Full Press Release Details
| Media Contacts: | Karissa Peer | Investor Contacts: | Jennifer Halchak |
| (614) 314-8094 Kate Vossen (732) 675-8448 | (201) 275-2711 |
reports results for the third quarter ended September 30, 2022
| Third quarter 2022 revenues of $1,537 million | ||
| Third quarter diluted earnings per share from continuing operations of $0.89 and non-GAAP adjusted diluted earnings per share from continuing operations of $1.32 | ||
| Both reported and non-GAAP adjusted diluted earnings per share include a negative impact of $0.04 for acquired in-process research and development (IPR&D) and milestones | ||
| Adjusted EBITDA of $546 million, inclusive of $10 million of acquired IPR&D and milestones | ||
| Board of Directors declares quarterly dividend of $0.28 per share | ||
| Full year 2022 financial guidance ranges updated: |
| Revenue range narrowed to $6.1 billion to $6.2 billion and reflects persisting foreign currency headwinds | ||
| Adjusted EBITDA margin range narrowed and raised to 33.5% to 34.5% |
Jersey City, N.J., November 3, 2022 - Organon (NYSE: OGN)
(the "company"), today announced its results for the third quarter ended September 30, 2022.
"We continue to build on our track record, demonstrating that
Organon's existing portfolio can deliver sustainable growth," said Kevin Ali, Organon's CEO. "In addition, we are gaining traction
with our newly-acquired assets. We recently made our first ex-U.S. shipment for the Jada system, which is intended to provide control
and treatment of abnormal postpartum uterine bleeding or hemorrhage. Further, last week we enrolled the first patient in the Phase 2
ELENA study to evaluate the safety and efficacy of OG-6219, the investigational candidate for endometriosis we acquired with Forendo Pharma last year. We are proud to have achieved this milestone as it is Organon's first molecular entity to enter this phase
and signifies our dedication to developing novel alternative therapies for patients suffering from endometriosis."
Third quarter 2022 revenues
| in $ millions | Q3 2022 | Q3 2021 | VPY | VPY ex-FX | ||||||||||||
| Women's Health | $ | 454 | $ | 381 | 19 | % | 23 | % | ||||||||
| Biosimilars | 129 | 140 | (7 | )% | (4 | )% | ||||||||||
| Established Brands | 915 | 1,027 | (11 | )% | (2 | )% | ||||||||||
| Other (1) | 39 | 52 | (26 | )% | (28 | )% | ||||||||||
| Revenues | $ | 1,537 | $ | 1,600 | (4 | )% | 3 | % |
(1) Other includes manufacturing sales to Merck & Co., Inc.,
Rahway, NJ, USA and other third parties, and allocated amounts from pre-spin revenue hedging activities.
Total net revenues were $1,537 million for the third quarter of 2022,
a decrease of 4% as-reported and an increase of 3% excluding the impact of foreign currency (ex-FX), compared with the third quarter
Women's Health grew 19% as-reported, and 23% ex-FX in the third
quarter of 2022 compared with the third quarter of 2021. During the third quarter of 2022, Nexplanon (etonogestrel implant)
grew 34% ex-FX, primarily driven by demand uptake in the United States as well as volume growth outside the United States, particularly
in the company's LAMERA (Latin America, Middle East, Russia and Africa) region. Continued demand for the company's fertility offerings
also contributed to growth in the quarter; Follistim AQ (follitropin beta injection), increased 2% ex-FX in the third quarter
of 2022, and ganirelix acetate injection increased 52% ex-FX.
Biosimilars revenue declined 7% as-reported and 4% ex-FX in the third
quarter 2022, compared with the third quarter of 2021 primarily driven by the timing of a tender for Ontruzant (trastuzumab-dttb)
in Brazil in 2021, as well as competitive pressures in Europe partially offset by the continued uptake of Ontruzant in the United
States since its launch in July 2020. The company's four other biosimilars Renflexis (infliximab-abda), Brenzys
(etanercept), Hadlima (adalimumab-bwwd) and Aybintio (bevacizumab) all grew double digits in the quarter
on a constant currency basis.
Established Brands represents a broad portfolio of well-known medicines,
predominantly marketed and sold outside of the United States, which are generally beyond market exclusivity. The portfolio includes leading
brands in cardiovascular, respiratory, dermatology and non-opioid pain management, and generic competition varies by market. The portfolio's
exposure to loss of exclusivity risk peaked in 2021 and no longer represents a significant impediment to stable long-term performance
in the Established Brands franchise.
Revenues for Established Brands decreased 11% as-reported and decreased
2% ex-FX in the third quarter of 2022, compared with the third quarter of 2021. During the third quarter of 2022, the two largest therapy
areas in Established Brands, cardiovascular and respiratory, declined modestly on a constant currency basis. In the cardiovascular portfolio,
Atozet grew 9% ex-FX in the third quarter of 2022, compared with the prior year period and in the respiratory portfolio, both Nasonex
and Singulair grew approximately 5% ex-FX in the third quarter of 2022 compared with the prior year period. Year to date, revenue for
the Established Brands franchise of $3.0 billion declined 1% as-reported and grew 6% on a constant currency basis. Given the strong year-to-date
performance, the company expects the Established Brands franchise to deliver modest growth on a constant currency basis for the full
year 2022, despite a forecasted impact in the fourth quarter of 2022 from the inclusion of certain of its products in Volume Based Procurement
initiatives in China.
