Organon & Co. · NYSE:OGN
Organon & — Q3 2023 Earnings Presentation
29 slides from Organon &'s earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings
Organon Third Quarter 2023 Earnings
Slide 2: Disclaimer statement, cont.
Disclaimer statement, cont. 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 no
Slide 3: Disclaimer statement
Disclaimer statement 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 calculat
Slide 4: Third quarter 2023 highlights
Third quarter 2023 highlights • Revenue of $1.5 billion, down 1% ex- FX • Adjusted EBITDA of $447 million • Diluted EPS of $0.23; Adjusted Diluted EPS of $0.87 • Revenue guidance range narrowed and lowered to $6.15 billion to $6.25 billion • Adjusted EBITDA margin guidance range narrowed and lowered
Slide 5: Franchise highlights: Women's Health, Biosimilars, Established Brands
• NuvaRing LOE primary driver of 7% ex-FX decline • Nexplanon down 3% ex-FX; new GTM model • Fertility expected to deliver high-single digit growth Women's Health for full year 2023 Women's Health • Jada doubles revenue year-over-year ex-FX • Recent launch of Xaciato • Franchise growth of 10% ex-FX
Slide 6: Solid relative performance for Hadlima
Solid relative performance for Hadlima 2023 U.S. Weekly Total Prescriptions (TRx) ~3.0X units vs next closest to competitor from July cohort Source: Healthcare Analytics, LLC (Jul 14-Oct 6, 2023) 6
Slide 7: Durability of Established Brands
Durability of Established Brands Durability and Expanding diversity of brands manufacturing Stemming LCM / price erosion entrepreneurial focus Established Brands 7
Slide 8: Stable, global Established Brands business delivered through strength of execution
Stable, global Established Brands business delivered through strength of execution & diversification Established Brands sales eX-FX variance by quarter vs. prior year, % % Change 4% 1% 3% -2% 0% -4% Q2 ‘22 Q3 ‘22 Q4 ‘22 Q1 ‘23 Q2 ‘23 Q3 ‘23 Total Total Established Established US EUCAN APAC China LAM
Slide 9: Revenue by geography
Revenue by geography Navigating macro environment in China Actual Ex-FX YTD YTD Actual Ex-FX $ mil Q3-23 Q3-22 VPY VPY 2023 2022 VPY VPY Europe and Canada 392 363 8% 3% 1,259 1,243 1% 2% United States 370 366 1% 1% 1,067 1,043 2% 2% Asia Pacific and Japan 284 283 —% 2% 869 888 (2)% 3% China 202 241
Slide 10: Volume growth offset LOE, VBP and pricing
Volume growth offset LOE, VBP and pricing (1%) $ mil reported (1%) ex-FX ~ ~ ~ ~ ~ ~ FX ~(65) bps headwind to growth in Q3 (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Volume Based Procurement (3) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties
Slide 11: Women's Health
Women’s Health • Nexplanon down 3% ex-FX • Expect high single digit growth in fertility ex-FX for full year • YTD Jada revenue more than double 2022 Act Ex-FX 2023 2022 Act Ex-FX Revenues $ mil Q3-23 Q3-22 VPY VPY YTD YTD VPY VPY Women’s Nexplanon ® (contraception) 220 229 (4)% (3)% 599 595 1% 2% He
Slide 12: Biosimilars
Biosimilars • Franchise grew 10% in third quarter • Renflexis up 15% ex-FX; on track for 6th consecutive year of growth • Ontruzant and Brenzys performance reflective of tender phasing Ex-FX 2023 2022 Ex-FX Revenues $ mil Q3-23 Q3-22 Act VPY Act VPY VPY YTD YTD VPY Biosimilars Renflexis ® 69 60 15%
Slide 13: Established Brands
Established Brands • Established Brands grew 3% ex-FX despite VBP and market action in early 2023 • Expect flat to slightly positive performance for full year Act Ex-FX 2023 2022 Act Ex-FX Revenues $ mil Q3-23 Q3-22 VPY VPY YTD YTD VPY VPY Established Cardiovascular 354 349 1% —% 1,139 1,171 (3)% —%
Slide 14: Gross margin drove profitability variance; attributable to FX and inflationary pressures
Gross margin drove profitability variance; attributable to FX and inflationary pressures All numbers presented on non-GAAP basis (1) Q3-23 Q3-22 Actual VPY 2023 YTD 2022 YTD Actual VPY Revenue 1,519 1,537 (1)% 4,665 4,689 (1)% Cost of sales 568 505 12% 1,699 1,568 8% Adjusted Gross profit 951 1,032
