Organon & (OGN) - 2025 Q2 - Quarterly Results

Financial Highlights Organon reported Q2 2025 revenue of $1.594 billion and $1.00 non-GAAP Adjusted diluted EPS, repaid $345 million debt, and raised full-year revenue guidance | Metric | Q2 2025 | | :--- | :--- | | Revenue | $1.594 billion | | GAAP Diluted EPS | $0.56 | | Non-GAAP Adjusted Diluted EPS | $1.00 | | Net Income | $145 million | | Adjusted EBITDA (Non-GAAP) | $522 million | | Adjusted EBITDA Margin (Non-GAAP) | 32.7% | - The company repaid $345 million of long-term debt during the quarter and is on track to achieve a net debt to Adjusted EBITDA ratio of less than 4.0x by the end of 2025, with a further goal of 3.5x or below by the end of 2026[3][4] - Full-year 2025 revenue guidance was raised to a range of $6.275 billion to $6.375 billion, primarily based on updated views of foreign exchange rates[4] Financial Performance Analysis Q2 2025 revenue decreased 1% to $1.594 billion, with growth in Women's Health and Biosimilars offset by Established Brands, while Adjusted EBITDA margin improved to 32.7% Revenue Analysis Q2 2025 revenue totaled $1.594 billion, down 1% YoY, with Women's Health and Biosimilars growth offset by Established Brands decline due to loss of exclusivity | Segment | Q2 2025 Revenue ($M) | YoY Change | YoY Change (ex-FX) | | :--- | :--- | :--- | :--- | | Women's Health | $462 | 3% | 2% | | Biosimilars | $173 | 5% | 6% | | Established Brands | $936 | (3)% | (4)% | | Total Revenue | $1,594 | (1)% | (1)% | - Women's Health growth was driven by the fertility business (+15% ex-FX), while Nexplanon® sales declined 1% ex-FX due to constrained funding for subsidized programs in the U.S[7] - Biosimilars growth was primarily due to strong performance of Hadlima®, which more than offset expected declines in mature products like Ontruzant® and Renflexis®[8] - Established Brands revenue declined due to the loss of exclusivity of Atozet™ in key European markets and lower sales of Singulair® in China and Japan[9] Profitability Analysis GAAP net income fell 26% to $145 million, while non-GAAP Adjusted EBITDA increased 2% to $522 million, with margin improving to 32.7% due to reduced operating expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Income | $145M | $195M | (26)% | | Diluted EPS | $0.56 | $0.75 | (25)% | | Non-GAAP Adjusted Net Income | $261M | $289M | (10)% | | Non-GAAP Adjusted Diluted EPS | $1.00 | $1.12 | (11)% | | Adjusted EBITDA (Non-GAAP) | $522M | $513M | 2% | | Adjusted EBITDA Margin (Non-GAAP) | 32.7% | 31.9% | +0.8 p.p. | - The year-over-year improvement in Adjusted EBITDA margin was primarily driven by a 3% reduction in operating expenses[14] - Lower reported GAAP gross margin was due to higher amortization expense related to prior-year acquisitions and the Dermavant acquisition. Non-GAAP Adjusted gross margin was consistent with the prior year[12] Capital Allocation and Financial Position Organon declared a $0.02 per share dividend, repaid $345 million in debt, and held $599 million cash against $8.90 billion debt as of June 30, 2025 - The Board of Directors declared a quarterly dividend of $0.02 per share, payable on September 11, 2025[15] - The company made principal repayments on long-term debt totaling $345 million in Q2 2025. This included repurchasing $242 million of its 2031 Notes, resulting in a pre-tax gain of $42 million[16] Financial Position (as of June 30, 2025) | Financial Position (as of June 30, 2025) | Amount ($M) | | :--- | :--- | | Cash and cash equivalents | $599 | | Debt | $8,900 | Full Year 2025 Guidance Organon raised full-year 2025 revenue guidance to $6.275 billion - $6.375 billion due to reduced foreign exchange headwind, while other non-GAAP metrics remain unchanged Full Year 2025 Guidance Summary | Guidance Metric | Previous Guidance (May 1, 2025) | Current Guidance | | :--- | :--- | :--- | | Revenue | $6.125B - $6.325B | $6.275B - $6.375B | | FX Translation Headwind | ~$200M | ~$50M | | Adjusted EBITDA Margin (Non-GAAP) | 31.0% - 32.0% | Unchanged | - The increase in revenue guidance is attributed to a more favorable foreign exchange outlook, with the expected headwind reduced from ~$200 million to ~$50 million[19] - Guidance for Adjusted Gross Margin, SG&A, R&D, Adjusted EBITDA Margin, Interest, Depreciation, tax rate, and share count remains unchanged[19] Appendix: Financial Statements and Reconciliations This appendix provides detailed unaudited financial statements, including consolidated income, sales breakdowns, and GAAP to non-GAAP reconciliations Consolidated Statement of Income The consolidated statement of income presents key financial results for Q2 and first six months of 2025 versus 2024, including revenues and net income Consolidated Statement of Income (Three Months Ended June 30) | ($ in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $1,594 | $1,607 | | Gross Profit | $874 | $939 | | Income before income taxes | $229 | $235 | | Net income | $145 | $195 | | Diluted EPS | $0.56 | $0.75 | Sales by Product and Geography This section details Q2 2025 sales revenue by product, including top sellers like Nexplanon, and by geographic region, with Europe and Canada as the largest Top Products (Q2 2025) | Top Products (Q2 2025) | Total Sales ($M) | | :--- | :--- | | Nexplanon/Implanon NXT | $240 | | Atozet | $86 | | Follistim AQ | $74 | | Zetia | $74 | | Singulair | $66 | Geography (Q2 2025) | Geography (Q2 2025) | Total Sales ($M) | YoY Change | | :--- | :--- | :--- | | Europe and Canada | $419 | (8.3)% | | United States | $414 | 6.7% | | Asia Pacific and Japan | $250 | (3.8)% | | China | $204 | (5.6)% | Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP financial metrics, including Adjusted EBITDA and Adjusted Net Income for Q2 2025 Reconciliation to Adjusted EBITDA (Q2 2025) | Reconciliation to Adjusted EBITDA (Q2 2025, $M) | Amount | | :--- | :--- | | GAAP Reported Net Income | $145 | | Depreciation | $33 | | Amortization | $53 | | Interest expense | $131 | | Income tax expense | $84 | | Restructuring and related charges | $6 | | Manufacturing network related | $36 | | Stock-based compensation | $22 | | Other adjustments | $14 | | Adjusted EBITDA (Non-GAAP) | $522 | Reconciliation to Adjusted Net Income (Q2 2025) | Reconciliation to Adjusted Net Income (Q2 2025, $M) | Amount | | :--- | :--- | | GAAP Reported Net Income | $145 | | Cost of sales adjustments | $109 | | SG&A adjustments | $44 | | R&D adjustments | $7 | | Other adjustments | $(31) | | Tax impact on adjustments | $(13) | | Non-GAAP Adjusted Net Income | $261 |