- Full year 2024 revenue of $6.4 billion, up 2% as-reported and
3% at constant currency
- Full year 2024 diluted earnings per share of $3.33 and non-GAAP
Adjusted diluted earnings per share of $4.11
- Full year 2024 Adjusted EBITDA of $1.96 billion inclusive of
$81 million of IPR&D, representing a 30.6% Adjusted EBITDA
margin
- Full year 2025 financial guidance ranges provided
- Full year revenue range of $6.125 billion - $6.325 billion,
inclusive of an approximate $200 million year-over-year negative
impact from foreign exchange
- Adjusted EBITDA margin range of 31.0% - 32.0%
Organon (NYSE: OGN) today announced its results for the fourth
quarter and full year ended December 31, 2024.
“In 2024 we achieved our third year of constant currency revenue
growth and delivered Adjusted EBITDA margin expansion
ex-IPR&D,” said Kevin Ali, Organon's chief executive officer.
“Our 2025 financial guidance reflects the potential for a fourth
year of constant currency revenue growth despite the loss of
exclusivity (LOE) of our second largest product, Atozet, in certain
markets. Further, we will continue to be extremely disciplined on
operating costs to support Adjusted EBITDA margins ex-IPR&D of
31.0% or better.”
Fourth Quarter 2024
Revenue
in $ millions
Q4 2024
Q4 2023
VPY
VPY ex-FX
Women’s Health
$
466
$
465
—%
—%
Biosimilars
163
199
(18)%
(18)%
Established Brands
935
915
2%
2%
Other (1)
28
19
53%
52%
Revenue
$
1,592
$
1,598
—%
—%
Totals may not foot due to rounding and
percentages are computed using unrounded amounts.
(1) Other includes manufacturing sales to
third parties.
For the fourth quarter of 2024, total revenue was $1.592
billion, flat on both an as-reported and ex-FX basis.
Women’s Health revenue was flat on both an as-reported and ex-FX
basis in the fourth quarter of 2024, compared with the fourth
quarter of 2023. Nexplanon® (etonogestrel implant) growth of 12%
ex-FX, offset a 37% ex-FX decline in NuvaRing® (etonogestrel /
ethinyl estradiol vaginal ring) attributable to ongoing generic
competition, as well as an 8% ex-FX decline in the company's
fertility portfolio. The fourth quarter decline in the fertility
portfolio was primarily due to an unfavorable year-over-year
comparison to the fourth quarter of 2023 when the company benefited
from a one-time buy-in associated with the exit of a spin-related
Interim Operating Model Agreement in the United States.
Biosimilars revenue declined 18% on both an as-reported and
ex-FX basis in the fourth quarter of 2024, compared with the fourth
quarter of 2023, primarily driven by the timing of tenders in
Brazil for Ontruzant® (trastuzumab-dttb) and Brenzys™ (etanercept)
as well as a 16% ex-FX decline in Renflexis® (infliximab-abda)
attributable to competitive pricing pressure in the U.S.
Performance was partially offset by sales of Hadlima®
(adalimumab-bwwd) that have continued to ramp up since its July
2023 launch in the U.S.
Established Brands revenue grew 2% both on an as-reported basis
and ex-FX in the fourth quarter of 2024, primarily related to the
revenue contribution of Emgality®(1) (galcanezumab-gnlm) and
Vtama®(2) (tapinarof), which together more than offset the impact
of the loss of exclusivity (“LOE”) of Atozet™ (ezetimibe and
atorvastatin) in key markets in Europe and in Japan.
(1) Emgality is a trademark registered in the United States in
the name of Eli Lilly and Company (used under license). Organon
acquired certain European licensing and distribution rights to
Emgality and Rayvow from Eli Lilly beginning in early 2024.
(2) Vtama was acquired as part of Organon's acquisition of
Dermavant Sciences Inc., which closed on October 28, 2024.
