- Second quarter 2022 revenues of $1,585 million
- Second quarter diluted earnings per share from continuing
operations of $0.92 and non-GAAP adjusted diluted earnings per
share from continuing operations of $1.25
- Both reported and non-GAAP adjusted diluted earnings per share
include a negative impact of $0.30 for acquired in-process research
and development (IPR&D) and milestones
- Adjusted EBITDA of $512 million, inclusive of $97 million of
acquired IPR&D and milestones
- Board of Directors declares quarterly dividend of $0.28 per
share
- Full year 2022 financial guidance ranges updated:
- Revenues range narrowed to $6.1 billion to $6.3 billion, and
reflects persisting foreign currency headwinds
- Adjusted EBITDA margin range now 32%-34% to incorporate
acquired IPR&D and milestone expenses from recent business
development
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
in $ millions
Q2 2022
Q2 2021
VPY
VPY ex-FX
Women’s Health
$
408
$
417
(2)%
1%
Biosimilars
119
86
39%
42%
Established Brands
1,018
1,045
(2)%
4%
Other (1)
40
47
(17)%
(18)%
Revenues
$
1,585
$
1,595
(1)%
5%
(1)
Other includes manufacturing sales to
Merck & Co., Inc., Rahway, NJ, USA and other third parties, and
allocated amounts from pre-spin revenue hedging activities.
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.
in $ millions, except per share
amounts
Q2 2022
Q2 2021 mid-year spin
VPY
Revenues
$
1,585
$
1,595
(1)%
Gross profit
997
1,012
(1)%
Non-GAAP Adjusted Gross Profit (1)
1,047
1,047
—%
Adjusted EBITDA (1,2)
512
627
(18)%
Net Income, continuing operations
234
431
(46)%
Non-GAAP adjusted net income, continuing
operations (1)
319
437
(27)%
Diluted Earnings per Share (EPS),
continuing operations
0.92
1.70
(46)%
Non-GAAP adjusted diluted EPS, continuing
operations (1)
1.25
1.72
(27)%
Acquired IPR&D and
milestones
97
—
NM
Per share impact to diluted EPS from
acquired IPR&D and milestones
(0.30)
—
NM
Q2 2022
Q2 2021 mid-year spin
Gross margin
62.9%
63.4 %
Non-GAAP Adjusted Gross Margin (1)
66.1%
65.6 %
Adjusted EBITDA margin (1,2)
32.3%
39.3 %
(1)
See Tables 4,5 and 6 for reconciliations
of GAAP to non-GAAP financial measures
(2)
Adjusted EBITDA and Adjusted EBITDA margin
include $97 million in the second quarter of 2022 related to
acquired IPR&D and milestones
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.
Previous guidance
FX impact
IPR&D
Current guidance
Revenues
$6.1B - $6.4B
From 300-475 bps to 550-650
bps
$6.1B - $6.3B
Adjusted Gross margin
Mid 60%
Unchanged
SG&A (as % of revenue)
Mid 20%
Unchanged
R&D (as % of revenue)
Mid-upper single digit
Upper single-digit
Adjusted EBITDA margin
34%-36%
~($110)M
32% - 34%
Interest
~$400 million
Unchanged
Depreciation
$100-$115 million
Unchanged
Effective Non-GAAP tax rate
17.5%-19.5%
Unchanged
Fully diluted weighted avg. shares
outstanding
~255 million
Unchanged
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
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,
2022
2021
2022
2021
Revenues
$
1,585
$
1,595
$
3,152
$
3,101
Costs, Expenses and Other
Cost of sales
588
583
1,149
1,174
Selling, general and administrative
423
416
794
798
Research and development
106
76
202
143
Acquired in-process research and
development and milestones
97
—
97
—
Restructuring costs
—
1
—
2
Interest expense
98
62
195
62
Other (income) expense, net
(14
)
20
(14
)
18
1,298
1,158
2,423
2,197
Income From Continuing Operations Before
Income Taxes
287
437
729
904
Taxes on Income
53
6
147
78
Net Income From Continuing Operations
234
431
582
826
Loss From Discontinued Operations - Net of
Tax
—
(4
)
—
—
Net Income
234
427
582
826
Earnings (Loss) per Share Attributable to
Organon & Co. Stockholders - Basic:
Continuing operations
$
0.92
$
1.70
$
2.29
$
3.26
Discontinued operations
—
(0.02
)
—
—
Net Earnings per Share Attributable to
Organon & Co. Stockholders
$
0.92
$
1.68
$
2.29
$
3.26
Earnings (Loss) per Share Attributable to
Organon & Co. Stockholders - Diluted:
Continuing operations
$
0.92
$
1.70
$
2.28
$
3.25
Discontinued operations
—
(0.02
)
—
—
Net Earnings per Share Attributable to
Organon & Co. Stockholders
$
0.92
$
1.68
$
2.28
$
3.25
Weighted Average Shares Outstanding:
Basic
254,018
253,516
253,802
253,516
Diluted
255,156
253,828
255,105
253,828
TABLE 2
Organon & Co.
