- Second quarter 2024 revenue of $1.607 billion, flat
year-over-year on an as-reported basis and up 2% at constant
currency
- Second quarter 2024 diluted earnings per share of $0.75 and
non-GAAP Adjusted diluted earnings per share of $1.12; both
reported and non-GAAP Adjusted diluted earnings per share include
$15 million of expense, or $0.05 per share, for acquired in-process
research and development (IPR&D) and milestones
- Second quarter 2024 net income of $195 million and Adjusted
EBITDA (non-GAAP) of $513 million
- Guidance range for full year 2024 revenue narrowed to $6.250
billion to $6.450 billion, mid-point of the range, affirmed;
Guidance range for Adjusted EBITDA margin (non-GAAP) affirmed at
31.0%-33.0%
Organon (NYSE: OGN) today announced its results for the second
quarter ended June 30, 2024.
"We are very pleased with our year to date results," said Kevin
Ali, Organon's Chief Executive Officer. "We are tracking well to
our 2024 objectives of delivering revenue growth at constant
currency, driving year-over-year EBITDA improvement and generating
approximately $1 billion of free cash flow before one-time
costs."
Second Quarter
2024 Revenue
in $ millions
Q2 2024
Q2 2023
VPY
VPY ex-FX
Women’s Health
$
449
$
438
3%
3%
Biosimilars
164
135
22%
22%
Established Brands
963
995
(3)%
(1)%
Other (1)
31
40
(20)%
(20)%
Revenues
$
1,607
$
1,608
—%
2%
Totals may not foot due to rounding and
percentages are computed using unrounded amounts.
(1) Other includes manufacturing sales to
third parties.
For the second quarter of 2024, total revenue was $1.607
billion, flat year-over-year on an as-reported basis and an
increase of 2% excluding the impact of foreign currency
(ex-FX).
Women’s Health revenue increased 3% on both an as-reported basis
and ex-FX basis in the second quarter of 2024 compared with the
second quarter of 2023 primarily driven by 13% ex-FX growth in
Nexplanon® (etonogestrel implant). Nexplanon's strong performance
was primarily due to favorable discount rates in the United States,
an increase in demand in the company's institutional business in
Africa, and increased demand in certain international markets.
Sales of MarvelonTM (desogestrel and ethinyl estradiol pill) and
MercilonTM (desogestrel and ethinyl estradiol pill), combined oral
hormonal daily contraceptive pills also grew strongly, up 42% ex-FX
compared to prior year as a result of increased demand in various
markets outside the U.S.
Performance in the Women's Health franchise was partially offset
by sales of NuvaRing® (etonogestrel / ethinyl estradiol vaginal
ring), a vaginal contraceptive product, which declined 35% ex-FX
during the period due to ongoing generic competition. The company's
fertility portfolio was down 8% ex-FX in the second quarter,
primarily due to a difficult comparison to a stronger prior period
for the China fertility business, which benefited from volume
recovery post-COVID 19 lockdowns coupled with a buy-out of
Follistim AQ® (follitropin beta injection) in the U.S. following a
significant buy-in during the fourth quarter of 2023 related to the
exit of a temporary spin-off related commercial arrangement and the
onboarding of a large customer.
Biosimilars revenue grew 22% on both an as-reported basis and
ex-FX basis in the second quarter of 2024, compared with the second
quarter of 2023, primarily due to the uptake of Hadlima®
(adalimumab-bwwd) since its July 2023 launch in the U.S. Ontruzant®
(trastuzumab-dttb) grew 46% ex-FX during the quarter driven by
increased demand associated with a government tender in Brazil
partially offset by the negative impact of unfavorable discount
rates in the U.S and lower demand in Europe. Performance was
partially offset by a 2% ex-FX decline in Renflexis®
(infliximab-abda) which was driven primarily by an increase in
discount rates in the U.S.
Established Brands revenue was down 3% on an as-reported basis
and declined 1% ex-FX in the second quarter of 2024. Contribution
from the recent licensing of Emgality® (galcanezumab) and RayvowTM
(lasmiditan)(1, 2), together with a recovery in certain injectable
steroid products following last year's market action partially
offset the impacts of Volume Based Procurement initiatives in
China, expected mandatory pricing revisions in Japan and phasing of
shipments for certain products in select markets related to the
implementation of the company's enterprise resource planning
system. The company expects revenue growth in the Established
Brands franchise to be about flat for full year 2024 on an ex-FX
basis.
