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目次
UNITED STATES
証券取引委員会
ワシントンDC20549
_____________________
フォーム 10-Q
________________
（表1）
☒
証券取引法第13条または15(d)条に基づく四半期報告書
報告期間が終了した2023年6月30日をもって2024年9月30日
OR
☐
移行期間：             から             まで
移行期間：___から___まで
コミッションファイルNo. 001-40235
オルガノン & Co.
（会社設立時の指定名）
デラウェア
46-4838035
（設立時に所在した州などの法的な管轄地）
（国税庁雇用者識別番号）
30 Hudson Street, 33階
ジャージーシティー,
ニュージャージー
07302
主たる事務所の所在地（郵便番号）
（登録者の電話番号（市外局番を含む）） (551) 430-6900
（法人格の設立または組織の州またはその他の管轄区域）
（前の名前、住所、および前回の報告以降に変更された場合の前回の会計年度。）
法第12条（b）に基づく登録証券
各クラスの名称
取引シンボル
登録されている各取引所の名称
普通株式（$0.01交換）
リリースには、会社に関する先行きに関する声明が含まれるため、実際の結果が予想から異なる重要な要因を示す注意事項が含まれます。
ニューヨーク証券取引所

規定のチェックマークにより、登録者が次のうちどちらであるかを示しなさい：（1）証券取引法の13条または15(d)条により、前の12か月間（または登録者がそれらの報告を提出することが必要だったより短い期間）に提出する必要のあるすべての報告書を提出しているか、（2）過去90日間このような提出要件の対象となっているか。はい ☒ いいえ ☐
規則405（この章の§232.405）に基づき提出が必要なすべてのインタラクティブデータファイルを、登録者が直近の12か月間（または登録者がそのようなファイルを提出する必要があったよりも短い期間）に電子的に提出したかどうかをチェックマークで示してください。はい ☒ いいえ ☐
登録者が大規模な加速申告者、加速申告者、非加速申告者、小規模な報告会社、または新興成長企業のいずれであるかをチェックマークで示してください。「大型アクセラレーテッドファイラー」、「アクセラレーテッドファイラー」の定義を参照してください。 証券取引法第120億2条の「小規模な報告会社」と「新興成長会社」。(1つチェックしてください):
大型加速ファイラー
☒
加速ファイラー
☐
非加速ファイラー
☐
レポート義務のある中小企業
☐
新興成長企業
☐
新しいまたは改訂された財務会計基準に従うための拡張期間を使用しないことを選択した場合は、新興成長企業である場合、エクステンデッドトランジション期間を利用しないことを示すために、チェックマークを付けてください。 ☐
取引所法のRule 12b-2で定義されるシェル企業である場合はチェックマークを付けてください。はい☐ いいえ ☒
2024年10月25日のビジネス終了時点で発行済み普通株式の株数: 257,538,875


目次
ページ番号
第I部分
項目1。
アイテム 2.
項目3。
項目4。
第2部
項目1。
項目1A。
項目5。
項目6。















この四半期報告書の「Form 10-Q」における次の注記は、以下に示す意味を持ちます。

“1” 2024年9月30日に終了する四半期のこの10-Qフォームで、アメリカ合衆国で利用できない製品のブランド名を示します。

“2” 2024年9月30日に終了する四半期のこのフォーム10-Qでは、当社またはその子会社が所有していない商標である製品のブランド名を示しています。 ヒュミラ は、アッヴィ・バイオテクノロジー株式会社の名前で米国で登録された商標です。 エンブレル は、Immunex Corporationの名前で米国で登録された商標です。 レミケード は、ヤンセン・バイオテック社の名前で米国で登録されている商標です。 ハーセプチン は、ジェネンテック社の名前で米国で登録されている商標です。 Xgevaさん そして プロリア は、Amgen Inc.の名前で米国で登録されている商標です。 エムガリティー は、イーライリリーアンドカンパニーという名前で米国で登録された商標です（ライセンスに基づいて使用されています）。そして レイボウ は、欧州連合およびその他の国におけるEli Lillyの登録商標です（ライセンスに基づいて使用されています）。脚注なしですべて斜体で書かれている製品のブランド名は、Organonおよび/またはその子会社の商標であるか、Organonまたはその子会社のいずれかのライセンスです。
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目次
第I部-財務情報
アイテム1。財務諸表


Organon & Co。 （監査されていないティッカーシンボル：OGN） （$百万、千株および株当たり金額を除く）
連結損益計算書
（未検証、単位：百万ドル、株千単位および1株あたりの金額）
 
3 か月が終了
9月30日		9か月が終わりました
9月30日
2024202320242023
収入$1,582 $1,519 $4,811 $4,665 
売上原価659 612 1,992 1,832 
売上総利益923 907 2,819 2,833 
販売、一般および管理422 538 1,290 1,424 
研究開発111 137 339 394 
進行中の研究開発とマイルストーンを獲得しました51 — 81 8 
リストラ費用— — 23 4 
支払利息126 134 388 398 
為替損失6 14 11 25 
その他の費用、純額— 4 9 11 
税引前利益207 80 678 569 
所得税（給付）費用(152)22 (77)92 
純利益$359 $58 $755 $477 
一株当たり利益:
ベーシック$1.39 $0.23 $2.94 $1.87 
希釈しました$1.38 $0.23 $2.92 $1.86 
加重平均発行済株式数:
ベーシック257,498 255,588 256,830 255,112 
希釈しました259,757 256,349 258,908 256,162 

付属の注釈は、これらの中間の総合財務諸表の本質的な一部です。
-3-
目次
Organon & Co。 （監査されていないティッカーシンボル：OGN） （$百万、千株および株当たり金額を除く）
総合損益計算書の簡易連結
(未検証、百万ドル単位)
 
終了した三ヶ月間
9月30日		終了した9か月間
9月30日
2024202320242023
当期純利益$359 $58 $755 $477 
その他包括利益（損失）、税引き後の額：
給付計画の純（損失）益および前払役務引当金、償却後の額
(1)— — (1)
累積翻訳調整
42 (43)(30)(11)
 41 (43)(30)(12)
包括的利益$400 $15 $725 $465 

付属の注釈は、これらの中間の総合財務諸表の本質的な一部です。
-4-
目次
Organon & Co。 （監査されていないティッカーシンボル：OGN） （$百万、千株および株当たり金額を除く）
簡易合算貸借対照表
（未検証、単位：百万ドル、株千単位および1株あたりの金額）
2024年9月30日2023年12月31日
資産
流動資産：
現金及び現金同等物$763 $693 
貸倒引当金（$14,562を除く）13サンディエゴ、カリフォルニアで
2024 年と $9 2023年に
1,685 1,744 
Inventories (excludes inventories of $1302024年と$で110 in 2023 classified in Other assets)
1,383 1,315 
その他の流動資産925 756 
現在の総資産4,756 4,508 
固定資産、装置及び器具、純額1,204 1,183 
のれん4,603 4,603 
無形資産　純額763 533 
その他の資産1,426 1,231 
総資産$12,752 $12,058 
負債および資産
支払手形および手形交換可能債務
長期借入金の短期部分$10 $9 
取引債務1,092 1,314 
未払費用およびその他の流動負債1,458 1,389 
未払法人税等230 206 
流動負債合計2,790 2,918 
新規買債務8,739 8,751 
繰延税金資産56 47 
その他の長期負債674 412 
純負債合計12,259 12,128 
特記事項（15注）
Organon＆Co.株主資本（赤字）：
普通株式、1株当たり0.001ドルの割額株式、承認済み株式総数900,000,000株、発行済み株式577,806,659株、2023年12月31日時点での流通株式540,387,949株、発行済み株式577,805,623株、2023年3月31日時点での流通株式545,459,814株、追加資本金0.01名目額面価格
許可済み - 500,000
発行済株式数 257,539 2024年において 255,6262023年には
3 3 
追加の資本金
86 25 
留保利益
975 443 
その他の総合損失(571)(541)
株主資本合計（赤字）
493 (70)
負債の合計と株主資本（赤字）
$12,752 $12,058 
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Table of Contents
Organon & Co.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited, $ in millions, except shares in thousands and per share amounts)
Common StockAdditional Paid-In Capital
Retained Earnings and (Accumulated Deficit)
Accumulated
Other
Comprehensive Income
(Loss)
Total
SharesPar Value
Balance at July 1, 2023255,568 $3 $— $(25)$(533)$(555)
Net income— — — 58 — 58 
Other comprehensive loss, net of taxes— — — — (43)(43)
Cash dividends declared on common stock ($0.28 per share)
— — — (74)— (74)
Stock-based compensation plans and other38 — — 25 — 25 
Balance at September 30, 2023255,606 $3 $— $(16)$(576)$(589)
Balance at July 1, 2024257,473 $3 $63 $690 $(612)$144 
Net income— — — 359 — 359 
Other comprehensive income, net of taxes
— — — — 41 41 
Cash dividends declared on common stock ($0.28 per share)
— — — (74)— (74)
Stock-based compensation plans and other66 — 23 — — 23 
Balance at September 30, 2024257,539 $3 $86 $975 $(571)$493 
Balance at January 1, 2023
254,370 $3 $— $(331)$(564)$(892)
Net income— — — 477 — 477 
Other comprehensive loss, net of taxes— — — — (12)(12)
Cash dividends declared on common stock ($0.84 per share)
— — — (221)— (221)
Stock-based compensation plans and other1,236 — — 59 — 59 
Balance at September 30, 2023255,606 $3 $— $(16)$(576)$(589)
Balance at January 1, 2024
255,626 $3 $25 $443 $(541)$(70)
Net income— — — 755 — 755 
Other comprehensive loss, net of taxes
— — — — (30)(30)
Cash dividends declared on common stock ($0.84 per share)
— — — (223)— (223)
Stock-based compensation plans and other1,913 — 61 — — 61 
Balance at September 30, 2024257,539 $3 $86 $975 $(571)$493 
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Table of Contents
Organon & Co.
Condensed Consolidated Statements of Cash Flows
(Unaudited, $ in millions)
Nine Months Ended September 30,
 20242023
Cash Flows from Operating Activities
Net income$755 $477 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation98 88 
Amortization102 88 
Acquired in-process research and development and milestones81 8 
Deferred income tax (benefit) expense
(170)4 
Stock-based compensation79 74 
Unrealized foreign exchange (gain) loss
(24)19 
Other18 24 
Net changes in assets and liabilities
Accounts receivable42 (185)
Inventories(100)(137)
Other current assets(180)(56)
Trade accounts payable(215)(68)
Accrued and other current liabilities(28)34 
Income taxes payable24 (21)
Other67 53 
Net Cash Flows Provided by Operating Activities549 402 
Cash Flows from Investing Activities
Capital expenditures(120)(172)
Proceeds from sale of property, plant and equipment2 1 
Acquired in-process research and development and milestones(26)(8)
Purchase of product rights and asset acquisition, net of cash acquired(73)— 
Net Cash Flows Used in Investing Activities(217)(179)
Cash Flows from Financing Activities
Proceeds from debt1,036 80 
Repayments of debt(1,045)(336)
Payment of long-term debt issuance costs(36)— 
Employee withholding taxes related to stock-based awards(18)(15)
Dividend payments(223)(221)
Net Cash Flows Used in Financing Activities(286)(492)
Effect of Exchange Rate Changes on Cash and Cash Equivalents24 (23)
Net Increase (Decrease) in Cash and Cash Equivalents
70 (292)
Cash and Cash Equivalents, Beginning of Period693 706 
Cash and Cash Equivalents, End of Period$763 $414 
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Background and Nature of Operations

