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Organon Reports Results for the Fourth Quarter and Full Year Ended December 31, 2021

Nexplanon® (etonogestrel implant), fertility, biosimilars grew double digits for full year

  • Full year 2021 revenue of $6.3 billion
  • Income from continuing operations before tax of $1.5 billion for full year 2021
  • Full year Adjusted EBITDA of $2.4 billion
  • Company executing on business development; four transactions since spin
  • Full year 2022 financial guidance provided; revenue range of $6.1 billion to $6.4 billion and Adjusted EBITDA margins in the range of 34%-36%

Organon (NYSE: OGN) today announced its results for the fourth quarter and full year ended December 31, 2021.

Organon also announced that its 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 17, 2022 to stockholders of record at the close of business on February 28, 2022.

"In 2021 we delivered on our financial objectives across the board. Organon has taken significant steps to advance our vision to become a leader in women’s health through meaningful business development that addresses areas of significant unmet need for women and society," said Kevin Ali, Organon's CEO. "We continue to balance our growth objectives against our commitment to lower leverage, and in the fourth quarter we repaid $100 million of our term loans. Overall, we are well positioned as we head into 2022."

Fourth quarter 2021 revenue

in $ millions

 

Q4 2021

 

Q4 2020

 

VPY

 

VPY ex-FX

Women’s Health

 

$

415

 

$

390

 

6

%

 

6

%

Biosimilars

 

 

118

 

 

103

 

15

%

 

14

%

Established Brands

 

 

1,037

 

 

1,062

 

(2

)%

 

(2

)%

Other(1)

 

 

34

 

 

58

 

(42

)%

 

(70

)%

Revenue

 

$

1,604

 

$

1,613

 

(1

)%

 

(1

)%

(1) Other includes manufacturing sales to Merck & Co., Inc.(“Merck”) and other third parties, and allocated amounts from pre-spin revenue hedging activities through the date of separation.

Total net revenue was $1,604 million for the fourth quarter of 2021, a decrease of 1%, both as-reported and excluding the impacts of foreign currency (ex-FX), compared with fourth quarter of 2020. Strong sales for Nexplanon, together with growth in biosimilars were offset by declines in Established Brands and supply sales to Merck and other third parties.

Women’s Health increased 6% both as-reported and ex-FX in the fourth quarter 2021 compared with the fourth quarter of 2020 driven primarily by Nexplanon, which increased 37% ex-FX in the fourth quarter 2021 compared with the fourth quarter of 2020. Nexplanon’s growth in the quarter was due to increased demand in the United States, as well as tenders won, which can be variable quarter to quarter. The increase in Women’s Health was partially offset by a decline in sales of Nuvaring® (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition.

Biosimilars revenue grew 15% as-reported and 14% ex-FX in the fourth quarter 2021 compared with fourth quarter 2020, driven by continued growth in the United States for Renflexis® (infliximab-abda) and growth in Canada. The biosimilars portfolio also benefited from the continued uptake of Ontruzant® (trastuzumab-dttb) in the United States, partially offset by a decrease in the European Union, due to increasing competitive pressures, and Latin America, due to the timing of tenders in Brazil.

Established Brands represents a broad portfolio of well-known medicines, which are generally beyond market exclusivity, including leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management, and for which generic competition varies by market. In 2021, declines related to loss of exclusivity (LOE) moderated, and in the fourth quarter the franchise was down 2% on both a nominal and constant currency basis. The decline in Established Brands during the fourth quarter of 2021 compared to the fourth quarter of 2020 was primarily due to a terminated agreement in Korea for Rosuzet™ (ezetimibe, rosuvastatin as calcium), loss of exclusivity for Zetia® (ezetimibe) in Japan in June 2020, the negative impact of Volume Based Procurement (VBP) in China, which was partially offset by growth in the retail channel and brands not impacted by VBP, as well as growth of Atozet™ (ezetimibe and atorvastatin calcium trihydrate) and certain products in the respiratory and non-opioid pain franchises.

