Organon Reports Results for the Second Quarter Ended June 30, 2021 and Announces Inaugural Dividend

Organon Reports Results for the Second Quarter Ended June 30, 2021 and Announces Inaugural Dividend




Organon Reports Results for the Second Quarter Ended June 30, 2021 and Announces Inaugural Dividend

  • Second quarter 2021 revenue of $1,595 million
  • Net income from continuing operations of $431 million, or $1.70 per diluted share; Adjusted net income from continuing operations of $437 million, or $1.72 per diluted share
  • Adjusted EBITDA of $627 million
  • Board of Directors declares quarterly dividend of $0.28 per share
  • Financial guidance affirmed for 2021

JERSEY CITY, N.J.–(BUSINESS WIRE)–#Health–Organon (NYSE: OGN) (the “company”), today announced its results for the second quarter and year to date ended June 30, 2021 and affirmed its full year 2021 financial guidance.

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 September 13, 2021 to stockholders of record at the close of business on August 23, 2021.

Since well before Organon’s June 2 spin-off from Merck, thousands of employees have been hard at work standing up Organon, committed to a  shared vision to advance the health of women. Already, we have demonstrated our commitment to identifying potential opportunities to help address some of the most important unmet needs in women’s health, with an acquisition focused on treating post-partum hemorrhage as well as a licensing agreement to develop an investigational agent being evaluated to delay pre-term labor,” said Kevin Ali, CEO of Organon. “At the same time, we are focused on driving our business, with all three of our franchises delivering on their objectives. Accordingly, today we affirmed our full year 2021 guidance. Looking beyond 2021, we remain confident in our ability to organically grow revenue in the low to mid-single digit range, as LOE risk will largely be behind us and Women’s Health and Biosimilars are positioned to deliver double digit growth.”

Second quarter 2021 revenue

in $ millions

Q2 2021

 

Q2 2020

 

VPY

 

VPY ex-

FX

Women’s Health

417

350

19%

16%

Biosimilars

86

60

43%

35%

Established Brands

1,045

1,092

(4)%

(10)%

Total Net Revenue(1)

$1,595

$1,526

5%

(1)%

(1)

 

Franchise revenue does not sum to total revenue due to manufacturing sales to the company’s former parent company and other third parties and pre-spin allocated revenue hedge activities

Total net revenue was $1,595 million for the second quarter of 2021, an increase of 5% as-reported and decrease of 1% excluding the impacts of foreign currency (ex-FX), compared with the second quarter of 2020.

Women’s Health grew 19% as-reported and 16% ex-FX in the second quarter 2021 compared with the second quarter of 2020, driven by growth in NEXPLANON (etonogestrel implant), which grew 39% ex-FX.. NEXPLANON, a single-rod subdermal contraceptive implant, is a physician-administered product. While in-person patient visits to healthcare professionals demonstrated recovery in the second quarter of 2021 relative to the height of the COVID-19 pandemic, which occurred during the same period in 2020, the company expects that ongoing negative impacts will persist through 2021. Growth in fertility also contributed to the performance in Women’s Health in the quarter; FOLLISTIM, AQ Cartridge (follitropin beta injection), grew 40% ex-FX and was positively impacted by a combination of COVID-19 recovery and increased demand. These growth drivers more than offset a 19% ex-FX decline in NuvaRing (etonogestrel/ethinyl estradiol vaginal ring) related to generic competition.

Biosimilars revenue grew 43% as-reported and 35% ex-FX in the second quarter 2021 compared with second quarter 2020, driven by continued demand growth in the US for RENFLEXIS (infliximab-abda), since its launch in 2017, and continued uptake of ONTRUZANT (trastuzumab-dttb) in the US since its July 2020 launch, which was partially offset by a decrease in the EU, reflecting increasing competitive pressures.

Established Brands represents a broad portfolio of well-known medicines, which generally are beyond market exclusivity, including leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management, for which generic competition varies by market. Revenue for Established Brands was down 4% as-reported and down 10% ex-FX in the second quarter of 2021, primarily driven by the loss of exclusivity of ZETIA (ezetimibe) in Japan. Excluding the impact of LOEs, Established Brands revenue was down 2% ex-FX. During the quarter, retail expansion in China grew double digits and partially offset impacts from decreases in the hospital channel due to Volume-Based Procurement.