Fourth Quarter 2024
Profitability
in $ millions, except per share
amounts
Q4 2024
Q4 2023
VPY
Revenues
$
1,592
$
1,598
—%
Cost of sales
696
683
2%
Gross profit
896
915
(2)%
Non-GAAP Adjusted gross profit (1)
965
964
—%
Net income
109
546
(80)%
Non-GAAP Adjusted net income (1)
235
226
4%
Diluted Earnings per Share (EPS)
0.42
2.13
(80)%
Non-GAAP Adjusted diluted EPS (1)
0.90
0.88
2%
Acquired IPR&D and milestones
—
—
—
Adjusted EBITDA (Non-GAAP) (1,2)
448
449
—%
Q4 2024
Q4 2023
Gross margin
56.3
%
57.3
%
Non-GAAP Adjusted gross margin (1)
60.6
%
60.3
%
Adjusted EBITDA margin (Non-GAAP) (1,
2)
28.1
%
28.1
%
(1) See Tables 4 and 5 for reconciliations
of GAAP to non-GAAP financial measures.
(2) There was no IPR&D or milestone
expense impacting Adjusted EBITDA in the fourth quarter comparable
periods.
Gross margin was 56.3% as-reported and 60.6% on a non-GAAP
adjusted basis in the fourth quarter of 2024, compared with 57.3%
as-reported and 60.3% on a non-GAAP adjusted basis in the fourth
quarter of 2023. Lower reported gross margin in the fourth quarter
of 2024 was due to higher year-over-year amortization related to
acquisitions completed in 2024 and acquisition-related expense. The
modest year-over-year improvement in non-GAAP Adjusted gross margin
was primarily due to favorable product mix partially offset by
unfavorable price.
Net income for the fourth quarter of 2024 was $109 million, or
$0.42 per diluted share, compared with $546 million, or $2.13 per
diluted share, in the fourth quarter of 2023. In the fourth quarter
of 2023, a Swiss tax arrangement was terminated, resulting in a net
benefit of $476 million to GAAP net income in that period, or a
benefit of $1.86 per share. For the fourth quarter of 2024,
non-GAAP Adjusted net income was $235 million, or $0.90 per diluted
share, compared with $226 million, or $0.88 per diluted share, in
2023.
Non-GAAP Adjusted EBITDA margin was 28.1% in the fourth quarter
of 2024 consistent with the fourth quarter of 2023 primarily due to
flat year-over-year revenue, Adjusted gross profit and non-GAAP
operating expenses. There was no IPR&D or milestone expense
impacting Adjusted EBITDA results in the fourth quarter comparable
periods.
Full Year 2024 Revenue
in $ millions
FY 2024
FY 2023
VPY
VPY ex-FX
Women’s Health
$
1,777
$
1,702
4%
5%
Biosimilars
662
593
12%
12%
Established Brands
3,849
3,847
—%
2%
Other (1)
115
121
(6)%
(6)%
Revenue
$
6,403
$
6,263
2%
3%
(1) Other includes manufacturing sales to
third parties.
Full year 2024 revenue was $6.4 billion, an increase of 2%
as-reported and 3% ex-FX, compared with the full year 2023.
Women’s Health revenue increased 4% as-reported and 5% ex-FX for
full year 2024 compared with 2023. Nexplanon grew 17% ex-FX to
record revenue of $963 million. Jada® System grew 40% ex-FX to
achieve $61 million in revenue. Together these factors more than
offset a 33% ex-FX decline in NuvaRing, which continues to be
impacted by generic competition as well as a 2% ex-FX decline in
the company’s Fertility business.
Biosimilars revenue increased 12% on both an as-reported and
ex-FX basis for full year 2024, compared with the prior year,
primarily driven by growth in Hadlima, following its U.S. launch in
July 2023. Renflexis and Ontruzant declined 1% ex-FX and 9% ex-FX,
respectively, as both products are in the mature phase of their
product life cycles and face significant competitive pricing
pressure.
Revenue for Established Brands was flat on an as-reported basis
and increased 2% ex-FX for full year 2024. Contributions from
Emgality and Vtama, along with recovery in certain injectable
steroid products following a market action in 2023 more than offset
the impact from the Atozet LOE in Europe and Japan and unfavorable
pricing in Japan.