Fourth quarter 2021 profitability

in $ millions, except per share amounts

 

Q4 2021

 

Q4 2020

 

VPY

Revenue

 

$

1,604

 

 

$

1,613

 

 

(1

)%

Cost of sales

 

 

599

 

 

 

586

 

 

2

%

Gross profit

 

 

1,005

 

 

 

1,027

 

 

(2

)%

Gross margin

 

 

62.7

%

 

 

63.7

%

 

 

Non-GAAP adjusted gross profit(*)

 

 

1,059

 

 

 

1,051

 

 

1

%

Non-GAAP adjusted gross margin

 

 

66.0

%

 

 

65.2

%

 

 

Adjusted EBITDA(*)

 

 

549

 

 

 

680

 

 

(19

)%

Adjusted EBITDA margin

 

 

34.2

%

 

 

42.2

%

 

 

Net Income, continuing operations

 

 

202

 

 

 

376

 

 

(46

)%

Non-GAAP adjusted net income, continuing operations(*)

 

 

349

 

 

 

494

 

 

(29

)%

Diluted Earnings per Share, continuing operations

 

 

0.79

 

 

 

1.48

 

 

(47

)%

Non-GAAP adjusted Diluted Earnings per Share, continuing operations(*)

 

 

1.37

 

 

 

1.95

 

 

(30

)%

 

(*) See Tables 4,5 and 6 for reconciliations of GAAP to non-GAAP measures.

Gross margin was 62.7% as-reported and 66.0% on an adjusted basis in the fourth quarter of 2021 compared with 63.7% as-reported and 65.2% on an adjusted basis in the fourth quarter of 2020.

Adjusted EBITDA margin was 34.2% in the fourth quarter of 2021 compared with 42.2% in the fourth quarter of 2020. The decline reflects costs incurred to establish Organon as a stand-alone entity.

Net income from continuing operations for the fourth quarter of 2021 was $202 million, or $0.79 per diluted share, compared with $376 million, or $1.48 per diluted share, in the fourth quarter of 2020. Non-GAAP Adjusted net income from continuing operations was $349 million, or $1.37 per diluted share, compared with $494 million, or $1.95 per diluted share, in 2020.

2021 revenue

in $ millions

 

FY 2021

 

FY 2020

 

VPY

 

VPY ex-FX

Women’s Health

 

$

1,612

 

$

1,555

 

4

%

 

2

%

Biosimilars

 

 

424

 

 

330

 

28

%

 

25

%

Established Brands

 

 

4,068

 

 

4,540

 

(10

)%

 

(13

)%

Other(1)

 

 

200

 

 

107

 

87

%

 

67

%

Revenue

 

$

6,304

 

$

6,532

 

(3

)%

 

(6

)%

(1) Other includes manufacturing sales to Merck and other third parties, and allocated amounts from pre-spin revenue hedging activities through the date of separation.

Total net revenue was $6,304 million for full year 2021, a decrease of 3% as-reported and 6% ex-FX, compared with 2020. The sales decline reflects decreases across certain markets within the Established Brands business, primarily due to ongoing competition after loss of exclusivity. The overall sales decline was offset by higher sales of Women's Health products, notably Nexplanon, Follistim AQ® (follitropin beta injection) and ganirelix acetate injection due to increasing demand, higher sales of biosimilars resulting from the continued uptake of Renflexis and Ontruzant in the United States, and the favorable impact of foreign exchange.

Women’s Health increased 4% as-reported and 2% ex-FX for full year 2021 compared with 2020, driven by Nexplanon which increased 12% ex-FX in 2021. This was partially offset by a 21% ex-FX decline in Nuvaring which continues to be impacted by generic competition, and by declining sales in the United States of the authorized generic of Nuvaring. Follistim AQ (marketed in most countries outside the United States as Puregon™), a fertility treatment, increased 19% ex-FX in 2021 compared with 2020, primarily due to volume growth, as well as recovery from the COVID-19 pandemic in the United States and China.

Biosimilars revenue grew 28% as-reported and 25% ex-FX for full year 2021 compared with 2020, driven by continued growth in the United States for Renflexis and growth in Canada. The biosimilars portfolio also benefited from the launch of Hadlima® (adalimumab-bwwd) and Aybintio® (bevacizumab) in certain ex-US markets during the year, and the continued uptake of Ontruzant in the United States, partially offset by revenue declines in the European Union due to increasing competitive pressures.