Second quarter 2021 profitability

in $ millions

Q2 2021

 

Q2 2020

 

VPY

Revenue

$1,595

$1,526

5%

Cost of goods sold

583

460

27%

Gross profit

1,012

1,066

(5)%

Gross margin

63.4%

69.9%

 

 

 

 

 

Non-GAAP Adjusted gross profit(2)

1,044

1,087

(4)%

Non-GAAP Adjusted gross margin(2)

65.5%

71.2%

 

 

 

 

 

Adjusted EBITDA, continuing operations(2,3)

627

776

(19)%

Adjusted EBITDA margin, continuing operations(2,3)

39.3%

50.9%

 

 

 

 

 

Net Income, continuing operations

431

586

(26)%

Non-GAAP Adjusted net income, continuing operations(2,3)

437

640

(32)%

Diluted Earnings per Share, continuing operations

1.70

2.31

(26)%

Non-GAAP Adjusted Diluted Earnings per Share, continuing operations(2,3)

1.72

2.52

(32)%

 

(2)

 

See Tables 4,5 and 6 for reconciliations of GAAP to non-GAAP measures

(3)

 

Discontinued operations includes Merck Retained Products

Gross margin was 63.4% as-reported and 65.5% on an adjusted basis in the second quarter of 2021 compared with 69.9% as-reported and 71.2% on an adjusted basis in the second quarter of 2020. The year-over-year decrease reflects an increase in stand-up costs, 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.

Adjusted EBITDA margin was 39.3% in the second quarter of 2021 compared with 50.9% in the second quarter of 2020, which reflects costs incurred to establish Organon as a standalone entity.

Net income from continuing operations for the second quarter of 2021 was $431 million, or $1.70 per diluted share, compared with $586 million, or $2.31 per diluted share, in the second quarter of 2020. Non-GAAP Adjusted net income was $437 million, or $1.72 per diluted share, compared with $640 million, or $2.52 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 September 13, 2021 to stockholders of record at the close of business on August 23, 2021.

As of June 30, 2021, cash and cash equivalents were $730 million and debt was $9,348 million, resulting in net debt of $8,618 million.

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

Organon does not provide GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty and without unreasonable effort, 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 is affirming the pre-spin financial guidance it provided at the Investor Day it co-hosted with Merck on May 3, 2021. The financial guidance is presented on a non-GAAP basis and is proforma as if Organon was a standalone company for the entire year.

Guidance on proforma

non-GAAP basis

Previous guidance

Current guidance

Revenue

$6.1B – $6.4B

 

Unchanged

Gross margin(4)

Low to mid-60% range

 

Unchanged

SG&A as % of sales(4)

Mid 20% range

 

Unchanged

R&D as % of sales(4)

Mid single-digit

 

Unchanged

Adjusted EBITDA margin

36%-38%

 

Unchanged

Interest

~$400 million

 

Unchanged

Depreciation(4)

$100-$115 million

 

Unchanged

Effective Non-GAAP tax rate

17.5% – 19.5%

 

Unchanged

Weighted avg. shares outstanding

~250 million (not diluted)

 

~254 million (fully diluted)

(4)

  Guidance provided in connection with the spin-off and unlikely to be a recurring component of the company’s annual guidance

Webcast Information

Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its second quarter 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 by clicking on this link: http://www.directeventreg.com/registration/event/9577397. 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 (NYSE: OGN) 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. Here for her health, the company has a portfolio of more than 60 medicines and products across a range of therapeutic areas. Led by the reproductive 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 future growth opportunities in women’s health, including business development like recently acquired Alydia Health, a medical device company focused on treating postpartum hemorrhage. 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 9,000 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

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 2021 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 Statement of Organon

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, 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; 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, 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 June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Sales

$

1,595

 

 

$

1,526

 

 

$

3,101

 

 

$

3,306

 

Costs, Expenses and Other

 

 

 

 

 

 

 

Cost of sales

583

 

 

460

 

 

1,174

 

 

998

 

Selling, general and administrative

416

 

 

284

 

 

798

 

 

601

 

Research and development

76

 

 

51

 

 

143

 

 

96

 

Restructuring costs

1

 

 

19

 

 

2

 

 

31

 

Other (income) expense, net

82

 

 

10

 

 

80

 

 

34

 

 

1,158

 

 

824

 

 

2,197

 

 

1,760

 

Income From Continuing Operations Before Income Taxes

437

 

 

702

 

 

904

 

 

1,546

 

Taxes on Income

6

 

 

116

 

 

78

 

 

226

 

Net Income From Continuing Operations

431

 

 

586

 

 

826

 

 

1,320

 

Loss From Discontinued Operations – Net of Tax

(4)

