Organon & Co. · NYSE:OGN
Organon & — Q3 2024 Earnings Presentation
23 slides from Organon &'s earnings presentation, Oct 31, 2024
Slide 1: Organon Third Quarter 2024 Earnings
Organon Third Quarter 2024 Earnings
Slide 2: Disclaimer statement
Disclaimer statement Cautionary Note Regarding Forward-Looking Statements Except for historical information, this presentation 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 limit
Slide 3: Disclaimer statement, cont.
Disclaimer statement, cont. Cautionary Note Regarding Non-GAAP Financial Measures This presentation 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 c
Slide 4: Third quarter 2024 highlights
Third quarter 2024 highlights • Revenue of $1.6 billion, up 5% ex-FX • Diluted EPS of $1.38, Adjusted Diluted EPS of $0.87 • Adjusted EBITDA of $459 million, inclusive of $51 million of IPR&D and milestones See Slides 20-22 of this presentation for a reconciliation of non-GAAP measures. 4
Slide 5: Proposed label vs non-steroidal treatments
Proposed label vs non-steroidal treatments AhR PDE 4 JAK IL-4 VTAMA® Eucrisa® Zoryve® Opzelura® Dupixent® Women's Health8 Weeks 4 Weeks 4 Weeks 8 Weeks 16 Weeks Women's Health Twice Daily Once Every Dosing regimen Once Daily Twice Daily Once Daily Topical cream 2 Weeks - Once Topical Cream Topical O
Slide 6: Women's Health
Women’s Health • Strong growth in Nexplanon and Fertility offset expected impact from generics of NuvaRing • Continued uptake in Jada Act Ex-FX 2024 2023 Act Ex-FX Revenues $ mil Q3-24 Q3-23 VPY VPY YTD YTD VPY VPY Nexplanon ® (contraception) 243 220 10% 11% 704 599 17% 18% NuvaRing ® (contraception
Slide 7: Biosimilars
Biosimilars • Hadlima uptake continues following U.S. launch • Ontruzant performance reflects timing of tenders in Brazil and lower demand in the U.S. and Europe • Renflexis reaching mature part of lifecycle Act Ex-FX 2024 2023 Act Ex-FX Revenues $ mil Q3-24 Q3-23 VPY VPY YTD YTD VPY VPY Renflexis ®
Slide 8: Established Brands
Established Brands • New migraine products and recovery in injectable steroids offset unfavorable pricing in Japan • Expect flat performance for the franchise in 2024 ex-FX Act Ex-FX 2024 2023 Act Ex-FX Revenues $ mil Q3-24 Q3-23 VPY VPY YTD YTD VPY VPY Cardiovascular 331 354 (7)% (5)% 1,039 1,139 (
Slide 9: Volume growth offsets price erosion; minimal LOE and VBP impact
Volume growth offsets price erosion; minimal LOE and VBP impact +4% as reported, and +5% at $ mil constant currency ~ ~ ~ ~ ~ ~(130) bps ~ headwind (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Volume Based Procurement (3) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ and
Slide 10: Containment of operating costs partially offset gross margin pressure
Containment of operating costs partially offset gross margin pressure All numbers presented on non-GAAP basis Actual Actual Q3-24 Q3-23 2024 YTD 2023 YTD except revenue and IPR&D (1) VPY VPY Revenue 1,582 1,519 4% 4,811 4,665 3% Cost of sales 606 568 7% 1,832 1,699 8% Adjusted Gross profit 976 951 3
Slide 11: On track to deliver ~$1B of free cash flow for full year 2024
On track to deliver ~$1B of free cash flow before one-time spin-related costs for full year 2024 YTD YTD • Timing-related improvement (USD millions) Sept. Sept. in YTD net working capital 2024 2023 Adjusted EBITDA $1,510 $1,495 • Significant decline in spin- Less: Net cash interest expense (292) (31
