Full Press Release Details
| Media Contacts: | Karissa Peer | Investor Contacts: | Jennifer Halchak |
| (614) 314-8094 Kate Vossen (732) 675-8448 | (201) 275-2711 Edward Barger (267) 614-4669 |
Organon reports results for the second quarter
ended June 30, 2021 and announces inaugural dividend
Jersey City, N.J., August 12, 2021 - Organon (NYSE: OGN) (the
"company"), today announced its results for the second quarter and year to date ended June 30, 2021 and affirmed its full
year 2021 financial guidance.
Organon also announced that its 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
13, 2021 to stockholders of record at the close of business on August 23, 2021.
"Since well before Organon's June 2nd
spin-off from Merck, thousands of employees have been hard at work standing up Organon, committed to a shared vision to advance
the health of women. Already, we have demonstrated our commitment to identifying potential opportunities to help address some of the
most important unmet needs in women's health, with an acquisition focused on treating post-partum hemorrhage as well as a
licensing agreement to develop an investigational agent being evaluated to delay pre-term labor," said Kevin Ali, CEO of
Organon. "At the same time, we are focused on driving our business, with all three of our franchises delivering on their
Accordingly, today we affirmed our full year 2021 guidance. Looking
beyond 2021, we remain confident in our ability to organically grow revenue in the low to mid-single digit range, as LOE risk will
largely be behind us and Women's Health and Biosimilars are positioned to deliver double digit growth."
Second quarter 2021 revenue
| in $ millions | Q2 2021 | Q2 2020 | VPY | VPY ex-FX | ||||||||||||
| Women's Health | 417 | 350 | 19 | % | 16 | % | ||||||||||
| Biosimilars | 86 | 60 | 43 | % | 35 | % | ||||||||||
| Established Brands | 1,045 | 1,092 | (4 | )% | (10 | )% | ||||||||||
| Total Net Revenue (1) | $ | 1,595 | $ | 1,526 | 5 | % | (1 | )% |
(1) Franchise revenue does not sum to total revenue due to manufacturing sales to the company's former parent company and other third
parties and pre-spin allocated revenue hedge activities
Total net revenue was $1,595 million for the second quarter of 2021,
an increase of 5% as-reported and decrease of 1% excluding the impacts of foreign currency (ex-FX), compared with the second quarter
Women's Health grew 19% as-reported and 16% ex-FX in the second
quarter 2021 compared with the second quarter of 2020, driven by growth in NEXPLANON (etonogestrel implant), which grew 39% ex-FX..
NEXPLANON, a single-rod subdermal contraceptive implant, is a physician-administered product. While in-person patient visits to
healthcare professionals demonstrated recovery in the second quarter of 2021 relative to the height of the COVID-19 pandemic, which occurred
during the same period in 2020, the company expects that ongoing negative impacts will persist through 2021. Growth in fertility also
contributed to the performance in Women's Health in the quarter; FOLLISTIM, AQ Cartridge (follitropin beta injection), grew 40%
ex-FX and was positively impacted by a combination of COVID-19 recovery and increased demand. These growth drivers more than offset a
19% ex-FX decline in NuvaRing (etonogestrel/ethinyl estradiol vaginal ring) related to generic competition.
Biosimilars revenue grew 43% as-reported and 35% ex-FX in the second
quarter 2021 compared with second quarter 2020, driven by continued demand growth in the US for RENFLEXIS (infliximab-abda), since its
launch in 2017, and continued uptake of ONTRUZANT (trastuzumab-dttb) in the US since its July 2020 launch, which was partially offset
by a decrease in the EU, reflecting increasing competitive pressures.
Established Brands represents a broad portfolio of well-known medicines,
which generally are beyond market exclusivity, including leading brands in cardiovascular, respiratory, dermatology and non-opioid pain
management, for which generic competition varies by market. Revenue for Established Brands was down 4% as-reported and down 10% ex-FX
in the second quarter of 2021, primarily driven by the loss of exclusivity of ZETIA (ezetimibe) in Japan. Excluding the impact of LOEs,
Established Brands revenue was down 2% ex-FX. During the quarter, retail expansion in China grew double digits and partially offset impacts
from decreases in the hospital channel due to Volume-Based Procurement.
