These gains partially offset headwinds, including the continued impact of the loss of exclusivity (LOE) for Atozet and challenges that emerged during the year. Morrissey highlighted policy-related changes in the U.S. affecting Nexplanon access and a revision to medical guidelines in certain international markets that deprioritized montelukast, impacting SINGULAIR.Biosimilars , driven primarily by HADLIMA and additional contributions from a denosumab biosimilar launch and TOFIDENCE, which Organon acquired in ...

Management attributed the 3% revenue decline in 2025 to the loss of exclusivity for Atozet and headwinds in the respiratory franchise, specifically policy-driven impacts on Singulair. The biosimilars franchise outperformed internal expectations, driven by Hadlima's 61% growth and successful expansion into new geographic markets like Canada and Puerto Rico. Operational efficiency was a primary focus, with over $200 million in cost savings achieved to keep adjusted EBITDA margins flat despite 150 basis ...

Financial Data and Key Metrics Changes - In 2025, Organon reported $6.2 billion in revenue and $1.9 billion of adjusted EBITDA, representing a 3% decline on both a reported and ex-FX basis [6][9] - Adjusted gross margin for Q4 2025 was 56.7%, down from 60.6% in Q4 2024, primarily due to pricing pressure and unfavorable product mix [22] - Net loss for Q4 2025 was $205 million, or $0.79 per diluted share, compared to net income of $109 million, or $0.42 per diluted share in Q4 2024 [23][24] Business Line Data and Key Metrics Changes - Women's health revenue decreased 16% ex-FX in Q4 and 2% for the year, with Nexplanon sales down 20% ex-FX in Q4 and 4% for the full year [11][12] - The fertility business declined 6% ex-FX in Q4 2025 but grew 8% for the full year, driven by performance in the U.S. [14] - Biosimilars revenue was driven by Hadlima, which grew 61% ex-FX globally for the full year, reflecting strong clinical performance and pricing strategy [16] Market Data and Key Metrics Changes - Nexplanon faced challenges due to government policy-related access restrictions impacting its market share in the U.S. [12] - The JADA System generated $74 million in revenue in 2025, with its divestiture expected to impact consolidated revenue in 2026 [15] - The company anticipates strong growth in Latin America for Nexplanon, offsetting U.S. declines [14] Company Strategy and Development Direction - Organon plans to lower its dividend payout ratio to focus on debt reduction and improve its balance sheet capacity for future growth opportunities [7][8] - The company is committed to managing operating expenses and capital deployment in a disciplined manner to achieve progress on deleveraging efforts [32] - Future launches include a Pertuzumab biosimilar in the U.K. in 2027 and in the U.S. in 2028, indicating a strategic focus on expanding its biosimilars portfolio [16] Management's Comments on Operating Environment and Future Outlook - Management expects revenue and adjusted EBITDA in 2026 to be in line with 2025, projecting approximately $6.2 billion in revenue and $1.9 billion in adjusted EBITDA [9][10] - The company anticipates a modest FX tailwind to offset the loss of revenue from the JADA System divestiture [29] - Management expressed confidence in maintaining performance that aligns with the previous year while managing operating expenses effectively [32] Other Important Information - The company achieved over $200 million in cost savings in 2025, which helped offset investments in growth drivers like VTAMA [8] - Non-GAAP adjusted net income for full year 2025 was $954 million, or $3.66 per share, down from $1,065 million, or $4.11 per share in 2024 [24] Q&A Session Summary Question: Concerns about channel behavior issues and audit committee investigation scope - Management stated they cannot provide additional details at this time [36] Question: Status of FDA draft guidance on biosimilars and its impact - Management views the guidance as incremental and believes their strategy for biosimilars is appropriate [40] Question: Nexplanon contribution to 2026 sales guidance - Nexplanon is expected to be roughly flat year-on-year, with growth anticipated in ex-U.S. markets [41][42] Question: Operating expense savings and underlying EBITDA performance - Management confirmed that some savings will be redirected to revenue growth opportunities while continuing to manage operating expenses aggressively [46] Question: Update on CEO search - No public update was provided regarding the search for a permanent CEO [62] Question: Strategy for Denosumab biosimilar in the osteoporosis market - Management indicated that the market will be competitive, and peak revenues for the Denosumab product are estimated at around $100 million over five years [63]