Full Year 2024
Profitability
in $ millions, except per share
amounts
2024
2023
VPY
Revenues
$
6,403
$
6,263
2%
Cost of sales
2,688
2,515
7%
Gross profit
3,715
3,748
(1)%
Non-GAAP Adjusted gross profit (1)
3,944
3,930
—%
Net income
864
1,023
(16)%
Non-GAAP Adjusted net income (1)
1,065
1,061
—%
Diluted Earnings per Share (EPS)
3.33
3.99
(17)%
Non-GAAP Adjusted diluted EPS (1)
4.11
4.14
(1)%
Acquired in-process research &
development (IPR&D) and milestones
81
8
NM
Adjusted EBITDA (1, 2)
1,958
1,944
1%
2024
2023
Gross margin
58.0
%
59.8
%
Non-GAAP Adjusted gross margin (1)
61.6
%
62.7
%
Adjusted EBITDA margin (1, 2)
30.6
%
31.0
%
(1) See Tables 4 and 5 for reconciliations
of GAAP to non-GAAP financial measures.
(2) Adjusted EBITDA and Adjusted EBITDA
margin include $81 million in 2024 and $8 million in 2023 related
to acquired IPR&D and milestones.
Gross margin was 58.0% as-reported and 61.6% on an adjusted
basis for full year 2024, compared with 59.8% as-reported and 62.7%
on an adjusted basis for full year 2023. The year-over-year decline
in reported gross margin was driven by higher year-over-year
amortization related to 2024 acquisitions as well as
acquisition-related expense. The year-over-year decrease in
Adjusted gross margin reflects unfavorable price as well as higher
inflation impacts to material and distribution costs.
Adjusted EBITDA margin was 30.6% for full year 2024, compared
with 31.0% for full year 2023. The year-over-year decrease was
primarily a result of higher IPR&D expense in full year 2024,
followed by lower Adjusted gross margin. Non-GAAP operating
expenses were contained to 1% growth in the full year 2024,
inclusive of $81 million of IPR&D and milestone expense in
2024, compared with $8 million in 2023.
Net income for full year 2024 was $864 million, or $3.33 per
diluted share, compared with $1,023 million, or $3.99 per diluted
share in 2023. Full year 2023 reported Net income benefited from
the fourth quarter termination of the aforementioned Swiss tax
arrangement, which represented a benefit of $1.86 per share for the
full year. Non-GAAP Adjusted net income was $1,065 million for full
year 2024, consistent with $1,061 million in full year 2023.
Capital Allocation
Today, Organon’s Board of Directors declared a quarterly
dividend of $0.28 for each issued and outstanding share of the
company's common stock. The dividend is payable on March 13, 2025,
to stockholders of record at the close of business on February 24,
2025.
As of December 31, 2024, cash and cash equivalents were $675
million, and debt was $8.9 billion.
Full Year Guidance
Organon does not provide GAAP financial measures on a
forward-looking basis because the company cannot predict with
reasonable certainty and without unreasonable effort, the ultimate
outcome of legal proceedings, unusual gains and losses, the
occurrence of matters creating GAAP tax impacts, and
acquisition-related expenses. These items are uncertain, depend on
various factors, and could be material to Organon’s results
computed in accordance with GAAP.
Full year 2024 actual results and 2025 financial guidance are
presented below on a non-GAAP basis, except revenue.
Full Year 2024 Actuals
Full Year 2025
Guidance
Revenue
$6.403B
$6.125B-$6.325B
FX translation headwind
~$80M
~$200M
Adjusted gross margin
61.6%
60.0%-61.0%
SG&A
$1.57B/25%
Mid-20% range
R&D
$440M/6.9%
Upper single-digit
IPR&D*
$81M
-
Adjusted EBITDA margin (Non-GAAP)
30.6%
31.0%-32.0%
Interest
$520M
~$510M
Depreciation
$126M
~$135M
Effective non-GAAP tax rate
18.8%
22.5%-24.5%
Fully diluted weighted average shares
outstanding
259M
~263M
*The company does not provide guidance for
forward-looking IPR&D and milestone expense.
