Organon & Co. · NYSE:OGN
Organon & — Q3 2022 Earnings Presentation
27 slides from Organon &'s earnings presentation, Nov 3, 2022
Slide 1: Organon Q3 2022 Earnings
Organon Q3 2022 Earnings O if: ORGANON’
Slide 2: Disclaimer statement
Disclaimer statement This text should be viewed in conjunction with Organon’s Q3 2022 earnings call Safe Harbor for Forward-Looking Statements Except for historical information herein, this presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S
Slide 3: Disclaimer statement, cont.
Disclaimer statement, cont. Non-GAAP Information This presentation contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. g
Slide 4: Third quarter 2022 highlights
Third quarter 2022 highlights • Revenue of $ 1.5 billion, growth of 3% at constant currency • Third consecutive quarter of revenue growth on constant currency basis • • Adjusted EBITDA of $546 million inclusive of $10M in acquired IPR&D and milestones • $1.32 Adjusted EPS from continuing operations,
Slide 5: Each franchise contributed to growth
Each franchise contributed to growth • Nexplanon record-setting quarter Women's Health • Franchise growth of 23% on constant currency basis • Double digit growth in fertility • Building pipeline for future growth; first patient in OG-6219 • Continued uptake in Renflexis and Ontruzant Biosimilars in
Slide 6: Delivering stability in Established Brands
Delivering stability in Established Brands $ mil 5600 24% 4800 16% % Product Sales Growth *LTM 4000 8% Product Sales in $m 3200 4% —% 2% (2)% 2400 (8)% 1600 (13)% (16)% (19)% (18)% 800 (24)% 0 (32)% 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 Established Brands LTM revenue LTM % Growth 6
Slide 7: US and APJ regions significant growth contributors
US and APJ regions significant growth contributors Actual Ex-FX $ mil Q3-22 Q3-21 VPY VPY Other, 3% Europe and Canada, 24% Europe and Canada 363 410 (11)% —% LAMERA, 15% United States 366 346 6% 6% ~3/4 of Asia Pacific and Japan 283 287 (1)% 13% sales China 241 252 (4)% 1% China, 16% generated Latin
Slide 8: Strong volume growth drove underlying performance
Strong volume growth drove underlying performance $ mil 1,675 ~75 1,600 ~0 1,537 <(5) ~(30) ~(100) 1,000 Q3 2021 LoE (1) VBP (2) Price Volume FX Q3 2022 (1) LOE = Loss of Exclusivity (2) VBP = Value Based Pricing (3) Other includes manufacturing sales to Merck and other third parties, and allocated
Slide 9: Women's Health
Women’s Health • Record quarter for Nexplanon • Double-digit growth YTD in fertility • Entrepreneurial focus yielding 1,197 1,240 results in other Women's Health 381 454 products Q3 Q3 YTD YTD 2021 2022 2021 2022 Ex-FX Ex-FX Revenues $ mil Q3-22 Q3-21 Act VPY 2022 YTD 2021 YTD Act VPY VPY VPY Top Co
Slide 10: Biosimilars
Biosimilars • Continued uptake for Renflexis and Ontruzant in US 306 346 • Phasing and timing of tenders 140 129 reflected in Ontruzant and Brenzys results Q3 Q3 YTD YTD 2021 2022 2021 2022 Ex-FX Ex-FX Revenues $ mil Q3-22 Q3-21 Act VPY 2022 YTD 2021 YTD Act VPY VPY VPY Biosimilars Renflexis ® 60 54
Slide 11: Established Brands
Established Brands • Cardiovascular and respiratory portfolios showing particular resilience 3,030 2,987 • Expect modest constant currency 1,027 915 revenue growth for FY 2022 despite Q3 Q3 YTD YTD VBP impact in Q4 2021 2022 2021 2022 Ex-FX 2022 Ex-FX Revenues $ mil Q3-2022 Q3-21 Act VPY 2021 YTD Ac
Slide 12: P&L reflects investment for future growth
P&L reflects investment for future growth $ mil Q3-22 Q3-21 Actual VPY 2022 YTD 2021 YTD Actual VPY Revenues 1,537 1,600 (4)% 4,689 4,701 —% Cost of sales 551 609 (10)% 1,700 1,783 (5)% Gross profit 986 991 (1)% 2,989 2,918 2% Non-GAAP Adjusted Gross profit (1) 1,032 1,038 (1)% 3,121 3,022 3% Sellin
Slide 13: Net Debt as of September 30, 2022
Net Debt as of September 30, 2022 Bank covenant (*) net leverage ratio ~3.6x $ mil Sept. 2021 Dec. 2021 Mar. 2022 Jun. 2022 Sept. 2022 Cash and 1,008 737 694 545 499 equivalents Gross Debt (1) 9,298 9,134 9,094 8,893 8,699 Net Debt (1) 8,290 8,397 8,400 8,348 8,200 (1) Debt figures are net of discou