Slide 12: Net leverage ratio ~4.0x at September 30, 2024
Net leverage ratio ~4.0x at September 30, 2024 $ mil Dec 2021 Dec 2022 Dec 2023 Mar 2024 Jun 2024 Sep 2024 Cash and cash 737 706 693 575 704 763 equivalents Gross Debt (1) 9,134 8,913 8,760 8,714 8,656 8,749 Net Debt (1) 8,397 8,207 8,067 8,139 7,952 7,986 * The definition of net debt is in the comp
Slide 13: 2024 expected to be third consecutive year of revenue growth at constant currency
2024 expected to be third consecutive year of revenue growth at constant currency $ mil +1.8% to +2.6% reported 3.1% to +3.8% constant currency ~ $6,375-$6,425 ~ ~ ~ ~ ~ ~(120)-(135) bps headwind to growth in 2024 (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Value Based Procurement (3) Other
Slide 14: Full Year 2024 Adjusted EBITDA range revised for IPR&D, product mix
Full Year 2024 Adjusted EBITDA range revised for IPR&D, product mix Mid-point of $51 million Mid-point of range Unfavorable Dermavant Productivity, range provided IPR&D expense provided product mix Nov/Dec impact base business August 6, 2024 in Q3 2024 October 31, 2024 32.0% ~(80) bps ~(50) bps ~(30
Slide 15: Full Year 2024 Guidance
Full Year 2024 Guidance Provided on a non-GAAP basis, except Prior guidance as of Current guidance revenue August 6, 2024 Revenues $6.250 B - $6.450 B $6.375 B - $6.425 B Adjusted gross margin 61.0% - 63.0% ~61.5% SG&A $1.50 B - $1.70 B $1.55B - $1.60B R&D $400M - $500M $430M - $470M IPR&D $30M $81M
Slide 16: Q&A
Q&A “iis ORGANON”
Slide 17: Appendix
Appendix O “i ORGANON’
Slide 18: Franchise performance
Franchise performance Q3 Q3 Actual Ex-FX 2024 2023 Actual Ex-FX $ mil 2024 2023 VPY VPY YTD YTD VPY VPY Women’s 440 418 5% 6% 1,312 1,237 6% 7% Health Biosimilars 165 142 16% 17% 499 394 27% 27% Est. Brands 951 935 2% 3% 2,915 2,932 (1)% 1% Other (1) 26 24 4% 7% 85 102 (17)% (17)% Total 1,582 1,519
Slide 19: Strength in EUCAN, US offsetting mandatory pricing revisions in Japan
Strength in EUCAN, US offsetting mandatory pricing revisions in Japan Actual Ex-FX 2024 2023 Actual Ex-FX $ mil Q3-24 Q3-23 VPY VPY YTD YTD VPY VPY Europe and 436 392 11% 12% 1,343 1,259 7% 7% Canada United States 398 370 8% 8% 1,156 1,067 8% 8% Asia Pacific and ~75% of 260 284 (8)% (6)% 806 869 (7)
Slide 20: Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics
Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics ($ in millions) Q3 2024 Q3 2023 2024 YTD 2023 YTD GAAP Gross Profit $ 923 $ 907 $ 2,819 $ 2,833 Adjusted for: Spin-related costs (1) $ — $ 10 $ 6 $ 30 Manufacturing network costs(2) $ 14 $ — 39 — Stock-based compensation $ 4 $ 5 13 13 Amor
Slide 21: Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics
Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics ($ in millions, except per share amounts) Q3 2024 Q3 2023 2024 YTD 2023 YTD GAAP Research and development expenses $ 111 $ 137 $ 339 $ 394 Adjusted for: Spin-related costs (1) (2) (4) (5) (10) Stock-based compensation (4) (4) (13) (11) Adj
Slide 22: GAAP Net Income to Adjusted EBITDA
GAAP Net Income to Adjusted EBITDA Unaudited, $ in millions Q3 2024 Q3 2023 2024 YTD 2023 YTD Net income $ 359 $ 58 $ 755 $ 477 Depreciation (1) 32 32 93 88 Amortization 35 29 102 88 Interest expense 126 134 388 398 Tax (benefit) expense (152) 22 (77) 92 EBITDA $ 400 $ 275 $ 1,261 $ 1,143 Restructur
Slide 23: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands TM TM Number of 5 56 14 products 23