OGN - Organon tightens 2022 revenue guidance on forex headwinds

Despite reporting better than expected financials for 2Q 2022, Organon ( NYSE: OGN ), Merck’s ( MRK ) spinoff focused on women’s health and biosimilars, narrowed the range of 2022 revenue guidance, citing the ongoing unfavorable impact of forex rates.

Organon ( OGN ) reported $1.6B in revenue with a ~1% YoY decline as growth in China moderated to ~3% YoY, bringing $244M in sales, while Europe and Canada added $433M with a ~6% YoY drop in sales.

However, sales from the U.S. improved ~4% YoY to $351M from a ~6% YoY contraction recorded in the preceding quarter.

Established brands brought $1.1B of revenue, indicating a ~2% YoY drop, while the Women’s Health division generated $408M with a ~2% YoY decline, and Biosimilars added $119M with a ~39% YoY growth.

Excluding the impact of forex headwinds during the quarter, revenue jumped ~2% YoY, and all three business segments expanded.

While the adjusted EBITDA margin stood at 32.3%, the gross margin dropped to 62.9% from 63.4% in 2Q 2022, driving down the net income ~12% YoY to $234M even as SG&A expenses fell ~3% YoY to $371M.

“…..despite a challenging global macroeconomic and geopolitical environment, during the second quarter, we delivered growth across all reportable geographies and in all 3 franchises,”  Chief Executive Kevin Ali said during the earnings call. “We even saw growth in China despite the negative impact from the COVID-related lockdowns.”

For 2022, Organon ( OGN ) tightened the revenue guidance to $6.1B - $6.3B from $6.1B - $6.4B estimated previously. The updated guidance includes 550-650 bps forex impact, up from 300-475 bps projected three months ago.

The company revised the 2022 adj. EBITDA margin guidance to 32% - 34% from 34%-36% to reflect a $110M impact from acquired IPR&D and milestone expenses through August 4.

For further details see: