Ganirelix Acetate

Reports Net Revenues of $178.1 Million for the Three Months Ended December 31, 2023 RANCHO CUCAMONGA, CA / ACCESSWIRE / February 28, 2024 / Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) ("Amphastar" or the "Company") today reported results for the three months and full-year ended December 31, 2023. Fourth Quarter Highlights Net revenues of $178.1 million for the fourth quarter GAAP net income of $36.2 million, or $0.68 per share, for the fourth quarter Adjusted non-GAAP net income of $46.9 million, or $0.88 per share, for the fourth quarter Full-Year Highlights Net revenues of $644.4 million for the fiscal year GAAP net income of $137.5 million, or $2.60 per share, for the fiscal year Adjusted non-GAAP net income of $175.7 million, or $3.32 per share, for the fiscal year Dr. Jack Zhang, Amphastar's President and Chief Executive Officer, commented: "We enter 2024 with strong momentum. 2023 was an important year for the Company driven by the strong performance of glucagon and Primatene MIST ® alongside the acquisition of BAQSIMI ® , which strengthened our diabetes portfolio. The recent submission of our first BLA for Insulin Aspart, known as AMP-004, underscores our continued pipeline development in diabetes management, and marks another milestone for Amphastar." Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (in thousands, except per share data) Net revenues $ 178,105 $ 135,023 $ 644,395 $ 498,987 GAAP net income $ 36,167 $ 33,913 $ 137,545 $ 91,386 Adjusted non-GAAP net income* $ 46,875 $ 37,638 $ 175,699 $ 103,186 GAAP diluted EPS $ 0.68 $ 0.66 $ 2.60 $ 1.74 Adjusted non-GAAP diluted EPS* $ 0.88 $ 0.73 $ 3.32 $ 1.97 ____________________________________ * Adjusted non-GAAP net income and adjusted non-GAAP diluted EPS are non-GAAP financial measures. Please see the discussion in the section entitled "Non-GAAP Financial Measures" and the reconciliation of GAAP to non-GAAP financial measures in Table III of this press release. Fourth Quarter Results Three Months Ended December 31, Change 2023 2022 Dollars % (in thousands) Product revenues: Glucagon $ 31,198 $ 18,319 $ 12,879 70 % Epinephrine 24,646 21,427 3,219 15 % Primatene MIST® 24,484 22,279 2,205 10 % Lidocaine 14,988 13,286 1,702 13 % Phytonadione 11,922 11,666 256 2 % Enoxaparin 6,092 7,812 (1,720 ) (22 )% Naloxone 4,230 4,845 (615 ) (13 )% Other finished pharmaceutical products 35,015 33,082 1,933 6 % Total finished pharmaceutical products net revenues $ 152,575 $ 132,716 $ 19,859 15 % API 3,074 2,307 767 33 % Other revenues 22,456 - 22,456 N/A Total product revenues, net $ 178,105 $ 135,023 $ 43,082 32 % Changes in product revenues as compared to the fourth quarter of the prior year were primarily driven by: Glucagon sales increased primarily due to an increase in unit volumes, as a result of two competitors discontinuing their glucagon injection products at the end of 2022 Epinephrine sales increased primarily due to an increase in unit volumes, as a result of supplier shortages Lidocaine sales increased primarily due to higher unit volumes as supply chain issues eased allowing us to fulfill backorders Primatene MIST® sales increased $1.3 million due to an increase in unit volumes, with the remainder of the increase due to an increase in average selling price Enoxaparin and naloxone sales decreased primarily due to a decrease in unit volumes Other finished pharmaceutical product sales increased primarily due to: Higher unit volumes of atropine, calcium chloride, and sodium bicarbonate, due to increased demand caused by supplier shortages during the fourth quarter Launch of regadenoson in April 2023 Active Pharmaceutical Ingredient ("API") sales increased primarily due to the timing of customer purchases Other revenues are comprised of net revenues from the sales of BAQSIMI® of $22.5 million during the three months ended December 31, 2023, which was recognized on a net basis similar to a royalty arrangement and based on Eli Lilly & Company's ("Lilly") reported BAQSIMI® net sales of $37.6 million. Currently, BAQSIMI® is being sold by Lilly on our behalf under the Transition Services Agreement ("TSA") with Lilly, whereby Lilly provides certain services to support the transition of the BAQSIMI® operations to us. Once Amphastar takes over the distribution of BAQSIMI®, Amphastar will recognize the entire revenue amount. This revenue recognition change is expected to be phased in by country during 2024. Three Months Ended December 31, Change 2023 2022 Dollars % (in thousands) Net revenues $ 178,105 $ 135,023 $ 43,082 32 % Cost of revenues 81,965 63,855 18,110 28 % Gross profit $ 96,140 $ 71,168 $ 24,972 35 % as % of net revenues 54 % 53 % Changes in the cost of revenues and gross margin were primarily driven by: Increased sales of higher-margin products such as glucagon and Primatene MIST®, as well as the sales of regadenoson, which we launched in April 2023. As a result of the TSA, the revenue relating to BAQSIMI® is recognized on a net basis within net revenues. These factors were partially offset by charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value, which includes a $3.6 million inventory reserve as a result of amending the Supply Agreement with MannKind Corporation in December 2023. Three Months Ended December 31, Change 2023 2022 Dollars % (in thousands) Selling, distribution, and marketing $ 8,619 $ 5,472 $ 3,147 58 % General and administrative 13,122 10,628 2,494 23 % Research and development 20,419 17,236 3,183 18 % Non-operating (expenses) income, net (12,635 ) 3,428 (16,063 ) NM Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales and marketing efforts related to BAQSIMI®. General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI®, which was partially offset by a decrease in legal fees. Research and development expenses increased due to an increase in materials and supply expenses, primarily related to our inhalation pipeline products. The change in non-operating (expenses) income, net