 

 

(44)

 

 

 

 

(75)

 

Net Income

$

427

 

 

$

542

 

 

$

826

 

 

$

1,245

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Continuing operations

$

1.70

 

 

$

2.31

 

 

$

3.26

 

 

$

5.21

 

Discontinued operations

(0.02)

 

 

(0.17)

 

 

 

 

(0.30)

 

Net Earnings per Share Attributable to Organon & Co. Stockholders

$

1.68

 

 

$

2.14

 

 

$

3.26

 

 

$

4.91

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Continuing operations

$

1.70

 

 

$

2.31

 

 

$

3.25

 

 

$

5.21

 

Discontinued operations

(0.02)

 

 

(0.17)

 

 

 

 

(0.30)

 

Net Earnings per Share Attributable to Organon & Co. Stockholders

$

1.68

 

 

$

2.14

 

 

$

3.25

 

 

$

4.91

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

Basic

253,516,000

 

 

253,516,000

 

 

253,516,000

 

 

253,516,000

 

Diluted

253,828,232

 

 

253,516,000

 

 

253,828,232

 

 

253,516,000

 

TABLE 2

Organon & Co.

Sales by top products

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

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

$

129

 

 

$

56

 

 

$

184

 

 

$

87

 

 

$

44

 

 

$

132

 

 

$

269

 

 

$

98

 

 

$

368

 

 

$

237

 

 

$

90

 

 

$

326

 

Follistim AQ

27

 

 

38

 

 

65

 

 

20

 

 

24

 

 

44

 

 

52

 

 

65

 

 

117

 

 

40

 

 

44

 

 

85

 

NuvaRing

26

 

 

28

 

 

53

 

 

35

 

 

28

 

 

63

 

 

47

 

 

52

 

 

98

 

 

61

 

 

64

 

 

126

 

Ganirelix Acetate Injection

5

 

 

25

 

 

31

 

 

3

 

 

11

 

 

14

 

 

14

 

 

46

 

 

60

 

 

3

 

 

27

 

 

30

 

Cerazette

 

 

18

 

 

18

 

 

 

 

15

 

 

15

 

 

 

 

34

 

 

34

 

 

 

 

33

 

 

33

 

Other Women’s Health (1)

23

 

 

43

 

 

66

 

 

54

 

 

28

 

 

82

 

 

63

 

 

76

 

 

139

 

 

75

 

 

65

 

 

141

 

Biosimilars

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renflexis

36

 

 

7

 

 

43

 

 

28

 

 

3

 

 

30

 

 

70

 

 

11

 

 

81

 

 

54

 

 

5

 

 

59

 

Ontruzant

7

 

 

15

 

 

22

 

 

 

 

18

 

 

19

 

 

11

 

 

34

 

 

45

 

 

 

 

40

 

 

40

 

Brenzys

 

 

11

 

 

11

 

 

 

 

11

 

 

11

 

 

 

 

21

 

 

21

 

 

 

 

29

 

 

29

 

Other Biosimilars (1)

 

 

10

 

 

10

 

 

 

 

 

 

 

 

 

 

19

 

 

19

 

 

 

 

 

 

 

Established Brands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cardiovascular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zetia

2

 

 

97

 

 

99

 

 

(1)

 

 

138

 

 

137

 

 

4

 

 

186

 

 

190

 

 

(4)

 

 

285

 

 

282

 

Vytorin

2

 

 

42

 

 

45

 

 

2

 

 

37

 

 

39

 

 

5

 

 

81

 

 

86

 

 

6

 

 

87

 

 

92

 

Atozet

 

 

121

 

 

121

 

 

 

 

115

 

 

115

 

 

 

 

233

 

 

233

 

 

 

 

238

 

 

238

 

Rosuzet

 

 

18

 

 

18

 

 

 

 

31

 

 

31

 

 

 

 

33

 

 

33

 

 

 

 

63

 

 

63

 

Cozaar/Hyzaar

2

 

 

84

 

 

86

 

 

5

 

 

94

 

 

98

 

 

6

 

 

171

 

 

177

 

 

12

 

 

188

 

 

200

 

Zocor

1

 

 

15

 

 

16

 

 

1

 

 

14

 

 

16

 

 

2

 

 

29

 

 

31

 

 

 

 

39

 

 

39

 

Other Cardiovascular (1)

 

 

45

 

 

45

 

 

 

 

54

 

 

54

 

 

 

 

69

 

 

69

 

 

 

 

87

 

 

87

 