Revenue for Established Brands was down 10% as-reported and down 13% ex-FX for the full year 2021, primarily driven by the impact of the loss of exclusivity of Zetia in Japan in June 2020. Excluding the impact of the loss of exclusivity, Established Brands revenue was down 8% ex-FX. Additionally, during 2021, the Established Brands portfolio in China was subject to the negative impact of the third round of VBP, the largest so far for Organon. The associated decline was partially offset by growth in brands in the hospital channel not impacted by VBP, the partial recovery of the respiratory market as well as growth in the retail segment which accounts for approximately 50% of the total sales of Established Brands in China.

Full year 2021 profitability

in $ millions, except per share amounts

 

 

2021

 

 

 

2020

 

 

VPY

Revenue

 

$

6,304

 

 

$

6,532

 

 

(3

)%

Cost of sales

 

 

2,382

 

 

 

2,119

 

 

12

%

Gross profit

 

 

3,922

 

 

 

4,413

 

 

(11

)%

Gross margin

 

 

62.2

%

 

 

67.6

%

 

 

Non-GAAP adjusted gross profit(*)

 

 

4,081

 

 

 

4,516

 

 

(10

)%

Non-GAAP adjusted gross margin

 

 

64.7

%

 

 

69.1

%

 

 

Adjusted EBITDA(*)

 

 

2,379

 

 

 

3,120

 

 

(24

)%

Adjusted EBITDA margin

 

 

37.7

%

 

 

47.8

%

 

 

Net Income, continuing operations

 

 

1,351

 

 

 

2,256

 

 

(40

)%

Non-GAAP adjusted net income, continuing operations(*)

 

 

1,662

 

 

 

2,523

 

 

(34

)%

Diluted Earnings per Share, continuing operations

 

 

5.31

 

 

 

8.90

 

 

(40

)%

Non-GAAP Adjusted Diluted Earnings per Share, continuing operations(*)

 

 

6.54

 

 

 

9.95

 

 

(34

)%

 

(*) See Tables 4,5 and 6 for reconciliations of GAAP to non-GAAP measures.

Gross margin was 62.2% as-reported and 64.7% on an adjusted basis for full year 2021 compared with 67.6% as-reported and 69.1% on an adjusted basis in 2020. The year-over-year decrease reflects costs of establishing Organon as an independent company, including certain costs related to manufacturing agreements between the company and its former parent company, which have lower gross margin percentages compared to third party product sales and purchases.

Adjusted EBITDA margin was 37.7% for 2021 compared with 47.8% in 2020, which reflects costs incurred to establish Organon as a stand-alone entity.

Net income from continuing operations for 2021 was $1,351 million, or $5.31 per diluted share, compared with $2,256 million, or $8.90 per diluted share in 2020. Non-GAAP Adjusted net income from continuing operations was $1,662 million, or $6.54 per diluted share, compared with $2,523 million, or $9.95 per diluted share in 2020.

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 17, 2022 to stockholders of record at the close of business on February 28, 2022.

As of December 31, 2021, cash and cash equivalents were $737 million, and gross debt was $9,134 million, resulting in net debt of $8,397 million. Total debt as of December 31, 2021 reflects a discretionary fourth quarter prepayment of $100 million on the company’s term loans.

Full year guidance – all guidance provided on a Non-GAAP basis

Organon does not provide GAAP financial measures (other than revenue) on a forward-looking basis because the company is unable to predict with reasonable certainty and without unreasonable effort, items such as, the ultimate outcome of legal proceedings, unusual gains and losses, 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.

The company provided financial guidance for full year 2022, which is presented on a non-GAAP basis.

