Organon & Co. · NYSE:OGN
Organon & — Q4 2023 Earnings Presentation
29 slides from Organon &'s earnings presentation, Feb 15, 2024
Slide 1: Fourth Quarter and Full Year 2023 Earnings
Organon Fourth Quarter and Full Year 2023 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: Full Year 2023 highlights
Full Year 2023 highlights • Revenue of $6.3 billion, up 3% ex-FX ◦ All three franchises contributed to growth • Adjusted EBITDA of $1.9 billion • Diluted EPS of $3.99, Adjusted Diluted EPS of $4.14 • 2024 expected to represent third consecutive year of revenue growth ex- FX; expect stable to improvi
Slide 5: Franchise highlights
• Fertility grew 9% ex-FX for full year 2023 • Jada more than doubled revenue ex-FX Women's Health • Nexplanon positioned for strong 2024 Women's Health • Recent launch of Xaciato • Franchise grew 24% ex-FX for FY 2023 • Double digit growth in both Renflexis and Biosimilars Ontruzant in 2023 • Hadli
Slide 6: Durability of Established Brands
Durability of Established Brands Q1 Q3 Durability and Expanding diversity of brands manufacturing Stemming LCM / price erosion entrepreneurial focus Established Brands Q2 Q4 6
Slide 7: Multiple market opportunities to drive continued stabilization across franchise
Multiple market opportunities to drive continued stabilization across franchise Over 30 unique opportunities identified since spin and in progress, across 20 plus markets covering all regions – Key Themes & Highlights LAMERA, APJ, EUCAN, China, US New market launches Product indication of existing p
Slide 8: Solid performance across all geographies
Solid performance across all geographies Actual Ex-FX FY FY Actual Ex-FX $ mil Q4-23 Q4-22 VPY VPY 2023 2022 VPY VPY Europe and Canada 414 389 6% 1% 1,673 1,631 3% 2% United States 411 394 4% 4% 1,478 1,437 3% 3% Asia Pacific and Japan 261 256 2% 3% 1,129 1,143 (1)% 3% China 203 196 4% 4% 864 917 (6
Slide 9: Q4 revenue: strong volume growth more than offset LOE and VBP impact
Q4 2024 revenue: strong volume growth more than offset LOE and VBP impact ~ +8% reported and ex-FX $ mil ~ ~ ~ $1,598 ~ ~ ~ (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 partie
Slide 10: FY revenue: strong volume growth offset LOE, VBP and pricing
FY 2024 revenue: strong volume growth offset LOE, VBP and pricing +1.4% reported $ mil +3.3% ex-FX ~420 ~ ~ ~ ~ ~ FX ~(190) bps headwind to growth for FY (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Volume Based Procurement 10 (3) Other includes manufacturing sales to Merck & Co., Inc., Rahwa
Slide 11: Women's Health
Women’s Health • Growth in Fertility, Marvelon/Mercilon, Jada offset generic competition for NuvaRing • Modest contribution from Nexplanon driven by one-time headwinds Act Ex-FX Act Ex-FX Revenues $ mil Q4-23 Q4-22 FY 2023 FY 2022 VPY VPY VPY VPY Nexplanon ® (contraception) 231 239 (4)% (3)% 830 834
Slide 12: Biosimilars
Biosimilars • Second year of double-digit revenue growth • Renflexis grew for 6th consecutive year, Ontruzant benefited from favorable timing of tenders • Hadlima uptake continues following U.S. launch Ex-FX Ex-FX Revenues $ mil Q4-23 Q4-22 Act VPY FY 2023 FY 2022 Act VPY VPY VPY Renflexis ® 77 60 2
Slide 13: Established Brands
Established Brands • Ex-FX growth of 2% for full-year 2023 despite headwinds in China • Volume growth continues to outpace price pressure Act Ex-FX Act Ex-FX Revenues $ mil Q4-23 Q4-22 FY 2023 FY 2022 VPY VPY VPY VPY Cardiovascular 322 328 (2)% (4)% 1,460 1,498 (3)% (1)% Respiratory 274 247 11% 13%
Slide 14: Gross Margin drove profitability variance
Gross Margin drove profitability variance All numbers presented on non-GAAP basis (1) Q4-23 Q4-22 Actual VPY FY 2023 FY 2022 Actual VPY Revenue 1,598 1,485 8% 6,263 6,174 1% Cost of sales 634 548 16% 2,333 2,116 10% Adjusted Gross profit 964 937 3% 3,930 4,058 (3)% Selling, general and administrativ