Third quarter 2022 profitability
| in $ millions, except per share amounts | Q3 2022 | Q3 2021 | VPY | |||||||||
| Revenues | $ | 1,537 | $ | 1,600 | (4 | )% | ||||||
| Gross profit | 986 | 991 | (1 | )% | ||||||||
| Non-GAAP Adjusted Gross Profit (1) | 1,032 | 1,038 | (1 | )% | ||||||||
| Adjusted EBITDA (1,2) | 546 | 611 | (11 | )% | ||||||||
| Net Income, continuing operations | 227 | 323 | (30 | )% | ||||||||
| Non-GAAP adjusted net income, continuing operations (1) | 337 | 401 | (16 | )% | ||||||||
| Diluted Earnings per Share (EPS), continuing operations | 0.89 | 1.27 | (30 | )% | ||||||||
| Non-GAAP adjusted diluted EPS, continuing operations (1) | 1.32 | 1.58 | (16 | )% | ||||||||
| Acquired IPR&D and milestones | 10 | 25 | NM | |||||||||
| Per share impact to diluted EPS from acquired IPR&D and milestones | (0.04 | ) | (0.09 | ) | NM |
| Q3 2022 | Q3 2021 | |||||||
| Gross margin | 64.2 | % | 61.9 | % | ||||
| Non-GAAP Adjusted Gross Margin (1) | 67.1 | % | 64.9 | % | ||||
| Adjusted EBITDA margin (1,2) | 35.5 | % | 38.2 | % |
See Tables 4,5 and 6 for reconciliations of GAAP to non-GAAP financial measures
Adjusted EBITDA and Adjusted EBITDA margin include $10 million in the third quarter of 2022 related to acquired IPR&D
Gross margin in the third quarter of 2022 was 64.2% as-reported, compared
with 61.9% in the prior year period. Adjusted Gross Margin was 67.1% in the third quarter of 2022 compared with 64.9% on an adjusted
basis in the third quarter of 2021. The year over year improvement in gross margin is primarily due to favorable product mix and a $24
million charge in 2021 that pertained to unavoidable losses associated with a long-term vendor supply contract conveyed as part of the
company's spin-off from Merck & Co., Inc.
Adjusted EBITDA margin was 35.5% in the third quarter of 2022 compared
with 38.2% in the third quarter of 2021. Adjusted EBITDA margin in the third quarter of 2022 is inclusive of $10 million of acquired
IPR&D and milestones, compared with $25 million of similar costs in the prior year period. Higher selling and promotional costs as
well as 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 the third quarter of 2022
was $227 million, or $0.89 per diluted share, compared with $323 million, or $1.27 per diluted share, in the third quarter of 2021. Non-GAAP
Adjusted net income from continuing operations was $337 million, or $1.32 per diluted share, compared with $401 million, or $1.58 per
diluted share, in 2021.
Beginning in 2022, Organon no longer excludes expenses for upfront
and milestone payments related to collaborations and licensing agreements, or charges related to pre-approval assets obtained in transactions
accounted for as asset acquisitions from its non-GAAP results. The change to include all acquired IPR&D and milestone expenses negatively
impacted Adjusted diluted EPS by $0.04 in the third quarter of 2022, compared with a negative $0.09 impact in the third quarter of 2021.
In connection with this change, acquired IPR&D expenses are now reported as a separate income statement line item. These costs were
previously recorded within the R&D expenses line.
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 15, 2022 to
stockholders of record at the close of business on November 14, 2022.
As of September 30, 2022, cash and cash equivalents were $499
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 2022 financial guidance ranges previously
provided on August 4, 2022. Organon's financial guidance does not assume an estimate for future IPR&D (in-process research &
development) and milestone payments for business development transactions not yet executed.
| Previous guidance | FX impact | Current guidance | ||||
| Revenues | $6.1B - $6.3B | from 550bps-650bps to ~650bps | $6.1B-$6.2B | |||
| Adjusted Gross margin | Mid 60% | Unchanged | ||||
| SG&A (as % of revenue) | Mid 20% | Unchanged | ||||
| R&D (as % of revenue) | Upper single-digit | Unchanged | ||||
| IPR&D and milestones | ~($110)M | Unchanged | ||||
| Adjusted EBITDA margin | 32%-34% | 33.5%-34.5% | ||||
| Interest | ~$400 million | ~$420 million | ||||
| Depreciation | $100-$115 million | ~$100 million | ||||
| Effective Non-GAAP tax rate | 17.5%-19.5% | Unchanged | ||||
| Fully diluted weighted avg. shares outstanding | ~255 million | Unchanged |
Organon will host a conference call at 8:30 a.m. Eastern Time today
to discuss its third quarter 2022 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 using conference ID# 58511 and by clicking on this link: https://conferencingportals.com/event/ZGyfDfjk.
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 has a portfolio of more than 60 medicines and products across a range of therapeutic
areas. Led by the women's 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 innovation and future growth opportunities in women's
health. 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 and Instagram.