Non-GAAP basis (except revenue)

 

 

Guidance

Revenue

 

 

$6.1B - $6.4B

Adjusted gross margin

 

 

Mid 60%

SG&A as % of sales

 

 

Mid 20%

R&D as % of sales

 

 

Mid to upper single digit

Adjusted EBITDA margin

 

 

34%-36%

Interest expense

 

 

~$400 million

Depreciation

 

 

$100-$115 million

Effective Non-GAAP tax rate

 

 

17.5%-19.5%

Fully diluted weighted avg. shares outstanding

 

 

~255 million

Webcast Information

Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its fourth quarter and full year 2021 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/. 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 using conference ID#2682555 and by clicking on this link: http://www.directeventreg.com/registration/event/2682555. 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 a global healthcare company formed through a spin-off from Merck, (NYSE: MRK) known as MSD outside of the United States and Canada, to focus on improving the health of women throughout their lives. Organon has a portfolio of more than 60 medicines and products across a range of therapeutic areas. Led by the women’s health portfolio coupled with an expanding biosimilars business and stable franchise of established medicines, Organon’s products produce strong cash flows that will support investments in innovation and future growth opportunities in women’s health. In addition, Organon is pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging its scale and presence in fast growing international markets.

Organon has a global footprint with significant scale and geographic reach, world-class commercial capabilities, and approximately 9,500 employees with headquarters located in Jersey City, New Jersey.

For more information, visit https://www.organon.com and connect with us on LinkedIn and Instagram.

Non-GAAP financial measures

Non-GAAP results, such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, are presented only as a supplement to the company’s financial statements based on GAAP. Non-GAAP financial information is provided to enhance understanding of the company’s financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation from, or as a substitute analysis for, the company’s results of operations as determined in accordance with GAAP. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measures are provided within the schedules attached to this release. The company uses non-GAAP measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful representation of the underlying operating performance of the business. The company also believes that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. The non-GAAP financial measures are not presented in accordance with GAAP. Please refer to the appendix of this press release for reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures. The company’s full-year 2022 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 and other items not reflective of the company's ongoing operations.

Forward-Looking Statements

Except for historical information herein, this news 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. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” 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, an inability to execute on our business development strategy or realize the benefits of our planned acquisitions; general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of the ongoing COVID-19 pandemic and emergence of variant strains; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances; new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict its future financial results and performance; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; difficulties developing and sustaining relationships with commercial counterparties; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

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 Securities and Exchange Commission (SEC), including its registration statement on Form 10 and subsequent periodic filings, available at the SEC’s Internet site (www.sec.gov).

TABLE 1

Organon & Co.

Condensed Consolidated Statement of Income

(Unaudited, $ in millions except share and per share amounts)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

Revenues

$

1,604

 

$

1,613

 

 

$

6,304

 

$

6,532

 

Costs, Expenses and Other

 

 

 

 

 

 

 

Cost of sales

 

599

 

 

586

 

 

 

2,382

 

 

2,119

 

Selling, general and administrative

 

481

 

 

434

 

 

 

1,668

 

 

1,356

 

Research and development

 

189

 

 

60

 

 

 

443

 

 

210

 

Restructuring costs

 

 

 

17

 

 

 

3

 

 

60

 

Other (income) expense, net

 

99

 

 

(9

)

 

 

279

 

 

35

 

 

 

1,368

 

 

1,088

 

 

 

4,775

 

 

3,780

 

Income From Continuing Operations Before Income Taxes

 

236

 

 

525

 

 

 

1,529

 

 

2,752

 

Taxes on Income

 

34

 

 

149

 

 

 

178

 

 

496

 

Net Income From Continuing Operations

 

202

 

 

376

 

 

 

1,351

 

 

2,256

 

Loss From Discontinued Operations - Net of Tax

 

 

 

(8

)

 

 

 

 

(96

)

Net Income

$

202

 

$

368

 

 

 

1,351

 

 

2,160

 

 

 

 

 

 

 

 

 

Earnings (Loss) per Share Attributable to Organon & Co. Stockholders - Basic:

 

 

 

 

 

 

 

Continuing operations

 

0.80

 

 

1.48

 

 

 

5.33

 

 

8.90

 

Discontinued operations

 

 

 

(0.03

)

 

 

 

 

(0.38

)

Net Earnings per Share Attributable to Organon & Co. Stockholders

 

0.80

 

 

1.45

 

 

 

5.33

 

 

8.52

 

 

 

 

 

 

 

 

 

Earnings (Loss) per Share Attributable to Organon & Co. Stockholders - Diluted:

 

 

 

 

 

 

 

Continuing operations

 

0.79

 

 

1.48

 

 

$

5.31

 

$

8.90

 

Discontinued operations

 

 

 

(0.03

)

 

$

 

$

(0.38

)

Net Earnings per Share Attributable to Organon & Co. Stockholders

 

0.79

 

 

1.45

 

 

$

5.31

 

$

8.52

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

253,549,167

 

 

253,516,000

 

 

 

253,537,941

 

 

253,516,000

 

Diluted

 

254,550,738

 

 

253,516,000

 

 

 

254,192,700

 

 

253,516,000

 

TABLE 2

Organon & Co.

