Organon & Co. · NYSE:OGN
Organon & — Q2 2024 Earnings Presentation
22 slides from Organon &'s earnings presentation, Aug 6, 2024
Slide 1: Second Quarter 2024 Earnings
Organon Second 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: Second quarter 2024 highlights
Second quarter 2024 highlights • Revenue of $1.6 billion, up 2% ex-FX • Diluted EPS of $0.75, Adjusted Diluted EPS of $1.12 • Adjusted EBITDA of $513 million, inclusive of $15 million of IPR&D and milestones See Slides 19-21 of this presentation for a reconciliation of non-GAAP measures. 4
Slide 5: Franchise highlights
• Franchise growth of 3% ex-FX • Strong growth in Nexplanon and Women's Health Marvelon/Mercilon, offset performance of Women's Health Fertility and NuvaRing • Franchise growth of 22% ex-FX • Ontruzant volume growth driven by favorable Biosimilars tender • Hadlima continuing to gain traction in U.S.
Slide 6: Strength in largest markets, year to date
Strength in largest markets, year to date Actual Ex-FX 2024 2023 Actual Ex-FX $ mil Q2-24 Q2-23 VPY VPY YTD YTD VPY VPY Europe and 457 467 (2)% (1)% 907 867 5% 4% Canada United States 388 371 5% 5% 758 697 9% 9% Asia Pacific and 260 261 —% 5% 546 585 (7)% (2)% ~75% of Japan YTD sales Latin America,
Slide 7: Minimal year to date impact from LOE, VBP, price
Minimal year to date impact from LOE, VBP, price Flat as reported, and +2% at $ mil constant currency ~ ~ ~ ~ ~ ~ ~(200) bps headwind (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Volume Based Procurement (3) Other includes manufacturing sales to Merck & Co., Rahway, NJ and other third parties
Slide 8: Women's Health
Women’s Health • Strong growth in Nexplanon and Marvelon/Mercilon offset performance of NuvaRing and Fertility • Continued uptake in Jada Act Ex-FX 2024 2023 Act Ex-FX Revenues $ mil Q2-24 Q2-23 VPY VPY YTD YTD VPY VPY Nexplanon ® (contraception) 242 214 13% 13% 462 380 22% 22% NuvaRing ® (contracep
Slide 9: Biosimilars
Biosimilars • Hadlima uptake continues following U.S. launch • Ontruzant volume growth driven by favorable tender Act Ex-FX 2024 2023 Act Ex-FX Revenues $ mil Q2-24 Q2-23 VPY VPY YTD YTD VPY VPY Renflexis ® 69 70 (2)% (2)% 138 132 5% 5% Ontruzant ® 48 33 46% 46% 87 54 62% 62% Brenzys 12 13 (4)% (4)%
Slide 10: Established Brands
Established Brands • New migraine products and recovery in injectable steroids largely offset VBP, expected price pressure in Japan and ERP- related shipment phasing • Expect flat performance for the franchise in 2024 ex-FX Act Ex-FX 2024 2023 Act Ex-FX Revenues $ mil Q2-24 Q2-23 VPY VPY YTD YTD VPY
Slide 11: 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 Q2-24 Q2-23 2024 YTD 2023 YTD except revenue and IPR&D (1) VPY VPY Revenue 1,607 1,608 —% 3,229 3,146 3% Cost of sales 611 596 3% 1,226 1,131 8% Adjusted Gross profit 996 1,012
Slide 12: On track to deliver ~$1B of free cash flow before one-time spin-related costs
On track to deliver ~$1B of free cash flow before one-time spin-related costs for full year 2024 (USD millions) 1H 2024 Adjusted EBITDA $1,051 Less: Net cash interest expense (247) • Timing-related improvement Less: Cash taxes (102) in Q2 working capital Less: Change in net working capital (204) Les
Slide 13: Expect to end 2024 with net leverage below 4.0x
Expect to end 2024 with net leverage below 4.0x Net leverage ratio ~4.1x at June 2024* $ mil Dec 2021 Dec 2022 Dec 2023 Mar 2024 Jun 2024 Cash and cash 737 706 693 575 704 equivalents Gross Debt (1) 9,134 8,913 8,760 8,714 8,656 Net Debt (1) 8,397 8,207 8,067 8,139 7,952 * The definition of net debt
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 (0.2%) to +3.0% reported, $ mil +2.0% to +4.7% growth 500-600 at constant currency (20)-(25) $6,250-$6,450 (110)-(140) $6,263 (70)-(90) (30)-(50) (180)-(200) FY 2023 LOE (1) China VBP (2) Price Volume Supply/Other (3)
Slide 15: Tightening of revenue range; no change to Adj. EBITDA margin range
Tightening of revenue range; no change to Adj. EBITDA margin range Provided on a non-GAAP basis, Prior guidance Current guidance except revenue Revenues $6.2B - $6.5B $6.25B-$6.45B Adjusted gross margin 61.0% - 63.0% Unchanged SG&A $1.5B - $1.7B Unchanged R&D $400M - $500M $430M - $530M* Adjusted EB
Slide 16: Q&A
Q&A “iis ORGANON”
Slide 17: Appendix
Appendix O “i ORGANON’
Slide 18: Franchise performance
Franchise performance Q2 Q2 Actual Ex-FX 2024 2023 Actual Ex-FX $ mil 2024 2023 VPY VPY YTD YTD VPY VPY Women’s 449 438 3% 3% 872 819 6% 8% Health Biosimilars 164 135 22% 22% 334 251 33% 33% Est. Brands 963 995 (3)% (1)% 1,964 1,997 (2)% 1% Other (1) 31 40 (20)% (20)% 59 79 (23)% (24)% Total 1,607 1
Slide 19: Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics
Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics ($ in millions) Q2 2024 Q2 2023 2024 YTD 2023 YTD GAAP Gross Profit $ 939 $ 968 $ 1,896 $ 1,926 Adjusted for: Spin-related costs (1) $ 3 $ 10 $ 6 $ 20 Manufacturing network costs(2) $ 15 $ — 25 — Stock-based compensation $ 5 $ 4 9 8 Amorti
Slide 20: Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics
Reconciliation of GAAP Reported to Non-GAAP Adjusted Metrics ($ in millions, except per share amounts) Q2 2024 Q2 2023 2024 YTD 2023 YTD GAAP Research and development expenses $ 116 $ 128 $ 228 $ 257 Adjusted for: Spin-related costs (1) (1) (3) (3) (6) Stock-based compensation (5) (4) (9) (7) Adjust
Slide 21: GAAP Net Income to Adjusted EBITDA
GAAP Net Income to Adjusted EBITDA Unaudited, $ in millions Q2 2024 Q2 2023 2024 YTD 2023 YTD Net income $ 195 $ 242 $ 396 $ 419 Depreciation (1) 31 28 61 56 Amortization 34 30 67 59 Interest expense 131 132 262 264 Taxes on income 40 12 75 70 EBITDA $ 431 $ 444 $ 861 $ 868 Restructuring costs — — 2
Slide 22: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands TM TM Number of 5 55 14 products 22