is primarily a result of: Interest expense in the fourth quarter of 2023, which was primarily related to our Wells Fargo Bank syndicated loan, as well as our convertible debt Foreign currency fluctuations Mark-to-market adjustments relating to our interest rate swap contracts. Year-End Results Year Ended December 31, Change 2023 2022 Dollars % (in thousands) Product revenues: Glucagon $ 113,684 $ 55,322 $ 58,362 105 % Primatene MIST® 89,321 84,309 5,012 6 % Epinephrine 81,650 74,204 7,446 10 % Lidocaine 58,162 52,539 5,623 11 % Phytonadione 44,939 49,500 (4,561 ) (9 )% Enoxaparin 31,533 34,950 (3,417 ) (10 )% Naloxone 19,004 26,269 (7,265 ) (28 )% Other finished pharmaceutical products 140,823 109,412 31,411 29 % Total finished pharmaceutical products net revenues $ 579,116 $ 486,505 $ 92,611 19 % API 14,122 12,482 1,640 13 % Other revenues 51,157 - 51,157 N/A Total product revenues, net $ 644,395 $ 498,987 $ 145,408 29 % Changes in product revenues were primarily driven by: Glucagon sales increased primarily due to an increase in unit volumes as a result of two competitors discontinuing their glucagon injection products at the end of 2022 Primatene MIST® sales increased due to an increase in the average selling price Epinephrine and lidocaine sales increased primarily due to an increase in unit volumes as a result of supplier shortages Phytonadione sales decreased due to lower unit volumes as a result of increased competition Enoxaparin sales decreased primarily due to a decrease in unit volumes Sales of naloxone decreased due to lower unit volumes, reducing sales by $4.6 million, as well as a lower average selling price, reducing sales by $2.7 million as a result of increased competition Other finished pharmaceutical product sales increased primarily due to: Higher unit volumes of dextrose, atropine, calcium chloride, and sodium bicarbonate due to increased demand caused by supplier shortages during the year A full year of sales for ganirelix and vasopressin, which was launched in June 2022 and August 2022, respectively Launch of regadenoson in April 2023 API sales increased primarily due to the timing of customer purchases Other revenues are comprised of net revenues from the sales of BAQSIMI® of $51.2 million during the year ended December 31, 2023, which was recognized on a net basis similar to a royalty and based on Lilly's reported BAQSIMI® net sales of $86.3 million. Year Ended December 31, Change 2023 2022 Dollars % (in thousands) Net revenues $ 644,395 $ 498,987 $ 145,408 29 % Cost of revenues 293,274 250,127 43,147 17 % Gross profit $ 351,121 $ 248,860 $ 102,261 41 % as % of net revenues 54 % 50 % Changes in the cost of revenues and gross margin were primarily driven by: Increased sales of higher-margin products such as glucagon and Primatene MIST®, the sales of ganirelix and vasopressin that were launched in 2022, as well as the sales of regadenoson, which we launched in April 2023 As a result of the TSA, the revenue relating to BAQSIMI® is recognized on a net basis within net revenues. These factors were partially offset by an impairment charge of $2.7 million related to the impairment of the IMS (UK) international product rights, as well as charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value, which includes a $3.6 million inventory reserve as a result of amending the Supply Agreement with MannKind Corporation in December 2023 Year Ended December 31, Change 2023 2022 Dollars % (in thousands) Selling, distribution, and marketing $ 28,853 $ 21,531 $ 7,322 34 % General and administrative 51,540 45,061 6,479 14 % Research and development 73,741 74,771 (1,030 ) (1 )% Non-operating (expenses) income, net (25,628 ) 8,543 (34,171 ) NM Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales and marketing efforts related to BAQSIMI®, as well as an increase in advertising spending for Primatene MIST® General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI®, which was partially offset by a decrease in legal fees Research and development expenses decreased due to: Decreases in materials and supply expenses as a result of a ramp-up of expenses in 2022 for AMP-018 and our insulin pipeline products This decrease was partially offset by an increase in salary and personnel-related expenses The change in non-operating (expenses) income, net is primarily a result of: Foreign currency fluctuations Costs incurred in connection with the syndicated credit agreement we entered into with Wells Fargo Bank, as syndication agent, to finance the acquisition of BAQSIMI® Mark-to-market adjustments relating to our interest rate swap contracts Cash flow provided by operating activities for the year ended December 31, 2023 was $183.5 million. Pipeline Information The Company currently has four abbreviated new drug applications ("ANDAs") and one biosimilar insulin candidate on the U.S. Food and Drug Administration (the "FDA") targeting products with a market size of over $3 billion and $4 billion, respectively, three biosimilar products in development targeting products with a market size of over $10 billion, and six generic products in development targeting products with a market size of over $8 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2023. The Company is developing multiple proprietary products with injectable and intranasal dosage forms. Amphastar's Chinese subsidiary, Amphastar Nanjing Pharmaceuticals, Co., Ltd. ("ANP"), currently has multiple Drug Master Files ("DMFs"), on the FDA and is developing several additional DMFs. Company Information Amphastar is a bio-pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically-challenging generic and proprietary injectable, inhalation, and intranasal products. Additionally, the Company sells insulin API products. Most of the Company's finished products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers. More information and resources are available at . Amphastar's logo and other trademarks or service marks of Amphastar, including, but