Financial Data and Key Metrics Changes - In 2025, Organon reported $6.2 billion in revenue and $1.9 billion of adjusted EBITDA, representing a 3% decline on both a reported and ex-FX basis [6] - Adjusted gross margin for Q4 2025 was 56.7%, down from 60.6% in Q4 2024, primarily due to pricing pressure and unfavorable product mix [22] - Net loss for Q4 2025 was $205 million, or $0.79 per diluted share, compared to net income of $109 million, or $0.42 per diluted share in Q4 2024 [23] Business Line Data and Key Metrics Changes - Women's health revenue decreased 16% ex-FX in Q4 and 2% for the year, with Nexplanon sales down 20% ex-FX in Q4 and 4% for the full year [11] - The fertility business declined 6% ex-FX in Q4 2025 but grew 8% ex-FX for the full year, driven by performance in the U.S. [14] - Biosimilars revenue was driven by HADLIMA, which grew 61% ex-FX globally for the full year [16] Market Data and Key Metrics Changes - Nexplanon faced challenges due to government policy-related access restrictions impacting its market share in the U.S. [12] - The JADA System generated $74 million in revenue in 2025 before its divestiture, which will impact consolidated revenue in 2026 [15] - The company expects strong growth in Latin America for Nexplanon, offsetting U.S. declines [14] Company Strategy and Development Direction - Organon decided to lower its dividend payout ratio to focus on debt reduction and improve its balance sheet capacity for future growth opportunities [7] - The company is scrutinizing spending and has discontinued early-stage clinical programs to focus on products already in the market [9] - For 2026, Organon expects to maintain revenue and adjusted EBITDA in line with 2025, targeting approximately $6.2 billion in revenue and $1.9 billion in adjusted EBITDA [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 targets despite anticipated gross margin deterioration and ongoing operational challenges [10] - The company is committed to managing operating expenses and capital deployment to support deleveraging efforts [32] - Management highlighted the importance of maintaining performance aligned with the previous year while navigating a competitive landscape [32] Other Important Information - The company divested the JADA System, resulting in approximately $390 million in net proceeds to reduce net debt in 2026 [8] - Organon expects to achieve net leverage below 4x by the end of 2026, supported by debt repayments and revenue from the JADA divestiture [27] Q&A Session Summary Question: Concerns about channel behavior issues and audit committee investigation scope - Management could not provide additional details regarding the audit committee's findings beyond what was previously disclosed [36] Question: Status of FDA draft guidance on biosimilars and its impact - Management views the FDA guidance as incremental and believes their current biosimilar strategy is appropriate for future growth [40] Question: Nexplanon contribution to 2026 sales guidance - Nexplanon is expected to be roughly flat year-on-year, with growth anticipated outside the U.S. but a dip in the U.S. due to the transition to a five-year label [41] Question: Operating costs and margins outlook - Management emphasized the need to streamline operations while ensuring that cost reductions do not hinder revenue growth opportunities [51] Question: Pressure on established brands and competitive dynamics for Vtama - Management expects established brands to stabilize but acknowledges potential challenges, particularly in the respiratory segment [58]

