Organon Second Quarter 2025 Earnings 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 limited to, statements about management's expectations about Organon's full-year 2025 guidance estimates and predictions regarding other financial information and metrics, as well ...

Financial Data and Key Metrics Changes - For the full year 2024, revenue was $6.4 billion, representing a 3% growth rate at constant currency, marking the third consecutive year of constant currency revenue growth [7] - Adjusted EBITDA was $1.96 billion, with a 30.6% adjusted EBITDA margin; excluding IPR&D, the margin was 31.8%, reflecting a half-point margin expansion over the previous year [8][47] - The company expects 2025 revenue to range from $6.125 billion to $6.325 billion, with an approximate $200 million headwind from foreign currency [9][56] Business Line Data and Key Metrics Changes - The women's health franchise grew 5% ex-exchange, driven by Nexplanon, which saw a 17% increase ex-FX, positioning it for at least $1 billion in revenue in 2025 [11][12] - The fertility franchise declined by 2% ex-exchange in 2024, impacted by a late 2023 buy-in and offset by growth in new launches in various regions [15] - The biosimilars franchise grew 12% at constant currency, with expectations of mid-single-digit declines in 2025 due to mature products [16][17] Market Data and Key Metrics Changes - Outside the U.S., strong growth was noted in the LAMERA region, particularly in Brazil and the U.K. [12] - The U.S. market benefited from Nexplanon's leadership and pricing strategies, including management of the 340B discount program [12] - The company anticipates a $200 million impact from foreign exchange in 2025, reflecting the strengthening U.S. dollar [60] Company Strategy and Development Direction - The company aims to demonstrate resiliency in its base business, capture efficiencies, consistently deploy capital, and deliver on growth products and pipeline [22][25] - The focus is on profitable growth, with a commitment to regular dividends as the top capital allocation priority [24][52] - The company plans to launch a Denosumab biosimilar in collaboration with Shanghai Henlius, pending FDA approval [17][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Nexplanon's future growth, especially with the potential five-year indication submitted to the FDA [13] - The company expects to manage through the loss of exclusivity of Atozet in Europe while offsetting it with growth in other products [9][57] - Management highlighted the potential for continued constant currency revenue growth in 2025 despite challenges [68] Other Important Information - The company achieved $967 million of free cash flow before one-time costs in 2024, with expectations of around $900 million for 2025 [48][75] - One-time spin-related costs were $160 million in 2024, with expectations for these costs to be essentially zero in 2025 [50] - The adjusted gross margin for 2025 is expected to be in the range of 60% to 61%, reflecting ongoing pricing pressures [61] Q&A Session Summary Question: Free cash flow estimate for 2025 and biosimilar opportunity for Denosumab - The company expects around $900 million of free cash flow before one-time items for 2025, with confidence in the denosumab biosimilar launch later in Q4 [75][76] Question: Status of Nexplanon and future growth ambitions - No paragraph four filing for Nexplanon has been received, and management is confident that no generics will enter the U.S. market before 2030 [80][85] Question: Competitive landscape for Vtama and margin improvements - Vtama has shown strong growth, with a 51% increase in NRX, and is expected to be a significant contributor to growth [92] - Margin improvements from manufacturing separation from Merck are anticipated to be around 250 to 300 basis points starting in 2027 [96] Question: Future plans for the dermatology business and net leverage targets - The company aims to build out its dermatology portfolio beyond Vtama and expects to reduce net leverage to below four times by the end of 2026 [106][107]