not limited to Amphastar®, BAQSIMI®, Primatene MIST®, REXTOVYTM, Amphadase®, and Cortrosyn®, are the property of Amphastar. Non-GAAP Financial Measures To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company is disclosing non-GAAP financial measures when providing financial results. The Company believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. As a result, the Company is disclosing certain non-GAAP results, including (i) Adjusted non-GAAP net income (loss) and (ii) Adjusted non-GAAP diluted EPS, which exclude amortization expense, share-based compensation, impairment charges, expenses related to our acquisition of BAQSIMI®, debt issuance costs, legal settlements, and other one-time events in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance because the Company's management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such non-GAAP measures, it will provide a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. Conference Call Information The Company will hold a conference call to discuss its financial results today, February 28, 2024, at 2:00 p.m. Pacific Time. To access the conference call, dial toll-free (877) 407-0989 or (201) 389-0921 for international callers, ten minutes before the conference. The call can also be accessed on the Investors page on the Company's website at . Forward-Looking Statements All statements in this press release and in the conference call referenced above that are not historical are forward-looking statements, including, among other things, statements relating to our expectations regarding future financial performance and business trends, our future growth, sales and marketing of our products, market size and expansion, product portfolio, product development, the timing of FDA filings or approvals, including the DMFs of ANP, the timing of product launches, acquisitions and other matters related to our pipeline of product candidates, the timing and results of clinical trials, the prospective benefits of the acquisition of BAQSIMI®, and other future events. These statements are not facts but rather are based on Amphastar's historical performance and our current expectations, estimates, and projections regarding our business, operations, and other similar or related factors. Words such as "may," "might," "will," "could," "would," "should," "anticipate," "predict," "potential," "continue," "expect," "intend," "plan," "project," "believe," "estimate," and other similar or related expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond Amphastar's control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar's filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 9, 2023, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023, and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 8, 2023. In particular, there can be no guarantee that the acquisition of BAQSIMI® will be beneficial to our business, that any event, change or other circumstance could cause the results of the acquisition and integration of BAQSIMI® into our product portfolio to differ from Amphastar's expectation, that all or any of the contingent consideration will be payable on the terms described herein or at all, or that Amphastar can reliably predict the impact of BAQSIMI® on its financial results or financial guidance. You can locate these reports through our website at and on the SEC's website at . The forward-looking statements in this release speak only as of the date of the release. Amphastar undertakes no obligation to revise or update information or any forward-looking statements in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause our expectations to change. Contact Information: Amphastar Pharmaceuticals, Inc. Bill Peters Chief Financial Officer (909) 476-3416 Table I Amphastar Pharmaceuticals, Inc. Condensed Consolidated Statement of Operations (Unaudited; in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 Net revenues: Product revenues, net $ 155,649 $ 135,023 $ 593,238 $ 498,987 Other revenues 22,456 - 51,157 - Total net revenues 178,105 135,023 644,395 498,987 Cost of revenues 81,965 63,855 293,274 250,127 Gross profit 96,140 71,168 351,121 248,860 Operating expenses: Selling, distribution, and marketing 8,619 5,472 28,853 21,531 General and administrative 13,122 10,628 51,540 45,061 Research and development 20,419 17,236 73,741 74,771 Total operating expenses 42,160 33,336 154,134 141,363 Income from operations 53,980 37,832 196,987 107,497 Non-operating (expenses) income, net (12,635 ) 3,428 (25,628 ) 8,543 Income before income taxes 41,345 41,260 171,359 116,040 Income tax provision 4,673 7,290 31,833 23,477 Net income before equity in losses of unconsolidated affiliate 36,672 33,970 139,526 92,563 Equity in losses of unconsolidated affiliate (505 ) (57 ) (1,981 ) (1,177 ) Net income $ 36,167 $ 33,913 $ 137,545 $ 91,386 Net income per share: Basic $ 0.75 $ 0.70 $ 2.85 $ 1.88 Diluted $ 0.68 $ 0.66 $ 2.60 $ 1.74 Weighted-average shares used to compute net income per share: Basic 47,957 48,298 48,265 48,551 Diluted 53,014 51,716 53,001 52,427 Table II Amphastar Pharmaceuticals, Inc. Condensed Consolidated Balance Sheets (Unaudited; in thousands, except share data) December 31, December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 144,296 $ 156,098 Restricted cash 235 235 Short-term investments 112,510 19,664 Restricted short-term investments 2,200 2,200 Accounts receivable, net 114,943 88,804 Inventories 105,833 103,584 Income tax refunds and deposits 526 171 Prepaid expenses and other assets 9,057 7,563 Total current assets 489,600 378,319 Property, plant, and equipment, net 282,746 238,266 Finance lease right-of-use assets 564 753 Operating lease right-of-use assets 32,333 25,554 Investment in unconsolidated affiliate 527 2,414 Goodwill and intangible assets, net 613,295 37,298 Long-term investments 14,685 - Other assets 25,910 20,856 Deferred tax assets 53,252 38,527 Total assets $ 1,512,912 $ 741,987 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 