Desogestrel

First quarter 2023 revenue of $1,538 million First quarter 2023 diluted earnings per share of $0.69 and non-GAAP Adjusted diluted earnings per share of $1.08 Both reported and non-GAAP Adjusted diluted earnings per share include a negative impact of $0.03 per share for acquired in-process research and development (IPR&D) Adjusted EBITDA of $518 million, inclusive of $8 million of acquired IPR&D Board of Directors declares quarterly dividend of $0.28 per share Voluntary $250 million debt repayment on U.S. dollar-denominated term loan Full year 2023 financial guidance ranges affirmed JERSEY CITY, N.J.--(BUSINESS WIRE)--Organon (NYSE: OGN) today announced its results for the first quarter ended March 31, 2023. "The first quarter of 2023 represents the sixth consecutive quarter of constant currency product sales growth, with all three franchises positively contributing to performance," said Kevin Ali, Organon's CEO. "The Established Brands franchise, which represents two-thirds of our business, continues to demonstrate its durability. The associated predictability of cash flows enables us to take a balanced approach to capital allocation, continuing to deploy capital for strategic investments that will position the company for future growth, as well as to opportunistically reduce debt, as we did during the first quarter." First Quarter 2023 revenues in $ millions Q1 2023 Q1 2022 VPY VPY ex-FX Women’s Health $ 381 $ 378 1 % 3 % Biosimilars 116 99 18 % 20 % Established Brands 1,002 1,053 (5 )% 1 % Other (1) 39 37 3 % 2 % Revenues $ 1,538 $ 1,567 (2 )% 3 % (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. For the first quarter of 2023, total revenue was $1,538 million, a decrease of 2% as-reported and an increase of 3% excluding the impact of foreign currency (ex-FX), compared with the first quarter of 2022. Women’s Health revenue grew 1% on an as-reported basis, and increased 3% ex-FX in the first quarter of 2023 compared with the first quarter of 2022 driven primarily by strong performance in oral contraceptives Marvelon™ (ethinylestradiol, desogestrel) and Mercilon™ (ethinylestradiol, desogestrel) for which Organon gained rights in selected territories in Southeast Asia and China during 2022. During the quarter, Nexplanon® (etonogestrel implant), a long-acting reversible contraceptive declined 1% ex-FX primarily due to the impact of distributors' buying patterns in prior periods. Follistim AQ® (follitropin beta injection) declined 7% ex-FX primarily related to COVID-related disruptions in China that have hampered access to fertility treatments in that market, as well as an unfavorable shift in customer mix and associated discount rates in the United States that was partially offset by strong product demand. Biosimilars revenue increased 18% as-reported and 20% ex-FX in the first quarter 2023, compared with the first quarter of 2022 primarily driven by Renflexis® (infliximab-abda) which grew 34% ex-FX due to continued demand growth in the United States and Canada as well as Brenzys™ (etanercept) which grew 36% ex-FX as a result of timing of tenders in Brazil. Ongoing competitive pressures in Europe more than offset strong U.S. growth in Ontruzant® (trastuzumab-dttb). Established Brands revenue decreased 5% as-reported and increased 1% ex-FX in the first quarter of 2023, compared with the first quarter of 2022 despite 1) the impact of Volume Based Procurement (VBP) initiatives in China which as of November 2022 included Zetia® (ezetimibe) (marketed in most countries outside of the United States as Ezetrol™) and 2) supply interruptions of Diprospan™, Celestone Chronodose™, and Celestone Soluspan™ stemming from the company's market action taken in January for those injectable steroid products. Strong performance in China and in the APJ region (Asia Pacific/Japan), primarily in markets outside Japan, were the most significant offsets to these factors. First Quarter 2023 Profitability in $ millions, except per share amounts 2023 2022 VPY Revenues $ 1,538 $ 1,567 (2 )% Cost of sales 580 561 3 % Gross profit 958 1,006 (5 )% Non-GAAP Adjusted gross profit (1) 1,003 1,042 (4 )% Adjusted EBITDA (1,2) 518 647 (20 )% Net Income 177 348 (49 )% Non-GAAP Adjusted net income (1) 276 420 (34 )% Diluted Earnings per Share (EPS) 0.69 1.36 (49 )% Non-GAAP Adjusted diluted EPS (1) 1.08 1.65 (35 )% Acquired in-process research & development (IPR&D) and milestones 8 — NM Per share impact to diluted EPS from acquired IPR&D and milestones 0.03 — NM 2023 2022 Gross margin 62.3 % 64.2 % Non-GAAP Adjusted gross margin (1) 65.2 % 66.5 % Adjusted EBITDA margin (1,2) 33.7 % 41.3 % (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 the first quarter of 2023 related to acquired IPR&D and milestones Gross margin was 62.3% as-reported and 65.2% on an adjusted basis in the first quarter of 2023 compared with 64.2% as-reported and 66.5% on an adjusted basis in the first quarter of 2022. The year-over-year decline in gross margin