Respiratory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Singulair

3

 

 

89

 

 

92

 

 

4

 

 

95

 

 

100

 

 

8

 

 

191

 

 

199

 

 

9

 

 

246

 

 

255

 

Nasonex

1

 

 

51

 

 

52

 

 

4

 

 

45

 

 

49

 

 

3

 

 

92

 

 

95

 

 

10

 

 

110

 

 

120

 

Dulera

42

 

 

10

 

 

52

 

 

32

 

 

7

 

 

39

 

 

73

 

 

18

 

 

91

 

 

105

 

 

18

 

 

122

 

Clarinex

2

 

 

29

 

 

30

 

 

2

 

 

32

 

 

33

 

 

3

 

 

52

 

 

55

 

 

3

 

 

81

 

 

84

 

Asmanex

13

 

 

1

 

 

14

 

 

12

 

 

2

 

 

14

 

 

29

 

 

3

 

 

32

 

 

38

 

 

4

 

 

42

 

Other Respiratory (1)

 

 

8

 

 

8

 

 

 

 

5

 

 

5

 

 

 

 

12

 

 

12

 

 

1

 

 

14

 

 

15

 

Non-Opioid Pain, Bone and Dermatology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arcoxia

 

 

62

 

 

62

 

 

 

 

65

 

 

65

 

 

 

 

119

 

 

119

 

 

 

 

135

 

 

135

 

Fosamax

1

 

 

48

 

 

49

 

 

1

 

 

52

 

 

52

 

 

2

 

 

85

 

 

86

 

 

2

 

 

92

 

 

93

 

Diprospan

 

 

32

 

 

32

 

 

 

 

24

 

 

24

 

 

 

 

57

 

 

57

 

 

 

 

53

 

 

53

 

Diprosone

1

 

 

23

 

 

23

 

 

 

 

16

 

 

17

 

 

1

 

 

42

 

 

43

 

 

1

 

 

36

 

 

37

 

Other Non-Opioid Pain,

Bone and Dermatology (1)

3

 

 

49

 

 

52

 

 

1

 

 

43

 

 

44

 

 

2

 

 

91

 

 

93

 

 

2

 

 

91

 

 

93

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proscar

 

 

31

 

 

32

 

 

 

 

51

 

 

51

 

 

1

 

 

63

 

 

64

 

 

1

 

 

93

 

 

94

 

Propecia

2

 

 

34

 

 

36

 

 

2

 

 

26

 

 

28

 

 

4

 

 

63

 

 

67

 

 

5

 

 

53

 

 

58

 

Sinemet

 

 

18

 

 

18

 

 

 

 

19

 

 

19

 

 

 

 

36

 

 

36

 

 

 

 

40

 

 

40

 

Remeron

1

 

 

15

 

 

15

 

 

1

 

 

16

 

 

16

 

 

1

 

 

31

 

 

32

 

 

1

 

 

30

 

 

31

 

Other (1)

12

 

 

35

 

 

48

 

 

6

 

 

41

 

 

46

 

 

23

 

 

80

 

 

102

 

 

29

 

 

87

 

 

116

 

Other (2)

(2)

 

 

49

 

 

47

 

 

4

 

 

20

 

 

24

 

 

(3)

 

 

119

 

 

117

 

 

6

 

 

41

 

 

48

 

Total sales

$

339

 

 

$

1,257

 

 

$

1,595

 

 

$

303

 

 

$

1,224

 

 

$

1,526

 

 

$

690

 

 

$

2,412

 

 

$

3,101

 

 

$

697

 

 

$

2,608

 

 

$

3,306

 

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)

  Includes allocated amounts from revenue hedging activities and manufacturing sales to Merck and third parties.  

TABLE 3

Organon & Co.

Sales by geographic area

(Unaudited, $ in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

($ in millions)

2021

 

2020

 

2021

 

2020

Europe and Canada

$

470

 

 

$

378

 

 

$

904

 

 

$

859

 

United States

339

 

 

303

 

 

690

 

 

697

 

Asia Pacific and Japan

309

 

 

419

 

 

587

 

 

836

 

China

236

 

 

211

 

 

442

 

 

429

 

Latin America, Middle East, Russia and Africa

190

 

 

187

 

 

357

 

 

421

 

Other(1)

51

 

 

28

 

 

121

 

 

64

 

 

$

1,595

 

 

$

1,526

 

 

$

3,101

 

 

$

3,306

 

(1)   Primarily reflects allocated amounts from revenue hedging activities and manufacturing sales to Merck and third parties. 