Financial Data and Key Metrics Changes - In 2025, Organon reported $6.2 billion in revenue, a decrease of 3% on both a reported and ex-FX basis [5] - Adjusted EBITDA for 2025 was $1.9 billion, with adjusted EBITDA margins remaining flat compared to 2024 despite a 150 basis points decline in gross margin [8][10] - The net loss for Q4 2025 was $205 million, or $0.79 per diluted share, compared to a net income of $109 million, or $0.42 per diluted share in Q4 2024 [23][24] Business Line Data and Key Metrics Changes - Women's health revenue decreased by 16% ex-FX in Q4 and 2% for the full year, with Nexplanon sales down 20% ex-FX in Q4 and 4% for the year [11] - The fertility business declined 6% ex-FX in Q4 but grew 8% for the full year, driven by performance in the U.S. [13] - Biosimilars revenue was driven by Hadlima, which grew 61% ex-FX globally for the full year [15] Market Data and Key Metrics Changes - The U.S. market faced headwinds due to government policy-related access restrictions impacting Nexplanon sales [12] - Internationally, particularly in Latin America, there was improved access contributing to growth in Nexplanon [43] - The divestiture of the JADA System resulted in approximately $390 million in net proceeds, impacting consolidated revenue in 2026 [8][9] Company Strategy and Development Direction - The company decided to lower its dividend payout ratio to focus on debt reduction and improve its balance sheet capacity for future growth opportunities [7] - Organon is committed to managing operating expenses and capital deployment in a disciplined manner to achieve progress on deleveraging efforts [33] - The company expects to maintain revenue and adjusted EBITDA in 2026 at levels similar to 2025, with a focus on cost savings and operational efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering results in 2026, despite anticipated challenges in gross margin and operating expenses [10] - The company expects a flat revenue outlook for Nexplanon in 2026, with growth anticipated in international markets [42][43] - Management acknowledged the competitive environment in the U.S. for the fertility business and the potential headwinds from the transition to a five-year label for Nexplanon [13][54] Other Important Information - Organon achieved over $200 million in cost savings in 2025, which helped offset investments in growth drivers [8] - The company expects adjusted gross margin in 2026 to decline by 75-100 basis points compared to the prior year [29] - Free cash flow for 2025 was $960 million, consistent with the prior year, with expectations for similar performance in 2026 [25] Q&A Session Summary Question: Concerns about channel behavior issues and audit committee scope - Management could not provide additional details regarding the audit committee's findings [37] Question: Status of biosimilar policy and its impact on Organon's business - Management views the FDA's draft guidance as an incremental change and remains optimistic about growth opportunities in biosimilars [41] Question: Nexplanon's contribution to 2026 sales guidance - Nexplanon is expected to be roughly flat year-on-year, with growth anticipated in international markets [42][43] Question: Operating expense savings and underlying EBITDA performance - Management confirmed that some of the $275 million in savings would be redirected to revenue growth opportunities [47] Question: Update on the search for a permanent CEO - No public update was available regarding the CEO search [64] Question: Strategy for the Denosumab biosimilar - Management indicated that the peak revenues for the Denosumab product could reach around $100 million over five years [65]

Core Viewpoint - India's largest drugmaker Sun Pharma is reportedly bidding for American pharmaceutical company Organon in a deal potentially worth $10 billion, which would mark the largest overseas acquisition by an Indian pharma company [1][2] Group 1: Acquisition Details - Sun Pharma has secured $10–14 billion in temporary 'bridge loans' to fund the acquisition of Organon [1] - The deal would allow Sun Pharma to expand beyond generics into higher-margin specialty and innovative branded markets, aligning with the company's long-term goals [2] - Organon, spun off from Merck in 2021, has a revenue of about $6.4 billion and an EBITDA of $1.96 billion for FY24, but comes with a significant debt of $8.9 billion [5] Group 2: Market Reactions - The potential acquisition has divided market opinions, with some investors supporting the move due to Sun Pharma's strong management and track record, while others express concerns over Organon's debt and governance issues [2][4] - Sun Pharma's stock price saw a decline of 3.23% on the NSE, reflecting investor apprehension regarding the deal valuation and Organon's financial health [4] Group 3: Strategic Implications - The acquisition could enhance Sun Pharma's US sales, increasing its earnings from over $1.6 billion in North America to potentially over $3 billion [7] - Analysts suggest that while Organon is not a growth asset, it has elements that could contribute to earnings growth through cost rationalizations [6] - The deal represents a significant shift for Sun Pharma, indicating a willingness to pursue large acquisitions again, contrasting with its recent strategy of smaller deals [17]

