of sales | 668 | 640 | 4 | % | ||||||||
| Gross profit | 939 | 968 | (3 | )% | ||||||||
| Non-GAAP Adjusted gross profit (1) | 996 | 1,012 | (2 | )% | ||||||||
| Net income | 195 | 242 | (19 | )% | ||||||||
| Non-GAAP Adjusted net income (1) | 289 | 336 | (14 | )% | ||||||||
| Diluted Earnings per Share (EPS) | 0.75 | 0.95 | (21 | )% | ||||||||
| Non-GAAP Adjusted diluted EPS (1) | 1.12 | 1.31 | (15 | )% | ||||||||
| Acquired IPR&D and milestones | 15 | - | NM | |||||||||
| Per share impact to diluted EPS from acquired IPR&D and milestones | (0.05 | ) | - | NM | ||||||||
| Adjusted EBITDA (Non-GAAP) (1,2) | 513 | 530 | (3 | )% | ||||||||
| Q2 2024 | Q2 2023 | |||||||||||
| Gross margin | 58.4 | % | 60.2 | % | ||||||||
| Non-GAAP Adjusted gross margin (1) | 62.0 | % | 62.9 | % | ||||||||
| Adjusted EBITDA margin (Non-GAAP) (1, 2) | 31.9 | % | 33.0 | % |
was 58.4% as-reported and 62.0% on a non-GAAP adjusted basis in the second quarter of 2024 compared with 60.2% as-reported and 62.9%
on a non-GAAP adjusted basis in the second quarter of 2023. The lower non-GAAP Adjusted gross margin was primarily related to unfavorable
product mix, foreign exchange translation and higher inflation impacts to material and distribution costs.
Net income for the second quarter of 2024 was $195 million, or $0.75
per diluted share, compared with $242 million, or $0.95 per diluted share, in the second quarter of 2023. Non-GAAP Adjusted net income
was $289 million, or $1.12 per diluted share, compared with $336 million, or $1.31 per diluted share, in 2023.
Non-GAAP Adjusted EBITDA margin was 31.9% in the second quarter of
2024 compared with 33.0% in the second quarter of 2023 primarily due to lower non-GAAP Adjusted gross margin. Total non-GAAP operating
expenses (selling, general and administrative and research and development) were down 2% year over year.
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 12, 2024, to stockholders of record at the close of business on August 16, 2024.
As of June 30, 2024, cash and cash equivalents were $704 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.
Full year 2024 financial guidance is presented below on a non-GAAP
basis, except revenue.
| Previous guidance as of May 2, 2024 | Current guidance | |||
| Revenues | $6.2B - $6.5B | $6.25B - $6.45B | ||
| Adjusted gross margin | 61.0% - 63.0% | Unchanged | ||
| SG&A | $1.5B - $1.7B | Unchanged | ||
| R&D | $400M - $500M | $430M - $530M* | ||
| Adjusted EBITDA margin (Non-GAAP) | 31.0% - 33.0% | Unchanged | ||
| Interest | ~$520M | Unchanged | ||
| Depreciation | ~$130M | Unchanged | ||
| Effective non-GAAP tax rate | 18.5% - 20.5% | Unchanged | ||
| Fully diluted weighted average shares outstanding | ~259M | Unchanged |
*Updated R&D expense guidance includes $30 million of IPR&D
and milestone expense incurred year-to-date June 30, 2024. R&D guidance does not take into consideration a forward looking view
of IPR&D and milestone expense.
Organon will host a conference call at 8:30 a.m. Eastern Time
today to discuss its second quarter 2024 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://registrations.events/direct/Q4I585119
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.
is an independent global healthcare company with a strategy to help improve the health of women throughout their lives. Organon's
diverse portfolio offers more than 60 medicines and products in women's health, biosimilars, and a large franchise of established
medicines across a range of therapeutic areas. In addition to Organon's current products, the company invests in innovative solutions
and research to drive future growth opportunities in women's health and biosimilars. In addition, Organon is pursuing opportunities
to collaborate with biopharmaceutical partners and innovators looking to commercialize their products by leveraging its scale and agile
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 EBITDA margin, 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. Please refer to Table 4 and Table 5 of this press release for additional information,
including relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP