Organon & Co. · NYSE:OGN
Organon & — Q1 2024 Earnings Presentation
22 slides from Organon &'s earnings presentation, May 2, 2024
Slide 1: Organon First Quarter 2024 Earnings
Organon First 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: First quarter 2024 highlights
First quarter 2024 highlights • Revenue of $1.6 billion, up 7% ex-FX ◦ All three franchises contributed to growth • Diluted EPS of $0.78, Adjusted Diluted EPS of $1.22 • Adjusted EBITDA of $538 million, inclusive of $15 million of IPR&D and milestones See Slides 19-21 of this presentation for a reco
Slide 5: Franchise highlights: Women's Health, Biosimilars, Established Brands
• Franchise growth of 12% ex-FX • Nexplanon up 34% ex-FX driven by favorable Women's Health comparison to buy-out in Q1 2023; volume and Women's Health price growth • Continued uptake in Jada • Franchise growth of 46% ex-FX • Ontruzant benefit from incremental demand in Biosimilars Brazil • Hadlima
Slide 6: Strong Q1 performance from largest markets
Strong Q1 performance from largest markets Actual Ex-FX $ mil Q1-24 Q1-23 VPY VPY Other, 2% Europe and Canada, 28% Europe and Canada 450 400 12% 10% LAMERA, 17% United States 371 326 14% 14% ~80% of Asia Pacific and Japan 287 324 (12)% (7)% Q1 sales China, 13% generated China 206 225 (8)% (5)% ex-US
Slide 7: Strong volume growth, driven by Nexplanon, Biosimilars
Strong volume growth, driven by Nexplanon, Biosimilars +5% reported, and +7% at $ mil constant currency ~130 $1,622 ~ (5) ~ (30) $1,538 ~ (5) ~ (5) ~ (1) (1) (2) (3) Q1 2023 LOE VBP Price Volume Supply/Other FX Q1 2024 (1) LOE = Loss of Exclusivity (2) VBP = Volume Based Procurement (3) Other includ
Slide 8: Women's Health
Women’s Health • Nexplanon up 34% ex-FX driven by favorable comparison to buy-out in Q1 2023; volume and price growth • Fertility down 2%, following strong Q4, expect high single-digit growth in fertility for full year 2024 Act Ex-FX Revenues $ mil Q1-24 Q1-23 VPY VPY Nexplanon ® (contraception) 220
Slide 9: Biosimilars
Biosimilars • Ontruzant benefited from incremental tender demand in Brazil • Hadlima uptake continues following U.S. launch Revenues $ mil Q1-24 Q1-23 Act VPY Ex-FX VPY Renflexis ® 69 62 12% 12% Ontruzant ® 39 21 86% 86% Brenzys™ 24 19 25% 26% Biosimilars Aybintio™ 8 10 (20)% (21)% Hadlima ® 30 5 NM
Slide 10: Established Brands
Established Brands • Volume growth continues to outpace price pressure • New migraine assets and recovery of injectable steroids more than offset China VBP Ex-FX Revenues $ mil Q1-24 Q1-23 Act VPY VPY Cardiovascular 365 384 (5)% (3)% Respiratory 277 292 (5)% (2)% Established Non-Opioid Pain, Bone &
Slide 11: SG&A and R&D cost management significantly offset gross margin pressure
SG&A and R&D cost management significantly offset gross margin pressure All numbers presented on non-GAAP basis except revenue Q1-24 Q1-23 Actual VPY and IPR&D (1) Revenue 1,622 1,538 5% Cost of sales 615 535 15% Adjusted Gross profit 1,007 1,003 —% Selling, general and administrative 373 373 —% R&D
Slide 12: Q1 free cash flow in line with historical performance
Q1 free cash flow in line with historical performance > 70% of annual free cash flow expected in 2H'24 (USD millions) Q1 2024 Net working capital driven by: Adjusted EBITDA $538 • Accrual drawdown for Less: Net cash interest expense (65) employee related incentive Less: Cash taxes (50) payments Less
Slide 13: Leverage ratio stable with 2023 year-end
Leverage ratio stable with 2023 year-end Net leverage ratio ~4.1x at March 2024* $ mil Dec 2021 Dec 2022 Dec 2023 Mar 2024 Cash and cash 737 706 693 575 equivalents Gross Debt (1) 9,134 8,913 8,760 8,714 Net Debt (1) 8,397 8,207 8,067 8,139 (*) The definition of net debt is in the company's credit a
Slide 14: 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 (1.0%) to +3.8% reported, +1.1% to +5.7% growth at constant currency ~450-650 $6,200-$6,500 ~ (15)-(20) $6,263 ~(100)-(140) ~ (70)-(90) ~ (30)-(50) ~ (180)-(220) ~(160)-(220) bps headwind to growth in 2024 (1) (2
Slide 15: No change to full year 2024 guidance ranges
No change to full year 2024 guidance ranges Provided on a Non-GAAP basis, Prior guidance Current guidance except revenue Revenues $6.2B - $6.5B Unchanged Adjusted gross margin 61.0% - 63.0% Unchanged SG&A $1.5B - $1.7B Unchanged R&D* $400M - $500M Unchanged Adjusted EBITDA margin (Non-GAAP) 31.0% -
Slide 16: Q&A
Q&A “i ORGANON
Slide 17: Appendix
Appendix O “i ORGANON™
Slide 18: Franchise performance Q1-2024 Q1-2023
Franchise performance Ex-FX $ mil Q1-2024 Q1-2023 Actual VPY VPY Women’s Health 422 381 11% 12% Biosimilars 170 116 46% 46% Est. Brands 1,001 1,002 —% 2% Other (1) 29 39 (27)% (29)% Total Revenues 1,622 1,538 5% 7% (1) Other includes manufacturing sales to third parties. 18
Slide 19: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Q1 2024)
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Three Months Ended March 31, 2024 Manufacturing Network Unaudited, $ in millions except per share Spin related Related Stock-based Non-GAAP amounts GAAP Costs(1) Costs (2) Restructuring Compensation Amortization Other Adjusted Cost of
Slide 20: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Q1 2023)
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Three Months Ended March 31, 2023 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(2) Adjusted Cost of sales $ 580 (10) — (4) (29) (2) $ 535
Slide 21: GAAP Net Income to Adjusted EBITDA
GAAP Net Income to Adjusted EBITDA Unaudited, $ in millions Q1-2024 Q1-2023 Net Income 201 177 Depreciation (1) 30 28 Amortization 33 29 Interest expense 131 132 Taxes on income 35 58 EBITDA 430 424 Restructuring costs 23 4 One-time costs (2) 59 68 Stock-based compensation 26 22 Adjusted EBITDA (Non
Slide 22: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands TM TM Number of 14 5 55 products 22