Organon & Co. (“Organon” or the “Company”) is an independent global healthcare company with a focus on improving the health of women throughout their lives. Organon develops and delivers innovative health solutions through a portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands (the “Organon Products”). Organon has a portfolio of more than 60 medicines and products across a range of therapeutic areas. The Company sells these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. The Company operates six manufacturing facilities, which are located in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom. Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by, the Organon group of companies.

The Company’s operations include the following product portfolios:

•Women’s Health: Organon’s women’s health products are sold by prescription primarily in two therapeutic areas, contraception, with key brands such as Nexplanon® (etonogestrel implant) (sold as Implanon NXT™ in some countries outside the United States) and NuvaRing® (etonogestrel / ethinyl estradiol vaginal ring), and fertility, with key brands such as Follistim AQ® (follitropin beta injection) (marketed in most countries outside the United States as Puregon™). Nexplanon is a long-acting reversible contraceptive, which is a class of contraceptives that is recognized as one of the most effective types of hormonal contraception available to patients with a low long-term average cost. Other women’s health products include the Jada® System, which is intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, and a license from Daré Biosciences for the global commercial rights to Xaciato® (clindamycin phosphate vaginal gel, 2%), an FDA-approved medication for the treatment of bacterial vaginosis (“BV”) in females 12 years of age and older. In October 2023, Xaciato was launched in the United States.

•Biosimilars: Organon’s current portfolio spans across immunology and oncology treatments. Organon’s oncology biosimilars, Ontruzant® (trastuzumab-dttb) and AybintioTM 1 (bevacizumab), have been launched in more than 20 countries, Organon’s immunology biosimilars, BrenzysTM 1 (etanercept), Renflexis® (infliximab-abda) and Hadlima® (adalimumab-bwwd), have been launched in five countries. All five biosimilars in Organon’s portfolio have launched in Canada, and three biosimilars, Ontruzant, Renflexis and Hadlima have launched in the United States.

•Established Brands: Organon has a portfolio of established brands, which generally are beyond market exclusivity, including leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management. A number of Organon’s established brands lost exclusivity years ago and have faced generic competition for some time.

2. Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures required by GAAP for complete consolidated financial statements are not included herein. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. All intercompany transactions and accounts within Organon have been eliminated. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Organon’s Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates

The presentation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP require management to make estimates and assumptions that affect the amounts reported, as further described in the Annual Report on Form 10-K for the year ended December 31, 2023. Accordingly, actual results could differ materially from management’s estimates and assumptions.

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Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The amendments in this ASU are effective for annual periods beginning on January 1, 2025, and should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. This ASU will have no impact on the Company’s consolidated financial condition or results of operations. The Company is currently evaluating the impact to its income tax disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The amendments in this ASU are effective for annual periods beginning on January 1, 2024 and interim periods beginning on January 1, 2025, and should be applied on a retrospective basis for all periods presented. This ASU will have no impact on the Company’s consolidated financial condition or results of operations. The Company is currently evaluating the impact to its segment disclosures.

Recent Securities and Exchange Commission (“SEC”) Final Rules Not Yet Adopted

In March 2024, the SEC adopted final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks will also include disclosure of a registrant's greenhouse gas emissions. In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements. These requirements are effective for the Company in various fiscal years, starting with its fiscal year beginning January 1, 2025. However, the climate rule is currently stayed which could potentially impact the effective date. Disclosures will be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing. The Company is currently evaluating the impact of these final rules on its consolidated financial statements and disclosures.

3. Acquisitions and Licensing Arrangements

Suzhou Centergene Pharmaceuticals (“Centergene”)

In September 2024, Organon entered into license and supply agreements with Centergene acquiring the exclusive commercialization rights to its investigational asset, SJ02, a long-acting recombinant human follicle-stimulating hormone carboxyl-terminal peptide fusion protein (FSH-CTP) designed for controlled ovarian stimulation (COS) in combination with a gonadotropin-releasing hormone (GnRH) antagonist to facilitate the development of multiple follicles in women undergoing assisted reproductive technology (ART) programs. Under the terms of the agreement, Organon will pay $12 million of which $6 million will be paid in the fourth quarter of 2024 and $6 million is payable upon Organon obtaining the manufacturing license, which are refundable if the regulatory approval is not obtained or marketing authorization cannot be transferred, and additional regulatory and sales-based milestones of up to $170 million. Organon will recognize regulatory and sales-based milestones when the achievement is probable.

Eli Lilly (“Lilly”)

In December 2023, Organon announced an agreement with Lilly to become the sole distributor and promoter of the migraine medicines Emgality® (galcanezumab) and Rayvow™ (lasmiditan) in Europe. Lilly will remain the marketing authorization holder and will manufacture the products for sale. Under the terms of the agreement, Organon paid an upfront payment of $50 million upon closing of the transaction in January 2024, and recognized sales-based milestones when the achievement was deemed probable. In the first quarter of 2024, the Company recognized an intangible asset of $220 million, comprised of the $50 million upfront payment and $170 million of sales-based milestones that were deemed probable. The intangible asset will be amortized over 10 years.

In August of 2024, Organon expanded its agreement with Lilly to become the sole distributor and promoter for Emgality in the following additional markets: Canada, Colombia, Israel, South Korea, Kuwait, Mexico, Qatar, Saudi Arabia, Taiwan, Turkey
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Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
and the United Arab Emirates. Organon paid an upfront payment of $23 million for the expansion of territory upon closing of the transaction in August 2024, and recognize sales-based milestones when the achievement is probable. As of September 30, 2024, Organon recognized an additional intangible asset of $113 million, comprised of the $23 million upfront payment and $90 million related to the sales-based milestones that were deemed probable. The intangible asset will be amortized over 10 years.

As of September 30, 2024, Organon had accrued $20 million in Accrued and Other current liabilities and $240 million in Other noncurrent liabilities in total related to the probable sales-based milestones.

Shanghai Henlius Biotech, Inc. (“Henlius”)

For the three and nine months ended September 30, 2024 research and development milestones related to the Henlius agreement were determined to be probable of being achieved and the Company expensed $50 million and $70 million, respectively, in Acquired in-process research and development and milestones expense related to the development of HLX11, an investigational biosimilar of Perjeta® (pertuzumab), and HLX14, an investigational biosimilar of Prolia2 and Xgeva2 (denosumab). As of September 30, 2024, $15 million of the Acquired in-process research and development and milestones has been paid. On May 24, 2024, the European Medicines Agency validated the marketing authorization applications for HLX14. On October 30, 2024, the U.S. Food and Drug Administration accepted the biologic license application for HLX14.

Cirqle Biomedical (“Cirqle”)

For the nine months ended September 30, 2024, research and development milestones related to the Cirqle agreement were determined to be probable of being achieved and the Company expensed and paid $10 million in Acquired in-process research and development and milestones expense.

4. Earnings per Share (“EPS”)

The calculations of basic and diluted EPS are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions and shares in thousands, except per share amounts)2024202320242023
Net income$359 $58 $755 $477 
Basic weighted average number of shares outstanding257,498255,588256,830255,112
Stock awards and equity units (share equivalent)2,259 761 2,0781,050
Diluted weighted average common shares outstanding259,757256,349258,908256,162
EPS:
Basic$1.39 $0.23 $2.94 $1.87 
Diluted$1.38 $0.23 $2.92 $1.86 
Anti-dilutive shares excluded from the calculation of EPS8,599 10,390 8,587 9,833 

Diluted EPS was computed using the treasury stock method for stock option awards, performance share units and restricted share units. The computation of diluted EPS excludes the effect of the potential exercise of stock-based awards when the effect of the potential exercise would be anti-dilutive.
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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
5. Product and Geographic Information

The Company’s operations include the following product portfolios, which constitute one operating segment engaged in developing and delivering innovative health solutions through its portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands.