Slide 15: Significant improvement in working capital in Q4
Significant improvement in working capital in Q4 FY 2023 close to $1 billion free cash flow before one-time, spin-related costs (USD millions) Q1 Q2 Q3 Q4 2023 Adjusted EBITDA $518 $530 $447 $449 $1,944 Less: Net cash interest expense (65) (179) (68) (184) (496) Less: Cash taxes (61) (29) (55) 10 (1
Slide 16: Voluntary debt repayments of $450M since spin
Voluntary debt repayments of $450M since spin Bank covenant (*) net leverage ratio ~4.1x $ mil Dec 2021 Dec 2022 Mar 2023 Jun 2023 Sept 2023 Dec 2023 Cash and cash 737 706 459 326 414 693 equivalents Gross Debt (1) 9,134 8,913 8,711 8,730 8,654 8,760 Net Debt (1) 8,397 8,207 8,252 8,404 8,240 8,067
Slide 17: 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 ~(1.0%) to +3.8% reported, $ mil ~0.6% to +4.6% growth at constant currency ~ $6,200-$6,500 ~ ~ ~ ~ ~ Fx~(80)-(160) bps headwind to growth in 2024 (1) (2) (3) (1) LOE = Loss of Exclusivity (2) VBP = Value Based Pricing
Slide 18: Full Year 2024 guidance ranges
Full Year 2024 guidance ranges Provided on a Non-GAAP 2023 Full Year Actuals 2024 Full Year Guidance basis, except revenue Revenues $6.3B $6.2B-$6.5B Adjusted gross margin 62.7% 61.0% - 63.0% SG&A $1,556M $1.5B - $1.7B R&D (excluding IPR&D) $500M $400M - $500M Adjusted EBITDA margin 31.0% 31.0% - 33
Slide 19: Q&A
Q&A O “i ORGANON’
Slide 20: Appendix
Appendix “iis ORGANON"
Slide 21: Franchise performance
Franchise performance Actual Ex-FX Ex-FX $ mil Q4-2023 Q4-2022 FY 2023 FY 2022 Actual VPY VPY VPY VPY Women’s Health 465 433 7% 8% 1,702 1,673 2% 3% Biosimilars 199 134 49% 48% 593 481 23% 24% Est. Brands 915 888 3% 3% 3,847 3,874 (1)% 2% Other (1) 19 30 (37)% (42)% 121 146 (17)% (19)% Total Revenue
Slide 22: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Three Months Ended December 31, 2023 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(2) Adjusted Revenues $ 1,598 $ 1,598 Cost of sales 683
Slide 23: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Year Ended December 31, 2023 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(2) Adjusted Revenues $ 6,263 $ 6,263 Cost of sales 2,515 (47)
Slide 24: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Three Months Ended December 31, 2022 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(2) Adjusted Revenues $ 1,485 $ 1,485 Cost of sales 594
Slide 25: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Year Ended December 31, 2022 Spin related Stock-based Non-GAAP Unaudited, $ in millions except per share amounts GAAP Costs(1) Restructuring Compensation Amortization Other(2) Adjusted Revenues $ 6,174 $ 6,174 Cost of sales 2,294 (25)
Slide 26: Income before income taxes to Adjusted EBITDA
Income before income taxes to Adjusted EBITDA Unaudited, $ in millions Q4-2023 Q4-2022 Income before income taxes 104 111 Depreciation (1) 30 24 Amortization 28 28 Interest expense 129 119 EBITDA 291 282 Restructuring costs 58 17 One-time costs (2) 73 58 Stock-based compensation 27 23 Adjusted EBITD
Slide 27: Income before income taxes to Adjusted EBITDA
Income before income taxes to Adjusted EBITDA Unaudited, $ in millions FY 2023 FY 2022 Income before income taxes 673 1,122 Depreciation (1) 118 96 Amortization 116 116 Interest expense 527 422 EBITDA 1,434 1,756 Restructuring costs 62 28 One-time costs (2) 347 226 Stock-based compensation 101 75 Ad
Slide 28: Broad and diverse portfolio
Broad and diverse portfolio Women’s Health Biosimilars Established Brands TM TM Number of 5 51 14 products 28
Slide 29: Hadlima gaining ground
Hadlima gaining ground 2023 U.S. Weekly Total Prescriptions (TRx) Source: Symphony Healthcare Analytics, LLC (Jul 14, 2023 - Jan 26, 2024) 29