Sales by top products

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2021

 

2020

 

2021

 

2020

($ in millions)

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

$

143

 

 

$

83

 

$

226

 

$

114

 

$

50

 

$

165

 

$

532

 

 

$

237

 

$

769

 

$

488

 

 

$

192

 

$

680

Follistim AQ

 

29

 

 

 

30

 

 

59

 

 

24

 

 

33

 

 

57

 

 

110

 

 

 

127

 

 

237

 

 

84

 

 

 

108

 

 

193

NuvaRing

 

18

 

 

 

27

 

 

44

 

 

25

 

 

28

 

 

53

 

 

85

 

 

 

106

 

 

191

 

 

111

 

 

 

126

 

 

236

ganirelix acetate injection

 

3

 

 

 

22

 

 

26

 

 

4

 

 

21

 

 

25

 

 

22

 

 

 

88

 

 

111

 

 

11

 

 

 

69

 

 

81

Cerazette

 

 

 

 

18

 

 

18

 

 

 

 

16

 

 

16

 

 

 

 

 

70

 

 

70

 

 

 

 

 

67

 

 

67

Other Women's Health (1)

 

14

 

 

 

29

 

 

42

 

 

45

 

 

30

 

 

74

 

 

96

 

 

 

139

 

 

234

 

 

165

 

 

 

133

 

 

298

Biosimilars

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renflexis

 

46

 

 

 

5

 

 

51

 

 

35

 

 

4

 

 

39

 

 

164

 

 

 

21

 

 

186

 

 

123

 

 

 

12

 

 

135

Ontruzant

 

14

 

 

 

11

 

 

26

 

 

2

 

 

35

 

 

37

 

 

34

 

 

 

92

 

 

126

 

 

3

 

 

 

113

 

 

115

Brenzys

 

 

 

 

28

 

 

28

 

 

 

 

23

 

 

23

 

 

 

 

 

63

 

 

63

 

 

 

 

 

74

 

 

74

Other Biosimilars (1)

 

 

 

 

13

 

 

13

 

 

 

 

4

 

 

4

 

 

 

 

 

49

 

 

49

 

 

 

 

 

6

 

 

6

Established Brands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cardiovascular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zetia

 

4

 

 

 

92

 

 

96

 

 

3

 

 

94

 

 

98

 

 

10

 

 

 

368

 

 

378

 

 

(1

)

 

 

483

 

 

482

Vytorin

 

3

 

 

 

34

 

 

37

 

 

3

 

 

40

 

 

43

 

 

11

 

 

 

153

 

 

164

 

 

12

 

 

 

170

 

 

182

Atozet

 

 

 

 

110

 

 

110

 

 

 

 

105

 

 

105

 

 

 

 

 

458

 

 

458

 

 

 

 

 

453

 

 

453

Rosuzet

 

 

 

 

19

 

 

19

 

 

 

 

36

 

 

36

 

 

 

 

 

68

 

 

68

 

 

 

 

 

130

 

 

130

Cozaar/Hyzaar

 

3

 

 

 

90

 

 

93

 

 

4

 

 

90

 

 

94

 

 

12

 

 

 

345

 

 

357

 

 

21

 

 

 

365

 

 

386

Zocor

 

1

 

 

 

15

 

 

16

 

 

1

 

 

18

 

 

19

 

 

4

 

 

 

61

 

 

65

 

 

3

 

 

 

75

 

 

77

Other Cardiovascular (1)

 

 

 

 

27

 

 

27

 

 

 

 

39

 

 

39

 

 

 

 

 