Revenues of the Company’s products were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
($ in millions)U.S.Int’lTotalU.S.Int’lTotalU.S.Int’lTotalU.S.Int’lTotal
Women’s Health
Nexplanon/Implanon NXT$172 $70 $243 $146 $74 $220 $497 $207 $704 $418 $181 $599 
Follistim AQ26 37 63 22 32 54 59 113 171 74 105 179 
NuvaRing (1)
7 17 23 23 20 43 33 57 90 70 67 137 
Ganirelix Acetate Injection
5 20 26 4 21 25 16 65 82 15 74 88 
Marvelon/Mercilon
— 29 29 — 30 30 — 103 103 — 97 97 
Jada15 — 16 12 — 13 42 1 43 30 — 31 
Other Women’s Health (1) (2)
14 28 40 11 22 33 41 78 119 32 74 106 
Biosimilars
Renflexis56 16 72 57 12 69 167 43 210 172 29 201 
Ontruzant5 15 20 11 28 40 23 84 107 36 57 93 
Brenzys— 27 27 — 13 13 — 63 63 — 45 45 
Aybintio— 7 7 — 12 12 — 22 22 — 34 34 
Hadlima29 11 40 2 6 8 71 27 98 2 18 20 
Established Brands
Cardiovascular
Zetia (1)
2 80 81 2 68 69 5 235 240 5 248 253 
Vytorin1 25 26 2 31 33 4 78 82 5 95 100 
Atozet— 125 125 — 126 126 — 396 396 — 397 397 
Rosuzet— 11 11 — 17 17 — 36 36 — 52 52 
Cozaar/Hyzaar2 57 59 3 65 68 7 179 186 8 217 225 
Other Cardiovascular (1) (2)
— 27 29 1 39 41 2 97 99 2 110 112 
Respiratory
Singulair2 83 85 3 88 91 7 268 275 8 282 290 
Nasonex (1)
— 63 63 — 60 60 — 200 200 — 197 197 
Dulera38 10 48 40 9 49 120 31 151 116 28 144 
Clarinex1 26 27 2 26 28 2 97 100 4 103 107 
Other Respiratory (1) (2)
11 3 14 17 3 20 26 10 35 42 10 52 
Non-Opioid Pain, Bone and Dermatology
Arcoxia— 69 69 — 64 64 — 211 211 — 207 207 
Fosamax1 37 38 1 40 41 3 109 112 2 121 123 
Diprospan— 37 37 — 31 31 — 102 102 — 58 58 
Other Non-Opioid Pain, Bone and Dermatology (2)
5 69 74 4 70 74 15 212 227 11 196 207 
Other
Emgality/Rayvow
— 29 29 — — — — 69 69 — — — 
Proscar— 23 23 — 25 25 1 72 73 1 76 77 
Propecia2 27 28 2 21 22 5 74 79 5 86 92 
Other (2)
3 80 84 5 72 76 12 229 241 10 231 240 
Other (3)
1 26 26 — 24 24 (2)87 85 (1)103 102 
Revenues$398 $1,184 $1,582 $370 $1,149 $1,519 $1,156 $3,655 $4,811 $1,067 $3,598 $4,665 
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.
(3) Includes manufacturing sales to third parties.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
Revenues by geographic area where derived are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Europe and Canada$436 $392 $1,343 $1,259 
United States398 370 1,156 1,067 
Asia Pacific and Japan260 284 806 869 
China212 202 634 661 
Latin America, Middle East, Russia, and Africa
243 239 768 687 
Other (1)
33 32 104 122 
Revenues$1,582 $1,519 $4,811 $4,665 
(1) Primarily reflects manufacturing sales to third parties.

6. Stock-Based Compensation Plans

The Company grants stock option awards, performance share units (“PSUs”) and restricted share units (“RSUs”) pursuant to its 2021 Incentive Stock Plan.

The PSU awards are based on the following performance factors:
•total stockholder return of the Company relative to an index of peer companies specified in the awards; and
•the results of cumulative free cash flow and revenue metrics of the Company.

PSUs include awards issued where the service inception date precedes the grant date. The grant date for the performance conditions is the date grantees have a mutual understanding of the key terms and conditions of the award, which will occur when the performance condition is objectively determinable and measurable. Recognition of stock-based compensation occurs at the service inception date. Measurement of stock-based compensation attributed to the PSUs will be based on the fair value of the underlying common stock once the grant date is determined.

Stock-based compensation expenses incurred by the Company were as follows:

Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Stock-based compensation expense recognized in:
Cost of sales$4 $5 $13 $13 
Selling, general and administrative 17 18 53 50 
Research and development4 4 13 11 
Total$25 $27 $79 $74 
Income tax benefits$6 $6 $17 $16 

The fair value of options granted was determined using the following assumptions:

Nine Months Ended September 30,
20242023
Expected dividend yield6.00 %4.82 %
Risk-free interest rate4.12 3.56 
Expected volatility41.02 42.30 
Expected life (years)5.895.89

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
A summary of the equity award transactions for the nine months ended September 30, 2024 is as follows:

Stock Options
RSUs
PSUs
(shares in thousands)SharesWeighted average exercise priceWeighted average grant date fair valueSharesWeighted average grant date fair valueSharesWeighted average grant date fair value
Outstanding as of January 1, 20245,758 $32.20 $8.51 7,511 $25.05 1,122 $30.16 
Granted/Issued
1,503 18.80 4.59 4,695 18.81 184 31.25 
Vested/Exercised— — — (2,952)29.47 (56)51.63 
Forfeited/Cancelled(314)29.11 7.66 (864)21.73 (129)37.44 
Outstanding as of September 30, 2024
6,947 $29.44 $7.70 8,390 $20.34 1,121 $28.44 

The following table summarizes information about equity awards outstanding that are vested and expected to vest and equity awards outstanding that are exercisable as of September 30, 2024:

Equity Awards Vested and Expected to VestEquity Awards That are Exercisable
(awards in thousands; aggregate intrinsic value in millions)
AwardsWeighted Average Exercise PriceAggregate Intrinsic Value
Remaining
Term
(in years)
AwardsWeighted Average Exercise PriceAggregate Intrinsic Value
Remaining
Term
(in years)
Stock Options6,772 $29.45 $— 6.834,658 $33.55 $— 5.72
RSUs
7,791 160 1.97
PSUs
854 18 1.54

The amount of unrecognized compensation costs as of September 30, 2024 was $160 million, which will be recognized in operating expense ratably over the weighted average vesting period of 1.95 years.

7. Restructuring

In the first quarter of 2024, Organon implemented additional restructuring activities related to the ongoing optimization of its internal operations by reducing headcount, primarily in the research and development function. In the fourth quarter of 2023, Organon implemented restructuring activities related to the ongoing optimization of its internal operations by reducing headcount in certain markets and functions. As a result of these combined activities, the Company’s headcount will be reduced by approximately 5% by the end of 2024. Organon expects the remaining severance payments associated with the restructuring activities to be paid by the end of 2024.

The following is a summary of changes in severance liabilities related to the restructuring activities included within Accrued and other current liabilities:
September 30, 2024December 31, 2023
Beginning balance $61 $20 
Severance & severance related costs 23 62 
Cash payments and other(60)(21)
Ending Balance $24 $61 

8. Taxes on Income

The effective income tax rates were (73.7)% and 27.0% for the three months ended September 30, 2024 and 2023, respectively, and (11.3)% and 16.1% for the nine months ended September 30, 2024 and 2023, respectively. These effective income tax rates reflect the beneficial impact of foreign earnings, offset by the impact of U.S. inclusions under the Global Intangible Low-Taxed Income regime and a partial valuation allowance recorded against non-deductible U.S. interest expense. There was a favorable impact to the 2024 year-to-date effective tax rate, which was driven by the favorable closure of the two non-US tax audits and a return to provision adjustment for the Switzerland entity.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
In the third quarter of 2024, the Swiss tax authority confirmed to the Company the applicable useful life of an existing tax asset. As a result, the Company has now concluded it is more likely than not it will utilize the entirety of the tax asset. As such, the Company released a $210 million related valuation allowance.

Effective January 1, 2024, multiple jurisdictions, most notably, a majority of the European Union member states, implemented the Organization for Economic Co-operation and Development’s Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least €750 million. The Company has evaluated the effect of this for the first three quarters of 2024 and does not expect that it will have a material effect on a full year basis.

9. Inventories

Inventories consisted of:
($ in millions)September 30, 2024December 31, 2023
Finished goods$719 $566 
Raw materials
26 110 
Work in process697 684 
Supplies77 65 
Total (approximates current cost)$1,519 $1,425 
Decrease to last in, first out (“LIFO”) costs
(6)— 
 $1,513 $1,425 
Recognized as:
Inventories$1,383 $1,315 
Other assets130 110 
Inventories valued under the LIFO method
160 105 

Amounts recognized as Other assets are comprised primarily of raw materials and work in process inventories and are not expected to be converted to finished goods that will be sold within one year. The Company has long-term vendor supply contracts that include certain annual minimum purchase commitments.