is primarily due to product mix as well as inflationary pressure that impacted distribution and employee-related costs. Adjusted EBITDA margin was 33.7% in the first quarter of 2023 compared to 41.3% in the first quarter of 2022. Higher promotional and employee-related costs as well as increasing R&D spend associated with the company's recent acquisitions of clinical stage assets were the primary contributors to the decline in Adjusted EBITDA margin year over year. Net income for the first quarter of 2023 was $177 million, or $0.69 per diluted share, compared with $348 million, or $1.36 per diluted share, in the first quarter of 2022. Non-GAAP Adjusted net income was $276 million, or $1.08 per diluted share, compared with $420 million, or $1.65 per diluted share, in 2022. The year over year decline in net income was a result of lower Adjusted EBITDA as well as increased interest expense (related to higher interest rates and interest expense for accelerated amortization of debt fees and discounts as part of the $250 million voluntary prepayment on the U.S. dollar-denominated term loan), a higher effective tax rate and the impact of exchange losses driven by the fluctuations in foreign currency. 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 June 15, 2023, to stockholders of record at the close of business on May 15, 2023. As of March 31, 2023, cash and cash equivalents were $459 million, and debt was $8.7 billion. Total debt as of March 31, 2023 reflects a discretionary first quarter prepayment of $250 million on the company’s U.S. dollar-denominated term loan. 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. Organon's financial guidance does not assume an estimate for future in-process research and development for business development transactions not yet executed. Full year 2023 financial guidance is presented below on a non-GAAP basis. Previous guidance as of February 16, 2023 Current guidance Revenues $6.150 billion - $6.450 billion Unchanged Adjusted gross margin Low-mid 60% range Unchanged SG&A (as % of revenue) Mid 20% range Unchanged R&D1 (as % of revenue) Upper single-digit Unchanged Adjusted EBITDA margin 31.0%-33.0% Unchanged Interest ~$510 million ~$515 million Depreciation ~$130 million Unchanged Effective non-GAAP tax rate 19.0% - 21.0% Unchanged Fully diluted weighted average shares outstanding ~255 million ~257 million 1 The range provided for estimated R&D spend includes the company's estimate of approximately $40 million for IPR&D for the full year 2023 which is based on estimated milestones that may be achieved in 2023 by products in the company's current portfolio. Organon's financial guidance does not assume an estimate for future IPR&D for business development transactions not yet executed. Webcast Information Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its first quarter 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 with a focus on improving the health of women throughout their lives. Organon has a portfolio of more than 60 medicines and products across a range of therapeutic areas. Led by the women’s health portfolio coupled with an expanding biosimilars business and stable franchise of established medicines, Organon’s products produce strong cash flows that will support investments in innovation and future growth opportunities in women’s health. 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, 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 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 2023 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. Forward-looking statements may be identified by words such as “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 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 the ongoing COVID-19 pandemic and emergence of variant strains; 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; 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 Annual Report on Form 10-K for the year ended December 31, 2022, 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 March 31, 2023 2022 Revenues $ 1,538 $ 1,567 Costs, Expenses and Other Cost of sales 580 561 Selling, general and administrative 435 371 Research and development 129 96 Acquired in-process research and development and milestones 8 — Restructuring costs 4 — Interest expense 132 97 Exchange losses (gains) 9 (4 ) Other expense, net 6 4 1,303 1,125 Income From Operations Before Income Taxes 235 442 Taxes on Income 58 94 Net Income 177 348 Earnings per Share: Basic $ 0.70 $ 1.37 Diluted $ 0.69 $ 1.36 Weighted Average Shares Outstanding: Basic 254,392 253,583 Diluted 256,170 255,052 TABLE 2 Organon & Co. Sales by top products (Unaudited, $ in millions) Three Months Ended March 31, 2023 2022 U.S. Int’l Total U.S. Int’l Total Women’s Health Nexplanon/Implanon NXT $ 114 $ 52 $ 165 $ 116 $ 55 $ 171 Follistim AQ 26 29 55 30 31 61 NuvaRing 15 24 40 16 24 41 Ganirelix Acetate Injection 6 23 30 8 22 30 Marvelon/Mercilon — 37 37 — 24 24 Other Women's Health (1) 