(1) Emgality is a trademark registered in
the United States in the name of Eli Lilly and Company (used under
license).
(2) Rayvow is a registered trademark of
Eli Lilly in the European Union and other countries (used under
license).
Second
Quarter 2024 Profitability
in $ millions, except per share
amounts
Q2 2024
Q2 2023
VPY
Revenues
$
1,607
$
1,608
—%
Cost of sales
668
640
4%
Gross profit
939
968
(3)%
Non-GAAP Adjusted gross profit (1)
996
1,012
(2)%
Net income
195
242
(19)%
Non-GAAP Adjusted net income (1)
289
336
(14)%
Diluted Earnings per Share (EPS)
0.75
0.95
(21)%
Non-GAAP Adjusted diluted EPS (1)
1.12
1.31
(15)%
Acquired IPR&D and milestones
15
—
NM
Per share impact to diluted EPS from
acquired IPR&D and milestones
(0.05)
—
NM
Adjusted EBITDA (Non-GAAP) (1,2)
513
530
(3)%
Q2 2024
Q2 2023
Gross margin
58.4%
60.2 %
Non-GAAP Adjusted gross margin (1)
62.0%
62.9 %
Adjusted EBITDA margin (Non-GAAP) (1,
2)
31.9%
33.0 %
(1)
See Tables 4 and 5 for reconciliations of
GAAP to non-GAAP financial measures.
(2)
Adjusted EBITDA and Adjusted EBITDA margin included $15 million
in the second quarter of 2024 related to Acquired IPR&D and
milestones. There was no Acquired IPR&D in the second quarter
of 2023.
Gross margin was 58.4% as-reported and 62.0% on a non-GAAP
adjusted basis in the second quarter of 2024 compared with 60.2%
as-reported and 62.9% on a non-GAAP adjusted basis in the second
quarter of 2023. The lower non-GAAP Adjusted gross margin was
primarily related to unfavorable product mix, foreign exchange
translation and higher inflation impacts to material and
distribution costs.
Net income for the second quarter of 2024 was $195 million, or
$0.75 per diluted share, compared with $242 million, or $0.95 per
diluted share, in the second quarter of 2023. Non-GAAP Adjusted net
income was $289 million, or $1.12 per diluted share, compared with
$336 million, or $1.31 per diluted share, in 2023.
Non-GAAP Adjusted EBITDA margin was 31.9% in the second quarter
of 2024 compared with 33.0% in the second quarter of 2023 primarily
due to lower non-GAAP Adjusted gross margin. Total non-GAAP
operating expenses (selling, general and administrative and
research and development) were down 2% year over year.
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 12,
2024, to stockholders of record at the close of business on August
16, 2024.
As of June 30, 2024, cash and cash equivalents were $704
million, and debt was $8.7 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 financial guidance is presented below on a
non-GAAP basis, except revenue.
Previous guidance as of
May 2, 2024
Current guidance
Revenues
$6.2B - $6.5B
$6.25B - $6.45B
Adjusted gross margin
61.0% - 63.0%
Unchanged
SG&A
$1.5B - $1.7B
Unchanged
R&D
$400M - $500M
$430M - $530M*
Adjusted EBITDA margin (Non-GAAP)
31.0% - 33.0%
Unchanged
Interest
~$520M
Unchanged
Depreciation
~$130M
Unchanged
Effective non-GAAP tax rate
18.5% - 20.5%
Unchanged
Fully diluted weighted average shares
outstanding
~259M
Unchanged
*Updated R&D expense guidance includes
$30 million of IPR&D and milestone expense incurred
year-to-date June 30, 2024. R&D guidance does not take into
consideration a forward looking view of IPR&D and milestone
expense.
Webcast Information
Organon will host a conference call at 8:30 a.m. Eastern Time
today to discuss its second quarter 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/Q4I585119
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
strategy to help improve the health of women throughout their
lives. Organon’s diverse portfolio offers more than 60 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 a global footprint with significant scale and
geographic reach, world-class commercial capabilities, and
approximately 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 2024 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 full-year 2024 guidance estimates and
predictions regarding other financial information and metrics, and
franchise and product performance and strategy expectations for
future periods. Forward-looking statements may be identified by
words such as "foresees" “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, 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;
an inability to adapt to the industry-wide trend toward highly
discounted channels; 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; uncertainty
regarding the U.S. federal budget and debt ceiling, and the impact
of a potential U.S. federal government shutdown; 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; 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 certain current patents
in 2027; difficulties implementing or executing on our acquisition
strategy or failure to recognize the benefits of such acquisitions;
and the impact of higher selling and promotional costs.
