Organon & (US:OGN)2025-11-10 13:08Financial Performance - Worldwide sales for the three months ended September 30, 2025, were $1.6 billion, an increase of 1% compared to 2024, positively impacted by approximately 2% or $36 million due to favorable foreign exchange rates [124]. - For the nine months ended September 30, 2025, worldwide sales were $4.7 billion, a decrease of 2% compared to 2024, with a positive impact of approximately $2 million from favorable foreign exchange rates [125]. - Sales of Nexplanon decreased 8% for the three months ended September 30, 2025, primarily due to lower demand and decreased funding of government programs in the United States [132]. - Hadlima sales increased 57% and 62% for the three and nine months ended September 30, 2025, respectively, due to sales ramp-up since its launch in July 2023 in the United States [138]. - Jada sales increased 30% and 25% for the three and nine months ended September 30, 2025, respectively, due to continued uptake in the United States following its launch in early 2022 [137]. - Renflexis sales declined 2% and 9% for the three and nine months ended September 30, 2025, respectively, primarily due to competitive pressure and unfavorable discount rates in the United States [138]. - NuvaRing sales increased 9% for the three months ended September 30, 2025, but declined 17% for the nine months ended September 30, 2025, due to the loss of a customer contract and ongoing generic competition [133]. - Atozet experienced a negative impact of approximately $47 million and $170 million in sales during the three and nine months ended September 30, 2025, respectively, due to loss of exclusivity in France, Spain, and Japan [128]. - Combined global sales of Zetia and Vytorin increased 10% and 1% for the three and nine months ended September 30, 2025, driven by increased demand in China [141]. - Combined global sales of Cozaar and Hyzaar declined 7% and 11% for the three and nine months ended September 30, 2025, due to decreased demand in Japan and Latin America [142]. - Worldwide sales of Singulair decreased 37% and 30% for the three and nine months ended September 30, 2025, due to lower demand outside the U.S. and price reductions in Japan and China [143]. - Sales of Vtama were $34 million and $89 million for the three and nine months ended September 30, 2025, following the acquisition of Dermavant [147]. Financial Position - As of September 30, 2025, the company had cash and cash equivalents of $672 million, with expectations of generating positive cash flow from operations [162]. - Working capital increased to $2.02 billion as of September 30, 2025, from $1.63 billion as of December 31, 2024, due to active cash cycle management [163]. - Accounts receivable factoring agreements resulted in $268 million of factored receivables as of September 30, 2025, compared to $186 million as of December 31, 2024 [164]. - Net cash provided by operating activities was $559 million for the nine months ended September 30, 2025, up from $549 million in the same period last year [165]. - Net cash used in investing activities increased to $325 million for the nine months ended September 30, 2025, compared to $217 million for the same period in the prior year, primarily due to increased milestone payments [165]. - Net cash used in financing activities was $374 million for the nine months ended September 30, 2025, compared to $286 million in the prior year, driven by the repurchase of $242 million of the 2031 Notes [166]. - Total potential payments for contractual milestones as of September 30, 2025, are $2.6 billion, with approximately $20 million expected to be paid through the remainder of 2025 [168]. - Cash dividends of $0.02 per share were paid during the third quarter of 2025, with a similar dividend declared for payment on December 11, 2025 [169]. Operational Insights - The company operates six manufacturing facilities located in Belgium, Brazil, Indonesia, Mexico, the Netherlands, and the United Kingdom [109]. - The company has a portfolio of more than 70 medicines and products across various therapeutic areas [109]. - The company is optimizing its manufacturing and supply network, including planned exits from supply agreements with Merck through 2031 [167]. - The company expects volume-based procurement in China to continue impacting its general medicines product portfolio for the next several quarters [128]. Internal Controls and Governance - The internal investigation revealed that the sales practices for wholesalers regarding Nexplanon represented less than 1% of consolidated revenue for the fiscal year ended December 31, 2022, and less than 2% for certain quarterly periods [111]. - The company concluded that there were material weaknesses in internal control over financial reporting as of December 31, 2024, which should no longer be relied upon [116]. - The former CEO resigned on October 26, 2025, following the findings of the Audit Committee investigation [119]. - The Audit Committee's investigation found that inappropriate pressure was applied to achieve sales targets, leading to improper inventory purchases by wholesalers [113]. - The investigation did not find that the improper sales practices extended to other company products beyond Nexplanon during the relevant periods [112]. Research and Development - Research and development expenses decreased 24% and 19% for the three and nine months ended September 30, 2025, primarily due to reduced headcount-related expenses [154]. - Restructuring costs for the nine months ended September 30, 2025, amounted to $88 million, aimed at driving operational efficiencies [156]. Market Risks - Geopolitical developments and global trade issues, including tariffs, could potentially impact the company's supply chain and operating costs [121]. - There have been no material changes to market risk during the quarter ended September 30, 2025 [173]. - The company may seek to retire or purchase outstanding debt through various means, depending on market conditions and liquidity requirements [170].