Organon & Co. · NYSE:OGN
Organon & — Q1 2023 Earnings Presentation
26 slides from Organon &'s earnings presentation, May 4, 2023
Slide 1: Organon First Quarter 2023 Earnings
Organon First Quarter 2023 Earnings
Slide 2: Disclaimer statement
Disclaimer statement 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 limi
Slide 3: Disclaimer statement, cont.
Disclaimer statement, cont. 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
Slide 4: First quarter 2023 highlights
First quarter 2023 highlights • Revenue of $1.5 billion, up 3% ex-FX • All three franchises grew, ex-FX • Adjusted EBITDA of $518 million • Diluted EPS of $0.69; Adjusted Diluted EPS of $1.08 • $250 million voluntary debt repayment • Expansion of Women's Health portfolio with strategic investment in
Slide 5: Each franchise contributed to growth
Each franchise contributed to growth • Growth of 3% ex-FX driven by Marvelon / Mercilion • Fertility volume growth offset by channel mix in U.S. and Women's Health COVID-related lockdowns in China early in the year • Strong physician demand for Nexplanon • Double digit growth ex-FX Biosimilars • Con
Slide 6: Nexplanon growth inflected since spin-off
Nexplanon® growth inflected since spin-off LTM view normalizes for tender phasing ex-US and inventory adjustments in the U.S. $ mil Pre-spin % Product Sales Growth *LTM * LTM: “Last 12 Months” | % Growth expressed at constant currency 6
Slide 7: Each franchise contributed to growth
Each franchise contributed to growth • Growth of 3% ex-FX driven by Marvelon / Mercilion • Fertility volume growth offset by channel mix in U.S. and Women's Health COVID-related lockdowns in China early in the year • Strong physician demand for Nexplanon • Double digit growth ex-FX Biosimilars • Con
Slide 8: Established Brands sizeable and stable base of revenue, drives durable cash flow
Established Brands sizeable and stable base of revenue, drives durable cash flow $ mil Pre-spin % Product Sales Growth *LTM 8 * LTM: “Last 12 Months” | % Growth expressed at constant currency
Slide 9: Minimal LOE and VBP impact; strong volume growth
Minimal LOE and VBP impact; strong volume growth -2% reported $ mil +3% ex-FX ~100 $1,567 ~0 ~(5) $1,538 ~(30) ~(70) ~(30) FX ~(450) bps headwind to growth in Q1 (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Volume Based Procurement (3) Other includes manufacturing sales to Merck & Co., Inc.,
Slide 10: China grew despite VBP impact; strong APJ growth
China grew despite VBP impact; strong APJ growth Actual Ex-FX $ mil Q1-23 Q1-22 VPY VPY Europe and Canada 400 436 (8)% (4)% United States 326 329 (1)% (1)% Asia Pacific and Japan 324 314 3% 12% ~80% of Q1 sales China 225 236 (5)% 3% generated ex-US Latin America, Middle 214 209 3% 3% East, Russia an
Slide 11: Women's Health
Women’s Health • Customer buying patterns tend to skew Q1 Nexplanon results • Strong physician demand for Nexplanon • Growth in Marvelon / Mercilon from re- acquisition of rights Ex-FX Revenues $ mil Q1-23 Q1-22 Act VPY VPY Women’s Top Contraception Products Health Nexplanon ® 165 171 (3)% (1)% Nuva
Slide 12: Biosimilars
Biosimilars • Double digit growth for Renflexis five + years after launch • Ontruzant growth in US tempered by competitive pressures in Europe and phasing/timing of sales in Brazil • Brenzys growth driven by timing of government purchases in Brazil Ex-FX Revenues $ mil Q1-23 Q1-22 Act VPY VPY Biosim
Slide 13: Established Brands
Established Brands • Modest growth despite VBP and market action • Strong growth in China and APJ regions • Expect generally flat performance in 2023 on a constant currency basis Ex-FX Revenues $ mil Q1-23 Q1-22 Act VPY VPY Established Cardiovascular 384 410 (6)% —% Brands Respiratory 292 305 (4)% 1