Group 1: Acquisition Details - Sun Pharmaceutical Industries Ltd is evaluating a potential acquisition of Organon & Co, which could become the largest cross-border transaction by an Indian drugmaker, with a non-binding all-cash bid and $10–14 billion in acquisition financing arranged [1][2] - If completed, the transaction, valued at about $10 billion including debt, would be Sun Pharma's largest acquisition to date and significantly strengthen its presence in women's health biopharma and biosimilars [2][5] - Sun Pharma has engaged a European bank as an adviser to prepare a financial proposal for Organon's board, with talks still at a preliminary stage [3][4] Group 2: Organon's Financial Performance - Organon reported third-quarter adjusted earnings of $1.01 per share, exceeding the consensus of 94 cents, with sales up 1% to $1.60 billion, also beating the consensus of $1.58 billion [6] - The company lowered its fiscal 2025 sales guidance from $6.275 billion-$6.375 billion to $6.20 billion-$6.25 billion, which is below the consensus of $6.289 billion [6] Group 3: Organon's Debt and Recent Activities - Organon, spun off from Merck & Co. in 2021, has inherited debt of approximately $9.5 billion, which has been reduced to $8.9 billion as of the end of the second quarter of fiscal 2025 [3][4] - Recently, Organon acquired Dermavant for $1.2 billion and sold its JADA post-partum hemorrhage system for $465 million as part of its strategy to streamline its balance sheet [4] Group 4: Regulatory Approvals - The U.S. FDA approved a supplemental New Drug Application for Nexplanon, extending its duration of use from three years to five years, along with a new Risk Evaluation and Mitigation Strategy program [7][8]

Acquisition Details - Sun Pharmaceutical Industries Ltd has submitted a non-binding offer to acquire Organon, marking its boldest global bet to date [13] - The acquisition financing is secured through bridge loans from three global banks, amounting to $10-14 billion, demonstrating commitment to Organon's board [14] - The due diligence process is set to begin shortly, with a binding bid expected to follow, typically shorter for listed companies [14] Financial Overview - Organon reported a total revenue of $1.60 billion for Q3 2025, a 1% increase, with a full-year revenue guidance lowered to $6.20 billion [9] - Sun Pharma's FY25 revenue was Rs 52,041 crore ($6.19 billion), with an EBITDA of Rs 15,300 crore ($1.82 billion), reflecting a 17.3% increase [9] - Organon has a significant debt of $8.9 billion as of Q2 2025, having inherited $9.5 billion of debt [7] Market Position and Strategy - If successful, the acquisition would be the largest by any Indian pharmaceutical company, surpassing Sun's previous acquisition of Ranbaxy for $4 billion in 2014 [5][14] - Analysts suggest that acquiring Organon would enhance Sun Pharma's position as a branded and innovative drug maker, filling gaps in specialized women's healthcare products and biosimilars [12] - Organon aims to expand its core EBITDA and enhance its R&D pipeline from 2026 onwards, indicating a strategic focus on growth [12] Stock Performance - Sun Pharma's stock was relatively stable at Rs 1,673.55, with a market cap of $46.17 billion, amidst a declining market [6] - Organon's stock opened at $8.67 on the NYSE, significantly below its peak of $17-18 in November 2024, but has surged 28.1% in the past month [8]