Webcast Information
Organon will host a conference call at 8:30 a.m. Eastern Time
today to discuss its fourth quarter and full year 2024 financial
results. To listen to the event and view the presentation slides
via webcast, join from the Organon Investor Relations website at
https://www.organon.com/investor-relations/events-and-presentations/.
A replay of the webcast will be available approximately two hours
after the conclusion of the live event on the company’s website.
Institutional investors and analysts interested in participating in
the call must register in advance by clicking on this link:
https://registrations.events/direct/Q4I5851155
Following registration, participants will receive a confirmation
email containing details on how to join the conference call,
including dial-in information and a unique passcode and registrant
ID. Pre-registration will allow participants to bypass an operator
and be placed directly into the call.
About Organon
Organon is an independent global healthcare company with a
primary mission to help improve the health of women throughout
their lives. Organon’s diverse portfolio offers over 70 medicines
and products in women’s health, biosimilars, and a large franchise
of established medicines across a range of therapeutic areas. In
addition to Organon’s current products, the company invests in
innovative solutions and research to drive future growth
opportunities in women’s health and biosimilars. In addition,
Organon is pursuing opportunities to collaborate with
biopharmaceutical partners and innovators looking to commercialize
their products by leveraging its scale and agile presence in fast
growing international markets.
Organon has geographic scope with significant reach, world-class
commercial capabilities, and over 10,000 employees with
headquarters located in Jersey City, New Jersey.
For more information, visit http://www.organon.com and
connect with us on LinkedIn, Instagram, X (formerly
known as Twitter) and Facebook.
Cautionary Note Regarding Non-GAAP
Financial Measures
This press release contains “non-GAAP financial measures,” which
are financial measures that either exclude or include amounts that
are correspondingly not excluded or included in the most directly
comparable measures calculated and presented in accordance with
U.S. generally accepted accounting principles (“GAAP”).
Specifically, the company makes use of the non-GAAP financial
measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted gross
margin, Adjusted gross profit, Adjusted net income, and Adjusted
diluted EPS, which are not recognized terms under GAAP and are
presented only as a supplement to the company’s GAAP financial
statements. This press release also provides certain measures that
exclude the impact of foreign exchange. We calculate foreign
exchange by converting our current-period local currency financial
results using the prior period average currency rates and comparing
these adjusted amounts to our current-period results. The company
believes that these non-GAAP financial measures help to enhance an
understanding of the company’s financial performance. However, the
presentation of these measures has limitations as an analytical
tool and should not be considered in isolation, or as a substitute
for the company’s results as reported under GAAP. Because not all
companies use identical calculations, the presentations of these
non-GAAP measures may not be comparable to other similarly titled
measures of other companies. Please refer to Table 4 and Table 5 of
this press release for additional information, including relevant
definitions and reconciliations of non-GAAP financial measures
contained herein to the most directly comparable GAAP measures.
In addition, the company’s full-year 2025 guidance measures
(other than revenue) are provided on a non-GAAP basis because the
company is unable to reasonably predict certain items contained in
the GAAP measures. Such items include, but are not limited to,
acquisition-related expenses, restructuring and related expenses,
stock-based compensation, the ultimate outcome of legal
proceedings, unusual gains and losses, the occurrence of matters
creating GAAP tax impacts and other items not reflective of the
company's ongoing operations.
The company’s management uses the non-GAAP financial measures
described above to evaluate the company’s performance and to guide
operational and financial decision making. Further, the company’s
management believes that these non-GAAP financial measures, which
exclude certain items, help to enhance its ability to meaningfully
communicate its underlying business performance, financial
condition and results of operations.
