[10-Q] Organon & Co. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Organon & Co. reported Q3 2025 results with revenues of $1,602 million, up slightly from $1,582 million a year ago. Gross profit was $857 million. Net income was $160 million and diluted EPS was $0.61, compared with $359 million and $1.38 in Q3 2024. The effective tax rate was 34.0%.
Year to date, revenues were $4,709 million versus $4,811 million last year, with net income of $392 million. Operating cash flow reached $559 million for the first nine months. The company ended the quarter with cash and equivalents of $672 million, total assets of $13,552 million, long-term debt of $8,783 million, and stockholders’ equity of $906 million. In Q2 2025, Organon repurchased $242 million of 5.125% notes due 2031 and terminated a $103 million NovaQuest funding agreement, recording gains in other income.
Product highlights included Nexplanon/Implanon NXT $223 million and Vtama $34 million in the quarter. In September, the FDA approved Bildyos and Bilprevda (denosumab biosimilars) for all reference indications, with the EU also granting authorizations. The company declared a $0.02 per-share dividend in Q3 and reported a restructuring program initiated earlier in 2025.
Positive
- None.
Negative
- Quarterly net income declined to $160M from $359M year over year, reducing EPS to $0.61 from $1.38.
Insights
Stable revenue, lower earnings; targeted balance sheet actions.
Quarterly revenue rose modestly to
Debt actions included a repurchase of
Growth drivers include Vtama quarterly sales of
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 10-Q
________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ______ to ______
Commission File No. 001-40235
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) (zip code) | ||||||||
(Registrant’s telephone number, including area code) (551) 430-6900
Not Applicable | ||||||||
(Former name, former address and former fiscal year, if changed since last report.) | ||||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of common stock outstanding as of the close of business on November 3, 2025: 259,982,912
Table of Contents
| Page No. | ||||||||
| PART I | FINANCIAL INFORMATION | 3 | ||||||
| Item 1. | Financial Statements (unaudited) | 3 | ||||||
Condensed Consolidated Statements of Income | 3 | |||||||
Condensed Consolidated Statements of Comprehensive Income | 4 | |||||||
Condensed Consolidated Balance Sheets | 5 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity | 6 | |||||||
Condensed Consolidated Statements of Cash Flows | 7 | |||||||
Notes to Condensed Consolidated Financial Statements (unaudited) | 8 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 38 | ||||||
| Item 4. | Controls and Procedures | 38 | ||||||
| PART II | OTHER INFORMATION | 40 | ||||||
| Item 1. | Legal Proceedings | 40 | ||||||
| Item 1A. | Risk Factors | 40 | ||||||
| Item 5. | Other Information | 42 | ||||||
| Item 6. | Exhibits | 43 | ||||||
Signatures | ||||||||
The following notations in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (this “Form 10-Q”) have the meanings as set forth below:
“1” Indicates, in this Form 10-Q, brand names of products, that are not available in the United States.
“2” Indicates, in this Form 10-Q, brand names of products that are trademarks not owned by Organon & Co. or its subsidiaries. Actemra is a trademark registered in the United States in the name of Chugai Seiyaku KK.; Humira is a trademark registered in the United States in the name of AbbVie Biotechnology Ltd.; Enbrel is a trademark registered in the United States in the name of Immunex Corporation; Remicade is a trademark registered in the United States in the name of Janssen Biotech, Inc.; Herceptin and Perjeta are trademarks registered in the United States in the name of Genentech, Inc.; Emgality is a trademark registered in the United States in the name of Eli Lilly and Company (used under license); and Rayvow is a registered trademark of Eli Lilly in the European Union and other countries (used under license); Prolia and Xgeva are trademarks registered in the U.S. in the name of Amgen Inc. Brand names of products that are in all italicized letters, without the footnote, are trademarks of, or are otherwise licensed by, Organon & Co. and/or one of its subsidiaries.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Organon & Co.
Condensed Consolidated Statements of Income
(Unaudited, $ in millions except shares in thousands and per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||||||||
| Acquired in-process research and development and milestones | |||||||||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
Exchange losses | |||||||||||||||||||||||||||||
Other (income) expense, net | ( | ( | |||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||
| Basic | |||||||||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Organon & Co.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, $ in millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
Other Comprehensive (Loss) Income, Net of Taxes: | |||||||||||||||||||||||||||||
Benefit plan net gain and prior service credit, net of amortization | ( | ||||||||||||||||||||||||||||
Cumulative translation adjustment | ( | ( | |||||||||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Organon & Co.
Condensed Consolidated Balance Sheets
(Unaudited, $ in millions except shares in thousands and per share amounts)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable (net of allowance for doubtful accounts of $ 2025 and $ | |||||||||||
Inventories (excludes inventories of $ | |||||||||||
| Other current assets | |||||||||||
| Total Current Assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangibles, net | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities: | |||||||||||
Current portion of long-term debt and short-term borrowings | $ | $ | |||||||||
| Trade accounts payable | |||||||||||
| Accrued and other current liabilities | |||||||||||
| Income taxes payable | |||||||||||
| Total Current Liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred income taxes | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Contingencies (Note 15) | |||||||||||
Organon & Co. Stockholders’ Equity: | |||||||||||
Common stock, $ Authorized - Issued and outstanding - | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Total Stockholders’ Equity | |||||||||||
Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Organon & Co.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, $ in millions, except shares in thousands and per share amounts)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total | |||||||||||||||||||||||||||||||||||||
| Shares | Par Value | ||||||||||||||||||||||||||||||||||||||||
| Balance at July 1, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of taxes | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Cash dividends declared on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Balance at July 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of taxes | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
Cash dividends declared on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
Balance at January 1, 2024 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
Cash dividends declared on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
Balance at January 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of taxes | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Cash dividends declared on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Organon & Co.
Condensed Consolidated Statements of Cash Flows
(Unaudited, $ in millions)
| Nine Months Ended September 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||||||||
| Depreciation | |||||||||||||||||
| Amortization | |||||||||||||||||
| Impairment of assets | |||||||||||||||||
| Acquired in-process research and development and milestones | |||||||||||||||||
Accretion and changes in fair value in contingent consideration | ( | ||||||||||||||||
Deferred income tax expense (benefit) | ( | ||||||||||||||||
| Stock-based compensation | |||||||||||||||||
Unrealized foreign exchange gain | ( | ( | |||||||||||||||
| Gain on debt repurchase | ( | ||||||||||||||||
| Other | |||||||||||||||||
Net changes in assets and liabilities, net of assets acquired | |||||||||||||||||
| Accounts receivable | ( | ||||||||||||||||
| Inventories | ( | ( | |||||||||||||||
| Other current assets | ( | ( | |||||||||||||||
| Trade accounts payable | ( | ( | |||||||||||||||
| Accrued and other current liabilities | ( | ||||||||||||||||
| Income taxes payable | ( | ||||||||||||||||
| Other | |||||||||||||||||
| Net Cash Flows Provided by Operating Activities | |||||||||||||||||
| Cash Flows from Investing Activities | |||||||||||||||||
| Capital expenditures | ( | ( | |||||||||||||||
| Proceeds from sale of property, plant and equipment | |||||||||||||||||
| Acquired in-process research and development and milestones | ( | ( | |||||||||||||||
Dermavant acquisition, net of cash acquired | ( | ||||||||||||||||
Purchase of product rights and asset acquisition | ( | ( | |||||||||||||||
| Net Cash Flows Used in Investing Activities | ( | ( | |||||||||||||||
| Cash Flows from Financing Activities | |||||||||||||||||
| Proceeds from debt | |||||||||||||||||
| Repayments of debt | ( | ( | |||||||||||||||
| Payment of long-term debt issuance costs | ( | ||||||||||||||||
| Employee withholding taxes related to stock-based awards | ( | ( | |||||||||||||||
| Dividend payments | ( | ( | |||||||||||||||
| Net Cash Flows Used in Financing Activities | ( | ( | |||||||||||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | |||||||||||||||||
Net (Decrease) Increase in Cash and Cash Equivalents | ( | ||||||||||||||||
| Cash and Cash Equivalents, Beginning of Period | |||||||||||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | |||||||||||||||
The accompanying notes are an integral part of these interim Condensed Consolidated Financial Statements.
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Notes to Condensed Consolidated Financial Statements (unaudited)
1. Background and Nature of Operations
Organon & Co. (“Organon” or the “Company”) is a global health care company with a primary focus on improving the health of women throughout their lives. Organon develops and delivers innovative health solutions through a portfolio of more than 70 medicines and products including prescription therapies and medical devices within its women’s health, and general medicines product portfolios (the “Organon Products”). 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 portfolio of 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.
•General Medicines: Organon’s current general medicines portfolio includes leading brands in cardiovascular, respiratory and dermatology as well as non-opioid pain management and biosimilars of immunology and oncology treatments. Organon’s immunology and oncology biosimilar medicines have been launched in several countries. Several brands in general medicines 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 for 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, 2024.
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, 2024. Accordingly, actual results could differ materially from management’s estimates and assumptions.
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Notes to Condensed Consolidated Financial Statements (unaudited)
Segments
Following a change in executive leadership, the Company reassessed its segment reporting structure and, during the second quarter of 2025, determined that it operates as one operating segment comprised of two reporting units: U.S. and International. Organon is engaged in developing and delivering innovative health solutions through its portfolio of prescription therapies and medical devices within women's health and general medicines. The Company’s chief operating decision‑maker (the “CODM”) is the Chief Executive Officer. The CODM assesses performance and decides how to allocate resources for our one operating segment based on consolidated net income that is reported on the consolidated statements of income. The Company has also evaluated the significant segment expenses incurred by our single segment and regularly provided to the CODM. The significant segment expenses provided to the CODM are consistent with those reported on the Condensed Consolidated Statements of Income and include cost of sales, selling, general and administrative, research and development, interest expense and income taxes. The CODM uses these metrics to make key operating decisions such as: approving a new product launch strategy, making significant capital expenditures, approving the design of key commercialization strategies, decisions about key personnel, and approving annual operating and capital budgets. Our CODM considers budget-to-actual variances and year over year performance when making decisions supporting capital resource allocation. The Company manages assets on a consolidated basis as reported on the consolidated balance sheets.
Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired. Goodwill is evaluated for impairment as of October 1 each year, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that fair value is less than carrying value. If the Company concludes it is more likely than not that fair value is less than carrying value, a quantitative fair value test is performed. If carrying value is greater than fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill).
The Company’s quantitative goodwill impairment analysis relies on projected cash flows and market assumptions. A significant decline in forecasted performance, whether due to external economic factors or internal operational challenges, could result in the fair value of either the U.S. or International reporting unit falling below its carrying amount. In such cases, the Company would be required to recognize a non-cash impairment charge, which could materially impact our financial condition and results of operations. Additionally, the Company may be required to record impairment charges on goodwill related to a reporting unit if adverse macroeconomic or geopolitical developments materially affect our business outlook. These developments may include, but are not limited to, the implementation of tariffs, changes in trade policies, inflationary pressures, supply chain disruptions, or regulatory changes that reduce forecasts or increase operating costs.
Recently Issued Accounting Standards Not Yet Adopted
In October 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. Among other things, the ASU adds the scope exception from derivative accounting for contracts that are not exchange-traded and having features based on operations or activities specific to one of the parties involved, reducing complexity and diversity in practice. The amendments in this ASU are effective for annual periods beginning on January 1, 2027, and should be applied on a prospective basis, with the option to apply the amendments on a modified retrospective basis; early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments modernize the accounting for internal-use software to better reflect contemporary development practices, such as agile and iterative methodologies. Key changes include revised cost capitalization thresholds, enhanced guidance for assessing development uncertainty, and new disclosure requirements intended to improve transparency and consistency across entities. The amendments in this ASU are effective for annual periods beginning on January 1, 2028 and interim reporting periods within those periods, and may be applied either prospectively, retrospectively or on a modified retrospective basis; early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard requires entities to disaggregate operating expenses into specific categories to provide enhanced transparency into the nature and function of expenses. This guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. This
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Notes to Condensed Consolidated Financial Statements (unaudited)
guidance should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. This ASU will have no impact on the Company’s consolidated financial condition or results of operations. The Company is currently evaluating the effects of this guidance on its related disclosures.
In December 2023, the FASB issued 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. 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.
3. Acquisitions and Licensing Arrangements
Biogen Inc. (“Biogen”)
In March 2025, Organon acquired from Biogen the regulatory and commercial rights in the United States for Tofidence® (tocilizumab-bavi). Tofidence, launched in the U.S. market in May 2024, is indicated in certain patients for the treatment of moderately to severely active rheumatoid arthritis, giant cell arthritis, polyarticular juvenile idiopathic arthritis, systemic juvenile idiopathic arthritis, and COVID-19. Under the terms of the agreement with Biogen, Organon paid an upfront payment of $51 million in July 2025, and will be obligated to pay tiered royalty payments based on net sales and tiered annual net sales milestone payments of up to $45 million from a previous in-license arrangement with Bio-Thera Solutions Ltd., the product developer for Tofidence. In the first quarter of 2025, the Company recognized an intangible asset of $51 million, related to the upfront payment to Biogen, which will be amortized over 10 years.
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, was approved by the U.S. Food and Drug Administration (the “FDA”) in May 2022 for the topical treatment of mild, moderate, and severe plaque psoriasis in adults. In December 2024, the FDA approved Vtama for the treatment of atopic dermatitis, also known as eczema, in adults and children two 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 acquisition expanded Organon’s existing portfolio of general medicines.
Consideration for Dermavant consists of the upfront payment of $175 million and a $75 million milestone payment upon regulatory approval of the atopic dermatitis indication in the United States, which was paid in the first quarter of 2025, 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 were accounted for at fair value on the acquisition date.
The transaction was accounted for as a business combination. The aggregate consideration is calculated as follows:
| (in millions) | ||||||||
| Cash consideration paid to Dermavant at closing | $ | |||||||
| Fair value of contingent consideration, as of acquisition date | ||||||||
| Aggregate purchase price consideration | $ | |||||||
Contingent consideration included as part of the consideration relates to potential future milestone obligations of up to $1.025 billion, including: (i) up to $75 million in cash payable upon regulatory approval, and (ii) up to $950 million for the achievements of certain commercial milestones. The fair value of the contingent consideration recognized on the acquisition date was determined using the inputs disclosed in Note 11. “Financial Instruments.” The Company reassesses its acquisition-related contingent consideration liabilities each quarter for changes in fair value.
In the second quarter of 2025, the final allocation of the consideration transferred to the assets acquired and the liabilities assumed was completed. The Company has not made any adjustments to the allocation of the consideration since initially reported in the fourth quarter of 2024.
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
In the first quarter of 2025, the Company paid $75 million for the regulatory milestone related to the atopic dermatitis indication of Vtama in the United States achieved during the fourth quarter of 2024, and paid $35 million related to sales-based milestones that were achieved in the fourth quarter of 2024 related to an assumed licensing agreement.
In April 2025, Health Canada approved Nduvra® (tapinarof) cream, the first in a novel class of aryl hydrocarbon receptor agonists to be approved in Canada for the topical treatment of plaque psoriasis in adults. As a result, in the second quarter of 2025, the Company reclassified the acquired IPR&D intangible asset to product and product rights and will amortize the intangible asset over nine years .
Suzhou Centergene Pharmaceuticals (“Centergene”)
Due to changes in the evolving fertility landscape in China, the Company exited its agreement with Centergene. As a result, during the first quarter of 2025, the Company recognized $6 million in Acquired in-process research and development and milestones.
Eli Lilly (“Lilly”)
As of September 30, 2025, Organon has $240 million accrued in Other noncurrent liabilities related to the probable sales-based milestones. In January 2025, the Company paid $20 million related to the milestones.
Shanghai Henlius Biotech, Inc. (“Henlius”)
In September 2025, the FDA approved Bildyos® (denosumab-nxxp) injection 60 mg/mL and Bilprevda® (denosumab-nxxp) injection 120 mg/1.7 mL, biosimilars to Prolia2 (denosumab) and Xgeva2 (denosumab), respectively, for all indications of the reference products, and the European Commission granted marketing authorization for Bildyos and Bilprevda. As a result, sales-based milestones related to the Henlius agreement were determined to be probable of being achieved and the Company recognized intangible assets of $30 million related to these milestones. The intangible assets will be amortized over 9 years.
In February 2025, Organon paid $10 million related to the milestone for the development of HLX11, an investigational biosimilar of Perjeta2 (pertuzumab), which was recognized as Acquired in-process research and development and milestones in 2024. In March 2025, the European Medicines Agency validated the marketing authorization application for HLX11.
Oss Biotech Site
In July 2025, Organon acquired the Oss Biotech manufacturing facility in the Netherlands from Merck & Co., Inc., Rahway, NJ, US (“Merck”). This agreement covers Organon’s fertility drug substance production and associated support functions. Organon is required to pay aggregate consideration of $25 million, of which $15 million was paid in July 2025 and the remaining $10 million will be paid in the first half of 2026. In addition to the purchase of the facility, the Company also paid $71 million for the purchase of the remaining inventory at the site.
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
4. Earnings per Share (“EPS”)
The calculations of basic and diluted EPS are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| ($ in millions and shares in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Basic weighted average number of shares outstanding | |||||||||||||||||||||||||||||
| Stock awards and equity units (share equivalent) | |||||||||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||||||||
| EPS: | |||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||||||||
| Anti-dilutive shares excluded from the calculation of EPS | |||||||||||||||||||||||||||||
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
5. Product and Geographic Information
Revenues of the Company’s products were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | U.S. | Int’l | Total | U.S. | Int’l | Total | U.S. | Int’l | Total | U.S. | Int’l | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Women’s Health | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nexplanon/Implanon NXT | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Follistim AQ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NuvaRing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ganirelix Acetate Injection | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marvelon/Mercilon | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jada | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Women’s Health (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Medicines | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Biosimilars | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Renflexis | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hadlima | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ontruzant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brenzys | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Biosimilars (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cardiovascular | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Atozet | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zetia | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cozaar/Hyzaar | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vytorin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rosuzet | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Cardiovascular (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Respiratory | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Singulair | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nasonex | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dulera | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clarinex | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Respiratory (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Opioid Pain, Bone and Dermatology | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arcoxia | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fosamax | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diprospan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vtama | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Non-Opioid Pain, Bone and Dermatology (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Propecia | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Emgality/Rayvow | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Proscar | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (2) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Totals may not foot due to rounding. Trademarks appearing above in italics are trademarks of, or are used under license by, the Organon group of companies.
(1) Includes sales of products not listed separately.
(2) Includes manufacturing sales to third parties.
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
Revenues by geographic area where derived are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Europe and Canada | $ | $ | $ | $ | |||||||||||||||||||||||||
| United States | |||||||||||||||||||||||||||||
| Asia Pacific and Japan | |||||||||||||||||||||||||||||
| China | |||||||||||||||||||||||||||||
Latin America, Middle East, Russia, and Africa | |||||||||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
(1) Includes manufacturing sales to third parties.
6. Stock-Based Compensation Plans
The Company grants stock option awards, restricted share units (“RSUs”), performance share units (“PSUs”), and cash awards pursuant to the 2021 Incentive Stock Plan.
Stock-based compensation expenses incurred by the Company were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Stock-based compensation expense recognized in: | |||||||||||||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
| Income tax benefits | $ | $ | $ | $ | |||||||||||||||||||||||||
The fair value of options granted was determined using the following assumptions:
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Expected dividend yield | % | % | ||||||||||||||||||
| Risk-free interest rate | ||||||||||||||||||||
| Expected volatility | ||||||||||||||||||||
| Expected life (years) | ||||||||||||||||||||
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
A summary of the equity award transactions for the nine months ended September 30, 2025 is as follows:
| Stock Options | RSUs | PSUs | |||||||||||||||||||||||||||||||||||||||
| (shares in thousands) | Shares | Weighted average exercise price | Weighted average grant date fair value | Shares | Weighted average grant date fair value | Shares | Weighted average grant date fair value | ||||||||||||||||||||||||||||||||||
| Outstanding as of January 1, 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Granted/Issued | |||||||||||||||||||||||||||||||||||||||||
| Vested/Exercised | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Forfeited/Cancelled | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Outstanding as of September 30, 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
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, 2025:
| Equity Awards Vested and Expected to Vest | Equity Awards That are Exercisable | ||||||||||||||||||||||||||||||||||||||||||||||
(awards in thousands; aggregate intrinsic value in millions) | Awards | Weighted Average Exercise Price | Aggregate Intrinsic Value | Remaining Term (in years) | Awards | Weighted Average Exercise Price | Aggregate Intrinsic Value | Remaining Term (in years) | |||||||||||||||||||||||||||||||||||||||
| Stock Options | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
RSUs | |||||||||||||||||||||||||||||||||||||||||||||||
PSUs | |||||||||||||||||||||||||||||||||||||||||||||||
The amount of unrecognized compensation costs as of September 30, 2025 was $146 million, which will be recognized in operating expense ratably over the weighted average vesting period of 1.96 years.
7. Restructuring
During the first quarter of 2025, we implemented additional restructuring initiatives to drive an enterprise-wide operating model optimization that resulted in an approximate 6 % headcount reduction. The restructuring activities were initiated to streamline and simplify the Company’s operating model to create more efficient processes and a simplified structure. Restructuring costs include separation costs associated with manufacturing-related headcount reductions.
In prior years, Organon implemented restructuring activities related to the optimization of its internal operations by reducing headcount. As a result of these combined activities, the Company’s headcount was reduced by approximately 5 % 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, 2025 | December 31, 2024 | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||
| Severance & severance related costs | ||||||||||||||
| Cash payments and other | ( | ( | ||||||||||||
| Ending Balance | $ | $ | ||||||||||||
Organon does not anticipate incurring additional restructuring charges related to previously-announced initiatives. Organon expects the remaining severance payments associated with the restructuring activities to be primarily paid in 2025.
