Organon Reports Results for the Second Quarter Ended June 30, 2023

 
  • Second quarter 2023 revenue of $1,608 million
  • Second quarter 2023 diluted earnings per share of $0.95 and non-GAAP Adjusted diluted earnings per share of $1.31
  • Adjusted EBITDA of $530 million
  • Board of Directors declares quarterly dividend of $0.28 per share
  • Full year 2023 financial guidance ranges updated:
    • Revenue range narrowed to $6.25 billion to $6.45 billion, primarily reflecting current foreign currency exchange rates
    • Adjusted EBITDA margin range now 31.5%-33.0% to incorporate current visibility on IPR&D (in-process research and development) and milestones
 

JERSEY CITY, N.J.--(BUSINESS WIRE)-- 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 2022.

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%

 

(1) See Tables 4 and 5 for reconciliations of GAAP to non-GAAP financial measures

(2) Adjusted EBITDA and Adjusted EBITDA margin include $97 million in the second quarter of 2022 related to acquired IPR&D and milestones, no such expense was incurred in the second quarter of 2023

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 debt.

Capital Allocation

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.

Full Year Guidance

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 basis.

 

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

Webcast Information

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: https://conferencingportals.com/event/jgIqShwa

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.

About Organon

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 identical calculations, the presentations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies. You should refer to Table 4 and Table 5 of this press release for relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures.

In addition, the company’s full-year 2023 guidance measures (other than revenue) are provided on a non-GAAP basis because the company is unable to reasonably predict certain items contained in the GAAP measures. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, stock-based compensation, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts and other items not reflective of the company's ongoing operations.

The company uses non-GAAP financial 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.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information, this press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about management’s expectations about Organon’s future financial performance and prospects. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include, but are not limited to, an inability to fully execute on our product development and commercialization plans within the United States or internationally; changes in tax laws or other tax guidance which could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; an inability to execute on our business development strategy or realize the benefits of our planned acquisitions; efficacy, safety, or other quality concerns with respect to marketed products, including market actions such as recalls, withdrawals, or declining sales; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; general economic factors, including recessionary pressures, interest rate and currency exchange rate fluctuations; general industry conditions and competition; the impact of the ongoing COVID-19 pandemic and emergence of variant strains; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances; new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict its future financial results and performance; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; difficulties developing and sustaining relationships with commercial counterparties; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s filings with the Securities and Exchange Commission ("SEC"), including the company’s Annual Report on Form 10-K for the year ended December 31, 2022, available at the SEC’s Internet site (www.sec.gov).

TABLE 1

Organon & Co.
Condensed Consolidated Statement of Income
(Unaudited, $ in millions except shares in thousands and per share amounts)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2023

 

2022

 

2023

 

2022

Revenues

$

1,608

 

$

1,585

 

 

$

3,146

 

$

3,152

 

Costs, Expenses and Other

 

 

 

 

 

 

 

Cost of sales

 

640

 

 

588

 

 

 

1,220

 

 

1,149

 

Selling, general and administrative

 

451

 

 

423

 

 

 

886

 

 

794

 

Research and development

 

128

 

 

106

 

 

 

257

 

 

202

 

Acquired in-process research and development and milestones

 

 

 

97

 

 

 

8

 

 

97

 

Restructuring costs

 

 

 

 

 

 

4

 

 

 

Interest expense

 

132

 

 

98

 

 

 

264

 

 

195

 

Exchange losses (gains)

 

2

 

 

(21

)

 

 

11

 

 

(25

)

Other expense, net

 

1

 

 

7

 

 

 

7

 

 

11

 

 

 

1,354

 

 

1,298

 

 

 

2,657

 

 

2,423

 

Income Before Income Taxes

 

254

 

 

287

 

 

 

489

 

 

729

 

Taxes on income

 

12

 

 

53

 

 

 

70

 

 

147

 

Net Income

 

242

 

 

234

 

 

 

419

 

 

582

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

Basic

$

0.95

 

$

0.92

 

 

$

1.64

 

$

2.29

 

Diluted

$

0.95

 

$

0.92

 

 

$

1.64

 