Cautionary Note Regarding
Forward-Looking Statements
Except for historical information, this press release 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 future financial performance and
prospects, including expectations regarding clinical studies and
regulatory approvals (including the timing and outcome thereof),
full-year 2025 guidance estimates and predictions regarding other
financial information and metrics, the expected impact of our
ongoing restructuring initiatives, expectations regarding our
collaborations with third parties, and franchise and product
performance and strategy expectations for future periods.
Forward-looking statements may be identified by words such as
“prospects,” “opportunity,” “objective,” “guidance,” potential,”
“should,” “continue,” “will,” “continue,” “pursuing,” “expects,”
“intends,” “plans,” “believes,” “future,” “estimates,” or words of
similar meaning. These statements are based upon the current
beliefs and expectations of the company’s management and are
subject to significant risks and uncertainties. If underlying
assumptions prove inaccurate, or risks or uncertainties
materialize, actual results may differ materially from those set
forth in the forward-looking statements.
Risks and uncertainties include, but are not limited to, the
uncertainty of the clinical trial and regulatory approvals during
the expected timeframe, if at all; an inability to adapt to the
industry-wide trend toward highly discounted channels; difficulties
implementing or executing on Organon’s acquisition strategy,
difficulties integrating such acquisitions (including its recent
acquisition of Dermavant Sciences Ltd.) or any other failure to
recognize the benefits of such acquisitions; changes in tax laws or
other tax guidance which could adversely affect our cash tax
liability, effective tax rates, and results of operations and lead
to greater audit scrutiny; expanded brand and class competition in
the markets in which the company operates; global tensions, which
may result in disruptions in the broader global economic
environment; governmental initiatives that adversely impact our
marketing activities, particularly in China; volatility in our
stock price; political and social pressures, or regulatory
developments, that adversely impact demand for, availability of, or
patient access to contraception or fertility products; recent
United States Supreme Court decisions and other developments
impacting regulatory agencies and their rule making, including
related financial market reactions, tax planning and international
trade practices; difficulties with performance of third parties we
rely on for our business growth; the failure of any supplier to
provide substances, materials, or services as agreed; the increased
cost of supply, manufacturing, packaging, and operations;
difficulties developing and sustaining relationships with
commercial counterparties; competition from generic products as our
products lose patent protection; any failure by us to obtain an
additional period of market exclusivity in the United States for
Nexplanon subsequent to the expiration of the rod patents in 2027;
as well as the continued impact of our loss of data exclusivity for
Atozet; disruptions at the U.S. Food and Drug Administration, the
U.S. Securities and Exchange Commission (the “SEC”) and other U.S.
and comparable foreign government agencies; pricing pressures
globally, including rules and practices of managed care groups,
judicial decisions and governmental laws and regulations related to
Medicare, Medicaid and health care reform, pharmaceutical
reimbursement and pricing in general; an inability to fully execute
on our product development and commercialization plans in the
United States, Europe, and elsewhere internationally; the failure
by us or our third party collaborators and/or their suppliers to
fulfill our or their regulatory or quality obligations; the impact
of higher selling and promotional costs; and the impact of
cyberattacks or other events that may affect Organon’s information
technology systems or those of third parties.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in the company’s filings
with the SEC, including the company’s most recent Annual Report on
Form 10-K and subsequent SEC filings, available at the SEC’s
Internet site (www.sec.gov).
TABLE 1
Organon & Co.
Condensed Consolidated
Statement of Income
(Unaudited, $ in millions except
shares in thousands and per share amounts)
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
Revenues
$
1,592
$
1,598
$
6,403
$
6,263
Cost of sales
696
683
2,688
2,515
Gross Profit
896
915
3,715
3,748
Selling, general and administrative
470
469
1,760
1,893
Research and development
130
134
469
528
Acquired in-process research and
development and milestones
—
—
81
8
Restructuring costs
8
58
31
62
Interest expense
132
129
520
527
Exchange losses
15
17
26
42
Other expense, net
12
4
21
15
Income before income taxes
129
104
807
673
Income tax expense (benefit)
20
(442
)
(57
)
(350
)
Net income
$
109
$
546
$
864
$
1,023
Earnings per share:
Basic
$
0.42
$
2.14
$
3.36
$
4.01
Diluted
$
0.42
$
2.13
$
3.33
$
3.99
Weighted average shares outstanding:
Basic
257,690
255,617
257,046
255,239
Diluted
259,878
256,590
259,152
256,270
TABLE 2
Organon & Co.