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
8. Taxes on Income
The effective income tax rates were 34.0 % and (73.7 )% for the three months ended September 30, 2025 and 2024, respectively, and 31.6 % and (11.3 )% for the nine months ended September 30, 2025 and 2024, 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 2025 year-to-date effective tax rate driven by a tax amortization benefit. The favorable impact to the 2024 year-to-date effective tax rate was driven by the reversal of a valuation allowance, the favorable closure of two non-U.S. tax audits and a return to provision adjustment for an entity in Switzerland.
9. Inventories
Inventories consisted of:
| ($ in millions) | September 30, 2025 | December 31, 2024 | |||||||||
| Finished goods | $ | $ | |||||||||
Raw materials | |||||||||||
| Work in process | |||||||||||
| Supplies | |||||||||||
| Total (approximates current cost) | $ | $ | |||||||||
Increase (Decrease) to last in, first out (“LIFO”) costs | ( | ||||||||||
| $ | $ | ||||||||||
| Recognized as: | |||||||||||
| Inventories | $ | $ | |||||||||
| Other assets | |||||||||||
Inventories valued under the LIFO method | |||||||||||
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.
As part of the Dermavant acquisition, the Company acquired $97 million of inventory, which includes a $63 million purchase accounting inventory fair value adjustment. As of September 30, 2025 and December 31, 2024, there was $25 million and $56 million, respectively, remaining in inventory related to the fair value adjustment.
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
10. Long-Term Debt and Short-Term Borrowings
Long-term debt and short-term borrowings consist of the following:
| ($ in millions) | September 30, 2025 | December 31, 2024 | |||||||||
| Senior Credit Agreement | |||||||||||
| Term Loan B Facility: | |||||||||||
SOFR plus | $ | $ | |||||||||
EURIBOR plus | |||||||||||
| Revolving credit facility | |||||||||||
Revenue Interest Purchase and Sale Agreement (1) | |||||||||||
| NovaQuest Funding Agreement | |||||||||||
| Other borrowings | |||||||||||
| Other (discounts and debt issuance costs) | ( | ( | |||||||||
| Total principal long-term debt and short-term borrowings | $ | $ | |||||||||
| Less: Current portion of long-term debt and short-term borrowings | |||||||||||
| Total Long-term debt, net of current portion | $ | $ | |||||||||
(1) Recognized at the amortized cost basis. The remaining principal is determined as the initial fair value less principal payments. As of September 30, 2025, the remaining principal of the revenue interest purchase and sale agreement (the “RIPSA”) that the Company assumed in connection with its acquisition of Dermavant is $156 million.
The nature and terms of Organon’s long-term debt are described in detail in Note 12. “Long-Term Debt and Leases” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
During the second quarter of 2025, the Company repurchased and cancelled $242 million of the Company’s 5.125 % notes due in 2031 (“the 2031 Notes”) prior to maturity which resulted in a pre-tax gain on extinguishment of debt of $42 million, recorded in Other (income) expense, net in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2025.
During the second quarter of 2025, the Company voluntarily repaid and terminated the funding agreement with NovaQuest Co-Investment Fund VIII, L.P. (“NovaQuest”, and such agreement, the “NovaQuest Funding Agreement”) valued at $103 million. The termination resulted in a pre-tax gain on extinguishment of debt of $4 million, recorded in Other (income) expense, net in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2025.
For the nine months ended September 30, 2025 the Company had borrowings and repayments on the revolver of $730 million and $700 million, respectively.
Long-term debt was recorded at the carrying amount. The estimated fair value of long-term debt (including current portion) is as follows:
| ($ in millions) | Fair Value Measurement Level | September 30, 2025 | December 31, 2024 | |||||||||||||||||
Long-term debt | 2 | $ | $ | |||||||||||||||||
| Long-term debt (RIPSA & NovaQuest) | 3 | |||||||||||||||||||
Level 2 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 liability. Level 3 was estimated using unobservable inputs.
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
The Company made interest payments related to its debt instruments of $276 million for the nine months ended September 30, 2025. The average maturity of the Company’s long-term debt as of September 30, 2025 is approximately 4.8 years and the weighted-average interest rate on total borrowings as of September 30, 2025 is 5.0 %.
The schedule of principal payments required on long-term debt and short-term borrowings for the next five years, exclusive of $22 million of accrued interest related to the RIPSA, and thereafter are as follows:
| ($ in millions) | |||||
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
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, 2025, the Company is in compliance with all financial covenants, and no default or event of default has occurred.
11. Financial Instruments
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, 2025 | December 31, 2024 | ||||||||||||||
Other current assets: | |||||||||||||||||
| Forward contracts | 2 | $ | $ | ||||||||||||||
Other assets: | |||||||||||||||||
| Cross-currency swap | 2 | ||||||||||||||||
Accrued and other current liabilities: | |||||||||||||||||
| Contingent consideration | 3 | ||||||||||||||||
| Forward contracts | 2 | ||||||||||||||||
Other noncurrent liabilities: | |||||||||||||||||
| Contingent consideration | 3 | ||||||||||||||||
| Cross-currency swap | 2 | ||||||||||||||||
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Table of Contents
Notes to Condensed Consolidated Financial Statements (unaudited)
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 Canadian dollar. 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 $2.0 billion and $1.4 billion as of September 30, 2025 and December 31, 2024, 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. €718 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 and Short-Term Borrowings” for additional details.
Cross-Currency Swaps
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 is 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 $1 billion. The notional amount based on the Euro leg of the cross-currency swaps has been designated and is effective as a hedge of the net investment in euro-denominated subsidiaries. The difference between the interest rate received and paid under the cross-currency swap agreements is recorded in Interest expense in the Condensed Consolidated Statements of Income. The cash flows and the related gains and losses from the periodic settlements of the cross-currency swaps are reported as Operating Activities in the Condensed Consolidated Statements of Cash Flows.
Foreign currency gain (loss) due to spot rate fluctuations on the euro-denominated debt instruments and the change in fair value of the cross-currency swaps resulting from hedge designation were included within Cumulative translation adjustment in Other comprehensive income (loss), net of taxes:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
Euro-denominated debt instruments gain (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||
Cross-currency swaps gain (loss) | ( | ( | ( | ||||||||||||||||||||||||||
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Notes to Condensed Consolidated Financial Statements (unaudited)
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) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
Derivative loss (gain) in Exchange losses | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Derivative gain in Interest expense | ( | ( | ( | ( | |||||||||||||||||||||||||
Contingent Consideration
The fair value measurement of contingent consideration arising from business combinations is determined via probability-weighted cash flows using a Monte Carlo simulation model, which are then discounted to present value. These inputs may include: (i) the estimated amount and timing of projected cash flows, (ii) the probability of the achievement of the factor(s) on which the contingency is based and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly higher or lower fair value measurement. At September 30, 2025, the fair value measurements of acquisition-related contingent consideration were determined using discount rates ranging from 5.54 % to 7.27 %.
The following table presents a reconciliation of contingent consideration measured on a recurring basis using significant unobservable inputs (Level 3):
| ($ in millions) | September 30, 2025 | |||||||
| Beginning balance | $ | |||||||
Accretion and changes in fair value in Other (income) expense, net | ( | |||||||
| Payment | ( | |||||||
| Ending balance | $ | |||||||
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 $268 million and $186 million of accounts receivable as of September 30, 2025 and December 31, 2024, respectively, which reduced outstanding accounts receivable. The cash received from the financial institutions is reported within Operating Activities in the Condensed Consolidated Statements of Cash Flows. The cost of factoring such accounts receivable were not material for the nine months ended September 30, 2025 and 2024.
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Notes to Condensed Consolidated Financial Statements (unaudited)
12. Accumulated Other Comprehensive Income (Loss)
Changes in Accumulated other comprehensive income (loss) by component are as follows:
| ($ in millions) | Employee Benefit Plans | Cumulative Translation Adjustment | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||
| Balance at July 1, 2024, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive (loss) income, pretax | ( | ||||||||||||||||
| Tax | |||||||||||||||||
Other comprehensive (loss) income, net of taxes | ( | ||||||||||||||||
| Balance at September 30, 2024, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
| Balance at July 1, 2025, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive loss, pretax | ( | ( | |||||||||||||||
| Tax | |||||||||||||||||
Other comprehensive loss, net of taxes | ( | ( | |||||||||||||||
| Balance at September 30, 2025, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
| Balance at January 1, 2024, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive loss, pretax | ( | ( | |||||||||||||||
| Tax | |||||||||||||||||
Other comprehensive loss, net of taxes | ( | ( | |||||||||||||||
| Balance at September 30, 2024, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
| Balance at January 1, 2025, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income, pretax | |||||||||||||||||
| Tax | |||||||||||||||||
Other comprehensive income, net of taxes | |||||||||||||||||
| Balance at September 30, 2025, net of taxes | $ | ( | $ | ( | $ | ( | |||||||||||
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, 2025, one potential remaining $25 million milestone remains unpaid.
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Notes to Condensed Consolidated Financial Statements (unaudited)
Summarized information related to this collaboration is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Sales | $ | $ | $ | $ | |||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||
| ($ in millions) | September 30, 2025 | December 31, 2024 | |||||||||
Receivables from Samsung included in Other current assets | $ | $ | |||||||||
Payables to Samsung included in Trade accounts payable | |||||||||||
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, 2025, 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 17 “Third-Party Arrangements” to the audited Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
The amounts due under such agreements were:
| ($ in millions) | September 30, 2025 | December 31, 2024 | |||||||||
Due from Merck in Accounts receivable | $ | $ | |||||||||
Due to Merck in Accounts payable | |||||||||||
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) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Sales | $ | $ | $ | $ | |||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||
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)
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, 2025, the Fosamax Litigation comprises approximately 844 cases in Federal court, approximately 1,532 cases in New Jersey state court, one case in Pennsylvania state court and approximately 209 cases in California 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 transferred to a multidistrict litigation in the U.S. District Court for 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. The Femur Facture MDL court then dismissed with prejudice approximately 650 cases on these same preemption grounds. Following a series of appeals, including a U.S. Supreme Court (“Supreme Court”) decision in 2019, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) ruled in September 2024 that plaintiffs’ failure-to-warn claims are not preempted by federal law. Consequently, approximately 844 cases are now before the Femur Fracture MDL court for further litigation. On March 10, 2025, Organon filed a writ of certiorari to the Supreme Court seeking review of the Third Circuit decision. On June 16, 2025, the Supreme Court denied the writ.
In New Jersey state court, the cases have been consolidated before a single judge in Middlesex County. On July 28, 2025, the Company signed a Master Settlement Agreement with the New Jersey state and federal plaintiffs’ lawyers who represent eligible clients (“NJ MSA Attorneys”), which provides that in exchange for a settlement amount (which is confidential, but non-material), at least 95 % of the NJ MSA Attorneys’ eligible clients will release the Company and Merck of any liability related to their filed claims.
In California state court, the cases have been consolidated before a single judge in Orange County, California. In the only bellwether case tried to date in California, Galper v. Merck, the jury returned a verdict in Merck’s favor.
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. There is one matter involving Nexplanon pending in state court in California. As of September 30, 2025, Merck had 17 cases pending outside the United States, of which seven relate to Implanon and ten relate to Nexplanon.