$

2.28

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

255,341

 

 

254,018

 

 

 

254,869

 

 

253,802

 

Diluted

 

255,953

 

 

255,156

 

 

 

256,064

 

 

255,105

 

TABLE 2

Organon & Co.
Sales by top products
(Unaudited, $ in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2023

 

2022

 

2023

 

2022

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

Women’s Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nexplanon/Implanon NXT

$

159

 

 

$

56

 

$

214

 

$

134

 

$

61

 

$

195

 

$

272

 

$

107

 

$

380

 

$

250

 

$

116

 

$

366

Follistim AQ

 

26

 

 

 

44

 

 

70

 

 

23

 

 

35

 

 

58

 

 

52

 

 

73

 

 

125

 

 

52

 

 

66

 

 

119

NuvaRing

 

17

 

 

 

23

 

 

40

 

 

22

 

 

20

 

 

42

 

 

33

 

 

47

 

 

80

 

 

38

 

 

45

 

 

83

Ganirelix Acetate Injection

 

4

 

 

 

29

 

 

34

 

 

6

 

 

25

 

 

32

 

 

11

 

 

53

 

 

63

 

 

14

 

 

47

 

 

61

Marvelon/Mercilon

 

 

 

 

29

 

 

29

 

 

 

 

31

 

 

31

 

 

 

 

67

 

 

67

 

 

 

 

54

 

 

54

Other Women's Health (1)

 

27

 

 

 

25

 

 

52

 

 

29

 

 

22

 

 

51

 

 

53

 

 

52

 

 

105

 

 

56

 

 

47

 

 

103

Biosimilars

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renflexis

 

60

 

 

 

11

 

 

70

 

 

51

 

 

8

 

 

59

 

 

114

 

 

18

 

 

132

 

 

93

 

 

12

 

 

105

Ontruzant

 

12

 

 

 

21

 

 

33

 

 

12

 

 

23

 

 

35

 

 

25

 

 

29

 

 

54

 

 

19

 

 

38

 

 

57

Brenzys

 

 

 

 

13

 

 

13

 

 

 

 

14

 

 

14

 

 

 

 

32

 

 

32

 

 

 

 

28

 

 

28

Aybintio

 

 

 

 

12

 

 

12

 

 

 

 

9

 

 

9

 

 

 

 

22

 

 

22

 

 

 

 

19

 

 

19

Hadlima

 

 

 

 

7

 

 

7

 

 

 

 

2

 

 

2

 

 

 

 

12

 

 

12

 

 

 

 

8

 

 

8

Established Brands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cardiovascular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zetia

 

2

 

 

 

89

 

 

90

 

 

2

 

 

99

 

 

101

 

 

4

 

 

169

 

 

173

 

 

5

 

 

195

 

 

200

Vytorin

 

1

 

 

 

37

 

 

38

 

 

3

 

 

32

 

 

35

 

 

3

 

 

65

 

 

67

 

 

5

 

 

68

 

 

73

Atozet

 

 

 

 

143

 

 

143

 

 

 

 

122

 

 

122

 

 

 

 

271

 

 

271

 

 

 

 

240

 

 

240

Rosuzet

 

 

 

 

17

 

 

17

 

 

 

 

16

 

 

16

 

 

 

 

35

 

 

35

 

 

 

 

38

 

 

38

Cozaar/Hyzaar

 

2

 

 

 

69

 

 

71

 

 

2

 

 

91

 

 

92

 

 

4

 

 

152

 

 

156

 

 

10

 

 

176

 

 

186

Other Cardiovascular (1)

 

1

 

 

 

41

 

 

41

 

 

1

 

 

45

 

 

46

 

 

1

 

 

81

 

 

82

 

 

2

 

 

83

 

 

85

Respiratory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Singulair

 

3

 

 

 

77

 

 

80

 

 

3

 

 

89

 

 

92

 

 

5

 

 

194

 

 

199

 

 

5

 

 

216

 

 

222

Nasonex

 

 

 

 

64

 

 

64

 

 

 

 

58

 

 

58

 

 

 

 

133

 

 

133

 

 

9

 

 

123

 

 