93,366 $ 84,242 Accrued payments for BAQSIMI® 126,090 - Income taxes payable 1,609 4,571 Current portion of long-term debt 436 3,046 Current portion of operating lease liabilities 3,906 3,003 Total current liabilities 225,407 94,862 Long-term reserve for income tax liabilities 6,066 7,225 Long-term debt, net of current portion and unamortized debt issuance costs 589,579 72,839 Long-term operating lease liabilities, net of current portion 29,721 23,694 Deferred tax liabilities - 144 Other long-term liabilities 22,718 14,565 Total liabilities 873,491 213,329 Commitments and contingencies Stockholders' equity: Preferred stock: par value $0.0001; 20,000,000 shares authorized; no shares issued and outstanding - - Common stock: par value $0.0001; 300,000,000 shares authorized; 59,390,194 and 48,068,881 shares issued and outstanding as of December 31, 2023 and 58,110,231 and 48,112,069 shares issued and outstanding as of December 31, 2022, respectively 6 6 Additional paid-in capital 486,056 455,077 Retained earnings 409,268 271,723 Accumulated other comprehensive loss (8,478 ) (8,624 ) Treasury stock (247,431 ) (189,524 ) Total equity 639,421 528,658 Total liabilities and stockholders' equity $ 1,512,912 $ 741,987 Table III Amphastar Pharmaceuticals, Inc. Reconciliation of Non-GAAP Measures (Unaudited; in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 GAAP net income $ 36,167 $ 33,913 $ 137,545 $ 91,386 Adjusted for: Intangible amortization 6,178 331 12,830 1,419 Share-based compensation 4,622 4,304 20,242 17,860 Impairment of long-lived assets 1 - 3,175 - Expenses related to BAQSIMI® acquisition 2,148 - 5,830 - Debt issuance costs 742 - 6,785 - Litigation settlements - - - (4,929 ) Income tax provision on pre-tax adjustments (2,983 ) (910 ) (10,708 ) (2,550 ) Non-GAAP net income $ 46,875 $ 37,638 $ 175,699 $ 103,186 Non-GAAP net income per share: Basic $ 0.98 $ 0.78 $ 3.64 $ 2.13 Diluted $ 0.88 $ 0.73 $ 3.32 $ 1.97 Weighted-average shares used to compute non-GAAP net income per share: Basic 47,957 48,298 48,265 48,551 Diluted 53,014 51,716 53,001 52,427 Three Months Ended December 31, 2023 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 81,965 $ 8,619 $ 13,122 $ 20,419 $ (12,635 ) $ 4,673 Intangible amortization (6,158 ) - (3 ) (17 ) - - Share-based compensation (1,023 ) (221 ) (2,946 ) (432 ) - - Impairment of long-lived assets - - (1 ) - - - Expenses related to BAQSIMI® acquisition - - (322 ) - 1,826 - Debt issuance costs - - - - 742 - Income tax provision on pre-tax adjustments - - - - - 2,983 Non-GAAP $ 74,784 $ 8,398 $ 9,850 $ 19,970 $ (10,067 ) $ 7,656 Three Months Ended December 31, 2022 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 63,855 $ 5,472 $ 10,628 $ 17,236 $ 3,428 $ 7,290 Intangible amortization (205 ) - (126 ) - - - Share-based compensation (941 ) (186 ) (2,791 ) (386 ) - - Income tax provision on pre-tax adjustments - - - - - 910 Non-GAAP $ 62,709 $ 5,286 $ 7,711 $ 16,850 $ 3,428 $ 8,200 Year Ended December 31, 2023 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 293,274 $ 28,853 $ 51,540 $ 73,741 $ (25,628 ) $ 31,833 Intangible amortization (12,741 ) - (19 ) (70 ) - - Share-based compensation (4,891 ) (870 ) (12,269 ) (2,212 ) - - Impairment of long-lived assets (3,170 ) - (5 ) - - - Expenses related to BAQSIMI® acquisition - - (2,179 ) - 3,651 - Debt issuance costs - - - - 6,785 - Income tax provision on pre-tax adjustments - - - - - 10,708 Non-GAAP $ 272,472 $ 27,983 $ 37,068 $ 71,459 $ (15,192 ) $ 42,541 Year Ended December 31, 2022 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 250,127 $ 21,531 $ 45,061 $ 74,771 $ 8,543 $ 23,477 Intangible amortization (865 ) - (554 ) - - - Share-based compensation (4,179 ) (726 ) (11,180 ) (1,775 ) - - Litigation settlements - - (800 ) - (5,729 ) - Income tax provision on pre-tax adjustments - - - - - 2,550 Non-GAAP $ 245,083 $ 20,805 $ 32,527 $ 72,996 $ 2,814 $ 26,027 SOURCE: Amphastar Pharmaceuticals, Inc. 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Full year 2023 revenue of $6.3 billion, up 1% as-reported and 3% at constant currency Full year 2023 diluted earnings per share of $3.99 and non-GAAP Adjusted diluted earnings per share of $4.14 Full year 2023 Adjusted EBITDA of $1.9 billion, representing a 31.0% Adjusted EBITDA margin Full year 2024 financial guidance ranges provided; full year revenue range of $6.2 billion to $6.5 billion and Adjusted EBITDA margin in the range of 31.0% to 33.0% JERSEY CITY, N.J.--(BUSINESS WIRE)-- Organon (NYSE: OGN) today announced its results for the fourth quarter and full year ended December 31, 2023. "As we move into 2024, our priorities are to deliver our third year of constant currency revenue growth and to achieve a stable to improving Adjusted EBITDA margin. Delivering this financial pro key for us to be able to continue advancing on our mission of a healthier every day for every woman. There’s a tremendous opportunity in women’s health to address significant unmet needs and we are well positioned at the forefront of that effort." Fourth Quarter 2023 Revenue in $ millions Q4 2023 Q4 2022 VPY VPY ex-FX Women’s Health $ 465 $ 433 7 % 8 % Biosimilars 199 134 49 % 48 % Established Brands 915 888 3 % 3 % Other (1) 19 30 (37 )% (42 )% Revenues $ 1,598 $ 1,485 8 % 8 % (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. For the fourth quarter of 2023, total revenue was $1,598 million, an increase of 8% on an as-reported basis as well as excluding impact of foreign currency (ex-FX), compared with the fourth quarter of 2022. Women’s Health revenue increased 7% on an as-reported basis, and increased 8% ex-FX in the fourth quarter of 2023 compared with the fourth quarter of 2022 driven primarily by strong growth in the company's fertility products, particularly Follistim AQ® (follitropin beta injection). Follistim grew 63% ex-FX in the fourth quarter due to a one-time buy-in as a result of the exit of the Interim Operating Model ("IOM") in the