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 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 June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Revenues
$
1,607
$
1,608
$
3,229
$
3,146
Cost of sales
668
640
1,333
1,220
Gross Profit
939
968
1,896
1,926
Selling, general and administrative
437
451
868
886
Research and development
116
128
228
257
Acquired in-process research and
development and milestones
15
—
30
8
Restructuring costs
—
—
23
4
Interest expense
131
132
262
264
Exchange (gains) losses
(1)
2
5
11
Other expense, net
6
1
9
7
Income before income taxes
235
254
471
489
Taxes on income
40
12
75
70
Net income
$
195
$
242
$
396
$
419
Earnings per share:
Basic
$
0.76
$
0.95
$
1.54
$
1.64
Diluted
$
0.75
$
0.95
$
1.53
$
1.64
Weighted average shares outstanding:
Basic
257,288
255,341
256,492
254,869
Diluted
258,598
255,953
258,480
256,064
TABLE 2
Organon & Co.
Sales by top products
(Unaudited, $ in millions)
Three Months Ended June 30,
Six Months Ended June 30,
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
$
171
$
70
$
242
$
159
$
56
$
214
$
324
$
137
$
462
$
272
$
107
$
380
Follistim AQ
22
40
62
26
44
70
33
75
108
52
73
125
NuvaRing (1)
10
19
29
23
23
46
26
41
67
48
47
94
Ganirelix Acetate Injection
5
22
27
4
29
34
11
45
56
11
53
63
Marvelon/Mercilon
—
41
41
—
29
29
—
73
73
—
67
67
Jada
14
—
14
11
—
11
27
—
27
18
—
18
Other Women’s Health (1) (2)
13
23
34
10
25
35
27
52
79
20
52
73
Biosimilars
Renflexis
56
13
69
60
11
70
111
27
138
114
18
132
Ontruzant
10
38
48
12
21
33
18
69
87
25
29
54
Brenzys
—
12
12
—
13
13
—
36
36
—
32
32
Aybintio
—
7
7
—
12
12
—
15
15
—
22
22
Hadlima
20
8
28
—
7
7
42
16
58
—
12
12
Established Brands
Cardiovascular
Zetia (1)
2
73
75
2
94
95
4
155
159
4
180
184
Vytorin
2
26
28
1
37
38
3
52
56
3
65
67
Atozet
—
140
140
—
143
143
—
271
271
—
271
271
Rosuzet
—
9
9
—
17
17
—
25
25
—
35
35
Cozaar/Hyzaar
2
58
60
2
69
71
5
122
127
4
152
156
Other Cardiovascular (1) (2)
1
31
32
1
36
36
1
71
71
1
70
71
Respiratory
Singulair
2
90
93
3
77
80
5
186
190
5
194
199
Nasonex (1)
—
60
60
—
66
66
—
137
137
—
137
137
Dulera
39
8
47
38
10
48
82
21
103
76
18
95
Clarinex
1
35
35
1
38
39
2
71
73
2
77
79
Other Respiratory (1) (2)
8
4
13
13
4
17
15
6
22
25
8
33
Non-Opioid Pain, Bone and Dermatology
Arcoxia
—
68
68
—
72
72
—
143
143
—
143
143
Fosamax
1
34
35
1
44
44
3
72
74
1
81
82
Diprospan
—
37
37
—
12
12
—
66
66
—
27
27
Other Non-Opioid Pain, Bone and
Dermatology (1)
5
73
78
2
67
71
9
141
151
7
127
133
Other
Emgality/Rayvow
—
30
30
—
—
—
—
40
40
—
—
—
Proscar
—
23
23
—
24
25
1
49
50
1
51
52
Propecia
2
27
28
2
35
36
3
47
51
4
66
69
Other (1)
2
69
72
2
81
84
7
149
155
4
156
162
Other (3)
—
31
31
(2)
41
40
(1)
61
59
—
79
79
Revenues
$
388
$
1,219
$
1,607
$
371
$
1,237
$
1,608
$
758
$
2,471
$
3,229
$
697
$
2,449
$
3,146
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. Revenues from Jada were previously reported as
part of Other Women's Health. Revenue from an arrangement for the
sale of generic etonogestrel/ethinyl estradiol vaginal ring is
included in Other Women's Health.
(3) Includes manufacturing sales to third parties.
TABLE 3
Organon & Co.