133

Dulera

 

38

 

 

 

10

 

 

48

 

 

36

 

 

12

 

 

47

 

 

76

 

 

18

 

 

95

 

 

67

 

 

21

 

 

88

Clarinex

 

1

 

 

 

38

 

 

39

 

 

1

 

 

34

 

 

35

 

 

2

 

 

77

 

 

79

 

 

2

 

 

70

 

 

73

Other Respiratory (1)

 

13

 

 

 

6

 

 

19

 

 

11

 

 

11

 

 

22

 

 

25

 

 

12

 

 

37

 

 

23

 

 

22

 

 

45

Non-Opioid Pain, Bone and Dermatology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arcoxia

 

 

 

 

72

 

 

72

 

 

 

 

61

 

 

61

 

 

 

 

143

 

 

143

 

 

 

 

121

 

 

121

Fosamax

 

1

 

 

 

44

 

 

44

 

 

1

 

 

39

 

 

40

 

 

1

 

 

81

 

 

82

 

 

2

 

 

79

 

 

81

Diprospan

 

 

 

 

12

 

 

12

 

 

 

 

31

 

 

31

 

 

 

 

27

 

 

27

 

 

 

 

63

 

 

63

Other Non-Opioid Pain, Bone and Dermatology (1)

 

2

 

 

 

67

 

 

71

 

 

5

 

 

71

 

 

76

 

 

7

 

 

127

 

 

133

 

 

8

 

 

137

 

 

145

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proscar

 

 

 

 

24

 

 

25

 

 

 

 

26

 

 

26

 

 

1

 

 

51

 

 

52

 

 

1

 

 

50

 

 

50

Propecia

 

2

 

 

 

35

 

 

36

 

 

2

 

 

33

 

 

35

 

 

4

 

 

66

 

 

69

 

 

3

 

 

63

 

 

66

Other (1)

 

2

 

 

 

81

 

 

84

 

 

7

 

 

74

 

 

82

 

 

4

 

 

156

 

 

162

 

 

15

 

 

149

 

 

164

Other (2)

 

(2

)

 

 

41

 

 

40

 

 

 

 

40

 

 

40

 

 

 

 

79

 

 

79

 

 

1

 

 

78

 

 

76

Revenues

$

371

 

 

$

1,237

 

$

1,608

 

$

351

 

$

1,234

 

$

1,585

 

$

697

 

$

2,449

 

$

3,146

 

$

680

 

$

2,472

 

$

3,152

 

Totals may not foot due to rounding. Trademarks appearing above in italics are trademarks of, or are used under license by, the Organon group of companies.

(1) Includes sales of products not listed separately. Revenues from Marvelon™ and Mercilon™ were previously reported as part of Other Women's Health. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health.

(2) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties.

TABLE 3

Organon & Co.
Sales by geographic area
(Unaudited, $ in millions)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2023

 

2022

 

2023

 

2022

Europe and Canada

$

467

 

$

443

 

$

867

 

$

880

United States

 

371

 

 

351

 

 

697

 

 

680

Asia Pacific and Japan

 

261

 

 

291

 

 

585

 

 

604

China

 

234

 

 

244

 

 

459

 

 

480

Latin America, Middle East, Russia and Africa

 

234

 

 

216

 

 

448

 

 

425

Other (1)

 

41

 

 

40

 

 

90

 

 

83

Revenues

$

1,608

 

$

1,585

 

$

3,146

 

$

3,152

 

(1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties.

TABLE 4

Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
(Unaudited, $ in millions except per share amounts)

 

 

Three Months Ended June 30, 2023

 

GAAP

 

Spin related
Costs(1)

 

Restructuring

 

Stock-based
Compensation

 

Amortization

 

Other(1)

 

Non-GAAP
Adjusted

Revenues

$

1,608

 

 

 

 

 

 

 

 

 

 

 

 

$

1,608

 

Cost of sales

 

640

 

 

(10

)

 

 

(4

)

 

(30

)

 

 

 

596

 

Gross profit

 

968

 

 

 

 

 

 

 

 

 

 

 

 

 

1,012

 

Gross margin

 