United States, increased demand in the U.S. that was largely tied to onboarding a new customer, as well as volume recovery in China tied to fertility patients returning to clinics following abating COVID-19 concerns. The Women's Health franchise also benefited from strong performance of oral contraceptives Marvelon™ (ethinylestradiol, desogestrel) and Mercilon™ (ethinylestradiol, desogestrel) which was driven in part by the reacquisition of rights in selected territories in Southeast Asia and China during 2022, as well as continued uptake of the Jada® system. Performance was partially offset by a 3% ex-FX decline in Nexplanon® (etonogestrel implant) primarily related to customer buying patterns associated with the company's decision to forgo its normal Nexplanon list-price increase in 2023, as well as a 12% ex-FX decrease in NuvaRing® (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition. Biosimilars revenue increased 49% on an as-reported basis and increased 48% ex-FX in the fourth quarter of 2023, compared with the fourth quarter of 2022 primarily driven by Ontruzant® (trastuzumab-dttb), which grew 76% ex-FX and benefited from favorable timing of tender phasing in Brazil, and Renflexis® (infliximab-abda), which grew 28% ex-FX primarily due to U.S. strong volume growth. Revenue of Hadlima™ (adalimumab-bwwd) more than doubled in the fourth quarter of 2023 compared with the fourth quarter of 2022 as a result of continued uptake since its July 2023 launch in the U.S. Established Brands revenue increased 3% as-reported and 3% ex-FX in the fourth quarter of 2023 despite the impacts of Volume Based Procurement (VBP) initiatives and a challenging operating environment in China. Growth in the quarter was driven by a 13% ex-FX increase in the respiratory portfolio. In the cardiovascular portfolio, continued growth in Atozet™ (ezetimibe and atorvastatin calcium) partially offset a decline in Cozaar®/Hyzaar® (losartan) products which are subject to ongoing generic competition. Fourth Quarter 2023 Profitability in $ millions, except per share amounts Q4 2023 Q4 2022 VPY Revenues $ 1,598 $ 1,485 8 % Cost of sales 683 594 15 % Gross profit 915 891 3 % Non-GAAP Adjusted gross profit (1) 964 937 3 % Adjusted EBITDA (1,2) 449 380 18 % Net income 546 108 406 % Non-GAAP Adjusted net income (1) 226 208 9 % Diluted Earnings per Share (EPS) 2.13 0.42 407 % Non-GAAP Adjusted diluted EPS (1) 0.88 0.81 9 % Acquired in-process research & development (IPR&D) and milestones — — — Per share impact to diluted EPS from acquired IPR&D and milestones — — — Q4 2023 Q4 2022 Gross margin 57.3 % 60.0 % Non-GAAP Adjusted gross margin (1) 60.3 % 63.1 % Adjusted EBITDA margin (1, 2) 28.1 % 25.6 % (1) See Tables 4 and 5 for reconciliations of GAAP to non-GAAP financial measures (2) Adjusted EBITDA and Adjusted EBITDA margin include no acquired IPR&D in the fourth quarter 2022 nor the fourth quarter 2023 Gross margin was 57.3% as-reported and 60.3% on an adjusted basis in the fourth quarter of 2023 compared with 60.0% as-reported and 63.1% on an adjusted basis in the fourth quarter of 2022. Unfavorable foreign exchange translation and to a lesser extent, product mix more than offset a favorable year-over-year comparison to the fourth quarter 2022 when the company took a market action on certain injectable steroid products. Adjusted EBITDA margin was 28.1% in the fourth quarter of 2023 compared with 25.6% in the fourth quarter of 2022 primarily due to lower year-over-year operating expenses and lower loss on foreign exchange translation attributable to the year-over-year comparison of the amount of the company's Euro-denominated debt covered under a net investment hedge program. Net income for the fourth quarter of 2023 was $546 million, or $2.13 per diluted share, compared with $108 million, or $0.42 per diluted share, in the fourth quarter of 2022. Non-GAAP Adjusted net income was $226 million, or $0.88 per diluted share, compared with $208 million, or $0.81 per diluted share, in 2022. Reported GAAP net income for the fourth quarter includes a net $476 million tax benefit resulting from the termination of a Swiss tax arrangement. Revenues in $ millions FY 2023 FY 2022 VPY VPY ex-FX Women’s Health $ 1,702 $ 1,673 2 % 3 % Biosimilars 593 481 23 % 24 % Established Brands 3,847 3,874 (1 )% 2 % Other(1) 121 146 (17 )% (19 )% Revenue $ 6,263 $ 6,174 1 % 3 % (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA. Total revenue was $6.3 billion for full year 2023, an increase of 1% as-reported and an increase of 3% ex-FX, compared with the full year 2022. Women’s Health revenue increased 2% as-reported and 3% ex-FX for full year 2023 compared with 2022. Strong growth in the company's fertility portfolio, which was up 9% ex-FX for the full year, a 24% ex-FX increase in oral contraceptives Marvelon/Mercilon and continued uptake of the Jada System, were the strongest revenue contributors to the Women’s Health franchise in 2023. Together these factors more than offset an 11% ex-FX decline in NuvaRing, which continues to be impacted by generic competition. Modest growth of Nexplanon of 1% ex-FX for the full year reflects the impact of the limited participation of a tender in Mexico and customer buying patterns associated with the company's decision to forgo its normal list price increase for Nexplanon in 2023. Biosimilars revenue increased 23% as-reported and 24% ex-FX for full year 2023 compared with 2022, driven primarily by continued demand growth in the U.S. and Canada for Renflexis and favorable phasing of tenders in Brazil and increased demand for Ontruzant, partially offset by competitive pressures in Europe. Revenue for Established Brands declined 1% as-reported and increased 2% ex-FX for the full year 2023 despite VBP initiatives and a challenging operating environment in China as well as supply interruptions of certain of the company's injectable steroid products stemming from the market action taken earlier in the year. Performance was