Slide 14: P&L reflects upcoming launches and pipeline development
P&L reflects upcoming launches and pipeline development $ mil Q1-23 Q1-22 Actual VPY Revenue 1,538 1,567 (2)% Cost of sales 580 561 3% Gross profit 958 1,006 (5)% Non-GAAP Adjusted Gross profit (1) 1,003 1,042 (4)% Selling, general and administrative 435 371 17% R&D 129 96 34% Acquired IPR&D and mil
Slide 15: Voluntary debt repayment of $250M in first quarter
Voluntary debt repayment of $250M in first quarter Net Leverage of ~4.0x; $450M voluntary prepayments since spin $ mil Jun 2021 Dec 2021 Dec 2022 Mar 2023 Cash (available to 330 737 706 459 Organon) (1) Gross Debt (2) 9,348 9,134 8,913 8,711 Net Debt (2) 9,018 8,397 8,207 8,252 (1) The June 30, 2021
Slide 16: On target to generate > $1B of free cash flow before one-time charges in 2023
On target to generate > $1B of free cash flow before one-time charges in 2023 in $ millions Q1 2023 Largely driven by: Adjusted EBITDA $518 • Accrual drawdown for Less: Net cash interest expense (65) employee-related incentive payments Less: Cash taxes (61) (~$110M) Less: Change in NWC (207) • Typic
Slide 17: Continued solid volume growth, partly offset by VBP, LOE and price; limited FX headwinds
[Organon] Confidential Continued solid volume growth, partly offset by VBP, LOE and price; limited FX headwinds $ mil Flat to +4.5% reported 500-600 $6,150 - $6,450 $6,174 (25)-(50) (50)-(100) (50)-(75) (125)-(175) FX ~(80)-(160) bps (75)-(125) headwind to growth in 2023 (1) (2 (3) ) (1) LOE = Loss
Slide 18: FY 2023 guidance ranges
FY 2023 guidance ranges Provided on a Non- GAAP Prior guidance Current guidance basis, except Revenues Revenue $6.150 - $6.450 billion Unchanged Adjusted gross margin Low - mid 60% range Unchanged SG&A (as % of revenues) Mid 20% range Unchanged R&D (as % of revenues) Upper single-digit Unchanged Adj
Slide 19: Q&A
Q&A O “i ORGANON’
Slide 20: Appendix
Appendix “iis ORGANON”
Slide 21: Gross margin reconciliation
Gross margin reconciliation Three Months Ended March 31, 2023 Spin Related Stock-based Non-GAAP Unaudited, $ in millions GAAP Costs(1) Restructuring Compensation Amortization Other(1) Adjusted Revenues $ 1,538 $ 1,538 Cost of sales 580 (10) — (4) (29) (2) 535 Gross profit 958 1,003 Gross margin 62.3
Slide 22: Gross margin reconciliation
Gross margin reconciliation Three Months Ended March 31, 2022 Spin Related Stock-based Non-GAAP Unaudited, $ in millions GAAP Costs(1) Restructuring Compensation Amortization Other(1) Adjusted Revenues $ 1,567 $ 1,567 Cost of sales 561 (4) — (3) (28) (1) 525 Gross profit 1,006 1,042 Gross margin 64.
Slide 23: Income from operations before income taxes to Adjusted EBITDA
Income from operations before income taxes to Adjusted EBITDA Unaudited, $ in millions Q1-2023 Q1-2022 Income from operations before income taxes 235 442 Depreciation 28 25 Amortization 29 28 Interest expense 132 97 EBITDA 424 592 Restructuring costs 4 — One-time costs (1) 68 40 Stock-based compensa
Slide 24: Franchise performance
Franchise performance Ex-FX $ mil Q1-2023 Q1-2022 Actual VPY VPY Women’s Health 381 378 1% 3% Biosimilars 116 99 18% 20% Est. Brands 1,002 1,053 (5)% 1% Other (1) 39 37 3% 2% Total Revenues 1,538 1,567 (2)% 3% (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other thi
Slide 25: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands TM TM Number of 13 5 49 products 25
Slide 26: Free cash flow providing opportunity for meaningful business development in growth pillars
Free cash flow providing opportunity for meaningful business development in growth pillars Commercialized/soon to be commercialized asset Building a pipeline Bacterial Vaginosis Gel Medical Device Licensing Agreement for Being studied for use during minimally FDA-approved for BV in females 12 and Cl