60.2

%

 

 

 

 

 

 

 

 

 

 

 

 

62.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

451

 

 

(44

)

 

 

(17

)

 

 

 

 

 

390

 

Research and development

 

128

 

 

(3

)

 

 

(4

)

 

 

 

 

 

121

 

Acquired in-process research and development and milestones

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

132

 

 

 

 

 

 

 

 

 

 

 

132

 

Exchange losses

 

2

 

 

 

 

 

 

 

 

 

 

 

2

 

Other expense (income), net

 

1

 

 

(4

)

 

 

 

 

 

 

 

 

(3

)

 

 

1,354

 

 

 

 

 

 

 

 

 

 

 

 

 

1,238

 

Income before income taxes

 

254

 

 

 

 

 

 

 

 

 

 

 

 

 

370

 

Taxes on income

 

12

 

 

13

 

 

 

4

 

 

5

 

 

 

 

34

 

Net income

$

242

 

 

 

 

 

 

 

 

 

 

 

 

$

336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - Diluted

$

0.95

 

 

 

 

 

 

 

 

 

 

 

 

$

1.31

 

 

(1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization and legal reserves.

 

Three Months Ended June 30, 2022

 

GAAP

 

Spin related
Costs(1)

 

Restructuring

 

Stock-based
Compensation

 

Amortization

 

Other(1)

 

Non-GAAP
Adjusted

Revenues

$

1,585

 

 

 

 

 

 

 

 

 

 

 

 

$

1,585

 

Cost of sales

 

588

 

 

(6

)

 

 

(3

)

 

(28

)

 

(13

)

 

 

538

 

Gross profit

 

997

 

 

 

 

 

 

 

 

 

 

 

 

 

1,047

 

Gross margin

 

62.9

%

 

 

 

 

 

 

 

 

 

 

 

 

66.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

423

 

 

(28

)

 

 

(13

)

 

 

 

 

 

 

382

 

Research and development

 

106

 

 

(3

)

 

 

(3

)

 

 

 

 

 

 

100

 

Acquired in-process research and development and

 

97

 

 

 

 

 

 

 

 

 

 

 

 

97

 

Restructuring costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

98

 

 

 

 

 

 

 

 

 

 

 

 

98

 

Exchange gains

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

(21

)

Other expense (income), net

 

7

 

 

(8

)

 

 

 

 

 

 

 

 

 

(1

)

 

 

1,298

 

 

 

 

 

 

 

 

 

 

 

 

 

1,193

 

Income before income taxes

 

287

 

 

 

 

 

 

 

 

 

 

 

 

 

392

 

Taxes on income

 

53

 

 

10

 

 

 

3

 

 

4

 

 

3

 

 

 

73

 

Net income

$

234

 

 

 

 

 

 

 

 

 

 

 

 

$

319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - Diluted

$

0.92

 

 

 

 

 

 

 

 

 

 

 

 

$

1.25

 

 

(1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization and legal reserves.

TABLE 4 (Continued)

Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
(Unaudited, $ in millions except per share amounts)

 

 

Six Months Ended June 30, 2023

 

GAAP

 

Spin related
Costs(1)

 

Restructuring

 

Stock-based
Compensation

 

Amortization

 

Other(1)

 

Non-GAAP
Adjusted

Revenues

$

3,146

 

 

 

 

 

 

 

 

 

 

 

 

$

3,146

 

Cost of sales

 

1,220

 

 

(20

)

 

 

 

(8

)

 

(59

)

 

(2

)

 

 

1,131

 

Gross profit

 

1,926

 

 

 

 

 

 

 

 

 

 

 

 

 

2,015

 

Gross margin

 

61.2

%

 

 

 

 

 

 

 

 

 

 

 

 

64.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

886

 

 

(90

)

 

 

 

(32

)

 

 

 

(1

)

 

 

763

 

Research and development

 

257

 

 

(6

)

 

 

 

(7

)

 

 

 

 

 

 

244

 

Acquired in-process research and development and milestones

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

Restructuring costs

 

4

 

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Interest expense

 

264

 

 

 

 

 

 

 

 

 

 

 