Sales by top products
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
($ 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
$
134
$
61
$
195
$
129
$
56
$
184
$
250
$
116
$
366
$
269
$
98
$
368
Follistim AQ
23
35
58
27
38
65
52
66
119
52
65
117
NuvaRing
22
20
42
26
28
53
38
45
83
47
52
98
Ganirelix Acetate Injection
6
25
32
5
25
31
14
47
61
14
46
60
Cerazette
—
15
15
—
18
18
—
32
32
—
34
34
Other Women's Health (1)
29
38
67
23
43
66
56
69
125
63
76
139
Biosimilars
Renflexis
51
8
59
36
7
43
93
12
105
70
11
81
Ontruzant
12
23
35
7
15
22
19
38
57
11
34
45
Brenzys
—
14
14
—
11
11
—
28
28
—
21
21
Aybintio
—
9
9
—
8
8
—
19
19
—
16
16
Hadlima
—
2
2
—
2
2
—
8
8
—
4
4
Established Brands
Cardiovascular
Zetia
2
99
101
2
97
99
5
195
200
4
186
190
Vytorin
3
32
35
2
42
45
5
68
73
5
81
86
Atozet
—
122
122
—
121
121
—
240
240
—
233
233
Rosuzet
—
16
16
—
18
18
—
38
38
—
33
33
Cozaar/Hyzaar
2
91
92
2
84
86
10
176
186
6
171
177
Other Cardiovascular (1)
1
45
46
1
60
61
2
83
85
2
98
100
Respiratory
Singulair
3
89
92
3
89
92
5
216
222
8
191
199
Nasonex
—
58
58
1
51
52
9
123
133
3
92
95
Dulera
36
12
47
42
10
52
67
21
88
73
18
91
Clarinex
1
34
35
2
29
30
2
70
73
3
52
55
Other Respiratory (1)
11
11
22
13
9
22
23
22
45
29
15
44
Non-Opioid Pain, Bone and Dermatology
Arcoxia
—
61
61
—
62
62
—
121
121
—
119
119
Fosamax
1
39
40
1
48
49
2
79
81
2
85
86
Diprospan
—
31
31
—
32
32
—
63
63
—
57
57
Other Non-Opioid Pain, Bone and
Dermatology (1)
5
71
76
4
72
75
8
137
145
3
133
136
Other
Proscar
—
26
26
—
31
32
1
50
50
1
63
64
Propecia
2
33
35
2
34
36
3
63
66
4
63
67
Other (1)
7
74
82
13
68
81
15
149
164
24
146
169
Other (2)
—
40
40
(2)
49
47
1
78
76
(3)
119
117
Revenues
$
351
$
1,234
$
1,585
$
339
$
1,257
$
1,595
$
680
$
2,472
$
3,152
$
690
$
2,412
$
3,101
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)
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 & Co., Inc., Rahway, NJ, USA and other third parties, and
allocated amounts from pre-spin revenue hedging activities.
TABLE 3
Organon & Co.
Sales by geographic
area
(Unaudited, $ in millions)
Three Months Ended June 30,
Six Months Ended June 30,
($ in millions)
2022
2021
2022
2021
Europe and Canada
$
443
$
470
$
880
$
904
United States
351
339
680
690
Asia Pacific and Japan
291
309
604
587
China
244
236
480
442
Latin America, Middle East, Russia and
Africa
216
190
425
357
Other (1)
40
51
83
121
Revenues
$
1,585
$
1,595
$
3,152
$
3,101
(1)
Other includes manufacturing sales to
Merck & Co., Inc., Rahway, NJ, USA and other third parties, and
allocated amounts from pre-spin revenue hedging activities.
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,
2022
2021
2022
2021
Revenues
$
1,585
$
1,595
$
3,152
$
3,101
Cost of sales
588
583
1,149
1,174
Gross Profit
997
1,012
2,003
1,927
Gross Margin
62.9
%
63.4
%
63.5
%
62.1
%
Amortization
28
22
56
42
One-time costs (1)
19
10
24
10
Stock-based compensation
3
3
6
5
Non-GAAP Adjusted Gross Profit
(2)
$
1,047
$
1,047
2,089
1,984
Non-GAAP Adjusted Gross Margin
66.1
%
65.6
%
66.3
%
64.0
%
(1)
One-time costs for the three and six
months ended June 30, 2022 primarily include costs to stand up the
Company and inventory step-up adjustments as well as a $9 million
impairment charge related to a licensed intangible asset.
