JERSEY CITY, N.J.--(BUSINESS WIRE)-- Organon(NYSE: OGN) (the “company”), today announced its results for the second quarter ended June 30, 2022.

“During the second quarter, Organon delivered constant currency growth across all our reported geographies and in all three franchises. Our Established Brands franchise grew in almost every therapy area, demonstrating the sustainability and untapped potential of these brands,” said Kevin Ali, Organon’s Chief Executive Officer. “Additionally, we continued to invest for growth during the quarter adding Shanghai Henlius Biotech as another R&D and manufacturing collaborator for biosimilars, underscoring our commitment to this business. And importantly, we further expanded our offerings in Women’s Health recently signing a research collaboration with Cirqle Biomedical for a novel investigational non-hormonal, on-demand contraceptive candidate.”

Second quarter 2022 revenues

Total net revenues were $1,585 million for the second quarter of 2022, a decrease of 1% as-reported and an increase of 5% excluding the impact of foreign currency (ex-FX), compared with the second quarter of 2021.

Women’s Health declined 2% as-reported, but increased 1% ex-FX in the second quarter of 2022 compared with the second quarter of 2021. During the second quarter of 2022, Nexplanon® (etonogestrel implant) grew 8% ex-FX, primarily driven by favorable pricing and demand uptake in the United States and volume growth outside the United States. Nuvaring® (etonogestrel/ethinyl estradiol vaginal ring) continues to be impacted by generic competition and declined 18% ex-FX in the second quarter of 2022 compared with the prior year period. Follistim AQ® (follitropin beta injection), declined 9% ex-FX in the second quarter of 2022, primarily due to COVID-related disruptions in China and an unfavorable channel mix in the United States, that offset solid demand.

Biosimilars revenue grew 39% as-reported and 42% ex-FX in the second quarter 2022 compared with the second quarter of 2021. Organon’s current portfolio includes certain immunology and oncology treatments. All five of the biosimilars in Organon’s portfolio have launched in certain countries globally, including two biosimilars, Renflexis® (infliximab-abda) and Ontruzant® (trastuzumab-dttb), in the United States. Renflexis grew 39% ex-FX in the second quarter of 2022 compared with the prior year period, primarily due to continued demand growth in the United States since its launch in 2017. Ontruzant grew 61% ex-FX driven by timing of an order in Brazil, as well as continued uptake in the United States since its launch in July 2020, partially offset by increased competition in Europe.

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. The portfolio’s exposure to loss of exclusivity (LOE) risk peaked in 2021 and no longer represents a significant impediment to stable performance in the Established Brands franchise. Revenues for Established Brands decreased 2% as-reported and increased 4% ex-FX in the second quarter of 2022 compared with the second quarter of 2021. During the second quarter of 2022, the cardiovascular portfolio grew 3% ex-FX primarily driven by strong Atozet™ (ezetimibe and atorvastatin calcium) sales in Europe and Cozaar® (losartan potassium) /Hyzaar® (losartan potassium and hydrochlorothiazide) sales in China. The Established Brands franchise also benefited from a continuation of a temporary supply disruption affecting several competitors in the Japanese market, most notably in the respiratory portfolio. Year to date, the franchise has not experienced significant impacts from the implementation of Volume Based Procurement (VBP) in China, which the company expects will be more pronounced in the second half of 2022. Still, based on the strong year to date performance, the company expects the Established Brands franchise to deliver relatively flat constant currency revenue growth for the full year 2022.

Second quarter 2022 profitability
Organon was spun-off from Merck & Co., Inc., Rahway, NJ, USA on June 2, 2021. Financial results during the pre-spin period were presented on the carve-out basis of accounting and do not purport to reflect what Organon’s financial results would have been had Organon operated as a standalone public company. Therefore, with the exception of revenue, financial results for the periods ending June 30, 2022 and June 30, 2021 are not meaningfully comparable.

Gross margin in the second quarter of 2022 was 62.9% as-reported, and comparable to 63.4% in the prior year period. Adjusted Gross Margin was 66.1% in the second quarter of 2022 compared with 65.6% on an adjusted basis in the second quarter of 2021.

Adjusted EBITDA margin was 32.3% in the second quarter of 2022 compared with 39.3% in the second quarter of 2021. Adjusted EBITDA margin in the second quarter of 2022 is inclusive of $97 million of acquired IPR&D and milestones. Higher R&D spend associated with the company’s recent acquisitions of clinical stage assets as well as higher employee related costs contributed to the decline in Adjusted EBITDA margin year over year.

Net income from continuing operations for the second quarter of 2022 was $234 million, or $0.92 per diluted share, compared with $431 million, or $1.70 per diluted share, in the second quarter of 2021. Non-GAAP Adjusted net income from continuing operations was $319 million, or $1.25 per diluted share, compared with $437 million, or $1.72 per diluted share, in 2021.

Beginning in 2022, Organon will no longer exclude expenses for upfront and milestone payments related to collaborations and licensing agreements, or charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions from its non-GAAP results. The change to include all acquired IPR&D and milestone expenses negatively impacted Adjusted diluted EPS by $0.30 in the second quarter of 2022. There was no similar impact in the second quarter of 2021. In connection with this change, acquired IPR&D expenses are now reported as a separate income statement line item. These costs were previously recorded within the R&D expenses line. Prior period amounts have been revised to conform to the current period presentation.

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 September 15, 2022 to stockholders of record at the close of business on August 15, 2022.

As of June 30, 2022, cash and cash equivalents were $545 million, and debt was $8.9 billion. Total debt as of June 30, 2022 reflects a discretionary second quarter prepayment of $100 million on the company’s U.S. dollar denominated term loan.

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.

The company is updating its full year 2022 guidance ranges previously provided on May 5, 2022. The range for full year 2022 revenue is narrowed to $6.1 billion to $6.3 billion, which reflects persisting foreign exchange headwinds. The range for full year Adjusted EBITDA margin is now 32% to 34% to incorporate approximately $110 million of IPR&D and milestone expenses from business development through August 4, 2022. Organon’s financial guidance does not assume an estimate for future IPR&D and milestone payments for business development transactions not yet executed.

Webcast Information
Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its second quarter 2022 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# 58511-993 and by clicking on this link: https://conferencingportals.com/event/ZGyfDfjk. 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 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 9,300 employees with headquarters located in Jersey City, New Jersey. For more information, visit http://www.organon.com and connect with us on LinkedIn and Instagram.

Non-GAAP financial measures
This press release contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are 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 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. 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. You should refer to the appendix of this press release for 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 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.

The company uses non-GAAP financial 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.

Forward-Looking Statement
Except for historical information herein, 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. 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 economic factors, including interest rate and currency exchange rate fluctuations; general industry conditions and competition; 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; 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 the company’s Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent SEC filings, available at the SEC’s Internet site (www.sec.gov).

TABLE 1

TABLE 2

TABLE 3

TABLE 4

TABLE 5

TABLE 6

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005119/en/