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Organon & Co. (OGN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue of $1.594B (-1% YoY) and non-GAAP adjusted EPS of $1.00; both came in ahead of S&P Global consensus: revenue $1.594B vs $1.558B* and adjusted EPS $1.00 vs $0.94*, driven by strong volume in Fertility, Hadlima, and VTAMA offsetting Atozet LOE and pricing headwinds.
  • Revenue guidance raised to $6.275–$6.375B (from $6.125–$6.325B) on FX improvement; adjusted EBITDA margin guidance held at 31–32%. This sets up Q3 flat YoY and modest growth in Q4 as Atozet LOE laps and VTAMA ramps.
  • Deleveraging accelerated: $345M of principal repaid; repurchased $242M of 2031 notes at 82.6, producing a $46M pre-tax gain ($0.14 GAAP EPS tailwind). Cash $599M; debt $8.90B; net leverage ~4.3x with sub-4x target by YE25.
  • Key watch items: U.S. Nexplanon softness amid funding constraints despite ex-U.S. growth; continued Atozet LOE pressure; H2 step-up in VTAMA supported by DTC/telehealth and access expansion.

Estimates marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • VTAMA execution: Q2 revenue $31M, +35% QoQ; >20,000 prescribers; on track for $150M FY25 with DTC, telehealth, pediatric initiatives, and access expanding toward 80% coverage by early 2026.
    • Biosimilars mix: Hadlima strength (Q2 $50M; leading TRx share; U.S. interchangeability) offset declines in mature biosimilars; added Tofidence (tocilizumab) U.S. rights.
    • Cost discipline and deleveraging: Adjusted EBITDA margin 32.7% (+80 bps YoY) on lower OpEx; $345M debt paydown and opportunistic bond repurchase with $46M gain; H1 FCF before one-time costs $525M.

  • What Went Wrong

    • Pricing and LOE headwinds: ~-$40M price impact in Q2 and ~$60M LOE impact (Atozet EU) weighed on Y/Y comps; gross margin (GAAP) down to 54.8% on amortization/fair-value step-up.
    • U.S. Nexplanon softness: -5% U.S. in Q2 on constrained subsidized funding; offset by +10% ex-U.S.; management still targets billion-dollar franchise, but H2 recovery depends on funding normalization and the five-year label.
    • Respiratory base pressure: CFO flagged risk in mature respiratory products in certain markets given mild seasonality, constraining overall volume guidance midpoint.

Financial Results

Headline financials (chronological)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($B)$1.592 $1.513 $1.594
GAAP Diluted EPS$0.42 $0.33 $0.56 (incl. $0.14 from debt extinguishment gain)
Adjusted Diluted EPS (non-GAAP)$0.90 $1.02 $1.00
Gross Margin (GAAP)56.3% 55.6% 54.8%
Adjusted Gross Margin60.6% 61.7% 61.7%
Adjusted EBITDA Margin28.1% 32.0% 32.7%

Q2 2025 actual vs YoY and vs estimates

MetricQ2 2024Q2 2025YoYS&P Global Consensus*Surprise
Revenue ($B)$1.607 $1.594 -0.8% $1.5579*+$0.036B
Adj. Diluted EPS$1.12 $1.00 -$0.12 $0.94*+$0.06

Estimates marked with * retrieved from S&P Global.

Segment revenue (Q2)

Segment ($M)Q2 2024Q2 2025YoY
Women’s Health$449 $462 +3%
Biosimilars$164 $173 +5%
Established Brands$963 $936 -3%
Other (mfg sales)$31 $23 -25%
Total Revenue$1,607 $1,594 -1%

Selected KPIs

KPIQ2 2025
Cash & Equivalents$599M
Total Debt$8.90B
Dividend per share (declared)$0.02
Debt principal repaid (Q2)$345M
Net leverage ratio~4.3x at 6/30/25
H1 Free Cash Flow before one-time costs$525M

Product color (Q2)

  • Nexplanon: $240M total ($163M U.S./$77M Int’l); U.S. down on funding pressure; ex-U.S. +10% ex-FX.
  • VTAMA: $31M (U.S. $29M/Int’l $2M); +35% QoQ; YTD $54M; FY25 target $150M.
  • Hadlima: $50M (U.S. $36M/Int’l $14M); strength offset Renflexis/Ontruzant maturity.
  • Atozet (EU LOE): $86M in Q2 vs $140M in Q2’24; LOE impact a key YoY driver.

Non-GAAP adjustments and items

  • GAAP gross margin down on higher amortization and Dermavant inventory step-up; adjusted gross margin stable at 61.7%.
  • $46M pre-tax gain from debt extinguishment lifted GAAP EPS by ~$0.14.