26 28 54 27 26 52 Biosimilars Renflexis 55 7 62 42 4 46 Ontruzant 13 8 21 7 15 22 Brenzys — 19 19 — 14 14 Aybintio — 10 10 — 10 10 Hadlima — 5 5 — 6 6 Established Brands Cardiovascular Zetia 2 81 83 3 96 99 Vytorin 2 28 29 2 36 38 Atozet — 128 128 — 119 119 Rosuzet — 18 18 — 22 22 Cozaar/Hyzaar 2 83 85 8 86 93 Other Cardiovascular (1) 1 40 41 1 38 39 Respiratory Singulair 3 117 120 3 127 130 Nasonex — 69 69 9 65 75 Dulera 38 8 46 31 9 40 Clarinex 1 39 39 1 37 38 Other Respiratory (1) 12 5 17 12 11 22 Non-Opioid Pain, Bone and Dermatology Arcoxia — 71 71 — 60 60 Fosamax — 37 38 1 40 41 Diprospan — 14 14 — 31 31 Other Non-Opioid Pain, Bone and Dermatology (1) 4 59 63 3 66 69 Other Proscar — 27 27 — 24 24 Propecia 2 31 33 1 29 30 Other (1) 4 76 80 8 74 83 Other (2) — 39 39 — 37 37 Revenues $ 326 $ 1,212 $ 1,538 $ 329 $ 1,238 $ 1,567 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 Marvelon/Mercilon 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 March 31, 2023 2022 Europe and Canada $ 400 $ 436 United States 326 329 Asia Pacific and Japan 324 314 China 225 236 Latin America, Middle East, Russia and Africa 214 209 Other (1) 49 43 Revenues $ 1,538 $ 1,567 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. TABLE 4 Reconciliation of GAAP Gross Margin to Non-GAAP Adjusted Gross Profit and Adjusted Gross Margin (Unaudited, $ in millions) Three Months Ended March 31, 2023 GAAP Spin Related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,538 $ 1,538 Cost of sales 580 (10 ) — (4 ) (29 ) (2 ) 535 Gross profit 958 1,003 Gross margin 62.3 % 65.2 % Selling, general and administrative 435 (46 ) — (15 ) — (1 ) 373 Research and development 129 (3 ) — (3 ) — — 123 Acquired in-process research and development and milestones 8 — — — — — 8 Restructuring costs 4 — (4 ) — — — — Interest expense 132 — — — — — 132 Exchange losses (gains) 9 — — — — — 9 Other expense, net 6 (6 ) — — — — — 1,303 1,180 Income from operations before income taxes 235 358 Taxes on income 58 13 1 4 6 — 82 Net income $ 177 $ 276 Earnings per Share - Diluted $ 0.69 $ 1.08 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck and Other primarily includes inventory step-up amortization and legal reserves. Three Months Ended March 31, 2022 GAAP Spin Related Costs(1) Restructuring Stock-based Compensation Amortization Other(1) Non-GAAP Adjusted Revenues $ 1,567 $ 1,567 Cost of sales 561 (4 ) — (3 ) (28 ) (1 ) 525 Gross profit 1,006 1,042 Gross margin 64.2 % 66.5 % Selling, general and administrative 371 (25 ) — (10 ) — — 336 Research and development 96 (3 ) — (2 ) — (1 ) 90 Restructuring costs — — — — — — — Interest expense 97 — — — — — 97 Exchange losses (gains) (4 ) — — — — — (4 ) Other expense, net 4 (6 ) — — — — (2 ) 1,125 1,042 Income from operations before income taxes 442 525 Taxes on income 94 4 — 2 5 — 105 Net income $ 348 $ 420 Earnings per Share - Diluted $ 1.36 $ 1.65 (1) Represents one-time costs. Spin-related includes costs from the separation of Merck and Other primarily includes inventory step-up amortization and legal reserves. TABLE 5 Organon & Co. Reconciliation of GAAP Income from Operations Before Income Taxes to Adjusted EBITDA (Unaudited, $ in millions) Three Months Ended March 31, 2023 2022 Income from operations before income taxes $ 235 $ 442 Depreciation 28 25 Amortization 29 28 Interest expense 132 97 EBITDA $ 424 $ 592 Restructuring costs 4 — One-time costs (1) 68 40 Stock-based compensation 22 15 Adjusted EBITDA $ 518 $ 647 Adjusted EBITDA margin 33.7 % 41.3 % (1) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments and legal reserves.

Full year 2022 revenues of $6.2 billion; all three franchises contribute to growth on constant currency basis Full year 2022 diluted earnings per share from continuing operations of $3.59 and non-GAAP Adjusted diluted earnings per share from continuing operations of $5.03 Full year 2022 Adjusted EBITDA of $2.1 billion Full year 2023 financial guidance provided; full year revenue range of $6.150 billion to $6.450 billion and Adjusted EBITDA margin in the range of 31%-33% JERSEY CITY, N.J.--(BUSINESS WIRE)-- Organon (NYSE: OGN) today announced its results for the fourth quarter and full year ended December 31, 2022. "We enter 2023 with momentum, building off the significant achievements in our short history as an independent company," said Kevin Ali, Organon's CEO. "Since these products have been in our hands, we have set three quarterly sales records for Nexplanon, delivered two consecutive years of double-digit revenue growth in Biosimilars and demonstrated the durability of the Established Brands franchise. We have also continued to position the company for future growth with active business development - adding seven assets in Women's Health and a second partner in Biosimilars. We remain committed to continuing to deliver on the promise of our portfolio and advancing the innovation needed to improve women’s health." Fourth Quarter 2022 revenues in $ millions Q4 2022 Q4 2021 VPY VPY ex-FX Women’s Health $ 433 $ 415 4% 9% Biosimilars 134 118 13% 17% Established Brands 888 1,037 (14)% (4)% Other (1) 30 34 (8)% (9)% Revenues $ 1,485 $ 1,604 (7)% 1% (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties. For the fourth quarter of 2022, total revenue was $1,485 million, a decrease of 7% as-reported and an increase of 1% excluding the impact of foreign currency (ex-FX), compared with the fourth quarter of 2021. Women’s Health revenue increased 4% as-reported, and 9% ex-FX in the fourth quarter of 2022 compared with the fourth quarter of 2021, driven primarily by Nexplanon® (etonogestrel implant) a long-acting reversible contraceptive, which grew 8% ex-FX in the fourth quarter of 2022 compared with the fourth quarter of 2021. The Women's Health franchise also benefited from 4% ex-FX growth in the fertility portfolio during the quarter, as well as from contributions from recent business development activity including combined oral contraceptives Marvelon™ (ethinylestradiol, desogestrel) and Mercilon™ (ethinylestradiol, desogestrel) which together grew 25% ex-FX in the fourth quarter of 2022. Growth in the Women's Health franchise was partially offset by a 5% ex-FX decrease of NuvaRing® (etonogestrel/ethinyl estradiol vaginal ring) which continues to be impacted by generic competition. Biosimilars revenue increased 13% as-reported and 17% ex-FX in the fourth quarter 2022, compared with the fourth quarter of 2021 primarily driven by double-digit growth from Renflexis® (infliximab-abda), Ontruzant® (trastuzumab-dttb), Hadlima™ (adalimumab-bwwd) and Aybintio™ (bevacizumab). This was offset by a 13% ex-FX decline in Brenzys™ (etanercept) due to the timing of a tender in Brazil. Established Brands revenue decreased 14% as-reported and 4% ex-FX in the fourth quarter of 2022, compared with the fourth quarter of 2021. The year over year decline in the fourth quarter was primarily related to the November 2022 inclusion of Ezetrol™ (ezetimibe) in the seventh round of VBP (Volume Based Procurement) in China. Additionally, In January 2023, Organon initiated a market action in certain markets for betamethasone suspension injections sold under the trademarks Diprospan™, Celestone Chronodose™, and Celestone Soluspan®, related to a non-conforming component of a manufacturing line at Organon’s Heist, Belgium facility. This action resulted in a reduction of Established Brands revenue of $8 million in the fourth quarter of 2022. No product quality complaints have been reported, and there have been no reported adverse events attributable to the potentially impacted and distributed product batches. Fourth Quarter 2022 Profitability in $ millions, except per share amounts Q4 2022 Q4 2021 VPY Revenues $ 1,485 $ 1,604 (7)% Gross profit 891 1,005 (11)% Non-GAAP Adjusted Gross Profit (1) 937 1,059 (12)% Adjusted EBITDA (1,2) 380 470 (19)% Net Income, continuing operations 108 202 (47)% Non-GAAP adjusted net income, continuing operations (1) 208 287 (28)% Diluted Earnings per Share (EPS), continuing operations 0.42 0.79 (47)% Non-GAAP adjusted diluted EPS, continuing operations (1) 0.81 1.13 (28)% Acquired IPR&D (in-process research and development) and milestones — 79 NM Per share impact to diluted EPS from acquired IPR&D and milestones — (0.24) NM Q4 2022 Q4 2021 Gross margin 60.0% 62.7% Non-GAAP Adjusted Gross Margin (1) 63.1% 66.0% Adjusted EBITDA margin (1,2) 25.6% 29.3% (1) See Tables 4,5 and 6 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 of 2022 , and $79 million in the fourth quarter of 2021 related to acquired IPR&D and milestones Gross margin in the fourth quarter of 2022 was 60.0% as-reported, compared with 62.7% in the prior year period. Adjusted Gross Margin was 63.1% in the fourth quarter of 2022 compared with 66.0% on an adjusted basis in the fourth quarter of 2021. The year over year decline in gross margin is primarily due to inventory charges of $36 million recognized in Cost of sales and an $8 million sales return reserve related to the market action associated with the Heist plant. Adjusted EBITDA margin was 25.6% in the fourth quarter of 2022 compared with 29.3% in the fourth quarter of 2021. Together with the costs associated with the market action at Heist, expenses related to positioning the company for future growth - higher selling and promotional costs as well as research and development spend associated with the company's prior acquisitions - contributed to the decline in Adjusted EBITDA margin in the fourth quarter. Net income from continuing operations for the fourth quarter of 2022 was $108 million, or $0.42 per diluted share, compared with $202 million, or $0.79 per diluted share, in the fourth quarter of 2021. Non-GAAP Adjusted net income from continuing operations was $208 million, or $0.81 per diluted share, compared with $287 million, or $1.13 per diluted share, in 2021. 