(2)
Non-GAAP Adjusted Gross Profit is
calculated by excluding amortization, one-time costs, and the
portion of stock-based compensation expense allocated to Cost of
sales.
TABLE 5
Organon & Co.
Reconciliation of GAAP Income
from Continuing Operations Before Income Taxes to Adjusted
EBITDA
($ in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Income from continuing operations
before income taxes
$
287
$
437
$
729
$
904
Depreciation
22
21
47
39
Amortization (1)
28
22
56
42
Interest expense
98
62
195
62
EBITDA
$
435
$
542
$
1,027
$
1,047
Restructuring costs
—
1
—
2
One-time costs (2)
58
66
98
115
Stock-based compensation
19
18
34
29
Adjusted EBITDA
$
512
$
627
$
1,159
$
1,193
Adjusted EBITDA margin
32.3
%
39.3
%
36.8
%
38.5
%
(1)
Amortization in all periods is included in
Cost of sales.
(2)
One-time costs primarily include costs
incurred in connection with the spin-off of Organon, an impairment
of a licensed intangible asset, and inventory step up adjustments.
For the three months ended June 30, 2022, approximately $28 million
of the one-time costs are recorded in Selling, general and
administrative expenses, $19 million are recorded in Cost of sales,
$8 million are recorded in Other (income) expense, and $3 million
are recorded in Research and development. For the three months
ended June 30, 2021, approximately $55 million of the one-time
costs are recorded in Selling, general and administrative expenses,
and approximately $10 million are recorded in Cost of sales.
(2)
One-time costs primarily include costs
incurred in connection with the spin-off of Organon, an impairment
of a licensed intangible asset, and inventory step-up adjustments.
For the six months ended June 30, 2022, approximately $53 million
of the one-time costs are recorded in Selling, general and
administrative expenses, approximately $24 million are recorded in
Cost of sales, $14 million are recorded in Other (income) expense,
and $7 million are recorded in Research and development. 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 $10 million are recorded
in Cost of sales.
TABLE 6
Organon & Co.
Reconciliation of GAAP Income
from Continuing Operations Before Income Taxes to Non-GAAP Adjusted
Net Income
($ in millions, except per share
amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Income from continuing operations
before income taxes
$
287
$
437
$
729
$
904
Adjustments:
Amortization (1)
28
22
56
42
Restructuring costs
—
1
—
2
One-time costs (2)
58
66
98
115
Stock-based compensation
19
18
34
29
Total Adjustments
105
107
188
188
Non-GAAP pre-tax income, continuing
operations
$
392
$
544
$
917
$
1,092
Taxes on income as reported in accordance
with GAAP
53
6
147
78
Tax benefit on adjustments
20
20
34
35
Tax benefit (deduction) on GAAP-only
discrete items (3)
—
81
(3
)
91
Non-GAAP adjusted taxes on
income
73
107
178
204
Non-GAAP adjusted net income,
continuing operations
$
319
$
437
$
739
$
888
Non-GAAP adjusted net income,
continuing operations per diluted share
$
1.25
$
1.72
$
2.90
$
3.50
(1)
Amortization in all periods is included in
Cost of sales.
(2)
One-time costs primarily include costs
incurred in connection with the spin-off of Organon, an impairment
of a licensed intangible asset, and inventory step-up adjustments.
For the three months ended June 30, 2022, approximately $28 million
of the one-time costs are recorded in Selling, general and
administrative expenses, $19 million are recorded in Cost of sales,
$8 million are recorded in Other (income) expense, and $3 million
are recorded in Research and development. For the three months
ended June 30, 2021, approximately $55 million of the one-time
costs are recorded in Selling, general and administrative expenses,
and approximately $10 million are recorded in Cost of sales.
(2)
One-time costs primarily include costs
incurred in connection with the spin-off of Organon, an impairment
of a licensed intangible asset, and inventory step-up adjustments.
For the six months ended June 30, 2022, approximately $53 million
of the one-time costs are recorded in Selling, general and
administrative expenses, approximately $24 million are recorded in
Cost of sales, $14 million are recorded in Other (income) expense,
and $7 million are recorded in Research and development. 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 sales.
(3)
For the three months ended June 30, 2021,
the company recorded a tax benefit of approximately $70 million
related to a portion of Non-U.S. step-up in tax basis as a result
of its separation from Merck & Co., Inc., Rahway, NJ, USA.
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