Organon & Co. Q4 FY2024 earnings call

Key Points

• 2024 revenue was $6.4B with 3% constant currency growth, third consecutive year of constant currency revenue growth. Adjusted EBITDA was $1.96B with a 30.6% margin.
• Women's health franchise grew 5% ex-exchange, led by Nexplanon up 17% ex-FX in 2024, aiming for over $1B in 2025.
• Biosimilars franchise grew 12% constant currency.
• Established brands grew 2% ex-exchange.
• Vtama showed strong NRX growth of 51% over pre-AD approval 13-week average, with a broad favorable label for atopic dermatitis.
• R&D pipeline includes progress on OG-6219 for endometriosis, denosumab biosimilar launch later in 2025, etc.
• Cost containment efforts led to non-GAAP operating expenses down 2% in 2024.

For the full year 2024, revenue was $6.4 billion, a 3% growth at constant currency. The women's health franchise grew 5% ex-exchange, led by Nexplanon which was up 17% ex-FX for the full year, achieving its best annual performance ever and aiming for over $1 billion in revenue in 2025. The biosimilars franchise grew 12% at constant currency. Established brands grew 2% ex-exchange.

2025 Guidance

• Revenue expected in range of $6.125B to $6.325B, inclusive of ~$200M FX headwind; midpoint flat at constant currency, offset by growth in Vtama, Emgality, Fertility, Nexplanon.
• Adjusted EBITDA range 31% to 32%, aiming to hold 31% floor ex-IPR&D.
• Vtama expected to contribute significantly, with ~$150M from recent transactions including Emgality and Vtama.

Risks

• Potential competition for Nexplanon, which could impact revenue.
• Biosimilar pricing pressures leading to margin impacts.
• FX headwinds affecting revenue.
• Loss of exclusivity of Atozet impacting revenue.

Q: Can you provide an estimate for free cash flow in 2025?

A: Our expectation is right around $900 million of free cash flow before one-time items.

Q: What's the probability of no generic Nexplanon in the U.S. market before 2030?

A: No paragraph four filing received yet, and confident no generic to challenge Nexplanon through 2030 due to patent protection and lack of precedents.

Q: What's the quarterly cadence for 2025 revenue?

A: First quarter likely lowest, fourth quarter highest, with ~$100M swing between first and fourth quarter, driven by Vtama ramp and LOE impacts.