2022 Revenues in $ millions FY 2022 FY 2021 VPY VPY ex-FX Women’s Health $ 1,673 $ 1,612 4% 7% Biosimilars 481 424 13% 17% Established Brands 3,874 4,068 (5)% 3% Other(1) 146 200 (27)% (29)% Revenue $ 6,174 $ 6,304 (2)% 4% (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA, and other third parties, and allocated amounts from pre-spin revenue hedging activities through the date of separation. Total revenue was $6.2 billion for full year 2022, a decrease of 2% as-reported and an increase of 4% ex-FX, compared with the full year 2021. With approximately 75% of the company's revenue outside of the United States, foreign exchange translation represented an approximate 600 bps headwind to total revenue in 2022. On a constant currency basis, all three of the company's franchises grew for the full year 2022. Women’s Health revenue increased 4% as-reported and 7% ex-FX for full year 2022 compared with 2021, driven by Nexplanon which increased 11% ex-FX. Nexplanon's growth was primarily due to demand uptake and favorable pricing and in the United States, as well as volume growth in the company's LAMERA region (Latin America, Middle-East, Russia and Africa). Additionally, within Women's Health, the fertility portfolio grew approximately 9% ex-FX for the full year 2022, and the reacquisition of rights to Marvelon and Mercilon in certain Asian markets contributed about two points of constant currency growth to Women's Health in 2022. Performance was partially offset by a 6% ex-FX decline in NuvaRing for full year 2022. Biosimilars revenue grew 13% as-reported and 17% ex-FX for full year 2022 compared with 2021, driven primarily by continued demand growth in the United States for Renflexis and Ontruzant as well as strong performance across the biosimilars portfolio in Canada. Hadlima was up 57% ex-FX in 2022, reflecting its successful 2021 launch in Canada and Australia. Revenue for Established Brands declined 5% as-reported and increased 3% ex-FX for the full year 2022. In 2022, volume growth of greater than 6% more than offset mandated price decreases in certain markets. Full year performance benefited from a temporary supply issue that impacted several competitors in the Japanese market as well as from strong performance in Atozet ™ (ezetimibe and atorvastatin), and the respiratory portfolio. Still, with loss of exclusivity risk largely behind the portfolio, together with continued focus on maximizing the potential of these well-known brands, Organon expects the Established Brands franchise to achieve flat performance in 2023 at constant currency. Full Year 2022 Profitability in $ millions, except per share amounts 2022 2021 VPY Revenues $ 6,174 $ 6,304 (2)% Cost of sales 2,294 2,382 (4)% Gross profit 3,880 3,922 (1)% Non-GAAP Adjusted Gross Profit (1) 4,058 4,081 (1)% Adjusted EBITDA (1,2) 2,085 2,275 (8)% Net Income, continuing operations 917 1,351 (32)% Non-GAAP adjusted net income, continuing operations (1) 1,284 1,577 (19)% Diluted Earnings per Share (EPS), continuing operations 3.59 5.31 (32)% Non-GAAP adjusted diluted EPS, continuing operations (1) 5.03 6.20 (19)% Acquired in-process research & development (IPR&D) and milestones 107 104 3% Per share impact to diluted EPS from acquired IPR&D and milestones (0.33) (0.33) NM 2022 2021 Gross margin 62.8% 62.2% Non-GAAP Adjusted Gross Margin (1) 65.7% 64.7% Adjusted EBITDA margin (1,2) 33.8% 36.1% (1) See Tables 4,5 and 6 for reconciliations of GAAP to non-GAAP financial measures (2) Adjusted EBITDA and Adjusted EBITDA margin include $107 million in 2022 and $104 million in 2021 related to acquired IPR&D and milestones Gross margin was 62.8% as-reported and 65.7% on an adjusted basis for full year 2022 compared with 62.2% as-reported and 64.7% on an adjusted basis in 2021. The year-over-year increase in Adjusted Gross Margin reflects the impact of lower supply sales (which carry lower margins) compared with the prior year, pre-spin allocated costs related to the separation in the prior year and a $24 million charge pertaining to unavoidable losses associated with a long-term vendor supply contract also incurred during the prior year, offset by the aforementioned inventory charges of $36 million recognized in Cost of sales in the fourth quarter of 2022 relating to the company’s market action. Adjusted EBITDA margin was 33.8% for the full year 2022 compared with 36.1% for the full year 2021. Together with the costs associated with the market action at Heist, expenses related to positioning the company for future growth - higher selling and promotional costs as well as continued R&D spend associated with the company's recent acquisitions of clinical stage assets - contributed to the decline in Adjusted EBITDA margin year over year. Net income from continuing operations for 2022 was $917 million, or $3.59 per diluted share, compared with $1.4 billion, or $5.31 per diluted share in 2021. Non-GAAP Adjusted net income from continuing operations was $1.3 billion, or $5.03 per diluted share, compared with $1.6 billion, or $6.20 per diluted share in 2021. 