126

 

 

126

 

 

 

 

 

162

 

 

162

Respiratory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Singulair

 

5

 

 

 

108

 

 

113

 

 

4

 

 

120

 

 

124

 

 

15

 

 

 

398

 

 

413

 

 

18

 

 

 

444

 

 

462

Nasonex

 

2

 

 

 

61

 

 

62

 

 

3

 

 

55

 

 

57

 

 

4

 

 

 

201

 

 

206

 

 

12

 

 

 

206

 

 

218

Dulera

 

34

 

 

 

10

 

 

44

 

 

33

 

 

8

 

 

41

 

 

154

 

 

 

36

 

 

190

 

 

188

 

 

 

34

 

 

222

Clarinex

 

1

 

 

 

27

 

 

28

 

 

2

 

 

19

 

 

21

 

 

6

 

 

 

106

 

 

111

 

 

7

 

 

 

123

 

 

130

Asmanex

 

14

 

 

 

2

 

 

16

 

 

17

 

 

2

 

 

20

 

 

57

 

 

 

7

 

 

63

 

 

76

 

 

 

8

 

 

83

Other Respiratory (1)

 

(1

)

 

 

10

 

 

9

 

 

2

 

 

7

 

 

9

 

 

 

 

 

26

 

 

26

 

 

3

 

 

 

32

 

 

35

Non-Opioid Pain, Bone and Dermatology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arcoxia

 

 

 

 

60

 

 

60

 

 

 

 

54

 

 

54

 

 

 

 

 

244

 

 

244

 

 

 

 

 

258

 

 

258

Fosamax

 

1

 

 

 

42

 

 

43

 

 

1

 

 

39

 

 

40

 

 

4

 

 

 

172

 

 

175

 

 

4

 

 

 

176

 

 

180

Diprospan

 

 

 

 

33

 

 

33

 

 

 

 

32

 

 

32

 

 

 

 

 

125

 

 

125

 

 

 

 

 

118

 

 

118

Diprosone

 

 

 

 

22

 

 

22

 

 

 

 

23

 

 

23

 

 

1

 

 

 

86

 

 

87

 

 

1

 

 

 

82

 

 

83

Other Non-Opioid Pain, Bone and Dermatology (1)

 

4

 

 

 

46

 

 

50

 

 

5

 

 

46

 

 

50

 

 

15

 

 

 

183

 

 

199

 

 

9

 

 

 

186

 

 

195

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proscar

 

 

 

 

25

 

 

26

 

 

 

 

22

 

 

22

 

 

1

 

 

 

116

 

 

117

 

 

2

 

 

 

174

 

 

176

Propecia

 

4

 

 

 

31

 

 

36

 

 

2

 

 

36

 

 

39

 

 

9

 

 

 

127

 

 

136

 

 

10

 

 

 

119

 

 

129

Sinemet

 

 

 

 

17

 

 

17

 

 

 

 

20

 

 

20

 

 

 

 

 

71

 

 

71

 

 

(1

)

 

 

78

 

 

77

Remeron

 

1

 

 

 

14

 

 

15

 

 

1

 

 

16

 

 

16

 

 

3

 

 

 

62

 

 

66

 

 

2

 

 

 

61

 

 

64

Other (1)

 

7

 

 

 

58

 

 

65

 

 

9

 

 

50

 

 

60

 

 

37

 

 

 

185

 

 

223

 

 

53

 

 

 

185

 

 

238

Other (2)

 

(3

)

 

 

38

 

 

34

 

 

1

 

 

57

 

 

58

 

 

(3

)

 

 

205

 

 

200

 

 

4

 

 

 

102

 

 

107

Total Revenue

$

347

 

 

$

1,257

 

$

1,604

 

$

340

 

$

1,272

 

$

1,613

 

$

1,383

 

 

$

4,921

 

$

6,304

 

$

1,408

 

 

$

5,124

 

$

6,532

U.S. plus international may not equal total due to rounding.
(1) Includes sales of products not listed separately. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health.
(2) Other includes manufacturing sales to Merck and other third parties, and allocated amounts from pre-spin revenue hedging activities through the date of Separation.

TABLE 3

Organon & Co.