10. Long-Term Debt

The following is a summary of Organon’s total debt:
($ in millions)September 30, 2024December 31, 2023
Term Loan B Facility:
SOFR plus 250 bps term loan due 2031 (1)
$1,543 $2,543 
EURIBOR plus 300 bps euro-denominated term loan due 2028 (€726 million in 2024 and €731 million in 2023)
809 809 
4.125% secured notes due 2028
2,100 2,100 
2.875% euro-denominated secured notes due 2028 (€1.25 billion)
1,394 1,384 
5.125% notes due 2031
2,000 2,000 
6.750% secured notes due 2034
500 — 
7.875% notes due 2034
500 — 
Other borrowings8 8 
Other (discounts and debt issuance costs)(105)(84)
Total principal long-term debt$8,749 $8,760 
Less: Current portion of long-term debt10 9 
Total Long-term debt, net of current portion$8,739 $8,751 
(1) Prior to entering into Amendment No. 2 to the Senior Secured Credit Agreement on May 17, 2024, the maturity date was 2028.
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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The nature and terms of Organon’s long-term debt are described in detail in Note 16. “Long-Term Debt and Leases” in the 2023 Annual Report on Form 10-K for the year ended December 31, 2023.

During the second quarter of 2024, Organon issued $500 million of 6.750% senior secured notes due 2034 (the “2034 Secured Notes”) and $500 million of 7.875% senior unsecured notes due 2034 (the “2034 Unsecured Notes” and, together with the Secured Notes the “2034 Notes”). Each series of notes is guaranteed by each of the entities that guarantees the Companies’ existing senior secured credit facilities (the “Credit Facilities”). Organon used the net proceeds from the sale of the 2034 Notes to repay a portion of its borrowings under the Credit Facilities’ U.S. dollar-denominated “tranche B” term loan and to pay the fees and expenses incurred in connection with the foregoing.

On May 17, 2024, Organon entered into Amendment No. 2 to the Senior Secured Credit Agreement (“Amendment No. 2”) which, among other things, (i) extended the maturity of the U.S. Dollar Term Loan B Facility to May 17, 2031, (ii) extended the maturity of the revolving credit loans made under the senior secured credit facility (the “Revolving Facility”) to December 2, 2027, (iii) increased the maximum amount of the Revolving Facility by $300 million and decreased the commitment fee payable in respect of the Revolving Facility to 0.375%, (iv) removed the credit spread adjustment applicable to SOFR loans, and (v) reduced the interest rate in respect of the remaining $1.55 billion of loans under the U.S. Dollar Term Loan B Facility from Term SOFR plus 3.0% to Term SOFR plus 2.50%.

During the second quarter of 2024, the Company borrowed $36 million on the Revolving Facility and subsequently repaid the amount on June 17, 2024. As of September 30, 2024 there were no outstanding balances under the Revolving Facility. In October 2024, the Company borrowed $100 million on the Revolving Facility.

During the second quarter of 2024, the Company recorded approximately $36 million of deferred debt issuance costs and discounts related to the 2034 Notes and Amendment No. 2. Debt issuance costs and discounts are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term on the related debt using the effective interest method.

Long-term debt was recorded at the carrying amount. The estimated fair value of long-term debt (including current portion) is as follows:
($ in millions)September 30, 2024December 31, 2023
Long-term debt
$8,642 $8,253 

Fair value was estimated using inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability and would be considered Level 2 in the fair value hierarchy.

The Company made interest payments related to its debt instruments of $292 million for the nine months ended September 30, 2024. The average maturity of the Company’s long-term debt as of September 30, 2024 is approximately 5.5 years and the weighted-average interest rate on total borrowings as of September 30, 2024 is 5.3%.

On June 26, 2024, the Company made a discretionary prepayment of $7.5 million on the U.S. Dollar-denominated term loan.

The schedule of principal payments required on long-term debt for the next five years and thereafter is as follows:
($ in millions)
2024$2 
20259 
202610 
20279 
20284,277 
Thereafter4,547 

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
The Senior Credit Agreement contains customary financial covenants, including a total leverage ratio covenant, which measures the ratio of (i) consolidated total debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, that must meet certain defined limits which are tested on a quarterly basis. In addition, the Senior Credit Agreement contains covenants that limit, among other things, Organon’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem, or repurchase equity interests, and create or become subject to liens. As of September 30, 2024, the Company is in compliance with all financial covenants and no default or event of default has occurred.

11. Financial Instruments

Foreign Currency Risk Management

The Company uses a balance sheet risk management program to partially mitigate the exposure of net monetary assets of its subsidiaries that are denominated in a currency other than a subsidiary’s functional currency from the effects of volatility in foreign exchange. In these instances, Organon principally utilizes forward exchange contracts to partially offset the effects of exchange on exposures denominated in developed country currencies, primarily the euro, Swiss franc, and Japanese yen. For exposures in developing country currencies, the Company enters into forward contracts to partially offset the effects of exchange on exposures when it is deemed economical to do so based on a cost-benefit analysis that considers the magnitude of the exposure, the volatility of the exchange rate and the cost of the hedging instrument.

Forward Contracts

Monetary assets and liabilities denominated in a currency other than the functional currency of a given subsidiary are remeasured at spot rates in effect on the balance sheet date with the effects of changes in spot rates reported in Exchange losses in the Condensed Consolidated Statements of Income. The forward contracts are not designated as hedges and are marked to market through Exchange losses in the Condensed Consolidated Statements of Income. Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not significant due to the short-term nature of the contracts, which typically have average maturities at inception of less than one year. The notional amount of forward contracts was $1.5 billion and $1.4 billion as of September 30, 2024 and December 31, 2023, respectively. The cash flows and the related gains and losses from these contracts are reported as operating activities in the Condensed Consolidated Statements of Cash Flows.

Net Investment Hedge

Euro-denominated debt instruments

Foreign exchange risk is also managed through the use of economic hedges on foreign currency balances. €726 million of the euro-denominated term loan and €1.25 billion of the 2.875% euro-denominated secured notes have been designated and are effective as a hedge of the net investment in euro-denominated subsidiaries. See Note 10 “Long-Term Debt” for additional details.

Cross-Currency Swaps

In conjunction with the issuance of the 2034 Notes, the Company entered into cross-currency swaps that mature in 2029. The Company elected to designate the fixed-for-fixed swaps as a hedge of the net investment in euro-denominated subsidiaries balance and the change in the fair value attributable to the changes in the spot rate will be recorded in Other Comprehensive Income (Loss), Net of Taxes. Throughout the term of the swaps, the Company will pay a fixed interest rate of 5.8330% based on the Euro notional amount of €922 million and receive a fixed interest rate of 7.3125% based on the U.S. dollar notional amount of $1 billion. The notional amount based on the Euro leg of the cross-currency swaps has been designated and is effective as a hedge of the net investment in euro-denominated subsidiaries. The difference between the interest rate received and paid under the cross-currency swap agreements is recorded in Interest expense in the Condensed Consolidated Statements of Income. The cash flows and the related gains and losses from the periodic settlements of the cross-currency swaps are reported as Operating Activities in the Condensed Consolidated Statements of Cash Flows.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following financial instruments were recorded at their estimated fair value. The recurring fair value measurement of the assets and liabilities was as follows:
($ in millions)Fair Value Measurement Level September 30, 2024December 31, 2023
Forward contracts in Other current assets
2$10 $9 
Forward contracts in Accrued and other current liabilities
227 16 
Cross-currency swap in Other noncurrent liabilities
225 — 

Foreign currency gain (loss) due to spot rate fluctuations on the euro-denominated debt instruments and the change in fair value of the cross-currency swaps resulting from hedge designation were included within Cumulative translation adjustment in Other comprehensive income (loss):

Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Euro-denominated debt instruments (loss) gain
$(92)$79 $(17)$21 
Cross-currency swaps loss
(29)— (25)— 

The Condensed Consolidated Statements of Income include the impact of net (gains) losses of Organon’s derivative financial instruments:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Derivative loss (gain) in Exchange losses
$14 $(12)$5 $(25)
Derivative gain in Interest expense
(3)— (5)— 

Concentrations of Credit Risk

Organon has established accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable. Under these agreements, Organon factored $39 million and $66 million of accounts receivable as of September 30, 2024 and December 31, 2023, respectively, which reduced outstanding accounts receivable. The cash received from the financial institutions is reported within Operating Activities in the Condensed Consolidated Statements of Cash Flows.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
12. Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated other comprehensive income (loss) by component are as follows:
($ in millions)Employee
Benefit
Plans		Cumulative
Translation
Adjustment
Accumulated Other
Comprehensive
(Loss) Income
Balance at July 1, 2023, net of taxes$9 $(542)$(533)
Other comprehensive loss, pretax— (43)(43)
Tax— — — 
Other comprehensive loss, net of taxes— (43)(43)
Balance at September 30, 2023, net of taxes$9 $(585)$(576)
Balance at July 1, 2024, net of taxes$(14)$(598)$(612)
Other comprehensive (loss) income, pretax
(1)42 41 
Tax— — — 
Other comprehensive (loss) income, net of taxes
(1)42 41 
Balance at September 30, 2024, net of taxes$(15)$(556)$(571)
Balance at January 1, 2023, net of taxes$10 $(574)$(564)
Other comprehensive loss, pretax(1)(11)(12)
Tax— — — 
Other comprehensive loss, net of taxes(1)(11)(12)
Balance at September 30, 2023, net of taxes$9 $(585)$(576)
Balance at January 1, 2024, net of taxes$(15)$(526)$(541)
Other comprehensive loss, pretax
— (30)(30)
Tax— — — 
Other comprehensive loss, net of taxes
— (30)(30)
Balance at September 30, 2024, net of taxes$(15)$(556)$(571)

13. Samsung Collaboration

The Company has an agreement with Samsung Bioepis Co., Ltd. (“Samsung Bioepis”) to develop and commercialize multiple pre-specified biosimilar candidates, which have since launched and are part of the Company's product portfolio. Under the agreement, Samsung Bioepis is responsible for preclinical and clinical development, process development and manufacturing, clinical trials and registration of product candidates, and the Company has an exclusive license for worldwide commercialization with certain geographic exceptions specified on a product-by-product basis. The Company's access rights to each product under the agreement last for 10 years from each product's launch date on a market-by-market basis. Gross profits are shared equally in all markets with the exception of certain markets in Brazil where gross profits are shared 65% to Samsung Bioepis and 35% to the Company. Since the Company is the principal on sales transactions with third parties, the Company recognizes sales, cost of sales and selling, general and administrative expenses on a gross basis. Generally, profit sharing adjustments are recorded either to Cost of sales (after commercialization) or Selling, general and administrative expenses (prior to commercialization).