Slide 14: Impact of net working capital on YTD free cash flow
Impact of net working capital on YTD free cash flow YTD 2022 Adjusted EBITDA $ 1,705 Working capital consumption due to: Less: • Post spin-off operating working capital build of ~ $300 million; Merck-related Net cash interest expense (221) Cash taxes (175) • Increase in working capital usage of Net
Slide 15: FX headwinds persist, masking solid volume growth
FX headwinds persist, masking solid volume growth $ mil ~550 ~(70) ~(400) $6,304 ~(25) <(50) ~(150) $6,100– $6,200 FX ~650 bps headwind to growth in 2022 (1) (2) (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties, and allocated amounts from pre-spin
Slide 16: Updated FY 2022 financial guidance ranges
Updated FY 2022 financial guidance ranges $M, provided on a Non- GAAP Guidance provided Guidance provided as of FX impact basis, except Revenues August 4, 2022 November 3, 2022 from 550 - 650 Revenues $6,100 - $6,300 $6,100 - $6,200 bps to ~650 bps Adjusted gross margin Mid-60% Unchanged SG&A (as %
Slide 17: Q&A
Q&A O “i ORGANON™
Slide 18: Appendix
Appendix “i ORGANON
Slide 19: LTM Nexplanon sales demonstrate revenue acceleration
LTM Nexplanon sales demonstrate revenue acceleration $ mil 1050 40% 900 30% % Product Sales Growth *LTM 750 20% Product Sales in $m 17% 600 12% 13% 10% 7% 450 —% (2)% (3)% 300 (10)% (14)% 150 (20)% 0 (30)% 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 Nexplanon Product Sales LTM* % Growth
Slide 20: Franchise performance
Franchise performance Ex-FX Ex-FX $ mil Q3-2022 Q3-2021 Actual VPY 2022 YTD 2021 YTD Actual VPY VPY VPY Women’s Health 454 381 19% 23% 1,240 1,197 4% 7% Biosimilars 129 140 (7)% (4)% 346 306 13% 16% Est. Brands 915 1,027 (11)% (2)% 2,987 3,030 (1)% 6% Other (1) 39 52 (26)% (28)% 116 168 (31)% (33)%
Slide 21: Gross margin reconciliation
Gross margin reconciliation $ mil Q3-2022 Q3-2021 2022 YTD 2021 YTD Revenues 1,537 1,600 4,689 4,701 Cost of sales 551 609 1,700 1,783 Gross Profit 986 991 2,989 2,918 Gross Margin 64.2% 61.9% 63.7% 62.1% Amortization 32 27 88 69 One-time costs (1) 11 17 35 27 Stock-based compensation 3 3 9 8 Non-GA
Slide 22: Income from continuing operations before income taxes to Adjusted EBITDA
Income from continuing operations before income taxes to Adjusted EBITDA $ mil Q3-2022 Q3-2021 Income from continuing operations before income taxes 282 389 Depreciation 25 25 Amortization (1) 32 27 Interest expense 108 98 EBITDA 447 539 Restructuring costs 11 1 One-time costs (2) 70 56 Stock-based
Slide 23: Income from continuing operations before income taxes to Adjusted EBITDA
Income from continuing operations before income taxes to Adjusted EBITDA $ mil 2022 YTD 2021 YTD Income from continuing operations before income taxes 1,011 1,293 Depreciation 72 64 Amortization (1) 88 69 Interest expense 303 160 EBITDA 1,474 1,586 Restructuring costs 11 3 One-time costs (2) 168 171
Slide 24: Income from continuing operations before income taxes to Adjusted Net Income
Income from continuing operations before income taxes to Adjusted Net Income $ mil (except EPS) Q3-2022 Q3-2021 Income from continuing operations before income taxes 282 389 Amortization (1) 32 27 Restructuring costs 11 1 One-time costs (2) 70 56 Stock-based compensation (3) 18 15 Total Adjustments
Slide 25: Income from continuing operations before income taxes to Adjusted Net Income
Income from continuing operations before income taxes to Adjusted Net Income $ mil (except EPS) 2022 YTD 2021 YTD Income from continuing operations before income taxes 1,011 1,293 Amortization (1) 88 69 Restructuring costs 11 3 One-time costs (2) 168 171 Stock-based compensation (3) 52 44 Total Adju
Slide 26: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands Number of 13 5 49 products 26
Slide 27: Balancing commercial and pipeline business development
Balancing commercial and pipeline business development Commercialized/soon to be Building a pipeline commercialized assets • July 2022 - Licensing agreement for a novel • March 2022 - Licensing agreement for investigational non-hormonal, on-demand Xaciato™ contraceptive candidate with Cirqle Biomedi