Securities and Stockholder Derivative Litigation
On May 27, 2025, a stockholder filed a lawsuit against the Company and certain of its officers on behalf of a putative class of stockholders who purchased or otherwise acquired shares between October 31, 2024 and April 30, 2025. A separate stockholder suit was filed on July 8, 2025 on behalf of a putative class of stockholders who purchased shares between November 3, 2022
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Notes to Condensed Consolidated Financial Statements (unaudited)
and April 30, 2025. Plaintiffs in each of these cases allege that defendants made materially false and misleading statements regarding the Company’s capital allocation strategy, including through the use of quarterly dividends, and its debt reduction strategy. On July 22, 2025, pursuant to the Private Securities Litigation Reform Act, five parties filed motions for consolidation of the related actions and to be appointed lead plaintiff, though one party subsequently withdrew its motion. The remaining four parties’ motions are still pending. The same allegations at issue in the securities lawsuits also form the basis for two stockholder derivative lawsuits filed against the Company, certain of its officers and directors. The stockholder derivative suits further allege that the individual defendants breached their fiduciary duties based on the purportedly materially false and misleading statements that were made. On July 7, 2025, the court consolidated each of the stockholder derivative lawsuits. Subsequently, on September 8, 2025, the court entered an order deferring the derivative action until all motions to dismiss filed in the securities lawsuits are fully and finally resolved. Each of the foregoing actions were filed in the U.S. District Court for the District of New Jersey and each seek unspecified monetary damages and other relief.
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
On February 24, 2025, Organon received a Paragraph IV Certification Letter notifying the Company that Xiromed Pharma Espana, S.L. (“Xiromed”) filed an abbreviated new drug application (“ANDA”) to the FDA seeking approval to market a generic version of Nexplanon in the United States prior to the expiration of U.S. Patent Nos. 8,722,037 (The “’037 patent”) and 9,757,552 (the “’552 patent”), in 2027 and 2030, respectively. On April 2, 2025, the Company sued Xiromed in the U.S. District Court for the District of New Jersey asserting that the filing of the ANDA infringed the ‘037 patent and ‘552 patent and triggering a stay of regulatory approval of Xiromed’s ANDA for up to 30 months.
Other Matters
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, 2025, 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)
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, 2025 and December 31, 2024 was $9 million and $7 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
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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,” “potential,” “should,” “estimate,” “anticipate,” “plan,” “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, expanded brand and class competition in the markets in which Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) operates; trade protection measures and import or export licensing requirements, including the direct and indirect impacts of tariffs (including pharmaceutical sector tariffs), trade sanctions or similar restrictions by the United States or other governments; changes in U.S. and foreign federal, state and local governmental funding allocations including the timing and amounts allocated to Organon’s customers and business partners; economic factors over which we have no control, including changes in inflation, interest rates, recessionary pressures, and foreign currency exchange rates; uncertainties surrounding the Audit Committee investigation described in our Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 27, 2025 (the “Form 8-K”); the impact of litigation, regulatory investigations and inquiries, and other legal matters, including risks to our reputation and relationships with customers, wholesalers, suppliers, and other business partners; risks related to potential disruptions to our business as a result of the leadership changes announced in the Form 8-K, including the risk that appointing a new Chief Executive Officer may take longer than anticipated; our ability to remediate the material weaknesses in internal control over financial reporting and the related costs and management resources in connection therewith, as well as our ability to maintain effective controls over financial reporting and disclosure controls and procedures in the future; our ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets; actions that may be taken by credit rating agencies that could negatively affect either our access to or terms of financing or our financial condition and liquidity; our ability to meet our revenue and growth expectations and outlook; unfavorable publicity and media reports; the potential impact that actions by activist stockholders could have on the pursuit of our business strategies; the loss of key personnel or highly skilled employees; market volatility, downgrades to the U.S. government’s sovereign credit rating or its perceived creditworthiness, changing political or geopolitical conditions, market contraction, boycotts, and sanctions, as well as Organon’s ability to successfully manage uncertainties related to the foregoing; 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, or otherwise meet their obligations to us; 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 retain market exclusivity for Nexplanon or to obtain an additional period of exclusivity in the United States for Nexplanon subsequent to the expiration of the rod patents in 2027; the continued impact of the September 2024 loss of exclusivity (“LOE”) for Atozet™1 (ezetimibe and atorvastatin); the success of our efforts to adapt our business and sales strategies to address the changing market and regulatory landscape in order to achieve our business objectives and remain competitive; restructurings or other disruptions at the U.S. Food and Drug Administration (“FDA”), the U.S. Securities and Exchange Commission (“SEC”) and other U.S. and comparable government agencies; difficulties and uncertainties inherent in the implementation of our acquisition strategy or failure to recognize the benefits of such acquisitions; pricing pressures globally, including rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to or affecting Medicare, Medicaid and health care reform, pharmaceutical pricing and reimbursement, access to our products, international reference pricing, including Most-Favored-Nation drug pricing, and other pricing-related initiatives and policy efforts; the impact of higher selling and promotional costs; changes in government laws and regulations in the United States and other jurisdictions, including laws and regulations governing the research, development, approval, clearance, manufacturing, supply, distribution, and/or marketing of our products and related intellectual property, environmental regulations, and the enforcement thereof affecting our business; efficacy, safety or other quality concerns with respect to our marketed products, whether or not scientifically justified, leading to product recalls, withdrawals, labeling changes, or declining sales; delays or failures to demonstrate adequate efficacy and safety of our product candidates in pre-clinical and clinical trials, which may prevent or delay the development, approval, clearance, or commercialization of our product candidates; future actions of third-parties, including significant changes in customer relationships or changes in the behavior and spending patterns of purchasers of health care products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and forgoing health care insurance coverage; legal factors, including product liability claims, antitrust litigation and governmental investigations, including tax disputes, environmental claims and patent disputes with branded and generic competitors, any of which could preclude commercialization of products or negatively affect the profitability of existing products; lost market opportunity resulting from delays and uncertainties in clinical trials and the approval or clearance process of the FDA and other regulatory authorities; the failure by us or our third party collaborators and/or their suppliers to fulfill our
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or their regulatory or quality obligations, which could lead to a delay in regulatory approval or commercial marketing of our products; cyberattacks on, or other failures, accidents, or security breaches of, our or third-party providers’ information technology systems, which could disrupt our operations and those of third parties upon which we rely; increased focus on privacy issues in countries around the world, including the United States, the European Union, and China, and a more difficult legislative and regulatory landscape for privacy and data protection that continues to evolve with the potential to directly affect our business, including recently enacted laws in a majority of states in the United States requiring security breach notification; changes in tax laws including changes related to the taxation of foreign earnings; the impact of any future pandemic, epidemic, or similar public health threat on our business, operations and financial performance; loss of key employees or inability to identify and recruit new employees; changes in accounting pronouncements promulgated by standard-setting or regulatory bodies, including the Financial Accounting Standards Board and the SEC, that are adverse to us; volatility of commodity prices, fuel, shipping rates that impact the costs and/or ability to supply our products; and other factors discussed in our most recently filed Annual Report on Form 10-K (as amended), Quarterly Reports on Form 10-Q (as amended) 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, 2024, as amended. Operating results discussed herein are not necessarily indicative of the results of any future period.
We are a global health care company with a primary 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 our women’s health and general medicines portfolios. We have a portfolio of more than 70 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.
Recent Developments
Internal Investigation Relating to Internal Control Over Financial Reporting
On October 27, 2025, we announced an internal investigation conducted by the Audit Committee (the “Audit Committee”) of the Company’s Board of Directors (the “Board”) regarding our sales practices for wholesalers as described in the Form 8-K.
Overview of Audit Committee Investigation and Findings
As disclosed in the Form 8-K and Amendment No. 1 (the “10-K Amendment”), filed on November 10, 2025, to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Original Form 10-K”) and amendments (the “10-Q Amendments” and, together with the 10-K Amendment, the “Amendments”) to our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2025 and June 30, 2025 (such original filings, the “Original Form 10-Qs” and, together with the Original Form 10-K, the “Original Reports”), after concerns regarding our sales practices for wholesalers for Nexplanon were brought to the Board’s attention, the Audit Committee oversaw an independent, internal investigation into these sales practices. The Audit Committee’s investigation focused on our sales of Nexplanon to wholesalers. The investigation found that we asked two wholesalers in the United States to purchase greater quantities of Nexplanon at the end of the fourth quarter of 2022, the third and fourth quarters of 2024 and the first, second and third quarters of 2025 (collectively, the “Relevant Periods”) than they otherwise would have purchased based on wholesaler demand. In certain instances, we waived inventory management fee performance metrics associated with caps on days of inventory to allow wholesalers to be paid the inventory management fees they would have earned but for the Company’s ask to purchase additional inventory. As a result of these purchases, the United States wholesalers significantly decreased or even halted their purchases of Nexplanon during the early weeks of the following quarters until their days of inventory on hand were reduced to levels within the contractual range. Although the incremental amount of Nexplanon sales that occurred during the Relevant Periods represented less than 1% of our consolidated revenue for the year ended December 31, 2022 or December 31, 2024, as applicable (and less than 2% of the Company’s consolidated
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revenue for the relevant quarterly periods), based on the results of the investigation, we have determined that without these sales practices, our consolidated revenue for the fiscal year ended December 31, 2024 reported in the Original Reports (and certain of the other Relevant Periods) would have fallen short of our guidance range and/or certain external expectations. The Audit Committee investigation did not find that the use of these sales practices for wholesalers extended to sales other than sales of Nexplanon in the United States during the Relevant Periods, or that these sales practices for wholesalers were otherwise used for any other Company products.
In connection with the investigation, the Audit Committee found that (i) our former Chief Executive Officer and leader of our U.S. commercial organization applied inappropriate pressure to achieve sales targets, which resulted in two United States wholesalers being asked to purchase inventory in excess of current customer demand for Nexplanon, (ii) our processes with respect to reporting and documenting the sales practices for wholesalers during the Relevant Periods, including with respect to inventory management fee performance metric waivers, were not followed, (iii) the former Chief Executive Officer did not reasonably ensure that relevant information was appropriately communicated; rather, relevant information was withheld from our independent directors, the Audit Committee, and the independent registered public accounting firm, and (iv) our former Chief Executive Officer and leader of our U.S. commercial organization engaged in inappropriate business conduct that violated our Code of Conduct. There were no investigative findings that other members of our executive leadership team, including the Company’s Chief Financial Officer, or any member of our accounting and financial reporting group involved in the preparation of our financial statements, were aware that these sales practices resulted in the United States wholesalers being asked to purchase inventory that exceeded their demand or contractual limits, or that waivers were given so that the United States wholesalers would continue to receive inventory management fees. The Audit Committee’s investigation is complete.
Based on the results of the Audit Committee’s investigation, we determined that these sales practices for wholesalers involving Nexplanon in the United States during the Relevant Periods were improper, and that certain of our prior disclosures relating to these sales practices for wholesalers and their effect upon revenues and product demand in our periodic filings were inaccurate or incomplete. As a result, we filed the Amendments.
Company Determinations Following the Audit Committee Findings
As disclosed in the Amendments, as a result of the investigation and the Audit Committee findings, our management, in consultation with the Audit Committee, has re-assessed the effectiveness of our disclosure controls and procedures and its internal control over financial reporting as of December 31, 2024.