Sales by top products
(Unaudited, $ in millions)
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Women’s Health
Nexplanon/Implanon NXT
$
175
$
83
$
258
$
154
$
76
$
231
$
672
$
291
$
963
$
572
$
257
$
830
Follistim AQ
26
39
65
51
31
83
84
152
237
125
136
262
NuvaRing (1)
6
18
24
20
19
39
39
75
115
90
86
176
Ganirelix Acetate Injection
4
24
28
4
18
22
20
89
109
19
91
110
Marvelon/Mercilon
—
31
31
—
37
37
—
134
134
—
134
134
Jada
18
—
18
13
—
13
60
1
61
43
—
43
Other Women’s Health (1) (2)
15
27
42
16
26
40
56
104
158
48
101
147
Biosimilars
Renflexis
52
13
65
63
14
77
219
55
274
234
43
278
Ontruzant
6
28
34
10
52
62
29
112
141
46
109
155
Brenzys
—
15
15
—
28
28
—
77
77
—
73
73
Aybintio
—
6
6
—
9
9
—
28
28
—
43
43
Hadlima
33
11
44
15
8
23
104
38
142
17
26
44
Established Brands
Cardiovascular
Zetia (1)
2
75
77
3
65
67
7
310
317
8
314
322
Vytorin
2
24
26
1
28
29
6
102
108
6
124
129
Atozet
—
76
76
—
122
122
—
473
473
—
519
519
Rosuzet
—
13
13
—
18
18
—
49
49
—
70
70
Cozaar/Hyzaar
2
55
57
2
55
57
9
234
243
10
272
281
Other Cardiovascular (1) (2)
—
34
34
—
28
29
2
130
133
2
136
139
Respiratory
Singulair
2
82
84
2
111
114
9
350
359
11
393
404
Nasonex (1)
—
76
76
—
69
69
—
276
276
—
266
266
Dulera
42
11
52
40
10
50
162
42
203
156
38
194
Clarinex
—
27
28
1
29
30
3
125
127
5
132
136
Other Respiratory (1) (2)
13
4
17
8
4
11
38
13
53
49
14
64
Non-Opioid Pain, Bone and Dermatology
Arcoxia
—
58
58
—
51
51
—
270
270
—
257
257
Fosamax
—
38
38
—
35
36
3
147
151
3
156
159
Diprospan
—
36
36
—
33
33
—
139
139
—
91
91
Vtama
10
1
12
—
—
—
10
1
12
—
—
—
Other Non-Opioid Pain, Bone and
Dermatology (2)
3
69
71
4
64
67
19
279
295
14
261
275
Other
Emgality/Rayvow
—
38
38
—
—
—
—
107
107
—
—
—
Proscar
—
22
22
—
20
20
1
94
95
1
96
97
Propecia
1
31
32
2
31
33
6
105
111
7
118
125
Other (2)
3
83
87
1
78
79
14
314
328
13
308
319
Other (3)
1
28
28
1
18
19
—
115
115
(1
)
121
121
Revenues
$
416
$
1,176
$
1,592
$
411
$
1,187
$
1,598
$
1,572
$
4,831
$
6,403
$
1,478
$
4,785
$
6,263
Totals may not foot due to rounding.
Trademarks appearing above in italics are trademarks of, or are
used under license by, the Organon group of companies.
(1) Sales of the authorized generic versions of
NuvaRing,
Zetia and
Nasonex were previously included in other and
have been reclassified to their respective brand name product.
(2) Includes sales of products not listed
separately.
(3) Other includes manufacturing sales to
third parties.
TABLE 3
Organon & Co.