Samsung Bioepis is eligible for additional payments associated with pre-specified clinical and regulatory milestones. As of September 30, 2024, potential future regulatory milestone payments of $25 million remain under the agreement.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
Summarized information related to this collaboration is as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Sales$164 $143 $499 $394 
Cost of sales112 98 329 272 
Selling, general and administrative18 17 60 53 

($ in millions)September 30, 2024December 31, 2023
Receivables from Samsung included in Other current assets
$44 $— 
Payables to Samsung included in Trade accounts payable
99 104 

14. Third-Party Arrangements

On June 2, 2021, Organon and Merck & Co., Inc. (“Merck”) entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”). Pursuant to the Separation and Distribution Agreement, Merck agreed to spin off the Organon Products into Organon, a new, publicly-traded company (the “Separation”).

The Separation was completed pursuant to the Separation and Distribution Agreement and other agreements with Merck related to the Separation. As of September 30, 2024, only one jurisdiction remains under an Interim Operating Model Agreement.

Under the manufacturing and supply agreements, the Company manufactures certain products for Merck, or its applicable affiliate, and Merck manufactures certain products for the Company, or its applicable affiliate. For details on the rights and responsibilities of the parties under the agreements, refer to Note 19 “Third-Party Arrangements and Related Party Disclosures” to the audited Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The amounts due under such agreements were:
($ in millions)September 30, 2024December 31, 2023
Due from Merck in Accounts receivable
$207 $583 
Due to Merck in Accounts payable
434 619 

Sales and cost of sales resulting from the manufacturing and supply agreements with Merck were:

Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Sales $25 $28 $82 $95 
Cost of sales 24 25 76 88 

15. Contingencies

Organon is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters.

Organon records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Individually significant contingent losses are accrued when probable and reasonably estimable. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
Given the nature of the litigation discussed in this note and the complexities involved in these matters, Organon is unable to reasonably estimate a possible loss or range of possible loss for such matters until Organon knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation, and (v) any other factors that may have a material effect on the litigation.

Organon’s decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made. Organon has evaluated its risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, has no insurance for most product liabilities.

Reference is made below to certain litigation in which Merck, but not Organon, is named as a defendant. Pursuant to the Separation and Distribution Agreement, Organon is required to indemnify Merck for liabilities relating to, arising from, or resulting from such litigation.

Product Liability Litigation

Fosamax

Merck is a defendant in product liability lawsuits in the United States involving Fosamax® (alendronate sodium) (the “Fosamax Litigation”). As of September 30, 2024, approximately 3,085 cases comprising the Fosamax Litigation are pending against Merck in either federal or state court. Plaintiffs in the vast majority of these cases generally allege that they sustained femur fractures and/or other bone injuries (“Femur Fractures”) in association with the use of Fosamax.

All federal cases involving allegations of Femur Fractures have been or will be transferred to a multidistrict litigation in the District of New Jersey (“Femur Fracture MDL”). In the only bellwether case tried to date in the Femur Fracture MDL, Glynn v. Merck, the jury returned a verdict in Merck’s favor. In addition, in June 2013, the Femur Fracture MDL court granted Merck’s motion for judgment as a matter of law in the Glynn case and held that the plaintiff’s failure to warn claim was preempted by federal law.

In August 2013, the Femur Fracture MDL court entered an order requiring plaintiffs in the Femur Fracture MDL to show cause why those cases asserting claims for a femur fracture injury that took place prior to September 14, 2010, should not be dismissed based on the court’s preemption decision in the Glynn case. Pursuant to the show cause order, in March 2014, the Femur Fracture MDL court dismissed with prejudice approximately 650 cases on preemption grounds. Plaintiffs in approximately 515 of those cases appealed that decision to the U.S. Court of Appeals for the Third Circuit (“Third Circuit”). In March 2017, the Third Circuit issued a decision reversing the Femur Fracture MDL court’s preemption ruling and remanding the appealed cases back to the Femur Fracture MDL court. In May 2019, the U.S. Supreme Court decided that the Third Circuit had incorrectly concluded that the issue of preemption should be resolved by a jury, and accordingly vacated the judgment of the Third Circuit and remanded the proceedings back to the Third Circuit to address the issue in a manner consistent with the Supreme Court’s opinion. In November 2019, the Third Circuit remanded the cases back to the District Court in order to allow that court to determine in the first instance whether the plaintiffs’ state law claims are preempted by federal law under the standards described by the Supreme Court in its opinion. On March 23, 2022, the District Court granted Merck’s motion and ruled that plaintiffs’ failure to warn claims are preempted as a matter of law to the extent they assert that Merck should have added a Warning or Precaution regarding atypical femur fractures prior to October 2010. On July 11, 2022, the District Court entered an Order to Show Cause as to why the Court should not dismiss either with prejudice or conditionally all of plaintiffs’ claims that are not dependent on the preempted failure to warn claims. On November 18, 2022, as a result of the Order to Show Cause, the District Court entered a Final Judgment resulting in the dismissal with prejudice of all plaintiffs in the MDL. On December 16, 2022, those plaintiffs filed their Notice of Appeal to the Third Circuit challenging the District Court’s preemption ruling. 974 of the 975 cases previously pending in the Femur Fracture MDL have either been dismissed or are on appeal to the Third Circuit. Plaintiff’s motion to remand one case back to its transferor court is pending. On September 20, 2024, the Third Circuit issued an Opinion finding that plaintiffs’ failure to warn claims were not preempted and remanded all cases back to the District Court for further proceedings.

As of September 30, 2024, approximately 1,830 cases alleging Femur Fractures have been filed in New Jersey state court and are pending in Middlesex County. The parties selected an initial group of cases to be reviewed through fact discovery, and Merck continues to select additional cases to be reviewed.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
As of September 30, 2024, approximately 275 cases alleging Femur Fractures have been filed and are pending in California state court. All of the Femur Fracture cases filed in California state court have been consolidated before a single judge in Orange County, California.

Additionally, there are four Femur Fracture cases pending in other state courts.

Discovery is presently stayed in the Femur Fracture MDL and in the state court in California.

Nexplanon/Implanon

Merck is a defendant in lawsuits brought by individuals relating to the use of Nexplanon and Implanon™ (etonogestrel implant). There are two filed product liability actions involving Implanon, both of which are pending in the Northern District of Ohio as well as 56 unfiled cases involving Implanon alleging similar injuries, all of which have been tolled under a written tolling agreement. As of September 30, 2024, Merck had 21 cases pending outside the United States, of which 11 relate to Implanon and 10 relate to Nexplanon.

Governmental Proceedings

From time to time, Organon’s subsidiaries may receive inquiries and may be the subject of preliminary investigation activities from competition and/or other governmental authorities, including in markets outside the United States. These authorities may include regulators, administrative authorities, and law enforcement and other similar officials, and these preliminary investigation activities may include site visits, formal or informal requests or demands for documents or materials, inquiries or interviews and similar matters. Certain of these preliminary inquiries or activities may lead to the commencement of formal proceedings. Should those proceedings be determined adversely to Organon, monetary fines and/or remedial undertakings may be required. Subject to certain exceptions specified in the Separation and Distribution Agreement, Organon assumed liability for all pending and threatened legal matters related to products transferred from Merck to Organon in connection with the spinoff, including competition investigations resulting from enforcement activity concerning Merck’s conduct involving Organon’s products. Organon could be obligated to indemnify Merck for fines or penalties, or a portion thereof, resulting from such investigations.

Patent Litigation

From time to time, generic manufacturers of pharmaceutical products file Abbreviated New Drug Applications with the FDA seeking to market generic forms of Organon’s products prior to the expiration of relevant patents owned by Organon. To protect its patent rights, Organon may file patent infringement lawsuits against such generic companies. Similar lawsuits defending Organon’s patent rights may exist in other countries. Organon intends to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior to the expiration of such patents. As with any litigation, there can be no assurance of the outcomes, which, if adverse, could result in significantly shortened periods of exclusivity for these products, potential payment of damages and legal fees, and, with respect to products acquired through acquisitions, potentially significant intangible asset impairment charges.

Nexplanon

In June 2017, Microspherix LLC (“Microspherix”) sued Organon in the U.S. District Court for the District of New Jersey asserting that the manufacturing, use, sale and importation of Nexplanon infringed several of Microspherix’s patents that claim radio-opaque, implantable drug delivery devices. Microspherix claimed damages from September 2014 until the patents expired in May 2021. In December 2023, the parties executed a settlement agreement and the district court dismissed the case. Organon made its first payment of $35 million in December 2023, its second payment of $25 million in August 2024, and has reserved $20 million to cover the remainder of the settlement.