As a result as reported in the Amendments, we concluded that there were material weaknesses in our internal control over financial reporting as of December 31, 2024 and that management’s assessment of our disclosure controls and procedures and our internal control over financial reporting as of December 31, 2024 that were included in Item 9A of the Original Form 10-K should no longer be relied upon, as a result of the material weaknesses disclosed in the 10-K Amendment.
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. For additional information, see Part I, Item 4 of this report.
We have determined that there will be no restatement or revision to our previously issued financial statements, including those filed with the Original Reports.
Change in Management
In connection with the Audit Committee investigation, on October 26, 2025, (i) Kevin Ali resigned as Chief Executive Officer of the Company and as a member of the Board, (ii) Joseph Morrissey, the then-current Executive Vice President and Head of Manufacturing & Supply of the Company, was appointed Interim Chief Executive Officer (and principal executive officer) of the Company, (iii) Carrie S. Cox, Chair of the Board, was appointed Executive Chair for an interim period, and (iv) Robert Essner, a member of the Board, was appointed to the position of Lead Independent Director. Additionally and in connection with the Audit Committee investigation, on October 26, 2025, the Company terminated the employment of its Head of U.S. Commercial & Government Affairs.
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Business Development
Biogen Inc. (“Biogen”)
In March 2025, we acquired from Biogen the regulatory and commercial rights in the United States for Tofidence, a biosimilar to Actemra2 (tocilizumab), for intravenous infusion. Tofidence, launched in the U.S. market in May 2024, is indicated in certain patients for the treatment of moderately to severely active rheumatoid arthritis, giant cell arthritis, polyarticular juvenile idiopathic arthritis, systemic juvenile idiopathic arthritis, and COVID-19. Under the terms of the agreement with Biogen, we paid an upfront payment of $51 million in July 2025, and will be obligated to pay tiered royalty payments based on net sales and tiered annual net sales milestone payments of up to $45 million from a previous in-license arrangement with Bio-Thera Solutions Ltd., the product developer for Tofidence. In the first quarter of 2025, we recognized an intangible asset of $51 million, related to the upfront payment to Biogen, which will be amortized over 10 years.
Other Macroeconomic Considerations
Geopolitical developments, global trade issues such as tariffs imposed by or on the United States, shifting U.S. federal and state government policies, policies hindering market access, and worsening macroeconomic conditions could impact our business and results of operations and may stress our working capital resources. While tariffs have not, to date, had a material impact on our business, future tariff actions could potentially have a significant effect on our supply chain and operating costs. Regulatory agency developments, including disruptions at the FDA and other agencies, could increase the time needed for review and approval of new drugs and medical devices, potentially impacting our ability to develop new drugs, delaying our product launches and impacting our business operations. Additionally, proposed cuts to Medicaid and changes in federal funding policies could reduce access to healthcare services for low-income individuals.
International reference pricing frameworks, including Most-Favored-Nation (“MFN”) mandates, may further constrain our pricing flexibility and commercial strategy. Voluntary price concessions in certain European markets and increased rebate negotiations across the European Union have introduced additional pressure on net pricing and margins. These developments may influence our commercial strategy, constrain pricing flexibility and delay product launches. For additional information, please refer to Item 1A — Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 and Part II. Item 1A below.
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Operating Results
Sales Overview
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 406 | $ | 398 | 2 | % | 2 | % | $ | 1,232 | $ | 1,156 | 7 | % | 7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| International | 1,196 | 1,184 | 1 | (2) | 3,477 | 3,655 | (5) | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,602 | $ | 1,582 | 1 | % | (1) | % | $ | 4,709 | $ | 4,811 | (2) | % | (2) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Worldwide sales were $1.6 billion for the three months ended September 30, 2025, an increase of 1%, compared to 2024. Worldwide sales were positively impacted by approximately 2% or $36 million, due to favorable foreign exchange rates.
Excluding the impact of foreign exchange rates, sales increases for the three months ended September 30, 2025 primarily reflect the performance of:
•Vtama, due to the acquisition of Dermavant in the fourth quarter of 2024, launch of the atopic dermatitis indication in adults and children two years of age and older in the United States and launch of the topical treatment of plaque psoriasis in adults in Canada in the third quarter of 2025;
•Hadlima® (adalimumab-bwwd), reflecting sales ramp up since its launch in July 2023 in the United States and a modest increase in international markets; and
•Emgality® 2 (galcanezumab-gnlm), due to the acquisition of the distribution and promotion rights from Lilly in 2024 in certain markets outside of the United States.
This performance was offset by decreases for the three months ended September 30, 2025 in:
•Singulair® (montelukast sodium), due to lower demand outside of the United States and the negative impact from price reductions in Japan and China;
•Atozet, primarily due to LOE in France, Spain and Japan, partially offset by increased demand in Asia Pacific, Latin America and China;
•Nexplanon, primarily due to lower demand and decreased funding of government programs in the United States, partially offset by increased demand in Brazil and the timing of tenders, primarily in Mexico. Nexplanon sales for the nine months ended September 30, 2025 included an estimated $17 million of sales resulting from the identified sales practices for wholesalers described in the “Recent Developments” section above, which was offset by an estimated $15 million of sales from such sales practices for wholesalers that were pulled forward into the year ended December 31, 2024, resulting in a net impact of $2 million for the nine months ended September 30, 2025. The impact was estimated using average daily sales, inventory levels at the wholesaler and days on hand at the wholesaler; and
•Dulera® (formoterol/fumarate dihydrate), primarily due to the loss of a customer contract in the first part of the year combined with increased discount rate pressure in the United States. In the third quarter, demand was further impacted by supply constraints.
Worldwide sales were $4.7 billion for the nine months ended September 30, 2025, a decrease of 2%, compared to 2024. Worldwide sales during the nine months ended September 30, 2025 were positively impacted by approximately $2 million, due to favorable foreign exchange rates.
Excluding the impact of foreign exchange rates, sales increases for the nine months ended September 30, 2025, primarily reflect the performance of:
•Vtama, due to the acquisition of Dermavant in the fourth quarter of 2024, launch of the atopic dermatitis indication in adults and children two years of age and older in the United States and launch of the topical treatment of plaque psoriasis in adults in Canada in the third quarter of 2025;
•Hadlima, reflecting sales ramp up since its launch in July 2023 in the United States and a modest increase in international markets; and
•Emgality, due to the acquisition of the distribution and promotion rights from Lilly in 2024 in certain markets outside of the United States.
This performance was more than offset by decreases for the nine months ended September 30, 2025 in:
•Atozet, primarily due to LOE in France, Spain and Japan, partially offset by increased demand in Asia Pacific, Latin America and China;
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•Singulair, due to lower demand outside of the United States and the negative impact from price reductions in Japan and China; and
•Dulera, primarily due to the loss of a customer contract in the first part of the year combined with increased discount rate pressure in the United States. In the third quarter, demand was further impacted by supply constraints.
LOE negatively impacted sales of certain of our products by approximately $47 million and $170 million during the three and nine months ended September 30, 2025, respectively, based on the decrease in volume period over period. This was primarily driven by the LOE of Atozet in France, Spain and Japan and Rosuzet™ (ezetimibe and rosuvastatin) in Japan. Volume-based procurement (“VBP”) in China had an immaterial impact on our sales during the nine months ended September 30, 2025. We expect VBP to continue to impact our general medicines product portfolio for the next several quarters.
Due to changing market conditions, new and evolving U.S. and international tariffs, U.S. tax law changes and regulatory uncertainty that impact our business, as well as the pharmaceutical industry, we have been and will continue to adapt our business and sales strategies to address this changing landscape in order to achieve our business objectives and remain competitive. Such strategies may include implementing or continuing to assess product discount programs and wholesaler inventory levels under the relevant agreements or waivers of their terms for certain key products.
Our operations include a portfolio of products. Highlights of the sales of our products for the three and nine months ended September 30, 2025 and 2024 are provided below. See Note 5 “Product and Geographic Information” to the Condensed Consolidated Financial Statements for further details on sales of our products.
Women’s Health
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nexplanon/Implanon NXT | $ | 223 | $ | 243 | (8) | % | (9) | % | $ | 711 | $ | 704 | 1 | % | 1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| NuvaRing | 26 | 23 | 9 | 5 | 75 | 90 | (17) | (18) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marvelon/Mercilon | 31 | 29 | 5 | 4 | 103 | 103 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Follistim AQ | 64 | 63 | 1 | — | 206 | 171 | 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jada | 20 | 16 | 30 | 29 | 54 | 43 | 25 | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contraception
Worldwide sales of Nexplanon, a single-rod subdermal contraceptive implant, decreased 8% for the three months ended September 30, 2025, compared to 2024, primarily due to lower demand and decreased funding of government programs in the United States, partially offset by increased demand in Brazil and the timing of tenders, primarily in Mexico. Sales increased 1% for the nine months ended September 30, 2025, compared to 2024, primarily due to increased demand in Brazil and the timing of tenders in various international markets offset by lower demand and decreased funding of government programs in the United States. Nexplanon sales for the nine months ended September 30, 2025 included an estimated $17 million of sales resulting from the identified sales practices for wholesalers described in the “Recent Developments” section above, offset by an estimated $15 million of sales from such identified sales practices for wholesalers that were pulled forward into the year ended December 31, 2024, which resulted in a net impact of $2 million for the nine months ended September 30, 2025. For the three and nine months ended September 30, 2024 there was an estimated $5 million of Nexplanon sales resulting from the identified sales practices for wholesalers described in the “Recent Developments” section above. The impact was estimated using average daily sales, inventory levels at the wholesaler and days on hand at the wholesaler. The Company ceased the identified sales practices for wholesalers described in the “Recent Developments” section above, which will adversely impact the fourth quarter 2025 sales. With regard to Nexplanon’s five-year duration indication, we continue to have collaborative discussions with the FDA. Though we were recently notified that the agency needs more time to complete the review of our submission, the PDUFA three-month extension is not material to our original timeline, which was to launch in late 2025 or early 2026.
Worldwide sales of NuvaRing, a vaginal contraceptive product, increased 9% for the three months ended September 30, 2025, compared to 2024, due to increased demand in the United States, partially offset by ongoing generic competition. Sales declined 17% for the nine months ended September 30, 2025, compared to 2024, due to the loss of a customer contract in 2024 and ongoing generic competition, partially offset by favorable discount rates in the United States associated with a new agreement. We expect a continued decline in NuvaRing sales as a result of generic competition.
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Worldwide sales of Marvelon™1 (desogestrel and ethinyl estradiol pill) and Mercilon™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 and nine months ended September 30, 2025, compared to 2024, respectively, as a result of favorable pricing in Asia Pacific offset by the phasing of shipments in various international markets. The nine months ended September 30, 2025 was impacted by increased demand in China.
Fertility
Worldwide sales of Follistim AQ, a fertility treatment, increased 1% and 20% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to increased demand in select international markets. The nine months ended September 30, 2025 was impacted by a one-time buy-in as a result of our exit from our interim operating model agreement in the United States with Merck related to this product during the fourth quarter of 2023, which resulted in lower sales in the first half of 2024.