Sales by geographic
area
(Unaudited, $ in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Europe and Canada
$
457
$
467
$
907
$
867
United States
388
371
758
697
Asia Pacific and Japan
260
261
546
585
China
216
234
421
459
Latin America, Middle East, Russia, and
Africa
251
234
525
448
Other (1)
35
41
72
90
Revenues
$
1,607
$
1,608
$
3,229
$
3,146
(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 June 30,
Six Months Ended June 30,
2024
2023
2024
2023
GAAP Gross Profit
$
939
$
968
$
1,896
$
1,926
Adjusted for:
Spin-related costs (1)
3
10
6
20
Manufacturing network costs (2)
15
—
25
—
Stock-based compensation
5
4
9
8
Amortization
34
30
67
59
Other
—
—
—
2
Adjusted Non-GAAP Gross Profit
$
996
$
1,012
$
2,003
$
2,015
(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.
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
GAAP Gross Margin
58.4 %
60.2 %
58.7 %
61.2 %
Total impact of Non-GAAP adjustments
3.6 %
2.7 %
3.3 %
2.8 %
Adjusted Non-GAAP Gross Margin
62.0 %
62.9 %
62.0 %
64.0 %
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
GAAP Selling, general and
administrative expenses
$
437
$
451
$
868
$
886
Adjusted for:
Spin-related costs (1)
(29)
(44)
(69)
(90)
Stock-based compensation
(18)
(17)
(36)
(32)
Other
—
—
—
(1)
Adjusted Non-GAAP Selling, general and
administrative expenses
$
390
$
390
$
763
$
763
(1) Spin-related costs include costs from
the separation of Merck & Co., Inc., Rahway, NJ, US. For
additional details refer to Table 5.
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
GAAP Research and development
expenses
$
116
$
128
$
228
$
257
Adjusted for:
Spin-related costs (1)
(1)
(3)
(3)
(6)
Stock-based compensation
(5)
(4)
(9)
(7)
Adjusted Non-GAAP Research and development
expenses
$
110
$
121
$
216
$
244
(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 June 30,
Six Months Ended June 30,
2024
2023
2024
2023
GAAP Reported Net Income
$
195
$
242
$
396
$
419
Adjusted for:
Cost of sales adjustments
57
44
107
89
Selling, general and administrative
adjustments
47
61
105
123
Research and development adjustments
6
7
12
13
Restructuring
—
—
23
4
Other expense, net
6
4
10
10
Tax impact on adjustments above(1)
(22)
(22)
(49)
(46)
Non-GAAP Adjusted Net Income
$
289
$
336
$
604
$
612
(1) For the three months ended June 30,
2024 and 2023, the GAAP income tax rates were 17.3% and 5.0%,
respectively, the non-GAAP income tax rates were 17.8% and 9.4%,
respectively. For the six months ended June 30, 2024 and 2023, the
GAAP income tax rates were 16.0% and 14.4%, respectively, the
non-GAAP income tax rates were 17.1% and 16.0%, 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 June 30,
Six Months Ended June 30,
2024
2023
2024
2023
GAAP Diluted Earnings per Share
$
0.75
$
0.95
$
1.53
$
1.64
Total impact of Non-GAAP adjustments
$
0.37
$
0.36
$
0.81
$
0.75
Non-GAAP Diluted Earnings per Share
$
1.12
$
1.31
$
2.34
$
2.39
TABLE 5
Organon & Co.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted
EBITDA (Unaudited, $ in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net income
$
195
$
242
$
396
$
419
Depreciation (1)
31
28
61
56
Amortization
34
30
67
59
Interest expense
131
132
262
264
Taxes on income
40
12
75
70
EBITDA
$
431
$
444
$
861
$
868
Restructuring costs
—
—
23
4
Spin-related costs (2)
39
61
88
126
Manufacturing network related (3)
15
—
25
—
Other costs
—
—
—
3
Stock-based compensation
28
25
54
47
Adjusted EBITDA (Non-GAAP)
$
513
$
530
$
1,051
$
1,048
Adjusted EBITDA margin (Non-GAAP)
31.9 %
33.0 %
32.5 %
33.3 %
(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, $19 million and $31 million for
the three months ended June 30, 2024 and 2023, respectively, and
$40 million and $68 million for the six months ended June 30, 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 $6 million and $8 million for the three months ended June
30, 2024 and 2023, respectively, and $20 million and $14 million
for the six months ended June 30, 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.
As the costs described in (1) through (3)
above are directly related to the separation of Organon 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.
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