Sales by geographic
area
(Unaudited, $ in millions)
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
Europe and Canada
$
420
$
414
$
1,763
$
1,673
United States
416
411
1,572
1,478
Asia Pacific and Japan
244
261
1,050
1,129
China
213
203
847
864
Latin America, Middle East, Russia, and
Africa
266
279
1,034
965
Other (1)
33
30
137
154
Revenues
$
1,592
$
1,598
$
6,403
$
6,263
(1) Other includes manufacturing sales to
third parties.
TABLE 4
Organon & Co.
Reconciliation of GAAP
Reported to Non-GAAP Adjusted Metrics
(Unaudited, $ in millions)
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
GAAP Gross Profit
$
896
$
915
$
3,715
$
3,748
Adjusted for:
Spin-related costs (1)
—
17
6
47
Manufacturing network costs (2)
15
—
54
—
Stock-based compensation
4
4
17
17
Amortization
43
28
145
116
Acquisition-related costs (3)
7
—
7
—
Other
—
—
—
2
Adjusted Non-GAAP Gross Profit
$
965
$
964
$
3,944
$
3,930
(1) Spin-related costs include costs from
the separation of Merck & Co., Inc., Rahway, NJ, US. For
additional details refer to Table 5.
(2) Manufacturing network related costs
include costs from exiting manufacturing and supply agreements with
Merck & Co., Inc., Rahway NJ, US. For additional details refer
to Table 5.
(3) Acquisition-related costs relate to
costs from the acquisition of Dermavant. For additional details
refer to Table 5.
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
GAAP Gross Margin
56.3
%
57.3
%
58.0
%
59.8
%
Total impact of Non-GAAP adjustments
4.3
%
3.0
%
3.6
%
2.9
%
Adjusted Non-GAAP Gross Margin
60.6
%
60.3
%
61.6
%
62.7
%
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
GAAP Selling, general and
administrative expenses
$
470
$
469
$
1,760
$
1,893
Adjusted for:
Spin-related costs (1)
(9
)
(47
)
(88
)
(178
)
Stock-based compensation
(17
)
(18
)
(70
)
(68
)
Acquisition-related costs (2)
(24
)
—
(28
)
—
Other
(3
)
(3
)
(3
)
(91
)
Adjusted Non-GAAP Selling, general and
administrative expenses
$
417
$
401
$
1,571
$
1,556
(1) Spin-related costs include costs from
the separation of Merck & Co., Inc., Rahway, NJ, US. For
additional details refer to Table 5.
(2) Acquisition-related costs relate to
costs from the acquisition of Dermavant. For additional details
refer to Table 5.
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
GAAP Research and development
expenses
$
130
$
134
$
469
$
528
Adjusted for:
Spin-related costs (1)
(6
)
(2
)
(11
)
(12
)
Stock-based compensation
(5
)
(5
)
(18
)
(16
)
Adjusted Non-GAAP Research and development
expenses
$
119
$
127
$
440
$
500
(1) Spin-related costs include costs from
the separation of Merck & Co., Inc., Rahway, NJ, US. For
additional details refer to Table 5.
Organon & Co.
Reconciliation of GAAP
Reported to Non-GAAP Adjusted Metrics (Continued)
(Unaudited, $ in millions except
per share amounts)
Three Months Ended
December 31,
Year Ended
December 31,
2024
2023
2024
2023
GAAP Reported Net Income
$
109
$
546
$
864
$
1,023
Adjusted for:
Cost of sales adjustments
69
49
229
182
Selling, general and administrative
adjustments
53
68
189
337
Research and development adjustments
11
7
29
28
Restructuring
8
58
31
62
Change in fair value of contingent
consideration
11
—
11
—
Other expense, net
2
4
16
17
Tax impact on adjustments above(1)
(28
)
(506
)
(304
)
(588
)
Non-GAAP Adjusted Net Income
$
235
$
226
$
1,065
$
1,061
(1) For the three months ended December
31, 2024 and 2023, the GAAP income tax rates were 15.3% and
(425.9)%, respectively, and the non-GAAP income tax rates were
17.1% and 21.8%, respectively. For the year ended December 31, 2024
and 2023, the GAAP income tax rates were (7.1)% and (52.2)%,
respectively, and the non-GAAP income tax rates were 18.8% and
18.3%, respectively. These adjustments represent the estimated tax
impacts on the reconciling items by applying the statutory rate and
applicable law of the originating territory of the non-GAAP
adjustments.