Sales by geographic area

(Unaudited, $ in millions)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

($ in millions)

2021

 

2020

 

2021

 

2020

Europe and Canada

$

427

 

$

440

 

$

1,741

 

$

1,726

United States

 

347

 

 

340

 

 

1,383

 

 

1,408

Asia Pacific and Japan

 

299

 

 

345

 

 

1,173

 

 

1,535

China

 

240

 

 

218

 

 

933

 

 

873

Latin America, Middle East, Russia and Africa

 

246

 

 

208

 

 

841

 

 

857

Other(1)

 

45

 

 

62

 

 

233

 

 

133

Revenue

$

1,604

 

$

1,613

 

$

6,304

 

$

6,532

(1) Other includes manufacturing sales to Merck and other third parties, and allocated amounts from pre-spin revenue hedging activities through the date of Separation.

TABLE 4

Reconciliation of GAAP Gross Margin to Non-GAAP Adjusted Gross Profit and Adjusted Gross Margin

($ in millions)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue

$

1,604

 

 

$

1,613

 

 

$

6,304

 

 

$

6,532

 

Cost of sales

 

599

 

 

 

586

 

 

 

2,382

 

 

 

2,119

 

Gross profit

 

1,005

 

 

 

1,027

 

 

 

3,922

 

 

 

4,413

 

Gross margin

 

62.7

%

 

 

63.7

%

 

 

62.2

%

 

 

67.6

%

Amortization

 

34

 

 

 

21

 

 

 

103

 

 

 

86

 

One-time costs(1)

 

17

 

 

 

 

 

 

45

 

 

 

 

Stock-based compensation

 

3

 

 

 

3

 

 

 

11

 

 

 

17

 

Non-GAAP adjusted gross profit(2)

 

1,059

 

 

 

1,051

 

 

 

4,081

 

 

 

4,516

 

Non-GAAP adjusted gross margin

 

66.0

%

 

 

65.2

%

 

 

64.7

%

 

 

69.1

%

(1) One-time costs for the three months ended December 31, 2021 include costs to stand up the Company as well as a $7 million impairment charge relating to a licensed intangible asset. For the twelve month period ended December 31, 2021, one time costs include inventory discards related to separation re-labeling and other costs to stand up the Company.
 
(2) Non-GAAP adjusted gross profit is calculated by excluding amortization, one-time costs described above, and the portion of stock-based compensation expense allocated to Cost of sales.

TABLE 5

Organon & Co.

Reconciliation of GAAP Net Income from Continuing Operations to Adjusted EBITDA

($ in millions)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net income from continuing operations before income tax

$

236

 

 

$

525

 

 

$

1,529

 

 

$

2,752

 

Depreciation

 

28

 

 

 

14

 

 

 

92

 

 

 

56

 

Amortization(1)

 

34

 

 

 

21

 

 

 

103

 

 

 

86

 

Interest expense

 

98

 

 

 

 

 

 

258

 

 

 

 

EBITDA

 

396

 

 

 

560

 

 

 

1,982

 

 

 

2,894

 

Restructuring costs

 

 

 

 

17

 

 

 

3

 

 

 

60

 

One-time costs(2)

 

59

 

 

 

95

 

 

 

231

 

 

 

126

 

Acquired in-process research and development(3)

 

79

 

 

 

 

 

 

104

 

 

 

 

Stock-based compensation

 

15

 

 

 

8

 

 

 

59

 

 

 

40

 

Adjusted EBITDA

$

549

 

 

$

680

 

 

$

2,379

 

 

$

3,120

 

Adjusted EBITDA margin

 

34.2

%

 

 

42.2

%

 

 

37.7

%

 

 

47.8

%

(1) Amortization in all periods is included in Cost of sales.
 
(2) For the three months ended December 31, 2021, one-time costs primarily include costs incurred in connection with the spin-off of Organon as well as $5 million of transaction costs pertaining to the Forendo acquisition and a $7 million impairment charge of a licensed intangible asset. For the three months ended December 31, 2021, approximately $26 million of the one-time costs are recorded in Selling, general and administrative expenses, approximately $17 million are recorded in Cost of sales, approximately $9 million are recorded in Research and development, and $7 million in Other (income) expense, net. For the three months ended December 31, 2020, $95 million of the one-time costs are classified in Selling, general and administrative expenses.
 