Slide 15: Net Debt as of September 30, 2023
Net Debt as of September 30, 2023 Bank covenant (*) net leverage ratio ~4.3x; Upward pressure on leverage expected to peak in Q4 $ mil Dec 2021 Dec 2022 Mar 2023 Jun 2023 Sept 2023 Cash and cash 737 706 459 326 414 equivalents Gross Debt (1) 9,134 8,913 8,711 8,730 8,654 Net Debt (1) 8,397 8,207 8,2
Slide 16: Despite Q3 improvement in FCF before OTC, Net Working Capital Consumption remained a headwind
Despite Q3 improvement in FCF before OTC, Net Working Capital Consumption remained a headwind (USD millions) Q1 Q2 Q3 2023 YTD • Expect ~$700-$800M FCF before one time costs in FY Adjusted EBITDA $518 $530 $447 $1,495 2023 Less: Net cash interest expense (65) (179) (68) (312) Less: Cash taxes (61) (
Slide 17: Continued volume growth, moderating headwinds in LOE, VBP, price
Continued volume growth, moderating headwinds in LOE, VBP, price ~ +1.6% to +3.3% growth at $ mil constant currency, ~ (0.4)% to + 1.2%, reported ~ ~ ~ ~ ~ ~ Fx~(195)-(210) bps headwind to growth in 2023 (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Value Based Pricing (3) Other includes manuf
Slide 18: Full Year 2023 guidance ranges
Full Year 2023 guidance ranges Provided on a Non- GAAP basis, Guidance provided August 8, Guidance provided as of November 2, except revenue 2023 2023 Revenues $6.250B-$6.450B $6.150B-$6.250B Adjusted gross margin Low-mid 60% range Low 60% range SG&A (as % of revenue) Mid 20% range Unchanged R&D (as
Slide 19: Q&A
Q&A O “i ORGANON’
Slide 20: Appendix
Appendix “iis ORGANON”
Slide 21: Franchise performance
Franchise performance Ex-FX Ex-FX $ mil Q3-2023 Q3-2022 Actual VPY 2023 YTD 2022 YTD Actual VPY VPY VPY Women’s Health 418 454 (8)% (7)% 1,237 1,240 —% 2% Biosimilars 142 129 10% 10% 394 346 14% 15% Est. Brands 935 915 2% 3% 2,932 2,987 (2)% 1% Other (1) 24 39 (36)% (38)% 102 116 (12)% (12)% Total R
Slide 22: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Three Months Ended September 30, 2023 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(1) Adjusted Revenues $ 1,519 $ 1,519 Cost of sales 61
Slide 23: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Nine Months Ended September 30, 2023 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(1) Adjusted Revenues $ 4,665 $ 4,665 Cost of sales 1,8
Slide 24: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Three Months Ended September 30, 2022 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(1) Adjusted Revenues $ 1,537 $ 1,537 Cost of sales 55
Slide 25: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Nine Months Ended September 30, 2022 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(1) Adjusted Revenues $ 4,689 $ 4,689 Cost of sales 1,7
Slide 26: Income before income taxes to Adjusted EBITDA
Income before income taxes to Adjusted EBITDA Unaudited, $ in millions Q3-2023 Q3-2022 Income before income taxes 80 282 Depreciation 32 25 Amortization 29 32 Interest expense 134 108 EBITDA 275 447 Restructuring costs — 11 One-time costs (1) 145 70 Stock-based compensation 27 18 Adjusted EBITDA 447
Slide 27: Income before income taxes to Adjusted EBITDA
Income before income taxes to Adjusted EBITDA Unaudited, $ in millions YTD Sept. 2023 YTD Sept. 2022 Income before income taxes 569 1,011 Depreciation 88 72 Amortization 88 88 Interest expense 398 303 EBITDA 1,143 1,474 Restructuring costs 4 11 One-time costs (1) 274 168 Stock-based compensation 74
Slide 28: Reinvesting in the business to create a pipeline of future revenue opportunities
Reinvesting in the business to create a pipeline of future revenue opportunities 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 Claria Medic
Slide 29: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands TM TM Number of 5 49 13 products 29