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 30% and 25% for the three and nine months ended September 30, 2025, compared to 2024, respectively. The sales increase is due to continued uptake in the United States following the Jada launch in early 2022. Subsequent to September 30, 2025, we entered into a definitive agreement to divest the Jada System to Laborie Medical Technologies Corporation. The transaction is expected to close in early 2026, subject to regulatory approvals and other customary closing conditions.
General Medicines
Biosimilars
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Renflexis | $ | 70 | $ | 72 | (2) | % | (1) | % | $ | 190 | $ | 210 | (9) | % | (9) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Hadlima | 63 | 40 | 57 | 57 | 159 | 98 | 62 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ontruzant | 31 | 20 | 54 | 53 | 80 | 107 | (25) | (25) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brenzys | 23 | 27 | (13) | (13) | 59 | 63 | (5) | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Renflexis® (infliximab-abda) is a biosimilar to Remicade2 (infliximab) for the treatment of certain autoimmune conditions. Sales declined 2% and 9% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to competitive pressure and unfavorable discount rates in the United States, partially offset by increased demand in Canada.
Hadlima is a biosimilar to Humira2 (adalimumab) for the treatment of certain autoimmune and autoinflammatory conditions. Sales increased 57% and 62% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to sales ramp up since its launch in July 2023 in the United States and a modest increase in international markets. We have commercialization rights to Hadlima in countries outside of the European Union, South Korea, China, Turkey, and Russia. Hadlima is currently approved in the United States, Australia, Canada, and Israel.
Ontruzant® (trastuzumab-dttb) 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, 2025, compared to 2024, increased 54% due to increased demand and timing of tenders in Brazil partially offset by unfavorable pricing in Brazil. Sales for the nine months ended September 30, 2025, compared to 2024, declined 25%, due to competitive pressure in the United States, unfavorable pricing and lower tendered volume from Brazil’s Ministry of Health when compared with 2024. We have commercialization rights to Ontruzant in all countries except in South Korea and China.
Brenzys™ 1 (etanercept) is a biosimilar to Enbrel2 (etanercept) for the treatment of certain inflammatory diseases. Sales for the three and nine months ended September 30, 2025, compared to 2024, declined 13% and 5%, respectively, as a result of the
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timing of international tenders in Brazil, partially offset by increased demand in Asia Pacific. We have commercialization rights to Brenzys in countries outside of the United States, Europe, South Korea, China, and Japan.
Cardiovascular
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Atozet | $ | 95 | $ | 125 | (24) | % | (27) | % | $ | 257 | $ | 396 | (35) | % | (35) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Zetia/Vytorin | 118 | 108 | 10 | 6 | 327 | 322 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cozaar/Hyzaar | 55 | 59 | (7) | (8) | 166 | 186 | (11) | (10) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of Atozet, a medicine for lowering LDL cholesterol, declined 24% and 35% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to LOE in France, Spain and Japan, partially offset by increased demand in Asia Pacific, Latin America and China. We anticipate a continued significant decline in sales of Atozet in 2025 due to LOE, which occurred late in the third quarter of 2024.
Combined global sales of Zetia® (ezetimibe) and Vytorin® (ezetimibe / simvastatin), medicines for lowering LDL cholesterol, increased 10% and 1% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily driven by increased demand in China, partially offset by the decrease in demand and pricing pressure in various international markets.
Combined global sales of Cozaar® (losartan potassium) and Hyzaar® (losartan potassium and hydrochlorothiazide), medicines for the treatment of hypertension, declined 7% and 11% for the three and nine months ended September 30, 2025, compared to 2024, respectively, driven by decreased demand in Japan and Latin America. Additionally, the nine months ended September 30, 2025 was impacted by decreased hospital demand in China.
Respiratory
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Singulair | $ | 53 | $ | 85 | (37) | % | (39) | % | $ | 193 | $ | 275 | (30) | % | (31) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Nasonex | 60 | 63 | (5) | (8) | 197 | 200 | (1) | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dulera | 34 | 48 | (31) | (31) | 118 | 151 | (22) | (21) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Worldwide sales of Singulair, a once-a-day oral medicine for the chronic treatment of asthma and for the relief of symptoms of allergic rhinitis, decreased 37% and 30% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to lower demand outside of the United States and the negative impact from price reductions in Japan and China.
Global sales of Nasonex, an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, declined 5% and 1% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to decreased demand and an increase in competitive pressure in various international markets.
Global sales of Dulera, which is also marketed as ZenhaleTM in certain markets outside of the United States, a combination medicine for the treatment of asthma, declined 31% and 22% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to the loss of a customer contract in the first part of the year combined with increased discount rate pressure in the United States. In the third quarter, demand was further impacted by supply constraints, which are expected to continue into the fourth quarter.
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Non-Opioid Pain, Bone and Dermatology
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arcoxia | $ | 71 | $ | 69 | 4 | % | (1) | % | $ | 195 | $ | 211 | (8) | % | (9) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vtama | 34 | — | * | * | 89 | — | * | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
* Calculation not meaningful.
Sales of Arcoxia™ 1 (etoricoxib), a medicine for the treatment of arthritis and pain, increased 4% for the three months ended September 30, 2025, compared to 2024, due to the impact of foreign exchange offset by decreased demand in Latin America and the phasing of shipments in various international regions. Sales declined 8% for the nine months ended September 30, 2025, compared to 2024, primarily due to decreased demand in Latin America and Asia Pacific and the phasing of shipments in various international regions.
Sales of Vtama, a cream for the topical treatment of mild, moderate, and severe plaque psoriasis in adults and atopic dermatitis, also known as eczema, in adults and children two years of age and older, were $34 million and $89 million for the three and nine months ended September 30, 2025, respectively as a result of our acquisition of Dermavant in the fourth quarter of 2024, launch of the atopic dermatitis indication in the United States and launch of the topical treatment of plaque psoriasis in adults in Canada in the third quarter of 2025.
Other
| Three Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | Nine Months Ended September 30, | % Change | % Change Excluding Foreign Exchange | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Emgality/Rayvow | $ | 51 | $ | 29 | 74% | 64 | $ | 125 | $ | 69 | 82 | % | 78 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of Emgality, a medicine for the preventive treatment of migraine and Rayvow™ 2 (lasmiditan), a medicine for acute treatment of the headache phase of migraine attacks, increased for the three and nine months ended September 30, 2025, compared to 2024, as a result of our acquisition of the distribution and promotion rights from Lilly in 2024 in certain markets outside of the United States.
Gross Profit, Expenses and Other
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales | $ | 745 | $ | 659 | 13 | % | $ | 2,137 | $ | 1,992 | 7 | % | ||||||||||||||||||||||||||||||||||||||
| Gross profit | 857 | 923 | (7) | 2,572 | 2,819 | (9) | ||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 415 | 422 | (2) | 1,288 | 1,290 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Research and development | 84 | 111 | (24) | 275 | 339 | (19) | ||||||||||||||||||||||||||||||||||||||||||||
| Acquired in-process research and development and milestones | — | 51 | (100) | 6 | 81 | (93) | ||||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | — | — | * | 88 | 23 | * | ||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | 128 | 126 | 2 | 383 | 388 | (1) | ||||||||||||||||||||||||||||||||||||||||||||
| Exchange losses | 17 | 6 | * | 12 | 11 | 9 | ||||||||||||||||||||||||||||||||||||||||||||
| Other (income) expense, net | (30) | — | * | (53) | 9 | * | ||||||||||||||||||||||||||||||||||||||||||||
* Calculation not meaningful.
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Cost of Sales
Cost of sales increased 13% and 7% for the three and nine months ended September 30, 2025, compared to 2024. Cost of sales for the three and nine months ended September 30, 2025, includes amortization associated with the inventory fair value adjustment related to the Dermavant acquisition of $12 million and $31 million, respectively, an impairment charge in the nine months ended September 30, 2025 related to a currently marketed women’s health product of $9 million and amortization of intangible assets of $52 million and $155 million, respectively. Cost of sales for the three and nine months ended September 30, 2024 includes amortization of intangible assets of $35 million and $102 million, respectively. In addition, the three and nine months ended September 30, 2025 were impacted by increased costs to optimize our manufacturing and supply network and unfavorable foreign exchange rates. Separation costs associated with manufacturing-related headcount reductions have been incurred and are reflected in Restructuring costs.
Gross Profit
Gross profit decreased 7% and 9% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to increased costs to optimize our manufacturing and supply network, the impact of unfavorable price, unfavorable product mix and foreign exchange translation offset by an increase in volume.
Selling, General and Administrative
Selling, general and administrative expenses decreased 2% and remained consistent for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to lower costs related to the prior year implementation of our ERP system offset by increased costs associated with the promotion of our recently acquired products and Nexplanon and reserves for legal settlements.
Research and Development
Research and development expenses decreased 24% and 19% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to a decrease in headcount related expenses and clinical study activity. In July 2025, we announced that the Phase 2 ELENA proof-of-concept study evaluating the investigational candidate OG-6219 in endometriosis-related pain did not meet its primary efficacy endpoint. Based on these results, we made the decision to discontinue the OG-6219 clinical development program.
Acquired In-Process Research and Development and Milestones
For the nine months ended September 30, 2025, we recognized $6 million in acquired in-process research and development and milestones, related to the exit of our agreement with Centergene, due to the evolving fertility landscape in China. For the three months ended September 30, 2024, acquired in-process research and development and milestones of $51 million primarily represents 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 represents 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.
Restructuring Costs
For the nine months ended September 30, 2025, we incurred restructuring costs of $88 million comprised primarily of headcount-related restructuring expense associated with restructuring initiatives that were aimed at driving operational efficiencies in 2025. The restructuring activities combined with our other cost savings initiatives are expected to result in approximately $200 million of annual savings. For the nine months ended September 30, 2024 we incurred restructuring costs of $23 million, comprised of headcount-related restructuring expense related to the optimization of our internal operations, primarily within the research and development function.
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Interest Expense
Interest expense increased 2% for the three months ended September 30, 2025, compared to 2024, and reflects interest related to the debt acquired as part of the Dermavant acquisition, partially offset by lower interest rates as a result of refinancing a portion of our long-term debt in the prior year and the repurchase and cancellation of the 2031 Notes. Interest expense decreased 1% for the nine months ended September 30, 2025, compared to 2024, and reflects lower interest rates as a result of refinancing a portion of our long-term debt in the prior year and the repurchase and cancellation of the 2031 Notes combined with lower reference rates on our variable rate debt, offset by interest related to the debt acquired as part of the Dermavant acquisition and previously unamortized debt issuance fees of approximately $2 million associated with the repurchase and cancellation of $242 million of the 2031 Notes.
Exchange Losses
Exchange losses increased for the three and nine months ended September 30, 2025, compared to 2024, primarily due to unfavorable movements in certain foreign currencies relative to the U.S. dollar. While the U.S. dollar weakened overall during 2025, several currencies in which we have exposure experienced adverse shifts, resulting in increased losses.