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 16, 2023 to stockholders of record at the close of business on February 27, 2023. As of December 31, 2022, cash and cash equivalents were $706 million, and debt was $8.9 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. The company is presenting its 2023 financial guidance ranges below. 2023 Full Year guidance Revenues $6.150 billion - $6.450 billion Adjusted Gross Margin Low-mid 60% range SG&A (as % of revenue) Mid 20% range R&D1 (as % of revenue) Upper single-digit Adjusted EBITDA Margin 31.0% - 33.0% Interest ~$510 million Depreciation ~$130 million Effective Non-GAAP Tax Rate 19.0% - 21.0% Fully Diluted Weighted Average Shares Outstanding ~$255 million (1) The range provided for estimated R&D spend includes the company's estimate of approximately $40 million for IPR&D for the full year 2023 which is based on estimated milestones that may be achieved in 2023 by products in the company's current portfolio. Organon's financial guidance does not assume an estimate for future IPR&D for business development transactions not yet executed. Webcast Information Organon will host a conference call at 8:30 a.m. Eastern Time today to discuss its fourth quarter and full year 2022 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 with a focus on improving the health of women throughout their lives. Organon has a portfolio of more than 60 medicines and products across a range of therapeutic areas. Led by the women’s health portfolio coupled with an expanding biosimilars business and stable franchise of established medicines, Organon’s products produce strong cash flows that will support investments in innovation and future growth opportunities in women’s health. 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, 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 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 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 the appendix 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 2023 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 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 herein, 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. Forward-looking statements may be identified by words such as “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 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; general economic factors, including recessionary pressures, interest rate and currency exchange rate fluctuations; general industry conditions and competition; the impact of the ongoing COVID-19 pandemic and emergence of variant strains; 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; 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 Annual Report on Form 10-K for the year ended December 31, 2022, 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, 2022 2021 2022 2021 Revenues $ 1,485 $ 1,604 $ 6,174 $ 6,304 Costs, Expenses and Other Cost of sales 594 599 2,294 2,382 Selling, general and administrative 470 481 1,704 1,668 Research and development 142 110 471 339 Acquired in-process research and development and milestones — 79 107 104 Restructuring costs 17 — 28 3 Interest expense 119 98 422 258 Exchange losses (gains) 32 (2 ) 11 4 Other expense, net — 3 15 17 1,374 1,368 5,052 4,775 Income From Continuing Operations Before Income Taxes 111 236 1,122 1,529 Taxes on Income 3 34 205 178 Net Income From Continuing Operations 108 202 917 1,351 Loss From Discontinued Operations - Net of Tax — — — — Net Income 108 202 917 1,351 Earnings per Share - Basic: Continuing operations $ 0.42 $ 0.80 $ 3.61 $ 5.33 Discontinued operations — — — — Net Earnings per Share - Basic $ 0.42 $ 0.80 $ 3.61 $ 5.33 Earnings per Share - Diluted: Continuing operations $ 0.42 $ 0.79 $ 3.59 $ 5.31 Discontinued operations — — — — Net Earnings per Share - Diluted $ 0.42 $ 0.79 $ 3.59 $ 5.31 Weighted Average Shares Outstanding: Basic 254,367 253,549 254,082 253,538 Diluted 255,390 254,551 255,169 254,193 TABLE 2 Organon & Co. Sales by top products Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 ($ 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 $ 172 $ 67 $ 239 $ 143 $ 83 $ 226 $ 573 $ 261 $ 834 $ 532 $ 237 $ 769 Follistim AQ 26 25 50 29 30 59 105 124 229 110 127 237 NuvaRing 21 20 40 18 27 44 85 88 173 85 106 191 Ganirelix Acetate Injection 6 20 25 3 22 26 26 97 123 22 88 111 Marvelon/Mercilon — 24 24 — 22 22 — 110 110 — 98 98 Other Women's Health (1) 30 24 54 14 25 38 110 94 204 96 111 206 Biosimilars Renflexis 51 9 60 46 5 51 196 30 226 164 21 186 Ontruzant 13 22 35 14 11 26 48 74 122 34 92 126 Brenzys — 23 23 — 28 28 — 75 75 — 63 63 Aybintio — 10 10 — 10 10 — 39 39 — 36 36 Hadlima — 6 6 — 4 4 — 19 19 — 13 13 Established Brands Cardiovascular Zetia 1 70 71 4 92 96 8 350 357 10 368 378 Vytorin 1 25 26 3 34 37 8 123 130 11 153 164 Atozet — 107 107 — 110 110 — 457 457 — 458 458 Rosuzet — 16 16 — 19 19 — 71 71 — 68 68 Cozaar/Hyzaar 2 66 68 3 90 93 13 310 323 12 345 357 Other Cardiovascular (1) 1 39 40 1 41 42 3 156 159 