TABLE 4

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

($ in millions)

         

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue 

$

1,595

 

 

$

1,526

 

 

$

3,101

 

 

$

3,306

 

Cost of Goods Sold

 

583

 

 

 

460

 

 

 

1,174

 

 

998

 

Gross Profit

 

1,012

 

 

 

1,066

 

 

 

1,927

 

 

 

2,308

 

Gross Margin

 

63.4%

 

 

 

69.9%

 

 

 

62.1%

 

 

 

69.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

22

 

 

 

21

 

 

 

42

 

 

 

42

 

One-time costs(1)

 

10

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted Gross Profit(2)

 

1,044

 

 

 

1,087

 

 

 

1,979

 

 

 

2,350

 

Non-GAAP Adjusted Gross Margin

 

65.5%

 

 

 

71.2%

 

 

 

63.8%

 

 

 

71.1%

 

 

(1)

  One-time costs primarily include inventory write offs and other costs to stand up the company.
 

(2)

  Non-GAAP Adjusted gross profit is calculated by subtracting total cost of goods sold, amortization and one-time costs from total revenue. 

TABLE 5

Organon & Co.

Reconciliation of GAAP Net Income from Continuing Operations to Adjusted EBITDA

($ in millions)

 

 

 

Three Months Ended June 30,

 

 

 

Six Months Ended June 30,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

Net income from continuing operations before income tax 

$

437

 

 

$

702

 

 

$

904

 

 

$

1,546

 

 

 

 

 

 

 

 

Depreciation

21

 

 

13

 

 

39

 

 

25

Amortization(1)

22

 

 

21

 

 

42

 

 

42

Interest expense

62

 

 

 

 

62

 

 

EBITDA

542

 

 

736

 

 

1,047

 

 

1,613

Restructuring costs

1

 

 

19

 

 

2

 

 

31

One-time costs(2)

66

 

 

10

 

 

115

 

 

23

Stock based compensation

 

18

 

 

 

11

 

 

 

29

 

 

 

21

Adjusted EBITDA

$

627

 

 

$

776

 

 

$

1,193

 

 

$

1,688

 

(1)

 

Amortization in all periods is included in Cost of goods sold.

 

(2)

 

One-time costs primarily include cost incurred in connection with the spin-off of Organon as well as costs incurred in June 2021 pertaining to the Alydia acquisition. For the three months ended June 30, 2021, approximately $55 million of the GAAP one-time costs are recorded in Selling, general and administrative expenses, and approximately $10 million are recorded in Cost of goods sold. For the three months ended June 30, 2020, the $10 million of GAAP one-time costs are classified in Selling, general and administrative expenses. For the six months ended June 30, 2021, approximately $104 million of the GAAP one-time costs are recorded in Selling, general and administrative expenses, and approximately $10 million are recorded in Cost of goods sold. For the six months ended June 30, 2020, the $23 million of GAAP one-time costs are classified in Selling, general and administrative expenses.

TABLE 6

Organon & Co.

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

($ in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

Six Months Ended June 30,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

Net income from continuing operations before income tax 

$

437

 

 

$

702

 

 

$

904

 

 

$

1,546

Adjustments:

 

 

 

 

 

 

 

Amortization(1)

22

 

 

21

 

 

42

 

 

42

Restructuring costs

1

 

 

19

 

 

2

 

 

31

One-time costs(2)

66

 

 

10

 

 

115

 

 

23

Stock based compensation

 

18

 

 

 

11

 

 

 

29

 

 

 

21

Total Adjustments

 

107

 

 

 

61

 

 

 

188

 

 

 

117

Non-GAAP pre-tax income from continuing operations

 

544

 

 

 

763

 

 

 

1,092

 

 

 

1,663

Taxes on income as reported in accordance with GAAP

 

6

 

 

 

116

 

 

 

78

 

 

 

226

Tax benefit on adjustments

 

20

 

 

 

7

 

 

 

35

 

 

 

13

Tax benefit on GAAP-only discrete items(3)

 

81

 

 

 

0

 

 

 

91

 

 

 

0

Non-GAAP adjusted taxes on income

 

107

 

 

 

123

 

 

 

204

 

 

 

239

Non-GAAP adjusted net income, continuing operations

 

437

 

 

 

640

 

 

 

888

 

 

 

1,424

Non-GAAP adjusted net income, continuing operations per

diluted share

 

1.72

 

 

 

2.52

 

 

 

3.50

 

 

 

5.62

   

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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