OGN - Organon stock slumps ~10% as Q1 profit contracts amid flat revenue

2023-05-04 12:05:35 ET

Organon ( NYSE: OGN ) stock fell ~10% on Thursday after Q1 results.

Adjusted EPS fell -34.5% Y/Y to $1.08 and also missed analysts' estimates.

Revenue declined -1.8% Y/Y to ~$1.54B, but came in line with expectations. Excluding the impact of foreign currency (ex-FX) revenue grew +3% Y/Y.

Revenue from Women's Health segment rose slightly +0.8% Y/Y (+3% ex-FX) to $381M, driven mainly by strong performance in oral contraceptives Marvelon and Mercilon.

Sales of birth control implant Nexplanon fell 1% ex-FX mainly due to the impact of distributors' buying patterns in prior periods, according to the company.

Infertility therapy Follistim AQ (follitropin beta injection) sales declined 7% ex-FX mainly due to COVID-related disruptions in China, unfavorable shift in customer mix and associated discount rates in the U.S., the company added.

Biosimilars revenue grew 17% (+20% ex-FX) to $116M.

Renflexis (infliximab-abda) which grew 34% ex-FX due to demand growth in the U.S. and Canada, and Brenzys (etanercept) which grew 36% ex-FX due to timing of tenders in Brazil.

Revenue from Established Brands decreased -4.8% Y/Y (increased +1% ex-FX ) to $1B.

The company said the impact of Volume Based Procurement (VBP) initiatives in China included Zetia (ezetimibe) (marketed in most countries outside the U.S. as Ezetrol); and supply interruptions of Diprospan, Celestone Chronodose, and Celestone Soluspan stemming from the company's market action taken in January for those injectable steroid products.

However, strong performance in China and in the Asia Pacific/Japan region, mainly in markets outside Japan, were the most significant offsets to these factors, the company added.

As of March 31, 2023, cash and cash equivalents were $459M, and debt was $8.7B.

Q1 also saw a voluntary $250M debt repayment on U.S. dollar-denominated term loan.

Outlook :

Organon reaffirmed its full year 2023 revenue to be between $6.15B and $6.45B ( consensus $6.28B).

Read more on the company from SA contributor: Organon: A Bitter Pill

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