For the twelve months ended December 31, 2021, approximately $165 million of the one-time costs are recorded in Selling, general and administrative expenses (which includes $23 million pertaining to the acquisition of Alydia in the second quarter 2021), approximately $45 million are recorded in Cost of sales, $14 million are recorded in Research and development, and $7 million are recorded in Other (income) expense, net. For the twelve months ended December 31, 2020, $126 million of one-time costs are classified in Selling, general and administrative expenses.
 
(3) Costs represent $79 million related to the Forendo acquisition in the fourth quarter 2021 and the twelve month period for 2021 includes the $25 million upfront licensing payment associated with ObsEva in the third quarter 2021, both of which were recorded in Research and development expense.

TABLE 6

Organon & Co.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

($ in millions, except per share amounts)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2021

 

2020

 

2021

 

2020

Net income from continuing operations before income tax

$

236

 

$

525

 

$

1,529

 

$

2,752

Adjustments:

 

 

 

 

 

 

 

Amortization(1)

 

34

 

 

21

 

 

103

 

 

86

Restructuring costs

 

 

 

17

 

 

3

 

 

60

One-time costs(2)

 

59

 

 

95

 

 

231

 

 

126

Acquired in-process research and development(3)

 

79

 

 

 

 

104

 

 

Stock-based compensation

 

15

 

 

8

 

 

59

 

 

40

Total Adjustments

 

187

 

 

141

 

 

500

 

 

312

Non-GAAP pre-tax income from continuing operations

 

423

 

 

666

 

 

2,029

 

 

3,064

Taxes on income as reported in accordance with GAAP

 

34

 

 

149

 

 

178

 

 

496

Tax benefit on adjustments

 

35

 

 

23

 

 

93

 

 

45

Tax benefit on GAAP-only discrete items(4)

 

5

 

 

 

 

96

 

 

Non-GAAP adjusted taxes on income

 

74

 

 

172

 

 

367

 

 

541

Non-GAAP adjusted net income, continuing operations

$

349

 

$

494

 

$

1,662

 

$

2,523

Non-GAAP adjusted net income, continuing operations per diluted share

$

1.37

 

$

1.95

 

$

6.54

 

$

9.95

(1) Amortization in all periods is included in Cost of sales.
 
(2) For the three months ended December 31, 2021, one-time costs primarily include costs incurred in connection with the spin-off of Organon as well as $5 million of transaction costs pertaining to the Forendo acquisition and a $7 million impairment charge of a licensed intangible asset. For the three months ended December 31, 2021, approximately $26 million of the one-time costs are recorded in Selling, general and administrative expenses, approximately $17 million are recorded in Cost of sales, approximately $9 million are recorded in Research and development, and $7 million in Other (income) expense, net. For the three months ended December 31, 2020, $95 million of the one-time costs are classified in Selling, general and administrative expenses.
 
For the twelve months ended December 31, 2021, approximately $165 million of the one-time costs are recorded in Selling, general and administrative expenses (which includes $23 million pertaining to the acquisition of Alydia in the second quarter 2021), approximately $45 million are recorded in Cost of sales, $14 million are recorded in Research and development, and $7million are recorded in Other (income) expense, net. For the twelve months ended December 31, 2020, $126 million of one-time costs are classified in Selling, general and administrative expenses.
 
(3) Costs represent $79 million related to the Forendo acquisition in the fourth quarter 2021 and the twelve month period for 2021 includes the $25 million upfront licensing payment associated with ObsEva in the third quarter 2021, both of which were recorded in Research and development expense.
 
(4) For the three months and twelve months ended December 31, 2021, the company recorded a tax benefit of approximately $5 million and $75 million, respectively, related to a portion of non-US step up in tax basis as a result of its separation from Merck.

 

Contacts

Media Contacts:

Karissa Peer

(614) 314-8094

Kate Vossen

(732) 675-8448

Investor Contacts:

Jennifer Halchak

(201) 275-2711

Edward Barger

(267) 614-4669

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