Core Insights - Organon reported fiscal Q2 2025 results with GAAP revenue of $1.59 billion, exceeding analyst expectations, but both revenue and earnings declined compared to the previous year [1][2] - The company is focusing on new product growth while facing challenges with its legacy product portfolio [1][4] Financial Performance - GAAP revenue for Q2 2025 was $1.59 billion, slightly down from $1.61 billion in Q2 2024, but above estimates by $42 million [2][5] - Non-GAAP adjusted EPS was $1.00, beating the consensus estimate of $0.95, but down 11% from $1.12 in Q2 2024 [2][5] - Net income (GAAP) fell to $145 million from $195 million year-over-year, a decline of 25.6% [2][10] - Adjusted EBITDA (non-GAAP) increased by 1.8% to $522 million, with a margin improvement to 32.7% [2][9] Business Segments - Women's Health segment generated $462 million in sales, up 3%, driven by a 15% increase in fertility treatments [5][6] - Biosimilars revenue rose 5% to $173 million, primarily due to Hadlima, which contributed $50 million [6][8] - Established brands revenue was $936 million, down 3% year-over-year, with notable declines in Atozet and Singulair due to competition [7][8] Strategic Focus - Organon is prioritizing growth in women's health, diversifying its biosimilars portfolio, and managing its mature product lines amid generic competition [4][12] - The company aims to launch new products and expand internationally while managing costs and reducing debt [4][11] Outlook - Full-year revenue guidance for 2025 was raised to $6.275 billion–$6.375 billion, reflecting improved expectations due to foreign exchange factors [12] - Adjusted EBITDA margin guidance remains at 31.0%–32.0%, with a focus on achieving a net leverage ratio below 4.0x by year-end 2025 [12][13]

Financial Performance - Revenue was $1.6 billion, down 1% ex-FX, consistent with the phasing of the Loss of Exclusivity (LOE) of Atozet[12] - Adjusted EBITDA was $522 million, representing a 32.7% Adjusted EBITDA margin[12] - The company raised full-year 2025 revenue guidance by $100 million at the midpoint, while the Adjusted EBITDA range was affirmed[12] - The company repaid $345 million of long-term debt and is on track to achieve net leverage below 40x by year-end[12] - Adjusted Gross Margin was 617% for both Q2 2025 and YTD 2025, compared to 620% for Q2 2024 and YTD 2024[30] Segment Performance - Women's Health revenue increased by 3% to $462 million in Q2 2025, and 6% YTD to $925 million[14] - Biosimilars revenue increased by 5% to $173 million in Q2 2025, but decreased 6% YTD to $314 million[18] - Established Brands revenue decreased by 3% to $936 million in Q2 2025, and 7% YTD to $1822 billion[23] Product Performance - Nexplanon revenue decreased 1% to $240 million in Q2 2025, but increased 6% YTD to $488 million[14] - Follistim AQ revenue increased 18% to $74 million in Q2 2025, and 31% YTD to $142 million[14] - Hadlima revenue increased 78% to $50 million in Q2 2025, and 66% YTD to $96 million[18]

Financial Performance - Revenue for Q1 2025 was $1.513 billion, a decrease of 7% as reported and 4% ex-FX, compared to $1.622 billion in Q1 2024[13, 53] - Adjusted EBITDA was $484 million, representing a 32% Adjusted EBITDA margin[13] - Adjusted diluted EPS was $1.02[13] - Free Cash Flow was $71 million, improved from $6 million in Q1 2024[30] Segment Performance - Women's Health franchise grew by 12% ex-FX, with total revenue of $463 million[17, 20] - Nexplanon is on track to achieve over $1 billion in revenue in 2025[20] - Biosimilars revenue was $141 million, a decrease of 15% ex-FX[21] - Established Brands revenue was $887 million, a decrease of 8% ex-FX[25] Geographic Performance - The U S represents approximately 27% of total Organon revenue[15] - Approximately 75% of FY sales are generated ex-US[15] Guidance and Outlook - Full year 2025 revenue guidance is unchanged at $6 125 billion-$6 325 billion[42] - The company anticipates a foreign exchange translation headwind of approximately $200 million, but there is potential upside at current rates[42]

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]