Other (Income) Expense, net
Other (income) expense, net was impacted for the three months ended September 30, 2025, by the fair value adjustments and accretion of the Dermavant acquisition contingent consideration, related to changes in the timing of expected commercial milestones based on updated sales forecasts. Other (income) expense, net was impacted for the nine months ended September 30, 2025, by a $46 million pre-tax gain related to the repurchase and cancellation of approximately $242 million of the 2031 Notes and the repayment and termination of the NovaQuest Funding Agreement and the fair value adjustments and accretion of the Dermavant acquisition contingent consideration, related to changes in the timing of expected commercial milestones based on updated sales forecasts.
Taxes on Income
The effective income tax rates were 34.0% and (73.7)% for the three months ended September 30, 2025 and 2024, respectively, and 31.6% and (11.3)% for the nine months ended September 30, 2025 and 2024, 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 2025 year-to-date effective tax rate driven by a tax amortization benefit. The favorable impact to the 2024 year-to-date effective tax rate was driven by the reversal of a valuation allowance, the favorable closure of two non-U.S. tax audits and a return to provision adjustment for an entity in Switzerland.
On July 4, 2025, U.S. House Resolution 1, referred to as the One Big Beautiful Bill Act (“OBBBA”), was signed into law. The OBBBA includes significant corporate tax provisions such as modifications to interest deductibility, the option to fully expense U.S.-based R&D costs, and changes to the taxation of foreign earnings. For 2025, any impact of the OBBBA is immaterial. For 2026 and beyond, we are evaluating the impacts of the OBBBA on our U.S. cash tax liability and income tax provision.
Liquidity and Capital Resources
As of September 30, 2025, we had cash and cash equivalents of $672 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, strategic business development transactions and the payment of dividends. 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.
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Working capital is defined as current assets less current liabilities and was $2.02 billion and $1.63 billion as of September 30, 2025 and December 31, 2024, respectively. Working capital was impacted by our active cash cycle management, which includes the factoring of receivables and timing of vendor payments; milestone payments; net repayments of debt; and increased inventory associated with the acquisition of the Oss Biotech Site.
We have accounts receivable factoring agreements with financial institutions in certain countries. Under these agreements, we have factored $268 million and $186 million of our accounts receivable as of September 30, 2025 and December 31, 2024, respectively. See Note 11 “Financial Instruments” to the Condensed Consolidated Financial Statements for information on the Company’s’ accounts receivable factoring and related agreements.
Net cash provided by operating activities was $559 million for the nine months ended September 30, 2025, compared to $549 million for the same period in the prior year due to lower operating income, partially offset by our active cash cycle management.
Net cash used in investing activities was $325 million for the nine months ended September 30, 2025, compared to $217 million for the same period in the prior year, primarily due to increased milestone payments.
Net cash used in financing activities was $374 million for the nine months ended September 30, 2025, compared with $286 million for the same period in the prior year primarily driven by the repurchase and cancellation of $242 million of the 2031 Notes and the payment and termination of the NovaQuest Funding Agreement, partially offset by borrowings on our Revolving Credit Facility, decreased dividend payments in the current year and no debt issuance costs compared to the prior period.
As part of our post-spinoff plan, we have an ongoing 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 with 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, 2025, which require material cash requirements in the future, consist of contractual milestones, purchase obligations and lease obligations. 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, 2024 for further details. As of September 30, 2025, total potential payments for contractual milestones are $2.6 billion. Potential amounts to be paid through the remainder of 2025 is approximately $20 million. As of September 30, 2025, other than the update for contractual milestones, there have been no material changes to our contractual obligations outside of the ordinary course of business.
During the third quarter of 2025, we paid cash dividends of $0.02 per share. On November 10, 2025, the Board of Directors declared a quarterly dividend of $0.02 for each issued and outstanding share of our common stock. The dividend is payable on December 11, 2025, to stockholders of record at the close of business on November 20, 2025.
We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such transactions, if any, may be material, and will depend upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Critical Accounting Estimates
Our significant accounting policies, which include management’s best estimates and judgments, are included in Note 2 “Summary of Accounting Policies” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. See Note 2 “Basis of Presentation” to the Condensed Consolidated Financial Statements for information on the adoption of new accounting standards during 2025. There have been no changes to our accounting policies as of September 30, 2025. 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, 2024.
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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 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, 2025. 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, 2024.
Item 4. Controls and Procedures
Overview
As previously disclosed in the Form 8-K and in the Amendments, after concerns regarding the Company’s sales practices for wholesalers for Nexplanon were brought to the Board’s attention, the Audit Committee oversaw an independent, internal investigation into these sales practices. The Audit Committee’s investigation focused on the Company’s sales of Nexplanon to wholesalers. The investigation found that the Company asked two wholesalers in the United States to purchase greater quantities of Nexplanon during the Relevant Periods than they otherwise would have purchased based on wholesaler demand. In certain instances, the Company waived inventory management fee performance metrics associated with caps on days of inventory to allow wholesalers to be paid the inventory management fees they would have earned but for the Company’s ask to purchase additional inventory. As a result of these purchases, the United States wholesalers significantly decreased or even halted their purchases of Nexplanon during the early weeks of the following quarters until their days of inventory on hand were reduced to levels within the contractual range. Although the incremental amount of Nexplanon sales that occurred during the Relevant Periods represented less than 1% of the Company’s consolidated revenue for the year ended December 31, 2022 or December 31, 2024, as applicable (and less than 2% of the Company’s consolidated revenue for the relevant quarterly periods, including the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025), based on the results of the investigation, the Company has determined that without these sales practices, the Company’s consolidated revenue for the fiscal year ended December 31, 2024 reported in the Original Form 10-K (and certain of the other Relevant Periods, including the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025) would have fallen short of the Company’s guidance range and/or certain external revenue expectations.
Based on the results of the Audit Committee’s investigation as further set forth in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments,” the Company determined that these sales practices for wholesalers involving Nexplanon in the United States during the Relevant Periods were improper, and that certain of the Company’s prior disclosures relating to these sales practices for wholesalers and their effect upon revenues and product demand in its periodic filings were inaccurate or incomplete. The Company identified material weaknesses in its internal control over financial reporting, as described in the Amendments and elsewhere in this report.
Quarterly Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Interim Chief Executive Officer (“CEO”) (our principal executive officer) and Chief Financial Officer (“CFO”) (our principal financial officer), as appropriate to allow timely decisions regarding required disclosure, and ensure that information required to be disclosed in the reports we file or submit is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
Our management, with the participation of the Interim CEO and the CFO, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025 in connection with the filing of this report. Based on this evaluation, the Interim CEO and the CFO concluded that our disclosure controls and procedures were not effective as of September 30, 2025 due to the material weaknesses in internal control over financial reporting as described below.
Notwithstanding the material weaknesses described below, management has concluded that its condensed consolidated financial statements included in this report are not materially misstated and fairly present, in all material respects, our condensed consolidated financial position as of September 30, 2025 and December 31, 2024, and results of operations for the three and nine months ended September 30, 2025 and 2024.
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Material Weaknesses in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Based on the evaluation described above, we identified the following material weaknesses in the Company’s internal control over financial reporting:
•The Company failed to set an appropriate tone at the top. Specifically, our former CEO and leader of the Company’s U.S. commercial organization applied inappropriate pressure to achieve sales targets through sales of Nexplanon to two United States wholesalers above demand and engaged in inappropriate business conduct that violated the Company’s Code of Conduct.
•The material weakness with respect to our tone at the top contributed to an additional material weakness of not maintaining effective controls related to information and communication. The Company did not design and maintain effective controls related to the information and communication component of the COSO Framework. Specifically, the former CEO and certain senior members of the Company’s U.S. commercial organization did not ensure appropriate communication with, or provide complete information to, the Company’s Disclosure Committee and the financial reporting group to evaluate disclosures and financial reporting conclusions related to sales practices for wholesalers.
For additional information, please see Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
These material weaknesses did not result in misstatements of our previously reported historical consolidated financial statements, including those filed with the Original Reports. Each of these material weaknesses could result in a misstatement of substantially all account balances or disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected.
Remediation Plan and Activities
To address the material weaknesses in internal control over financial reporting, the Company, with the oversight of its Audit Committee, has developed a remediation plan, which is described below.
We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses described above. Actions taken to date include:
•The appointment of a new Interim CEO, the termination and appointment of a new Head of U.S. Commercial & Government Affairs, the appointment of an Executive Chair and the appointment of a Lead Independent Director.
In addition to the remedial actions taken to date, the Company is taking, or plans to take, the following actions, among others, to remediate the material weaknesses identified herein:
•Enhance the Company’s Code of Conduct to clarify responsibilities related to the Company’s financial reporting and disclosures, including awareness of the options to raise concerns or questions to management, human resources, compliance, legal, the technical accounting department and/or through the SpeakUp Tool, which is available globally as an alternate, confidential channel for raising concerns;
•Enhance compliance training and communication on the Company’s Code of Conduct regarding ethical tone and corporate culture and enhance training for commercial and finance personnel regarding appropriate business practices;
•Enhance the Company’s Annual Ethics and Policy Certifications;
•Implement additional representations within the Company’s Quarterly Financial Certification Questionnaire relating to the disclosures of misleading business practices;
•Enhance existing Disclosure Committee responsibilities to include among other requirements, additional questions and more information regarding the representations being made, and provide incremental training on these responsibilities;
•Implement additional and enhance existing sub-certifications and internal management representation letters, including providing training on the purpose of the sub-certification and the process for evaluating the representations;
•Enhance controls and implement written policies and procedures to provide governance, oversight and guidelines for timely communication of management fee arrangements with wholesalers; and
•Evaluate and enhance internal controls related to sales monitoring.
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Management continues to evaluate the effectiveness of these remedial measures and expects to continue implementing improvements to the Company’s internal control over financial reporting. The process of designing and maintaining effective internal control over financial reporting is a continuous effort that requires management to anticipate and react to changes in our business, economic, and regulatory environments and to expend significant resources. As we continue to evaluate our internal control over financial reporting, we may take additional actions to remediate the material weaknesses or modify the remediation actions described above.
Quarterly Changes in Internal Control Over Financial Reporting
During the quarter ended September 30, 2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that 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” to the Condensed Consolidated Financial Statements included in Part I, Item. 1.
Item 1A. Risk Factors
Except as set forth below, 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, 2024, as amended.
The self-initiated Audit Committee internal investigation has been time-consuming and expensive and may result in additional expense and/or litigation.
After concerns regarding the Company’s sales practices for wholesalers for Nexplanon were brought to the Board’s attention, the Audit Committee oversaw an independent, internal investigation into these sales practices.
The Audit Committee’s investigation focused on the Company’s sales of Nexplanon to wholesalers. The investigation has found that the Company asked two wholesalers in the United States to purchase greater quantities of Nexplanon at the end of the Relevant Periods than they otherwise would have purchased based on wholesaler demand. In certain instances, the Company waived inventory management fee performance metrics associated with caps on days of inventory to allow wholesalers to be paid the inventory management fees they would have earned but for the Company’s ask to purchase additional inventory.
As a result of these purchases, the United States wholesalers significantly decreased or even halted their purchases of Nexplanon during the early weeks of the following quarters until their days of inventory on hand were reduced to levels within the contractual range. Although the incremental amount of Nexplanon sales that occurred during the Relevant Periods represented less than 1% of the Company’s consolidated revenue for the year ended December 31, 2022 or December 31, 2024, as applicable (and less than 2% of the Company’s consolidated revenue for the relevant quarterly periods), based on the results of the investigation, the Company has determined that without these improper sales practices for wholesalers, the Company’s consolidated revenue for the fiscal year ended December 31, 2024 reported in the Original Form 10-K (and certain of the other Relevant Periods) would have fallen short of the Company’s guidance range and/or certain external expectations. While we have taken certain actions aimed at preventing the use of such improper sales practices for wholesalers (including the appointment of a new Interim CEO, the termination and appointment of a new Head of U.S. Commercial & Government Affairs, the appointment of an Executive Chair and the appointment of a Lead Independent Director) and are in the process of implementing additional measures, there is no assurance that these actions and procedures will continue to be effective over time.
Additionally, while the Audit Committee’s investigation is complete, the Company has identified material weaknesses in its internal control over financial reporting as described in Part I, Item 4 of this report and, as a result, the Company’s management has determined that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2024 or as of September 30, 2025. To address the ineffective disclosure controls and procedures and internal control over financial reporting due to the material weaknesses, the Company, with the oversight of its Audit Committee, has developed a remediation plan, which is described in Part I, Item 4 of this report. In accordance with the remediation plan, we
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continue to evaluate our policies and procedures and we are actively engaged in remedial activities to strengthen the Company’s internal control environment, which include, but are not limited to, the activities described in Part I, Item 4 of this report. As we execute on our remediation plan, there can be no assurance that we will not discover additional matters that we will need to address that could have an adverse impact on us, our business and/or our results of operations, including determining that further changes to our internal controls are required. We have incurred significant expenses, including audit, legal, forensic accounting, consulting and other professional fees, in connection with the Audit Committee investigation and related matters, and we may incur additional time and expense as a result of the investigation and our efforts to address the investigation results. The incurrence of significant additional expense, or the requirement that management and the Board continue to devote significant time that could reduce the time available to execute on our business strategies, could have an adverse effect on our business, results of operations and financial condition.
We voluntarily contacted the SEC staff to advise that we had an internal Audit Committee investigation as described in this report. We cannot guarantee that we will not receive inquiries from the SEC or any other regulatory authorities regarding the investigation, or that we will not be subject to future claims, investigations or proceedings. Any future inquiries from the SEC or other regulatory authorities, or future claims or proceedings or any related regulatory investigation will, regardless of the outcome, likely consume a significant amount of our internal resources and result in additional legal and accounting costs. We can provide no assurances as to the outcome of any governmental investigation.
In addition, we may be subject to potential legal proceedings arising out of our announcement of the Audit Committee investigation and/or findings of the investigation. Any future litigation, investigation or other actions that may be filed or initiated against us or our officers or directors, may be time consuming and expensive. We cannot predict what losses we may incur in these litigation matters, and contingencies related to our obligations under the federal and state securities laws, or in other legal proceedings or governmental investigations or proceedings related to these matters.
Any legal proceedings, if decided adversely to us, could result in significant monetary damages, penalties and reputational harm, and will likely involve significant defense and other costs. We have entered into indemnification agreements with each of our directors and certain of our officers, and our Amended and Restated Bylaws require us to indemnify each of our directors and officers. Further, our insurance may not cover all claims that have been or may be brought against us, and insurance coverage may not continue to be available to us at a reasonable cost. As a result, we may be exposed to substantial uninsured liabilities, including pursuant to our indemnification obligations, which could adversely affect our business, prospects, results of operations and financial condition.
The Company identified material weaknesses in the Company’s internal control over financial reporting, which could impact the Company’s ability to report its results of operations and financial condition accurately and in a timely manner.
In connection with the Audit Committee investigation, the Company identified material weaknesses in the Company’s internal control over financial reporting. For a description of these material weaknesses, see “Controls and Procedures” in Part I, Item 4 of this report. While the Company has developed a remediation plan, the material weaknesses cannot be considered remediated until the applicable remedial control is implemented and operates for a sufficient period of time to allow management to conclude, through testing, that this remediation plan is implemented and the control is operating effectively. The material weaknesses, if not fully addressed, could result in a material misstatement of the Company’s annual or interim financial statements, and the Company may be unable to remediate these material weaknesses in a timely manner, which could adversely impact the accuracy and timeliness of future reports and filings the Company makes with the SEC. Any such failure could result in litigation or regulatory actions by the SEC or other regulatory authorities, which could further result in loss of investor confidence, a decline in the price of our common stock, delisting of our securities, harm to our reputation and financial condition and/or diversion of financial and management resources from the operation of our business.
Key products generate a significant amount of our profits and cash flows, and any events that adversely affect the markets for our leading products could adversely affect our results of operations and financial condition.
Our ability to generate profits and operating cash flow depends largely upon the continued profitability of our key products, such as Nexplanon, Arcoxia, Singulair and the ezetimibe family of products. As a result of our dependence on key products, any event that adversely affects any of these products or the markets for any of these products could adversely affect our sales, results of operations or cash flows. These adverse events could include increased costs associated with manufacturing, product shortages, increased generic or over-the-counter availability of our products or competitive products, the discovery of previously unknown side effects or enhanced safety warnings, results of post-approval trials, increased competition from the introduction of new, more effective treatments and discontinuation or removal from the market of these products for any reason. In addition, recent adverse market and political events could negatively impact our key products and/or our business, results of operation and financial condition as a whole. These recent adverse events may include, among other things, U.S. and
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international tariffs or other protectionist trade measures, the recent changes to U.S. tax laws, healthcare and regulatory reforms, including those relating to insurance coverage, and other U.S. and international regulatory changes, including changes in regulatory enforcement landscape. We also expect that competition will continue to adversely affect the sales of our key products (including generic competition as a result of LOE in 2024 for Atozet and if we are unable to obtain an additional period of market exclusivity for Nexplanon).
To address such adverse effects and remain competitive, we have and will continue to adapt our business and sales practices for wholesalers, particularly in connection with our key products. These business and sales practices for wholesalers have historically included product discount programs and discussing with wholesalers whether to increase their inventory levels either within or above the agreed upon product inventory levels under the relevant agreement terms or pursuant to waivers. In the United States, the current structure of our arrangements provides us with data on inventory levels at our wholesalers, which is closely monitored and reviewed with the goal of ensuring that inventory levels are appropriate and reasonable in the normal course of business. Additionally, with respect to markets outside of the United States, inventory levels are also reviewed to the extent information is available by market or customer type. However, even with available inventory data, if we do not accurately predict inventory levels or we otherwise determine that inventory levels of our wholesalers should increase due to either customer demand or demand generated via the sales practices for wholesalers, then this may result in the inventory of our wholesalers exceeding customer demand at the time. However, if demand does not keep pace with the additional inventory purchases, then channel inventory for such products could grow in any particular quarter, which could adversely affect corresponding product revenues and/or rate of returns, and could result in a greater amount of product expirations, reduced inventory purchases in subsequent months and/or product discounts being recorded in subsequent quarters. Moreover, if we choose to eliminate or adjust the use of these strategies or if wholesalers decrease their inventory levels, this could contribute to our quarterly and/or annual revenue failing to meet our expectations.
Recent health care reform initiatives focused on the cost of prescription drugs may have a material adverse effect on our business and results of operations.
Governments globally, as well as payors in the U.S., are increasingly using a variety of measures to control costs, including, among others, legislative or regulatory pricing reforms, drug formularies. In the United States, there have been significant and wide-ranging federal policy and legislative reforms impacting drug pricing and reimbursement. For example, in April 2025, the U.S. presidential administration issued an executive order with multiple directives aimed at lowering drug prices, including refining the Medicare drug price negotiation program established by the Inflation Reduction Act of 2022; accelerating competition for high-cost prescription drugs by accelerating approval of generics and biosimilars and facilitating the process for re-classifying prescription drugs as over-the-counter drugs; and increasing drug importation. In May 2025, the U.S. presidential administration issued another executive order that directed government agencies and officials to identify MFN pricing targets for prescription drugs (and looked to pharmaceutical manufacturers to make significant progress towards delivering target prices to patients); prevent foreign countries from disproportionately shifting the cost of global pharmaceutical research and development to the United States; and facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers to sell their products to patients at the MFN price. In addition, in July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA includes significant corporate tax provisions such as modifications to interest deductibility, the option to fully expense U.S.-based R&D costs, and changes to the taxation of foreign earnings. We expect to see continued focus by the U.S. government and states on regulating drug pricing and access to medicine, any of which could impair our ability to compete and have a material adverse impact on our business, financial condition, and results of operations.
Item 5. Other Information
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2025, none of our directors or officers adopted terminated
Reduction in Size of Board
In connection with the circumstances described in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments — Internal Investigation Relating to Internal Control Over Financial Reporting,” on October 26, 2025, Kevin Ali resigned as Chief Executive Officer of the Company and as a member of the Board. As a result, on October 26, 2025, the Board reduced the size of the Board from 12 to 11 directors. As a result of such reduction, there are currently no vacancies on the Board.
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Item 6. Exhibits
| Number | Description | ||||||||||
*31.1 | — | Certification of Principal Executive Officer (Interim CEO) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||||
| *31.2 | — | Certification of Principal Financial Officer (CFO) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||||
| **32.1 | — | Section 1350 Certification of Principal Executive Officer (Interim CEO) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||
| **32.2 | — | Section 1350 Certification of Principal Financial Officer (CFO) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||
| 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 | ||||||||||
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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 10, 2025 | /s/ Lynette Holzbaur | |||||||
| Lynette Holzbaur | ||||||||
| Senior Vice President Finance - Corporate Controller | ||||||||
Date: November 10, 2025 | /s/ Matthew Walsh | |||||||
| Matthew Walsh | ||||||||
Chief Financial Officer | ||||||||
FAQ
How did Organon (OGN) perform in Q3 2025?
Revenues were $1,602 million and net income was $160 million with diluted EPS of $0.61.
What were Organon’s year-to-date 2025 results?
Year-to-date revenues were $4,709 million and net income was $392 million; operating cash flow was $559 million.
Which products drove Q3 2025 sales for OGN?
Key contributors included Nexplanon/Implanon NXT $223M and Vtama $34M in the quarter.
Did Organon report notable regulatory milestones?
Yes. The FDA approved Bildyos and Bilprevda (denosumab biosimilars) and the EU granted marketing authorizations.
What changed in Organon’s capital structure in 2025?
Organon repurchased $242M of 2031 notes and terminated a $103M funding agreement, recording gains in other income.
What is Organon’s debt and equity position?
Long-term debt was $8,783 million and stockholders’ equity was $906 million at September 30, 2025.
Did Organon declare a dividend in Q3 2025?
Yes. The company declared a cash dividend of $0.02 per share.
ORGANON & CO
NYSE:OGN
OGN Latest News
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Nov 10, 2025
[8-K] Organon & Co. Reports Material Event
Nov 10, 2025
[10-K/A] Organon & Co. Amends Annual Report
Nov 7, 2025
[8-K] Organon & Co. Reports Material Event
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