driven by 2% growth in volume across the portfolio, partially offset by 1% price pressure. The company expects flat performance in the Established Brands franchise for full year 2024 on an ex-FX basis. Full Year 2023 Profitability in $ millions, except per share amounts 2023 2022 VPY Revenues $ 6,263 $ 6,174 1 % Cost of sales 2,515 2,294 10 % Gross profit 3,748 3,880 (3 )% Non-GAAP Adjusted gross profit (1) 3,930 4,058 (3 )% Adjusted EBITDA (1,2) 1,944 2,085 (7 )% Net income 1,023 917 12 % Non-GAAP Adjusted net income (1) 1,061 1,284 (17 )% Diluted Earnings per Share (EPS) 3.99 3.59 11 % Non-GAAP Adjusted diluted EPS (1) 4.14 5.03 (18 )% Acquired in-process research & development (IPR&D) and milestones 8 107 (93 )% Per share impact to diluted EPS from acquired IPR&D and milestones (0.03 ) (0.33 ) (91 )% 2023 2022 Gross margin 59.8 % 62.8 % Non-GAAP Adjusted gross margin (1) 62.7 % 65.7 % Adjusted EBITDA margin (1, 2) 31.0 % 33.8 % (1) See Tables 4 and 5 for reconciliations of GAAP to non-GAAP financial measures (2) Adjusted EBITDA and Adjusted EBITDA margin include $8 million in 2023 and $107 million in 2022 related to acquired IPR&D and milestones Gross margin was 59.8% as-reported and 62.7% on an adjusted basis for full year 2023 compared with 62.8% as-reported and 65.7% on an adjusted basis for full year 2022. The year-over-year decrease in Adjusted gross margin reflects higher cost of sales due to foreign exchange translation and product mix, and to a lesser extent, higher employee-related and distribution-related costs. Adjusted EBITDA margin was 31.0% for the full year 2023 compared with 33.8% for the full year 2022. The year-over-year decrease was primarily a result of a lower Adjusted gross margin. Higher selling and promotional costs were mostly offset by lower total research and development spend, which includes in-process research and development (IPR&D). Net income for 2023 was $1.0 billion, or $3.99 per diluted share, compared with $917 million, or $3.59 per diluted share in 2022. Non-GAAP Adjusted net income was $1.1 billion or $4.14 per diluted share, compared with $1.3 billion, or $5.03 per diluted share in 2022. The year-over-year decline in net income was primarily due to higher interest expense due to increased interest rates, and accelerated amortization of capitalized financing costs associated with voluntary prepayments on the company’s U.S. dollar-denominated term loan. Capital Allocation Today, Organon’s Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of the company's common stock. The dividend is payable on March 14, 2024, to stockholders of record at the close of business on February 26, 2024. As of December 31, 2023, cash and cash equivalents were $693 million, and debt was $8.8 billion. Full Year Guidance Organon does not provide GAAP financial measures on a forward-looking basis because the company cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to Organon’s results computed in accordance with GAAP. Full year 2024 financial guidance is presented below on a non-GAAP basis. For full year 2024, Organon expects constant currency revenue growth in the low-single-digit range and expects stable to improving Adjusted EBITDA margin, which Organon expects to achieve, in part, through operating expense management. 2024 Full Year Guidance Revenues $6.2B-$6.5B Adjusted gross margin 61.0% - 63.0% SG&A $1.5B - $1.7B R&D (excluding IPR&D) $400M - $500M Adjusted EBITDA margin 31.0% - 33.0% Interest ~$520M Depreciation ~$130M Effective non-GAAP tax rate 18.5% - 20.5% Fully diluted weighted average shares outstanding ~259M Webcast Information Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its fourth quarter and full year 2023 financial results. To listen to the event and view the presentation slides via webcast, join from the Organon Investor Relations website at . A replay of the webcast will be available approximately two hours after the conclusion of the live event on the company’s website. Institutional investors and analysts interested in participating in the call must register in advance by clicking on this link: Following registration, participants will receive a confirmation email containing details on how to join the conference call, including dial-in information and a unique passcode and registrant ID. Pre-registration will allow participants to bypass an operator and be placed directly into the call. About Organon Organon is a global healthcare company formed to focus on improving the health of women throughout their lives. Organon offers more than 60 medicines and products in women’s health in addition to a growing biosimilars business and a large franchise of established medicines across a range of therapeutic areas. Organon’s existing products produce strong cash flows that support investments in innovation and future growth opportunities in women’s health and biosimilars. In addition, Organon is pursuing opportunities to collaborate with biopharmaceutical innovators looking to commercialize their products by leveraging its scale and presence in fast growing international markets. Organon has a global footprint with significant scale and geographic reach, world-class commercial capabilities, and approximately 10,000 employees with headquarters located in Jersey City, New Jersey. For more information, visit and connect with us on LinkedIn, Instagram, X (formerly known as Twitter) and Facebook. Cautionary Note Regarding Non-GAAP Financial Measures This press release contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are correspondingly not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the company makes use of the non-GAAP financial measures Adjusted EBITDA, Adjusted gross margin, Adjusted gross profit, Adjusted net income, and Adjusted diluted EPS, which are not recognized terms under GAAP and are presented only as a supplement to the company’s GAAP financial statements. This press release also provides certain measures that exclude the impact of foreign exchange. We calculate foreign exchange by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. The company believes that these non-GAAP financial measures help to enhance an understanding of the company’s financial performance. However, the presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies. You should refer to Table 4 and Table 5 of this press release for relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures. In addition, the company’s full-year 2024 guidance measures (other than revenue) are provided on a non-GAAP basis because the company is unable to reasonably predict certain items contained in the GAAP measures. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, stock-based compensation, the ultimate outcome of legal proceedings, unusual gains and losses, the occurrence of matters creating GAAP tax impacts and other items not reflective of the company's ongoing operations. The company uses non-GAAP financial measures in its operational and financial decision making and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful representation of the underlying operating performance of the business. Cautionary Note Regarding Forward-Looking Statements Except for historical information, this press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about management’s expectations about Organon’s future financial performance and prospects, including full-year 2024 guidance estimates and predictions regarding other financial information and metrics, and franchise and product performance and strategy expectations for future periods. Forward-looking statements may be identified by words such as "foresees" “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include, but are not limited to, an inability to fully execute on our product development and commercialization plans within the United States or internationally; an inability to adapt to the industry-wide trend toward highly discounted channels; changes in tax laws or other tax guidance that could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; an inability to execute on our business development strategy or realize the benefits of our planned acquisitions; efficacy, safety, or other quality concerns with respect to marketed products, including market actions such as recalls, withdrawals, or declining sales; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; general economic factors, including recessionary pressures, interest rate and currency exchange rate fluctuations; general industry conditions and competition; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances; new products and patents attained by competitors; the impact of higher selling and promotional costs; any failure by Organon to obtain an additional period of market exclusivity in the United States for Nexplanon subsequent to the expiration of certain key patents in 2027; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict its future financial results and performance; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; difficulties developing and sustaining relationships with commercial counterparties; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s filings with the Securities and Exchange Commission ("SEC"), including the company’s most recent Annual Report on Form 10-K and subsequent SEC filings, available at the SEC’s Internet site ( ). TABLE 1 Organon & Co. Condensed Consolidated Statement of Income (Unaudited, $ in millions except shares in thousands and per share amounts) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Revenues $ 1,598 $ 1,485 $ 6,263 $ 6,174 Costs, Expenses and Other Cost of sales 683 594 2,515 2,294 Selling, general and administrative 469 470 1,893 1,704 Research and development 134 142 528 471 Acquired in-process research and development and milestones — — 8 107 Restructuring costs 58 17 62 28 Interest expense 129 119 527 422 Exchange losses 17 32 42 11 Other expense, net 4 — 15 15 1,494 1,374 5,590 5,052 Income Before Income Taxes 104 111 673 1,122 Taxes on income (442 ) 3 (350 ) 205 Net Income 546 108 1,023 917 Earnings per Share: Basic $ 2.14 $ 0.42 $ 4.01 $ 3.61 Diluted $ 2.13 $ 0.42 $ 3.99 $ 3.59 Weighted Average Shares Outstanding: Basic 255,617 254,367 255,239 254,082 Diluted 256,590 255,390 256,270 255,169 TABLE 2 Organon & Co. Sales by top products (Unaudited, $ in millions) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 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 $ 154 $ 76 $ 231 $ 172 $ 67 $ 239 $ 572 $ 257 $ 830 $ 573 $ 261 $ 834 Follistim AQ 51 31 83 26 25 50 125 136 262 105 124 229 NuvaRing 16 19 35 21 20 40 66 86 152 85 88 173 Ganirelix Acetate Injection 4 18 22 6 20 25 19 91 110 26 97 123 Marvelon/Mercilon — 37 37 — 24 24 — 134 134 — 110 110 Jada 13 — 13 8 — 8 43 — 43 20 — 20 Other Women's Health (1) 20 26 44 22 24 46 72 101 171 90 94 184 Biosimilars Renflexis 63 14 77 51 9 60 234 43 278 196 30 226 Ontruzant 10 52 62 13 22 35 46 109 155 48 74 122 Brenzys — 28 28 — 23 23 — 73 73 — 75 75 Aybintio — 9 9 — 10 10 — 43 43 — 39 39 Hadlima 15 8 23 — 6 6 17 26 44 — 19 19 Established Brands Cardiovascular Zetia 3 65 67 1 70 71 8 299 306 8 350 357 Vytorin 1 28 29 1 25 26 6 124 129 8 123 130 Atozet — 122 122 — 107 107 — 519 519 — 457 457 Rosuzet — 18 18 — 16 16 — 70 70 — 71 71 Cozaar/Hyzaar 2 55 57 2 66 68 10 272 281 13 310 323 Other Cardiovascular (1) — 28 29 1 39 40 2 151 155 3 156 159 Respiratory Singulair 2 111 114 3 92 95 11 393 404 11 400 411 Nasonex — 65 65 — 56 56 — 252 253 10 229 238 Dulera 40 10 50 42 10 52 156 38 194 140 40 180 Clarinex 1 29 30 2 25 27 5 132 136 4 121 125 Other Respiratory (1) 8 8 15 12 5 17 49 28 77 46 36 83 Non-Opioid Pain, Bone and Arcoxia — 51 51 — 56 56 — 257 257 — 241 241 Fosamax — 35 36 2 34 36 3 156 159 4 148 152 Diprospan — 33 33 — 31 31 — 91 91 — 122 122 Other Non-Opioid Pain, Bone and Dermatology (1) 4 64 67 5 56 62 14 261 275 15 257 273 Other Proscar — 20 20 — 23 24 1 96 97 1 99 101 Propecia 2 31 33 2 28 30 7 118 125 7 118 125 Other (1) 1 78 79 3 72 75 13 308 319 24 302 326 Other (2) 1 18 19 (1 ) 30 30 (1 ) 121 121 — 146 146 Revenues $ 411 $ 1,187 $ 1,598 $ 394 $ 1,091 $ 1,485 $ 1,478 $ 4,785 $ 6,263 $ 1,437 $ 4,737 $ 6,174 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. Revenues from Jada were previously reported as part of Other Women's Health. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health. (2) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 3 Organon & Co. Sales by geographic area (Unaudited, $ in millions) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Europe and Canada $ 414 $ 389 $ 1,673 $ 1,631 United States 411 394 1,478 1,437 Asia Pacific and Japan 261 256 1,129 1,143 China 203 196 864 917 Latin America, Middle East, Russia, and Africa 279 230 965 895 Other (1) 30 20 154 151 Revenues $ 1,598 $ 1,485 $ 6,263 $ 6,174 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 4 Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Three Months Ended December 31, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(2) Non-GAAP Adjusted Revenues $ 1,598 $ 1,598 Cost of sales 683 (17 ) — (4 ) (28 ) — 634 Gross profit 915 964 Gross margin 57.3 % 60.3 % Selling, general and administrative 469 (47 ) — (18 ) — (3 ) 401 Research and development 134 (2 ) — (5 ) — — 127 Acquired in-process research and development and milestones — — — — — — — Restructuring costs 58 — (58 ) — — — — Interest expense 129 — — — — — 129 Exchange losses 17 — — — — — 17 Other expense (income), net 4 (4 ) — — — — — 1,494 1,308 Income before income taxes 104 290 Taxes on income (442 ) 7 12 5 5 477 64 Net income $ 546 $ 226 Earnings per share - Diluted $ 2.13 $ 0.88 (1) One-time spin-related costs includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US. (2) Other costs primarily includes a tax benefit resulting from the termination of a Swiss tax arrangement and one-time costs related to inventory step-up adjustments and legal reserves. Three Months Ended December 31, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(2) Non-GAAP Adjusted Revenues $ 1,485 $ 1,485 Cost of sales 594 (7 ) — (4 ) (28 ) (7 ) 548 Gross profit 891 937 Gross margin 60.0 % 63.1 % Selling, general and administrative 470 (36 ) — (16 ) — (4 ) 414 Research and development 142 (3 ) — (3 ) — (1 ) 135 Acquired in-process research and development and milestones — — — — — — — Restructuring costs 17 — (17 ) — — — — Interest expense 119 — — — — — 119 Exchange losses 32 — — — — — 32 Other expense (income), net — (3 ) — — — 3 — 1,374 1,248 Income before income taxes 111 237 Taxes on income 3 12 4 6 4 — 29 Net income $ 108 $ 208 Earnings per share - Diluted $ 0.42 $ 0.81 (1) One-time spin-related costs includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US. (2) Other costs primarily includes one-time costs related to inventory step-up adjustments and legal reserves. TABLE 4 (continued) Reconciliation of GAAP Reported to Non-GAAP Adjusted Information (Unaudited, $ in millions except per share amounts) Year Ended December 31, 2023 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(2) Non-GAAP Adjusted Revenues $ 6,263 $ 6,263 Cost of sales 2,515 (47 ) — (17 ) (116 ) (2 ) 2,333 Gross profit 3,748 3,930 Gross margin 59.8 % 62.7 % Selling, general and administrative 1,893 (178 ) — (68 ) — (91 ) 1,556 Research and development 528 (12 ) — (16 ) — — 500 Acquired in-process research and development and milestones 8 — — — — — 8 Restructuring costs 62 — (62 ) — — — — Interest expense 527 — — — — — 527 Exchange losses 42 — — — — — 42 Other expense (income), net 15 (17 ) — — — — (2 ) 5,590 4,964 Income before income taxes 673 1,299 Taxes on income (350 ) 49 13 17 21 488 238 Net income $ 1,023 $ 1,061 Earnings per share - Diluted $ 3.99 $ 4.14 (1) One-time spin-related costs includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US. (2) Other costs primarily includes a tax benefit resulting from the termination of a Swiss tax arrangement and one-time costs related to inventory step-up adjustments and legal reserves. Year Ended December 31, 2022 GAAP Spin related Costs(1) Restructuring Stock-based Compensation Amortization Other(2) Non-GAAP Adjusted Revenues $ 6,174 $ 6,174 Cost of sales 2,294 (25 ) — (13 ) (116 ) (24 ) 2,116 Gross profit 3,880 4,058 Gross margin 62.8 % 65.7 % Selling, general and administrative 1,704 (122 ) — (51 ) — (21 ) 1,510 Research and development 471 (11 ) — (11 ) — (3 ) 446 Acquired in-process research and development and milestones 107 — — — — — 107 Restructuring costs 28 — (28 ) — — — — Interest expense 422 — — — — — 422 Exchange losses 11 — — — — — 11 Other expense (income), net 15 (23 ) — — — 3 (5 ) 5,052 4,607 Income before income taxes 1,122 1,567 Taxes on income 205 36 6 13 19 4 283 Net income $ 917 $ 1,284 Earnings per share - Diluted $ 3.59 $ 5.03 (1) One-time spin-related costs includes costs from the separation of Merck & Co., Inc., Rahway, NJ, US. (2) Other costs primarily includes one-time costs related to inventory step-up adjustments, impairment charges and legal reserves. TABLE 5 Organon & Co. Reconciliation of GAAP Income Before Income Taxes to Adjusted EBITDA (Unaudited, $ in millions) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Income before income taxes $ 104 $ 111 $ 673 $ 1,122 Depreciation (1) 30 24 118 96 Amortization 28 28 116 116 Interest expense 129 119 527 422 EBITDA $ 291 $ 282 $ 1,434 $ 1,756 Restructuring costs 58 17 62 28 One-time costs (2) 73 58 347 226 Stock-based compensation 27 23 101 75 Adjusted EBITDA $ 449 $ 380 $ 1,944 $ 2,085 Adjusted EBITDA margin 28.1 % 25.6 % 31.0 % 33.8 % (1) Excludes accelerated depreciation included in one-time costs. (2) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step-up adjustments, impairment charges and legal reserves. View source version on businesswire.com: Contacts Media Contacts: Karissa Peer (614) 314-8094 Kate Vossen (732) 675-8448 Investor Contacts: Jennifer Halchak (201) 275-2711 Alex Arzeno (203) 550-3972 Source: Organon & Co. View this news release online at: