Organon & Co. · NYSE:OGN
Organon & — Q3 2022 Earnings Presentation
27 slides from Organon &'s earnings presentation, Nov 3, 2022
Slide 1: Q3 2022 Earnings
[Organon] Confidential Q3 2022 Earnings Organon
Slide 2: Disclaimer statement: Safe Harbor for Forward-Looking Statements
[Organon] Confidential Disclaimer statement 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. Private Securities Litigation Reform Act of 1995,
Slide 3: Disclaimer statement, cont.: Non-GAAP Information
[Organon] Confidential Disclaimer statement, cont. Non - GAAP Information This presentation contains “non - GAAP financial measures,” which are financial measures that either exclude or include amounts th at are not excluded or included in the most directly comparable measures calculated and present
Slide 4: Third quarter 2022 highlights
[Organon] Confidential Third quarter 2022 highlights 4 • 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
Slide 5: Each franchise contributed to growth
[Organon] Confidential Each franchise contributed to growth Women's Health Biosimilars Established Brands • Nexplanon record - setting quarter • Franchise growth of 23% on constant currency basis • Double digit growth in fertility • Building pipeline for future growth; first patient in OG - 6219 • C
Slide 6: Delivering stability in Established Brands
[Organon] Confidential Delivering stability in Established Brands $ mil 6 % Product Sales Growth *LTM
Slide 7: US and APJ regions significant growth contributors
[Organon] Confidential US and APJ regions significant growth contributors $ mil Q3 - 22 Q3 - 21 Actual VPY Ex - FX VPY Europe and Canada 363 410 (11)% — % United States 366 346 6% 6% Asia Pacific and Japan 283 287 (1)% 13% China 241 252 (4)% 1% Latin America, Middle East, Russia and Africa 236 238 (
Slide 8: Strong volume growth drove underlying performance
[Organon] Confidential Strong volume growth drove underlying performance $ mil 8 (1) LOE = Loss of Exclusivity (2) VBP = Value Based Pricing (3) Other includes manufacturing sales to Merck and other third parties, and allocated amounts from pre - spin revenue hedging activit ies through the date of
Slide 9: Women's Health
[Organon] Confidential Women’s Health Women’s Health Revenues $ mil Q3 - 22 Q3 - 21 Act VPY Ex - FX VPY 2022 YTD 2021 YTD Act VPY Ex - FX VPY Top Contraception Products Nexplanon ® 229 175 31% 34% 595 543 10% 12% NuvaRing ® 50 49 3% 5% 133 147 (10)% (7)% Cerazette Œ 15 18 (19)% (10)% 47 53 (10)% (3)
Slide 10: Biosimilars
[Organon] Confidential Biosimilars Biosimilars Revenues $ mil Q3 - 22 Q3 - 21 Act VPY Ex - FX VPY 2022 YTD 2021 YTD Act VPY Ex - FX VPY Renflexis ® 60 54 11% 12% 166 136 22% 23% Ontruzant ® 29 56 (47)% (45)% 87 101 (14)% (11)% Brenzys Œ 24 14 71% 75% 52 35 48% 53% Aybintio Œ 10 10 (2)% 13% 29 26 11%
Slide 11: Established Brands
[Organon] Confidential Established Brands Established Brands Revenues $ mil Q3 - 2022 Q3 - 21 Act VPY Ex - FX VPY 2022 YTD 2021 YTD Act VPY Ex - FX VPY Cardiovascular 349 397 (13)% (2)% 1,171 1,217 (4)% 4% Respiratory 231 250 (8)% (1)% 790 737 7% 14% Non - Opioid Pain, Bone & Dermatology 193 224 (14
Slide 12: P&L reflects investment for future growth
[Organon] Confidential 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,
Slide 13: Bank covenant net leverage ratio ~3.6x; Net Debt as of September 30, 2022
[Organon] Confidential 13 Bank covenant (*) net leverage ratio ~3.6x Net Debt as of September 30, 2022 $ mil Sept. 2021 Dec. 2021 Mar. 2022 Jun. 2022 Sept. 2022 Cash and equivalents 1,008 737 694 545 499 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
Slide 14: Impact of net working capital on YTD free cash flow
[Organon] Confidential Impact of net working capital on YTD free cash flow YTD 2022 Adjusted EBITDA $ 1,705 Less: Net cash interest expense (221) Cash taxes (175) Net working capital (764) Capital expenditures, normal course (66) Free Cash Flow Before One - Time Costs 479 Less: One - time costs (246
Slide 15: FX headwinds persist, masking solid volume growth
[Organon] Confidential $ mil 15 FX headwinds persist, masking solid volume growth (1) (2) $6,304 $6,100 – $6,200 ~(25) <(50) ~(150) ~550 ~(70) ~(400 ) FX ~650 bps headwind to growth in 2022 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties, and allo
Slide 16: Updated FY 2022 financial guidance ranges
[Organon] Confidential Updated FY 2022 financial guidance ranges 16 $M, provided on a Non - GAAP basis, except Revenues Guidance provided August 4, 2022 FX impact Guidance provided as of November 3, 2022 Revenues $6,100 - $6,300 from 550 - 650 bps to ~650 bps $6,100 - $6,200 Adjusted gross margin Mi
Slide 17: Q&A
[Organon] Confidential Q&A
Slide 18: Appendix
[Organon] Confidential Appendix
Slide 19: LTM Nexplanon sales demonstrate revenue acceleration
[Organon] Confidential LTM Nexplanon sales demonstrate revenue acceleration $ mil 19 % Product Sales Growth *LTM
Slide 20: Franchise performance
[Organon] Confidential Franchise performance $ mil Q3 - 2022 Q3 - 2021 Actual VPY Ex - FX VPY 2022 YTD 2021 YTD Actual VPY Ex - FX 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 (
Slide 21: Gross margin reconciliation
[Organon] Confidential 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 - ba
Slide 22: Income from continuing operations before income taxes to Adjusted EBITDA (Q3)
[Organon] Confidential 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
Slide 23: Income from continuing operations before income taxes to Adjusted EBITDA (YTD)
[Organon] Confidential 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
Slide 24: Income from continuing operations before income taxes to Adjusted Net Income (Q3)
[Organon] Confidential 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 compensati
Slide 25: Income from continuing operations before income taxes to Adjusted Net Income (YTD)
[Organon] Confidential 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 compen
Slide 26: Broad and diverse portfolio: number of products
[Organon] Confidential Number of products 13 5 49 Women’s Health Biosimilars Established Brands Broad and diverse portfolio 26
Slide 27: Balancing commercial and pipeline business development
[Organon] Confidential Balancing commercial and pipeline business development Commercialized/soon to be commercialized assets Building a pipeline • March 2022 - Licensing agreement for Xaciato Œ • July 2022 - Licensing agreement for a novel investigational non - hormonal, on - demand contraceptive c