4 187 191 Respiratory Singulair 3 92 95 5 108 113 11 400 411 15 398 413 Nasonex — 56 56 2 61 62 10 229 238 4 201 206 Dulera 42 10 52 34 10 44 140 40 180 154 36 190 Clarinex 2 25 27 1 27 28 4 121 125 6 106 111 Other Respiratory (1) 12 5 17 13 12 25 46 36 83 56 33 89 Non-Opioid Pain, Bone and Arcoxia — 56 56 — 60 60 — 241 241 — 244 244 Fosamax 2 34 36 1 42 43 4 148 152 4 172 175 Diprospan — 31 31 — 33 33 — 122 122 — 125 125 Other Non-Opioid Pain, Bone and Dermatology (1) 5 56 62 4 68 72 15 257 273 16 269 286 Other Proscar — 23 24 — 25 26 1 99 101 1 116 117 Propecia 2 28 30 4 31 36 7 118 125 9 127 136 Other (1) 3 72 75 8 89 97 24 302 326 41 318 360 Other (2) (1) 30 30 (3) 38 34 — 146 146 (3) 205 200 Revenues $ 394 $ 1,091 $ 1,485 $ 347 $ 1,257 $ 1,604 $ 1,437 $ 4,737 $ 6,174 $ 1,383 $ 4,921 $ 6,304 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 Marvelon/Mercilon 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, and allocated amounts from pre-spin revenue hedging activities. TABLE 3 Organon & Co. Sales by geographic area (Unaudited, $ in millions) Three Months Ended December 31, Year Ended December 31, ($ in millions) 2022 2021 2022 2021 Europe and Canada $ 389 $ 427 $ 1,631 $ 1,741 United States 394 347 1,437 1,383 Asia Pacific and Japan 256 299 1,143 1,173 China 196 240 917 933 Latin America, Middle East, Russia and Africa 230 246 895 841 Other (1) 20 45 151 233 Revenues $ 1,485 $ 1,604 $ 6,174 $ 6,304 (1) Other includes manufacturing sales to Merck & Co., Inc., Rahway, NJ, USA and other third parties, and allocated amounts from pre-spin revenue hedging activities. TABLE 4 Reconciliation of GAAP Gross Margin to Non-GAAP Adjusted Gross Profit and Adjusted Gross Margin ($ in millions) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Revenues $ 1,485 $ 1,604 $ 6,174 $ 6,304 Cost of sales 594 599 2,294 2,382 Gross Profit 891 1,005 3,880 3,922 Gross Margin 60.0 % 62.7 % 62.8 % 62.2 % Amortization 28 34 116 103 One-time costs (1) 14 17 49 45 Stock-based compensation 4 3 13 11 Non-GAAP Adjusted Gross Profit (2) $ 937 $ 1,059 4,058 4,081 Non-GAAP Adjusted Gross Margin 63.1 % 66.0 % 65.7 % 64.7 % (1) One-time costs for the three months ended December 31, 2022 primarily include costs to stand up the company and inventory step-up adjustments. One-time costs for the year ended December 31, 2022 primarily include costs to stand up the company and inventory step-up adjustments as well as a $9 million impairment charge related to a licensed intangible asset. One-time costs for the three months ended December 31, 2021 include costs to stand up the Company as well as a $7 million impairment charge relating to a licensed intangible asset. For the twelve month period ended December 31, 2021, one-time costs include inventory discards related to separation re-labeling and other costs to stand up the Company as well as a $7 million impairment charge related to a licensed intangible asset. (2) Non-GAAP Adjusted Gross Profit is calculated by excluding amortization, one-time costs, and the portion of stock-based compensation expense allocated to Cost of sales. TABLE 5 Organon & Co. Reconciliation of GAAP Income from Continuing Operations Before Income Taxes to Adjusted EBITDA ($ in millions) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Income from continuing operations before income taxes $ 111 $ 236 $ 1,122 $ 1,529 Depreciation 24 28 96 92 Amortization (1) 28 34 116 103 Interest expense 119 98 422 258 EBITDA $ 282 $ 396 $ 1,756 $ 1,982 Restructuring costs 17 — 28 3 One-time costs (2) 58 59 226 231 Stock-based compensation (3) 23 15 75 59 Adjusted EBITDA $ 380 $ 470 $ 2,085 $ 2,275 Adjusted EBITDA margin 25.6 % 29.3 % 33.8 % 36.1 % (1) Amortization in all periods is included in Cost of sales. (2) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments and legal reserves. For the three months ended December 31, 2022, $41 million of the one-time costs are recorded in Selling, general and administrative expenses, $14 million are recorded in Cost of sales and $3 million are recorded in Research and development. For the three months ended December 31, 2021, $26 million of the one-time costs are recorded in Selling, general and administrative expenses, $17 million are recorded in Cost of sales, $9 million are recorded in Research and development, and $7 million in Other (income) expense. (2) One-time costs primarily include costs incurred in connection with the spin-off of Organon, an impairment of a licensed intangible asset, inventory step-up adjustments and legal reserves. For the year ended December 31, 2022, $143 million of the one-time costs are recorded in Selling, general and administrative expenses, $49 million are recorded in Cost of sales, $19 million are recorded in Other (income) expense, and $15 million are recorded in Research and development. For the year ended December 31, 2021, $165 million of the one-time costs are recorded in Selling, general and administrative expenses (which includes $23 million