Other Litigation

In addition to the matters described above, there are various other pending legal proceedings involving Organon, principally product liability and intellectual property lawsuits. While it is not feasible to predict the outcome of such proceedings, in the opinion of Organon as of September 30, 2024, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to Organon’s financial condition, results of operations or cash flows either individually or in the aggregate.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
Legal Defense Reserves

Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. Some of the significant factors considered in the review of these legal defense reserves are as follows: the actual costs incurred by Organon; the development of Organon’s legal defense strategy and structure in light of the scope of its litigation; the number of cases being brought against Organon; and the costs and outcomes of completed trials and the most current information regarding anticipated timing, progression, and related costs of pre-trial activities and trials in the associated litigation. The legal defense reserve as of September 30, 2024 and December 31, 2023 was $17 million and $20 million, respectively, and represented Organon’s best estimate of the minimum amount of defense costs to be incurred in connection with its outstanding litigation; however, events such as additional trials and other events that could arise in the course of its litigation could affect the ultimate amount of legal defense costs to be incurred by Organon. Organon will continue to monitor its legal defense costs and review the adequacy of the associated reserves and may determine to increase the reserves at any time in the future if, based upon the factors set forth, it believes it would be appropriate to do so.

16. Subsequent Events

Dermavant Sciences Ltd. (“Dermavant”)

On October 28, 2024, Organon acquired Dermavant, a company dedicated to developing and commercializing innovative therapeutics in immuno-dermatology. Dermavant’s novel product, Vtama® (tapinarof) cream, 1%, for the topical treatment of mild, moderate, and severe plaque psoriasis in adults, was approved by the U.S. Food and Drug Administration (FDA) in May 2022. It is currently being reviewed by the FDA for the treatment of atopic dermatitis, also known as eczema, in adults and children 2 years of age and older. Atopic dermatitis is one of the most common inflammatory dermatological conditions in adults, presenting a higher disease burden for women compared to men.

The transaction will be accounted for as an acquisition of a business. Consideration consists of an upfront payment of $175 million and a $75 million milestone payment upon regulatory approval, as well as payments of up to $950 million for the achievements of certain commercial milestones, tiered royalties on net sales, and the assumption of liabilities, including certain debt obligations, which would be accounted for at fair value on the acquisition date. Organon incurred costs associated with the transaction of approximately $4 million recognized in Selling, general and administrative expenses for the three and nine months ended September 30, 2024.

Oss Biotech Site

Organon has entered into an agreement with Merck to acquire the Oss Bio-Tech manufacturing facility in the Netherlands. This agreement covers Organon’s fertility drug substance production and associated support functions. Organon will pay aggregate consideration of $25 million, of which $15 million will be paid upon closing in the third quarter of 2025 and the remaining $10 million will be paid in the first half of 2026.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “forecast,” “intend,” “would,” “seek,” “continue,” and other words of similar meaning, or negative variations of any of the foregoing. These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Risks and uncertainties that may affect our future results 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; difficulties implementing or executing on our acquisition strategy, difficulties integrating such acquisitions (including our recent acquisition of Dermavant) or any other failure to recognize the benefits of such acquisitions; 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 Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) operates; global tensions, which may result in disruptions in the broader global economic environment; 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; recent Supreme Court decisions and other developments impacting regulatory agencies and their rule making, including related financial market reactions, tax planning and international trade practices; 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; the impact of the 2024 United States presidential election and any resulting public policy changes affecting women and their health care decisions, including changes in financial outcomes resulting from candidate positions on healthcare topics and the possible impact on related laws, regulations and policies following the election; the impact of higher selling and promotional costs; the impact of cyberattacks or other events that may affect our information technology systems or those of third parties; and other factors discussed in our most recently filed Annual Report on Form 10-K and Current Reports on Form 8-K, including those discussed in the “Business,” “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those reports.

General

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist the reader in understanding our financial condition and results of operations. The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and with our audited financial statements, including the accompanying notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. Operating results discussed herein are not necessarily indicative of the results of any future period.

We are a global health care company with a focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands. We have a portfolio of more than 60 medicines and products across a range of therapeutic areas. We sell these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. We operate six manufacturing facilities, which are located in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom. Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by, our group of companies.

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Recent Developments

Business Development

Dermavant Sciences Ltd. (“Dermavant”)

On October 28, 2024, Organon acquired Dermavant, a company dedicated to developing and commercializing innovative therapeutics in immuno-dermatology. Dermavant’s novel product, Vtama® (tapinarof) cream, 1%, for the topical treatment of mild, moderate, and severe plaque psoriasis in adults, was approved by the U.S. Food and Drug Administration (FDA) in May 2022. It is currently being reviewed by the FDA for the treatment of atopic dermatitis, also known as eczema, in adults and children 2 years of age and older. Atopic dermatitis is one of the most common inflammatory dermatological conditions in adults, presenting a higher disease burden for women compared to men.

The transaction will be accounted for as an acquisition of a business. Consideration consists of an upfront payment of $175 million and a $75 million milestone payment upon regulatory approval, as well as payments of up to $950 million for the achievements of certain commercial milestones, tiered royalties on net sales, and the assumption of liabilities, including certain debt obligations, which would be accounted for at fair value on the acquisition date. Organon incurred costs associated with the transaction of approximately $4 million recognized in Selling, general and administrative expenses for the three and nine months ended September 30, 2024.

Suzhou Centergene Pharmaceuticals (“Centergene”)

In September 2024, we entered into license and supply agreements with Centergene acquiring the exclusive commercialization rights to its investigational asset, SJ02, a long-acting recombinant human follicle-stimulating hormone carboxyl-terminal peptide fusion protein (FSH-CTP) designed for controlled ovarian stimulation (COS) in combination with a gonadotropin-releasing hormone (GnRH) antagonist to facilitate the development of multiple follicles in women undergoing assisted reproductive technology (ART) programs. Under the terms of the agreement, we will pay $12 million of which $6 million will be paid in the fourth quarter of 2024 and $6 million is payable when we obtain the manufacturing license, which are refundable if the regulatory approval is not obtained or marketing authorization cannot be transferred, and additional regulatory and sales-based milestones of up to $170 million. We will recognize regulatory and sales-based milestones when the achievement is probable.

Eli Lilly (“Lilly”)

In December 2023, we announced an agreement with Lilly to become the sole distributor and promoter of the migraine medicines Emgality and Rayvow in Europe. Lilly will remain the marketing authorization holder and will manufacture the products for sale. Under the terms of the agreement, we paid an upfront payment of $50 million upon closing of the transaction in January 2024, and recognized sales-based milestones when the achievement was deemed probable. In the first quarter of 2024, we recognized an intangible asset of $220 million, comprised of the $50 million upfront payment and $170 million of sales-based milestones that were deemed probable. The intangible asset will be amortized over 10 years.

In August of 2024, we expanded the agreement with Lilly to become the sole distributor and promoter for Emgality in the following additional markets: Canada, Colombia, Israel, South Korea, Kuwait, Mexico, Qatar, Saudi Arabia, Taiwan, Turkey and the United Arab Emirates. We paid an upfront payment of $23 million for the expansion of territory upon closing of the transaction in August 2024, and recognize sales-based milestones when the achievement is probable. As of September 30, 2024, we recognized an additional intangible asset of $113 million, comprised of the $23 million upfront payment and $90 million related to the sales-based milestones that were deemed probable. The intangible asset will be amortized over 10 years.

As of September 30, 2024, we had accrued $20 million in Accrued and Other current liabilities and $240 million in Other noncurrent liabilities in total related to the probable sales-based milestones.

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Operating Results

Sales Overview
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
United States$398 $370 8 %8 %$1,156 $1,067 8 %8 %
International1,184 1,149 3 5 3,655 3,598 2 4 
Total$1,582 $1,519 4 %5 %$4,811 $4,665 3 %5 %

Worldwide sales were $1.6 billion for the three months ended September 30, 2024 an increase of 4%, compared to 2023. Worldwide sales were negatively impacted by approximately 1% or $18 million, due to unfavorable foreign exchange.

Excluding foreign exchange, sales increases for the three months ended September 30, 2024 primarily reflect the performance of:
•Nexplanon, due to increased demand, favorable price and discount rates in the United States and increased demand in international markets, partially offset by the timing of tenders in Latin America;
•Hadlima, due to the launch in the United States in July 2023 and a modest increase in international markets; and
•Emgality and Rayvow, due to the acquisition of the distribution and promotion rights from Lilly in 2024.

This performance was offset by decreases for the three months ended September 30, 2024 in:
•NuvaRing, due to ongoing generic competition and the negative impact of increased government discount rates in the United States;
•Ontruzant, due to the timing of tenders in Brazil and lower demand in the United States and Europe; and
•Cozaar® (losartan) and Hyzaar® (losartan / hydrochlorothiazide) due to the unfavorable pricing in Japan.

Worldwide sales were $4.8 billion for the nine months ended September 30, 2024, an increase of 3%, compared to 2023. Worldwide sales during the nine months ended September 30, 2024 were negatively impacted by approximately 2% or $76 million, due to unfavorable foreign exchange.

Excluding foreign exchange, sales increases for the nine months ended September 30, 2024 primarily reflect the performance of:
•Nexplanon, due to increased demand, favorable price and discount rates in the United States and increased demand in international markets and our institutional business in Africa;
•Hadlima, due to the launch in the United States in July 2023 and a modest increase in international markets;
•Diprospan™ 1 (betamethasone), due to recovery from the manufacturing issues resulting from the regulatory inspection finding at the Heist manufacturing location that impacted the manufacturing of selected injectable steroid brands in the first quarter of 2023 (the “Market Action”); and
•Emgality and Rayvow, due to the acquisition of the distribution and promotion rights from Lilly in 2024.