Guidance Changes

MetricPeriodPrevious (May 1, 2025)Current (Aug 5, 2025)Change
RevenueFY 2025$6.125B–$6.325B $6.275B–$6.375B Raised
Nominal Rev. GrowthFY 2025(4.3%)–(1.2%) (2.0%)–(0.4%) Raised
FX translation headwindFY 2025~($200M) ~($50M) Improved
Ex-FX Rev. GrowthFY 2025(1.2%)–1.9% (1.2%)–0.3% Narrowed
Adjusted Gross MarginFY 202560–61% 60–61% Maintained
Adjusted EBITDA MarginFY 202531–32% 31–32% Maintained
SG&A (% of sales)FY 2025Mid-20s Mid-20s Maintained
R&D (% of sales)FY 2025Upper single-digit Upper single-digit Maintained
Interest ExpenseFY 2025~$510M ~$510M Maintained
DepreciationFY 2025~$135M ~$135M Maintained
Effective non-GAAP tax rateFY 202522.5–24.5% 22.5–24.5% Maintained
Diluted SharesFY 2025~263M ~263M Maintained

Phasing: Q3 2025 revenue expected flat YoY; modest growth in Q4 on Atozet LOE lap and VTAMA uptake.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Deleveraging & capital allocationReset dividend to $0.08 annual and prioritize debt reduction; path to sub-4x by YE25. $345M principal repaid; $242M notes repurchased (82.6 price) creating $46M gain; reaffirm sub-4x YE25, 3.5x or below by end-2026. Improving
Tariffs exposureLimited 2025 exposure; inventory positioning; too early beyond 2025. EU import exposure largest; even 15% EU tariff wouldn’t change FY25 margin guidance; 2026 still too early to call. Stable/managed
Nexplanon performanceDouble-digit growth Q1; five-year indication submission; billion-dollar 2025 goal. U.S. softness on subsidized funding; ex-U.S. +10% ex-FX; five-year launch expected late 2025; long-term growth intact. Mixed near term, positive LT
VTAMA ramp & accessAD label positioned as a “game changer”; $150M FY25 target; access building; ex-U.S. launches to come. Q2 $31M; DTC/telehealth and >125 reps in field; aiming 80% coverage by early 2026; confident to reach $150M FY25. Improving
BiosimilarsHadlima growth offsetting Renflexis/Ontruzant; acquired U.S. Tofidence; Henlius denosumab late-2025. Hadlima momentum; Tofidence added; outlook improved for biosimilar business in 2025. Improving
China VBP & respiratoryVBP minimal Q1; Fosamax likely in Round 11; mild respiratory season pressure. VBP and respiratory pressures reflected in narrowed volume midpoint and H2 caution. Slight headwind

Management Commentary

  • “We are right where we want to be with VTAMA, making significant progress on our access objectives, with the overall portfolio compensating well for the loss of exclusivity of Atozet in Europe.” – Kevin Ali, CEO.
  • “Adjusted EBITDA…32.7%… The year-over-year improvement… was primarily driven by a 3% reduction in operating expenses.” – Press release.
  • “In the second quarter, we repaid approximately $350 million… repurchased and canceled $242 million of our 5.125% notes due in 2031… resulting in a pretax gain… of $42 million… $0.14 per share to our GAAP EPS.” – Matt Walsh, CFO.
  • “We are raising our revenue guide by $100 million at the midpoint… now estimating a $50 million FX headwind year on year…” – Matt Walsh, CFO.
  • “Sales of Nexplanon declined 1% ex-FX… Outside the U.S., Nexplanon grew 10% ex-FX… U.S. customers relying on federal and state subsidized programs are facing potentially constrained funding.” – Press release.

Q&A Highlights

  • VTAMA commercialization: H2 stepped-up DTC, telehealth, pediatric initiatives; >125 reps; confidence in H2 ramp toward $150M FY25.
  • Nexplanon U.S. funding: Impact from Planned Parenthood/Medicaid dynamics; Title X unfreezing in key states; five-year indication expected late 2025; long-term billion-dollar trajectory intact.
  • Tariffs: Even a 15% EU pharma tariff alone would not change FY25 adjusted gross margin range; 2026 impact too early to specify.
  • Free cash flow and one-time costs: H1 FCF before one-time costs $525M; 2025 restructuring/manufacturing separation outlook reduced to $250–$300M cash from $325–$375M prior.
  • Pipeline/strategic: Endometriosis 6219 lacked efficacy signal; backup molecule discontinued; focus on Nexplanon five-year label; high regulatory/IP bar for potential generics.

Estimates Context

  • Q2 2025 results vs S&P Global consensus: Revenue $1.594B vs $1.558B*; Adjusted EPS $1.00 vs $0.94*; both beats.
  • Forward estimate implications: Management’s raised revenue guidance and reiterated margin framework suggest modest upward revenue estimate revisions with largely unchanged margin assumptions; watch modeling for H2 VTAMA ramp and Q3 flat/Q4 growth cadence.

Estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Q3 likely flat YoY; Q4 growth as Atozet LOE laps and VTAMA access/DTC investments drive volume—favorable into year-end catalysts.
  • Quality of beat: Revenue and adjusted EPS beat consensus, aided by volume growth in key growth pillars and cost control; GAAP EPS aided by $0.14 debt extinguishment gain.
  • Guidance credibility: Revenue raise reflects FX relief; unchanged 31–32% EBITDA margin guidance balances H2 VTAMA investment and OpEx savings traction.
  • Deleveraging is working: $345M principal repayment, opportunistic bond repurchase, FCF strength; sub-4x net leverage by YE25 on track—improves equity story resilience.
  • Nexplanon watch: U.S. funding volatility presents near-term noise; ex-U.S. growth and five-year label are key to medium-term franchise expansion.
  • Biosimilars: Hadlima momentum and Tofidence add diversification; late-2025 denosumab potential adds optionality.
  • Risk checks: Pricing pressure in mature respiratory and continued Atozet LOE drag persist near-term; monitor China VBP and U.S. funding/tariff policy evolution.

All citations:

  • Q2 2025 press release and 8-K:
  • Q2 2025 earnings call transcript:
  • Q1 2025 press release and call:
  • Q4 2024 press release:

Estimates marked with * retrieved from S&P Global.