 

 

264

 

Exchange losses

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

Other expense (income), net

 

7

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

2,657

 

 

 

 

 

 

 

 

 

 

 

 

 

2,418

 

Income before income taxes

 

489

 

 

 

 

 

 

 

 

 

 

 

 

 

728

 

Taxes on income

 

70

 

 

26

 

 

1

 

 

8

 

 

11

 

 

 

 

 

116

 

Net income

$

419

 

 

 

 

 

 

 

 

 

 

 

 

$

612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - Diluted

$

1.64

 

 

 

 

 

 

 

 

 

 

 

 

$

2.39

 

 

(1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization and legal reserves.

 

Six Months Ended June 30, 2022

 

GAAP

 

Spin related
Costs(1)

 

Restructuring

 

Stock-based
Compensation

 

Amortization

 

Other(1)

 

Non-GAAP
Adjusted

Revenues

$

3,152

 

 

 

 

 

 

 

 

 

 

 

 

$

3,152

 

Cost of sales

 

1,149

 

 

(10

)

 

 

(6

)

 

(56

)

 

(14

)

 

 

1,063

 

Gross profit

 

2,003

 

 

 

 

 

 

 

 

 

 

 

 

 

2,089

 

Gross margin

 

63.5

%

 

 

 

 

 

 

 

 

 

 

 

 

66.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

794

 

 

(53

)

 

 

(23

)

 

 

 

 

 

 

718

 

Research and development

 

202

 

 

(6

)

 

 

(5

)

 

 

 

(1

)

 

 

190

 

Acquired in-process research and development and

 

97

 

 

 

 

 

 

 

 

 

 

 

 

97

 

Restructuring costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

195

 

 

 

 

 

 

 

 

 

 

 

 

195

 

Exchange gains

 

(25

)

 

 

 

 

 

 

 

 

 

 

 

(25

)

Other expense (income), net

 

11

 

 

(14

)

 

 

 

 

 

 

 

 

 

(3

)

 

 

2,423

 

 

 

 

 

 

 

 

 

 

 

 

 

2,235

 

Income before income taxes

 

729

 

 

 

 

 

 

 

 

 

 

 

 

 

917

 

Taxes on income

 

147

 

 

14

 

 

 

5

 

 

9

 

 

3

 

 

 

178

 

Net income

$

582

 

 

 

 

 

 

 

 

 

 

 

 

$

739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - Diluted

$

2.28

 

 

 

 

 

 

 

 

 

 

 

 

$

2.90

 

 

(1) Represents one-time costs. Spin-related includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US and Other primarily includes inventory step-up amortization and legal reserves.

TABLE 5

Organon & Co.
Reconciliation of GAAP Income Before Income Taxes to Adjusted EBITDA
(Unaudited, $ in millions)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2023

 

2022

 

2023

 

2022

Income before income taxes

$

254

 

 

$

287

 

 

$

489

 

 

$

729

 

Depreciation

 

28

 

 

 

22

 

 

 

56

 

 

 

47

 

Amortization

 

30

 

 

 

28

 

 

 

59

 

 

 

56

 

Interest expense

 

132

 

 

 

98

 

 

 

264

 

 

 

195

 

EBITDA

$

444

 

 

$

435

 

 

$

868

 

 

$

1,027

 

Restructuring costs

 

 

 

 

 

 

 

4

 

 

 

 

One-time costs (1)

 

61

 

 

 

58

 

 

 

129

 

 

 

98

 

Stock-based compensation

 

25

 

 

 

19

 

 

 

47

 

 

 

34

 

Adjusted EBITDA

$

530

 

 

$

512

 

 

$

1,048

 

 

$

1,159

 

Adjusted EBITDA margin

 

33.0

%

 

 

32.3

%

 

 

33.3

%

 

 

36.8

%

 

(1) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments and legal reserves.

 

Contacts

Media Contacts:
Karissa Peer
(614) 314-8094

Kate Vossen
(732) 675-8448

Investor Contacts:
Jennifer Halchak
(201) 275-2711

Alex Arzeno
(203) 550-3972

 
 

Source: Organon & Co.

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