This performance was offset by decreases for the nine months ended September 30, 2024 in:
•NuvaRing, due to ongoing generic competition and the negative impact of increased government discount rates in the United States;
•Zetia® (ezetimibe), which is marketed as Ezetrol™ in most countries outside the United States; Vytorin® (ezetimibe / simvastatin), which is marketed as Inegy™ outside of the United States, primarily driven by the decrease in demand and unfavorable pricing in Japan, partially offset by increased demand in China; and
•Cozaar and Hyzaar, driven by the negative impact of volume-based procurement (“VBP”) in China and unfavorable pricing in Japan.

The loss of exclusivity (“LOE”) negatively impacted sales of certain of our products by approximately $3 million and $15 million during the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, respectively, based on the decrease in volume period over period, mainly impacting AtozetTM 1 (ezetimibe and atorvastatin) in Japan. VBP in China had a $13 million negative impact on our sales during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. VBP in China did not have an impact for the three months ended September 30, 2024. We expect VBP to continue to impact our established brands product portfolio for the next several quarters.

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Our operations include a portfolio of products. Highlights of the sales of our products for the three and nine months ended September 30, 2024 and 2023 are provided below. See Note 5 “Product and Geographic Information” to the Condensed Consolidated Financial Statements for further details on sales of our products.

Women’s Health
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
Nexplanon/Implanon NXT$243 $220 10 %11 %$704 $599 17 %18 %
NuvaRing (1)
23 43 (45)(45)90 137 (34)(32)
Marvelon/Mercilon29 30 (3)(2)103 97 6 8 
Follistim AQ63 54 16 16 171 179 (4)(3)
Ganirelix Acetate Injection
26 25 3 4 82 88 (7)(6)
Jada
16 13 24 24 43 31 40 40 
(1) Sales of the authorized generic version of NuvaRing were previously included in Other Women’s Health.

Contraception

Worldwide sales of Nexplanon, a single-rod subdermal contraceptive implant, increased 10% and 17% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to increased demand, favorable price and discount rates in the United States and increased demand in international markets. In addition, sales for the three months ended September 30, 2024, were partially offset by the timing of tenders in Latin America, and sales for the nine months ended September 30, 2024, were impacted by an increase in demand in our institutional business in Africa.

Worldwide sales of NuvaRing, a vaginal contraceptive product, declined 45% and 34% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to ongoing generic competition and the negative impact of increased government discount rates in the United States. We expect a continued decline in NuvaRing sales as a result of generic competition.

Worldwide sales of MarvelonTM 1 (desogestrel and ethinyl estradiol pill) and MercilonTM 1 (desogestrel and ethinyl estradiol pill), combined oral hormonal daily contraceptive pills not approved or marketed in the United States but available in certain countries outside the United States, remained consistent for the three months ended September 30, 2024, compared to 2023. Sales increased 6% for the nine months ended September 30, 2024, compared to 2023, as a result of increased demand in various international markets.

Fertility

Worldwide sales of Follistim AQ, a fertility treatment, increased 16% for the three months ended September 30, 2024, compared to 2023, due to increased demand in the United States and launches in various international markets, partially offset by unfavorable discount rates in the United States. Sales declined 4% for the nine months ended September 30, 2024, compared to 2023, due to a one-time buy-in as a result of our exit from our Interim Operating Model Agreement in the United States with Merck & Co., Inc. (“Merck”), during the fourth quarter of 2023 and unfavorable discount rates in the United States, partially offset by increased demand in the United States and launches in various international markets.

Worldwide sales of ganirelix acetate injection, a fertility treatment, increased 3% for the three months ended September 30, 2024, compared to 2023, primarily due to increased demand in the United States. Sales declined 7% for the nine months ended September 30, 2024, compared to 2023, primarily due to generic competition partially offset by increased demand in the United States.

Other Women’s Health

Worldwide sales of Jada, a device intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, increased 24% and 40% for the three and nine months ended September 30, 2024, compared to 2023, respectively. The sales increase is due to continued uptake in the United States following the Jada launch in early 2022.

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Biosimilars
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
Renflexis$72 $69 3 %4 %$210 $201 4 %4 %
Ontruzant20 40 (49)(49)107 93 15 15 
Brenzys27 13 98 99 63 45 38 39 
Hadlima40 8 **98 20 **
* Calculation not meaningful.

Renflexis is a biosimilar to Remicade2 (infliximab) for the treatment of certain autoimmune conditions. Sales increased 3% and 4% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to continued demand growth in the United States and Canada, partially offset by unfavorable discount rates in the United States. We have commercialization rights to Renflexis in countries outside of Europe, Korea, China, Turkey, and Russia.

Ontruzant is a biosimilar to Herceptin2 (trastuzumab) for the treatment of HER2-overexpressing breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Sales for the three months ended September 30, 2024, compared to 2023, declined 49%, due to the timing of tenders in Brazil and lower demand in the United States and Europe. Sales for the nine months ended September 30, 2024, compared to 2023, increased 15%, driven by increased demand as a result of tenders in Brazil partially offset by lower demand in the United States and Europe. We have commercialization rights to Ontruzant in all countries except in Korea and China.

Brenzys is a biosimilar to Enbrel2 (etanercept) for the treatment of certain inflammatory diseases. Sales in the three and nine months ended September 30, 2024, compared to 2023, increased 98% and 38%, respectively, driven by the timing of government orders in Brazil. We have commercialization rights to Brenzys in countries outside of the United States, Europe, Korea, China, and Japan.

Hadlima is a biosimilar to Humira2 (adalimumab) for the treatment of certain autoimmune and autoinflammatory conditions. We have commercialization rights to Hadlima in countries outside of the EU, Korea, China, Turkey, and Russia. We recorded sales of $40 million and $98 million during the three and nine months ended September 30, 2024, respectively, reflecting an increase due to the launch in the United States in July 2023 and a modest increase in international markets. Hadlima is currently approved in the United States, Australia, Canada, and Israel.

Established Brands

Established brands represents a broad portfolio of well-known brands, 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.

Cardiovascular
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
Zetia/Vytorin (1)
$108 $102 5 %7 %$322 $353 (9)%(7)%
Atozet125 126 (1)1 396 397 — 1 
Cozaar/Hyzaar59 68 (13)(12)186 225 (17)(14)
(1) Sales of the authorized generic version of Zetia were previously included in Other Cardiovascular.

Combined global sales of Zetia and Vytorin, medicines for lowering LDL cholesterol, increased 5% for the three months ended September 30, 2024, compared to 2023, primarily driven by increased demand in China partially offset by unfavorable pricing in Japan. Sales declined 9% for the nine months ended September 30, 2024, compared to 2023, primarily driven by the decrease in demand and unfavorable pricing in Japan, partially offset by increased demand in China.

Sales of Atozet, a medicine for lowering LDL cholesterol, declined 1% and remained consistent for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to LOE in Japan and the timing of tenders in the
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Latin America region partially offset by increased demand in certain markets in Europe. We anticipate a significant decline in sales beginning in the fourth quarter of 2024 due to LOE, which occurred late in the third quarter, in certain markets in Europe.

Combined global sales of Cozaar and Hyzaar, medicines for the treatment of hypertension, declined 13% and 17% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to the unfavorable pricing in Japan. Sales for the nine months ended September 30, 2024 were impacted by VBP in China.

Respiratory
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
Singulair$85 $91 (7)%(5)%$275 $290 (5)%(2)%
Nasonex (1)
63 60 5 5 200 197 1 5 
Dulera48 49 (2)(1)151 144 5 5 
(1) Sales of the authorized generic version of Nasonex were previously included in Other Respiratory.

Worldwide sales of Singulair® (montelukast sodium), a once-a-day oral medicine for the chronic treatment of asthma and for the relief of symptoms of allergic rhinitis, decreased 7% for the three months ended September 30, 2024, compared to 2023, due to unfavorable pricing in Japan and China. Sales decreased 5% for the nine months ended September 30, 2024, compared to 2023, due to decreased demand and price decreases in Japan.

Global sales of Nasonex® (mometasone), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, increased 5% and 1% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to increased demand across international markets partially offset by the phasing of shipments in various international markets.

Global sales of Dulera® (formoterol/fumarate dihydrate), which is also marketed as Zenhale™ in certain markets outside of the United States, a combination medicine for the treatment of asthma, remained relatively consistent for the three months ended September 30, 2024, compared to 2023. Sales increased 5% for the nine months ended September 30, 2024, compared to 2023, primarily due to the favorable impact of increased demand in the United States and Canada.

Non-Opioid Pain, Bone and Dermatology
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
Arcoxia$69 $64 8 %9 %$211 $207 2 %5 %
Diprospan37 31 19 22 102 58 78 80 

Sales of Arcoxia™ ¹ (etoricoxib), a medicine for the treatment of arthritis and pain, increased 8% and 2% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to increased demand in China and favorable pricing in the Asia Pacific region partially offset by a decrease in demand in various international markets.

Sales of Diprospan, a corticosteroid approved for treatment of a wide range of inflammatory conditions, increased 19% and 78% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to recovery from the manufacturing issues resulting from the Market Action. In the first quarter of 2023, we resolved the regulatory inspection findings. We expect sales recovery to continue through the end of 2024.

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Other
Three Months Ended September 30,% Change% Change Excluding Foreign ExchangeNine Months Ended September 30,% Change% Change Excluding Foreign Exchange
($ in millions)2024202320242023
Emgality/Rayvow$29 $— **$69 $— **
Proscar$23 $25 (8)%(7)%$73 $77 (6)%(3)%
* Calculation not meaningful.