Core Viewpoint - Sun Pharmaceutical Industries Ltd is evaluating the acquisition of US-based Organon for approximately $10 billion, which would be a transformative deal for Sun and the largest cross-border acquisition in the Indian pharmaceutical sector [1][19]. Company Overview - Sun Pharma has a current market cap of $45 billion and reported FY25 revenue of Rs 52,041 crore ($6.19 billion) with an EBITDA of Rs 15,300 crore ($1.82 billion), reflecting a 17.3% increase [11][19]. - Organon, spun out from MSD in 2021, has a market cap of $2.28 billion and reported total revenue of $1.60 billion for Q3 2025, with a full-year revenue guidance of $6.20 billion [10][19]. Financial Position - Organon has inherited $9.5 billion in debt and had $8.9 billion in debt at the end of Q2 2025, while Sun Pharma's total debt is negligible at Rs 2,362 crore [2][14][19]. - The combined pro forma leverage post-acquisition is expected to be 2.5x net debt to EBITDA, adjusted against Sun's cash reserves of approximately Rs 20,000 crore [14][19]. Market Dynamics - The global biosimilar market is dominated by eight major corporations, accounting for about 70% of sales, with Sun Pharma looking to expand its presence in this area [15][19]. - Sun Pharma has an established portfolio of about 12 branded products and is actively developing at least six innovative drugs, including a weight-loss drug in early testing [16][19]. Strategic Rationale - The acquisition of Organon is seen as a strategic move to enhance Sun Pharma's capabilities in women's health and biosimilars, areas with high margins and less competition [17][19]. - Sun Pharma has a proven track record of successfully acquiring and turning around companies facing financial challenges, making it a suitable match for Organon [13][19].

Summary of Organon Conference Call Company Overview - **Company**: Organon - **Event**: 37th Annual Piper Sandler Healthcare Conference - **Speakers**: Joe Morrissey (Interim CEO), Matt Walsh (CFO) Key Points Internal Investigation and Remediation - An internal investigation focused on sales practices related to Nexplanon and two wholesalers was concluded, identifying a weakness in the "tone at the top" [2][3] - A detailed remediation plan has been approved by the audit committee, emphasizing ethics training and mechanisms for employees to escalate concerns [2][3] - The investigation found that revenue management around quarter-end orders affected less than 1% of annual revenue and 2% in any quarter, confirming that revenue recognition practices were appropriate [3][5] Financial Performance and Cost Discipline - In 2025, Organon achieved a reduction of $200 million in operating expenses, with continued cost discipline expected in 2026 [11][14] - The adjusted EBITDA margin target of 31% for 2026 is considered challenging due to flattening Nexplanon sales and ongoing investments in Vtama [14][18] Research and Development (R&D) Strategy - The primary R&D focus is on maximizing the value of existing products, including Vtama, while deprioritizing larger, longer-term programs [21][28] - Organon aims to evolve into a more commercially focused organization, potentially leading to significant cuts in the R&D budget [28][30] Nexplanon Product Outlook - Nexplanon is expected to face flat to declining sales in the U.S. due to Title X funding challenges and policy changes affecting Planned Parenthood [39][44] - Internationally, Nexplanon continues to grow, with recent reimbursement wins in Brazil [53][41] - The product lost exclusivity in Europe, but generics have not yet entered the market [44][46] Vtama Sales Performance - Vtama's 2025 sales guidance was lowered due to challenges in volume growth and gross-to-net moderation, with access improving from less than 40% to around 70%-80% in preferred tiers [75][80] - The competitive landscape for topical dermatology products is challenging, but Vtama is positioned to compete based on its efficacy and safety profile [100][102] Established Brands and Market Challenges - Respiratory products, particularly Singulair and Dulera, are facing significant headwinds due to price reductions and loss of contracts [122][136] - The impact of Atozet's loss of exclusivity (LOE) is expected to be less than $75 million in 2026, compared to over $200 million in 2025 [154] Growth Opportunities - Emgality is performing well, with expansion into 22 markets, showcasing Organon's capability to leverage its global infrastructure for growth [156][161] - Organon is open to acquiring additional dermatology-focused assets to capitalize on its existing sales force and capabilities [111][112] Biosimilars and Divestitures - Biosimilars are viewed as a growth driver, with successful launches of Hadlima and plans for further expansion [168][172] - Divestitures will be approached opportunistically to improve capital structure and accelerate deleveraging [180][183] Additional Insights - The company is focused on maintaining a strong balance sheet while exploring strategic partnerships and acquisitions that align with its core capabilities [111][162] - The competitive dynamics in the dermatology space and the broader healthcare market are acknowledged as critical factors influencing future performance [100][102]