Second quarter 2021 profitability
| in $ millions | Q2 2021 | Q2 2020 | VPY | |||||||||
| Revenue | $ | 1,595 | $ | 1,526 | 5 | % | ||||||
| Cost of goods sold | 583 | 460 | 27 | % | ||||||||
| Gross profit | 1,012 | 1,066 | (5 | )% | ||||||||
| Gross margin | 63.4 | % | 69.9 | % | ||||||||
| Non-GAAP Adjusted gross profit (2) | 1,044 | 1,087 | (4 | )% | ||||||||
| Non-GAAP Adjusted gross margin (2) | 65.5 | % | 71.2 | % | ||||||||
| Adjusted EBITDA, continuing operations (2,3) | 627 | 776 | (19 | )% | ||||||||
| Adjusted EBITDA margin, continuing operations (2,3) | 39.3 | % | 50.9 | % | ||||||||
| Net Income, continuing operations | 431 | 586 | (26 | )% | ||||||||
| Non-GAAP Adjusted net income, continuing operations (2,3) | 437 | 640 | (32 | )% | ||||||||
| Diluted Earnings per Share, continuing operations | 1.70 | 2.31 | (26 | )% | ||||||||
| Non-GAAP Adjusted Diluted Earnings per Share, continuing operations (2,3) | 1.72 | 2.52 | (32 | )% |
Tables 4, 5 and 6 for reconciliations of GAAP to non-GAAP measures
operations includes Merck Retained Products
Gross margin was 63.4% as-reported and 65.5% on an adjusted basis
in the second quarter of 2021 compared with 69.9% as-reported and 71.2% on an adjusted basis in the second quarter of 2020. The year-over-year decrease reflects an increase in stand-up costs, including certain costs related to manufacturing agreements between the company
and its former parent company, which have lower gross margin percentages compared to third party product sales.
Adjusted EBITDA margin was 39.3% in the second quarter of 2021 compared
with 50.9% in the second quarter of 2020, which reflects costs incurred to establish Organon as a standalone entity.
Net income from continuing operations for the second quarter of 2021
was $431 million, or $1.70 per diluted share, compared with $586 million, or $2.31 per diluted share, in the second quarter of 2020. Non-GAAP
Adjusted net income was $437 million, or $1.72 per diluted share, compared with $640 million, or $2.52 per diluted share, in 2020.
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
13, 2021 to stockholders of record at the close of business on August 23, 2021.
As of June 30, 2021, cash and cash equivalents were $730 million
and debt was $9,348 million, resulting in net debt of $8,618 million.
Full year guidance - all guidance provided on a Non-GAAP
Organon does not provide GAAP financial measures on a forward-looking
basis because the company is unable to predict with reasonable certainty and without unreasonable effort, the ultimate outcome of legal
proceedings, unusual gains and losses, 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 affirming the pre-spin financial guidance it provided
at the Investor Day it co-hosted with Merck on May 3, 2021. The financial guidance is presented on a non-GAAP basis and is proforma as
if Organon was a standalone company for the entire year.
| Guidance on proforma non-GAAP basis | Previous guidance | Current guidance | ||
| Revenue | $6.1B - $6.4B | Unchanged | ||
| Gross margin (4) | Low to mid-60% range | Unchanged | ||
| SG&A as % of sales (4) | Mid 20% range | Unchanged | ||
| R&D as % of sales (4) | Mid single-digit | Unchanged | ||
| Adjusted EBITDA margin | 36%-38% | Unchanged | ||
| Interest | ~$400 million | Unchanged | ||
| Depreciation (4) | $100-$115 million | Unchanged | ||
| Effective Non-GAAP tax rate | 17.5% - 19.5% | Unchanged | ||
| Weighted avg. shares outstanding | ~250 million (not diluted) | ~254 million (fully diluted) |
(4) Guidance provided in connection with the spin-off and unlikely
to be a recurring component of the company's annual guidance
Organon will host a conference call at 8:30 a.m. Eastern Time today
to discuss its second quarter 2021 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/. 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: http://www.directeventreg.com/registration/event/9577397.
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 (NYSE: OGN) is a global healthcare company formed through
a spinoff from Merck, (NYSE: MRK) known as MSD outside of the United States and Canada, to focus on improving the health of women throughout
their lives. Here for her health, the company has a portfolio of more than 60 medicines and products across a range of therapeutic areas.
Led by the reproductive health portfolio coupled with an expanding biosimilars business and stable franchise of established medicines,
Organon's products produce strong cash flows that will support investments in future growth opportunities in women's health,
including business development like recently acquired Alydia Health, a medical device company focused on treating postpartum hemorrhage.
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 9,000 employees with headquarters located in Jersey City, New Jersey.
For more information, visit http://www.organon.com and connect
with us on LinkedIn and Instagram.
Non-GAAP financial measures
Non-GAAP results, such as Adjusted EBITDA, Adjusted Net Income,
and Adjusted Diluted EPS, are presented only as a supplement to the company's financial statements based on GAAP. Non-GAAP
financial information is provided to enhance understanding of the company's financial performance, but none of these non-GAAP
financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation from, or as a
substitute analysis for, the company's results of operations as determined in accordance with GAAP. Definitions and
reconciliations of non-GAAP measures to the most directly comparable GAAP measures are provided within the schedules attached to
this release. The company uses non-GAAP 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. The company also believes that investors may find non-GAAP financial measures useful for the same