Sales of Emgality and Rayvow were $29 million and $69 million for the three and nine months ended September 30, 2024, due to the acquisition of the distribution and promotion rights from Lilly in 2024.

Worldwide sales of Proscar® (finasteride), a medicine for the treatment of symptomatic benign prostate enlargement, declined 8% and 6% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to decreased demand in China.

Gross Profit, Expenses and Other
Three Months Ended September 30,% ChangeNine Months Ended September 30,% Change
($ in millions)2024202320242023
Cost of sales$659 $612 8 %$1,992 $1,832 9 %
Gross profit923 907 2 2,819 2,833 — 
Selling, general and administrative422 538 (22)1,290 1,424 (9)
Research and development111 137 (19)339 394 (14)
Acquired in-process research and development and milestones51 — *81 8 *
Restructuring costs— — *23 4 *
Interest expense126 134 (6)388 398 (3)
Exchange losses6 14 (57)11 25 (56)
Other expense, net— 4 (100)9 11 (18)
* Calculation not meaningful.

Cost of Sales

Cost of sales increased 8% and 9% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to unfavorable product mix, foreign exchange translation and higher inflation impacts to material and distribution costs.

Gross Profit

Gross profit for the three and nine months ended September 30, 2024, compared to 2023, was impacted by increased sales due to volume, partially offset by unfavorable product mix and price, foreign exchange translation and higher inflation impacts to material and distribution costs.

Selling, General and Administrative

Selling, general and administrative expenses decreased 22% and 9% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to the $80 million charge in 2023 related to the Microspherix legal matter and lower costs associated with the implementation of our Enterprise Resource Planning (“ERP”) system.

Research and Development

Research and development expenses decreased 19% and 14% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to a decrease in clinical study activity and lower personnel costs due to a reduction in headcount related to our restructuring initiatives.
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Acquired In-Process Research and Development and Milestones

For the three months ended September 30, 2024, acquired in-process research and development and milestones of $51 million primarily represent the research and development milestones related to our agreement with Henlius, which were determined to be probable of being achieved. For the nine months ended September 30, 2024, acquired in-process research and development and milestones of $81 million primarily represent the research and development milestones of $70 million for our agreement with Henlius and $10 million for our agreement with Cirqle, which were determined to be probable of being achieved. For the nine months ended September 30, 2023 acquired in-process research and development and milestones of $8 million represent the upfront and development milestones related to the Claria transaction.

Restructuring Costs

For the nine months ended September 30, 2024, we incurred $23 million, of headcount-related restructuring expense related to the ongoing optimization of our internal operations, primarily the research and development function.

Interest Expense

Interest expense for the three months ended September 30, 2024, compared to 2023, decreased 6% due to lower interest rates on the refinanced debt and our cross-currency swaps. Interest expense for the nine months ended September 30, 2024, compared to 2023, decreased 3% due to lower interest rates on the refinanced debt and our cross-currency swaps, partially offset by approximately $4 million in debt issuance costs related to the refinancing of our long-term debt. Beginning in May 2024, the difference between the interest rate received of 7.3125% and paid of 5.8330% under the cross-currency swap agreements is recorded in Interest expense.

Exchange Gains (Losses)

For the three and nine months ended September 30, 2024, the reduction in exchange losses was driven by less volatility in foreign exchange compared to the prior year and the favorable changes in spot rates of our forward contracts.

Other Expense, net

Other expense decreased for the three and nine months ended September 30, 2024, compared to 2023.

Taxes on Income

The effective income tax rates were (11.3)% and 16.1% for the nine months ended September 30, 2024 and 2023, respectively. These effective income tax rates reflect the beneficial impact of foreign earnings, offset by the impact of U.S. inclusions under the Global Intangible Low-Taxed Income regime and a partial valuation allowance recorded against non-deductible U.S. interest expense. There was a favorable impact to the 2024 year-to-date effective tax rate, which was driven by the favorable closure of the two non-US tax audits and a return to provision adjustment for the Switzerland entity.

In the third quarter of 2024, the Swiss tax authority confirmed to the Company the applicable useful life of an existing tax asset. As a result, the Company has now concluded it is more likely than not it will utilize the entirety of the tax asset. As such, the Company released a $210 million related valuation allowance.

Effective January 1, 2024, multiple jurisdictions, most notably, a majority of the European Union member states, implemented the Organization for Economic Co-operation and Development’s Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least €750 million. We have evaluated the effect of this for the first three quarters of 2024 and do not expect that it will have a material effect on a full year basis.

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Liquidity and Capital Resources

As of September 30, 2024, we had cash and cash equivalents of $763 million. We have historically generated and expect to continue to generate positive cash flow from operations. Our ability to fund our operations and anticipated capital needs is reliant upon the generation of cash from operations, supplemented as necessary by periodic utilization of our revolving credit facility. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings, payment of dividends and strategic business development transactions. We believe that our financing arrangements, future cash from operations, and access to capital markets will provide adequate resources to fund our future cash flow needs.

During the second quarter of 2024, we refinanced a portion of our long-term debt. These transactions extended certain maturity dates, resulted in lower interest rates for certain of our long-term debt and increased the capacity of our revolving credit facility. See Note 10 “Long-Term Debt” to the Condensed Consolidated Financial Statements included elsewhere in this report for further information on our long-term debt transactions.

Working capital is defined as current assets less current liabilities and was $2.0 billion and $1.6 billion as of September 30, 2024 and December 31, 2023, respectively. The increase in working capital was primarily driven by increased cash from positive cash flows, inventory purchases, and current assets due to the timing of tax payments and a decline in our payables, due to the timing of payments.

Net cash provided by operating activities was $549 million for the nine months ended September 30, 2024, compared to $402 million for the same period in the prior year. The increase in cash provided by operating activities was primarily attributable to the increase in our operating results, which was the result of increased sales period over period.

Net cash used in investing activities was $217 million for the nine months ended September 30, 2024, compared to $179 million for the same period in the prior year, primarily due to the $73 million upfront payments related to the agreement with Lilly and the additional $26 million payments related to milestones, partially offset by lower capital spending as a result of the completion of the implementation of our ERP system.

Net cash used in financing activities was $286 million for the nine months ended September 30, 2024, compared to $492 million for the same period in the prior year. The decrease in cash used in financing activities was driven by the $250 million voluntary prepayment on the U.S. dollar-denominated term loan in the nine months ended September 30, 2023, compared to a $7.5 million voluntary prepayment on the U.S. dollar-denominated term loan and $36 million of debt issuance costs related to the long-term debt refinancing in the nine months ended September 30, 2024.

As part of our post-spinoff plan, we have approved an initiative to further optimize our manufacturing and supply network. As part of this initiative, we will continue to separate our supply chain through planned exits from supply agreements from Merck through 2031. This will enable us to redefine our appropriate sourcing strategy, and move to fit-for-purpose supply chains, while focusing on delivering efficiencies. We anticipate we will incur costs associated with this separation, including but not limited to accelerated depreciation, exit premiums and fees, technology transfer costs, stability and qualification batch costs, one-time resourcing costs, regulatory and filing costs, capital investment, and inventory stock bridges.

Our contractual obligations as of September 30, 2024, which require material cash requirements in the future, consist of contractual milestones, purchase obligations and lease obligations. During the fourth quarter, we anticipate paying higher cash taxes than the fourth quarter of 2023. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 for further details. As of September 30, 2024, there have been no material changes to our contractual obligations outside of the ordinary course of business.

During the third quarter of 2024, we paid cash dividends of $0.28 per share. On October 31, 2024, the Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of our common stock. The dividend is payable on December 12, 2024, to stockholders of record at the close of business on November 12, 2024.

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Critical Accounting Estimates

Our significant accounting policies, which include management’s best estimates and judgments, are included in Note 3 “Summary of Accounting Policies” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. See Note 2 “Basis of Presentation” to the Condensed Consolidated Financial Statements for information on the adoption of new accounting standards during 2024. There have been no changes to our accounting policies as of September 30, 2024. A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates are disclosed in the Critical Accounting Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Organon’s Annual Report on Form 10-K for the year ended December 31, 2023.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, see Note 2 “Basis of Presentation” to the Condensed Consolidated Financial Statements included elsewhere in this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no changes to our market risk during the quarter ended September 30, 2024. For a discussion of our exposure to market risk, refer to our market risk disclosures set forth under Item 7A.—Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”)) as of the period ending September 30, 2024. Based upon that evaluation, our CEO and our CFO concluded that, as of September 30, 2024, the end of the period covered by this report, our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO and our CFO, as appropriate, to allow timely decisions regarding required disclosure.

During the quarter ended September 30, 2024, there have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The information called for by this Item is incorporated herein by reference to Note 15 “Contingencies” included in Part I, Item. 1.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 5. Other Information

Rule 10b5-1 and non-Rule 10b5-1 Trading Arrangements

During the three months ended September 30, 2024, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.


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Item 6. Exhibits
Number
Description
♦2.1
—
*31.1
—
*31.2
—
**32.1
—
**32.2
—
101.INS
—
XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
—
XBRL Taxonomy Extension Schema Document.
101.CAL
—
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
—
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
—
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
—
XBRL Taxonomy Extension Presentation Linkbase Document.
104
—
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Filed herewith
**Furnished herewith
♦Certain Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any document so furnished.


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Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ORGANON & CO.
Date: November 1, 2024
/s/ Kathryn DiMarco
Kathryn DiMarco
Senior Vice President Finance - Corporate Controller
Date: November 1, 2024
/s/ Matthew Walsh
Matthew Walsh
Chief Financial Officer