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
GAAP Diluted Earnings per Share
$
0.42
$
2.13
$
3.33
$
3.99
Total impact of Non-GAAP adjustments
0.48
(1.25
)
0.78
0.15
Non-GAAP Diluted Earnings per Share
$
0.90
$
0.88
$
4.11
$
4.14
TABLE 5
Organon & Co.
Reconciliation of GAAP Net
Income to Non-GAAP Adjusted EBITDA
(Unaudited, $ in millions)
Three Months Ended December
31,
Year Ended December 31,
2024
2023
2024
2023
Net income
$
109
$
546
$
864
$
1,023
Depreciation (1)
33
30
126
118
Amortization
43
28
145
116
Interest expense
132
129
520
527
Income tax expense (benefit)
20
(442
)
(57
)
(350
)
EBITDA (Non-GAAP)
$
337
$
291
$
1,598
$
1,434
Restructuring costs
8
58
31
62
Spin-related costs (2)
17
70
121
254
Manufacturing network related (3)
15
—
54
—
Acquisition-related costs (4)
31
—
35
—
Change in fair value of contingent
consideration
11
—
11
—
Other costs (5)
3
3
3
93
Stock-based compensation
26
27
105
101
Adjusted EBITDA (Non-GAAP)
$
448
$
449
$
1,958
$
1,944
Adjusted EBITDA margin (Non-GAAP)
28.1
%
28.1
%
30.6
%
31.0
%
(1) Excludes accelerated depreciation
included in one-time costs.
(2) Spin-related costs reflect certain
costs incurred in connection with activities taken to separate
Organon from Merck & Co., Inc., Rahway, NJ, US. These costs
include, but are not limited to, $6 million and $34 million for the
three months ended December 31, 2024 and 2023, respectively, and
$53 million and $134 million for the year ended December 31, 2024
and 2023, respectively, for information technology infrastructure,
primarily related to the implementation of a stand-alone enterprise
resource planning system and redundant software licensing costs, as
well as $8 million for the three months ended December 31, 2023,
and $20 million and $28 million for the year ended December 31,
2024 and 2023, respectively, associated with temporary transition
service agreements with Merck & Co., Inc., Rahway, NJ, US.
(3) Manufacturing network related costs,
including exiting of temporary manufacturing and supply agreements
with Merck & Co., Inc., Rahway, NJ, US, reflect accelerated
depreciation, exit premiums, technology transfer costs, stability
and qualification batch costs, and third-party contractor
costs.
(4) Acquisition-related costs for the
three months ended December 31, 2024 reflect $8 million of
transaction related costs, $10 million of Dermavant transaction
bonuses and separation charges and $7 million of amortization
pertaining to the fair value inventory purchase accounting
adjustment. Acquisition related costs for the year ended December
31, 2024 reflect $12 million of transaction related costs, $10
million of Dermavant transaction bonuses and separation charges and
$7 million of amortization pertaining to the fair value inventory
purchase accounting adjustment.
(5) Other costs for the year ended
December 31, 2023, include $80 million related to the Microspherix
legal matter.
As the costs described in (1) through (5)
above are directly related to the separation of Organon and
acquisition related activities and therefore arise from a one-time
event outside of the ordinary course of the company’s operations,
the adjustment of these items provides meaningful, supplemental,
information that the company believes will enhance an investor's
understanding of the company's ongoing operating performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250213967301/en/
Media Contacts: Felicia Bisaro (646) 703-1807
Karissa Peer (614) 314-8094
Investor Contacts: Jennifer Halchak (201) 275-2711
Renee McKnight (551) 204-6129
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