pertaining to the acquisition of Alydia in the second quarter 2021), $45 million are recorded in Cost of sales, $14 million are recorded in Research and development, and $7 million are recorded in Other (income) expense. (3) For the three months ended December 31, 2022, approximately $4 million of stock-based compensation is recorded in Cost of sales, $16 million is recorded in Selling, general and administrative and $3 million is recorded in Research and development. For the three months ended December 31, 2021, approximately $3 million of stock-based compensation is recorded in Cost of sales, $10 million is recorded in Selling, general and administrative and $2 million is recorded in Research and development. (3) For the year ended December 31, 2022, approximately $13 million of stock-based compensation is recorded in Cost of sales, $51 million is recorded in Selling, general and administrative and $11 million is recorded in Research and development. For the year ended December 31, 2021, approximately $11 million of stock-based compensation is recorded in Cost of sales, $36 million is recorded in Selling, general and administrative and $12 million is recorded in Research and development. TABLE 6 Organon & Co. Reconciliation of GAAP Income from Continuing Operations Before Income Taxes to Non-GAAP Adjusted Net Income ($ in millions, except per share amounts) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Income from continuing operations before income taxes $ 111 $ 236 $ 1,122 $ 1,529 Adjustments: Amortization (1) 28 34 116 103 Restructuring costs 17 — 28 3 One-time costs (2) 58 59 226 231 Stock-based compensation (3) 23 15 75 59 Total Adjustments 126 108 445 396 Non-GAAP pre-tax income, continuing operations $ 237 $ 344 $ 1,567 $ 1,925 Taxes on income as reported in accordance with GAAP 3 34 205 178 Tax benefit on adjustments 23 18 78 74 Tax benefit on GAAP-only discrete items (4) 3 5 — 96 Non-GAAP adjusted taxes on income 29 57 283 348 Non-GAAP adjusted net income, continuing operations $ 208 $ 287 $ 1,284 $ 1,577 Non-GAAP adjusted net income, continuing operations per diluted share $ 0.81 $ 1.13 $ 5.03 $ 6.20 (1) Amortization in all periods is included in Cost of sales. (2) One-time costs primarily include costs incurred in connection with the spin-off of Organon, inventory step up adjustments and legal reserves. For the three months ended December 31, 2022, $41 million of the one-time costs are recorded in Selling, general and administrative expenses, $14 million are recorded in Cost of sales and $3 million are recorded in Research and development. For the three months ended December 31, 2021, $26 million of the one-time costs are recorded in Selling, general and administrative expenses, $17 million are recorded in Cost of sales, $9 million are recorded in Research and development, and $7 million in Other (income) expense. (2) One-time costs primarily include costs incurred in connection with the spin-off of Organon, an impairment of a licensed intangible asset, inventory step-up adjustments and legal reserves. For the year ended December 31, 2022, $143 million of the one-time costs are recorded in Selling, general and administrative expenses, $49 million are recorded in Cost of sales, $19 million are recorded in Other (income) expense, and $15 million are recorded in Research and development. For the year ended December 31, 2021, $165 million of the one-time costs are recorded in Selling, general and administrative expenses (which includes $23 million pertaining to the acquisition of Alydia in the second quarter 2021), $45 million are recorded in Cost of sales, $14 million are recorded in Research and development, and $7 million are recorded in Other (income) expense. (3) For the three months ended December 31, 2022, approximately $4 million of stock-based compensation is recorded in Cost of sales, $16 million is recorded in Selling, general and administrative and $3 million is recorded in Research and development. For the three months ended December 31, 2021, approximately $3 million of stock-based compensation is recorded in Cost of sales, $10 million is recorded in Selling, general and administrative and $2 million is recorded in Research and development. (3) For the year ended December 31, 2022, approximately $13 million of stock-based compensation is recorded in Cost of sales, $51 million is recorded in Selling, general and administrative and $11 million is recorded in Research and development. For the year ended December 31, 2021, approximately $11 million of stock-based compensation is recorded in Cost of sales, $36 million is recorded in Selling, general and administrative and $12 million is recorded in Research and development. (4) For the three months and year ended December 31, 2021, the Company recorded a tax benefit of approximately $5 million and $75 million, respectively, related to a portion of non-US step up in tax basis as a result of its separation from Merck & Co., Inc., Rahway, NJ.