Organon (OGN 0.66%), a pharmaceutical company focused on women’s health, biosimilars, and established brands, released its fiscal Q2 2025 (ended June 30, 2025) results on August 5, 2025. The company reported GAAP revenue of $1.59 billion, above analyst expectations of $1.552 billion, and non-GAAP adjusted earnings per share (EPS) of $1.00, exceeding the $0.95 consensus estimate (non-GAAP). Despite these beats, both revenue and earnings (GAAP and non-GAAP) declined compared to fiscal Q2 2024, with net income (GAAP) falling to $145 million from $195 million in the prior-year period. The quarter’s results highlighted the company’s focus on new product growth and its ongoing challenges managing its legacy product portfolio.
| Metric | Fiscal Q2 2025 | Q2 2025 Estimate | Fiscal Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.00 | $0.95 | $1.12 | (11.0%) |
| Revenue (GAAP) | $1.59 billion | N/A | $1.61 billion | (0.8%) |
| Adjusted EBITDA (Non-GAAP) | $522 million | $513 million | 1.8% | |
| Net Income (GAAP) | $145 million | $195 million | (25.6%) | |
| Gross Margin (GAAP) | 54.8 % | 58.4 % | (3.6 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Organon and its business priorities
Organon is a global pharmaceutical company that focuses on therapies in women’s health, biosimilars (which are follow-on versions of off-patent biologic drugs), and a portfolio of established brand medicines. Its products range from contraceptives to fertility treatments to biosimilar versions of major immunology and oncology drugs.
The company’s recent business focus has been on growing its women’s health franchise, diversifying within biosimilars, and managing its mature portfolio as these established brands face heavy generic competition. Success for Organon depends on its ability to launch new products and biosimilars, expand presence internationally, and manage costs while paying down debt. Partnerships and acquisitions, such as those that brought Vtama (a topical dermatology treatment) and Emgality (a migraine therapy) into the portfolio, are central to enhancing its growth profile.
Quarter highlights and drivers
During the quarter, Organon’s revenue (GAAP) slightly declined from $1.61 billion in fiscal Q2 2024 to $1.59 billion. However, this topped analyst expectations by $42 million (GAAP). Women’s Health delivered $462 million in sales, up 3% (GAAP), supported by a 15% increase in fertility treatments. Nexplanon, a contraceptive implant, alone contributed $240 million in revenue, with international growth of 10% ex-foreign exchange offsetting a 5% U.S. decline—mainly because some customers limited purchases due to tighter government funding.
Biosimilars revenue increased 5% as reported to $173 million, driven mainly by Hadlima, an adalimumab biosimilar for immune-mediated disorders, which generated $50 million. The company also launched Tofidence, an intravenous biosimilar for certain inflammatory diseases, expanding its portfolio in May 2024. However, older biosimilars like Ontruzant (for breast cancer) and Renflexis (for arthritis) saw declines.
The established brands segment—which includes cardiovascular, respiratory, dermatology, and pain management drugs—made up $936 million in revenue but fell 3% year-over-year on a GAAP as-reported basis. Sales of Atozet, for high cholesterol, declined in international markets after losing patent exclusivity, dropping to $86 million from $140 million in fiscal Q2 2024. Singulair, a respiratory medication, also slipped further due to competition and fewer sales in China and Japan.
Notably, Vtama, a once-daily nonsteroidal topical cream for atopic dermatitis (a chronic skin condition), contributed $31 million, its first full quarter following Organon’s acquisition of Dermavant Sciences. Products like Emgality (a migraine therapy) and Rayvow (for acute migraine), which Organon distributes through a licensing deal with Eli Lilly, added $42 million in sales. These launches partially compensated for declines elsewhere in the portfolio, though the company continued to realize cost savings from restructuring and integration of acquired assets.
Profitability, margins, and regional trends
Gross margin (GAAP) shrank from 58.4% in fiscal Q2 2024 to 54.8%, with Organon citing higher amortization expense from recent acquisitions and fair value adjustments related to Dermavant, the maker of Vtama. Adjusted EBITDA (non-GAAP) rose 1.8% year-over-year to $522 million as the company managed to reduce operating expenses by 3%, pushing the adjusted EBITDA margin (non-GAAP) up to 32.7% from 31.9% in the prior-year period.
Net income (GAAP) fell by $50 million year-over-year, and adjusted net income (non-GAAP) also dropped 10%. The contraction in net profitability shows the limits of relying on cost control to offset top-line pressures and higher amortization and integration costs. Regional sales results were mixed: U.S. revenue grew 7% year-over-year, while Europe and Canada declined 8%. Sales in Asia Pacific, Japan, and China all saw moderate declines, while Latin America, the Middle East, Russia, and Africa revenue increased from $251 million in fiscal Q2 2024 to $285 million.
Balance sheet strength was improved by repayment of $345 million in debt, bringing quarter-end debt to $8.90 billion and cash reserves to $599 million. The quarterly dividend was held at $0.02 per share, reflecting ongoing focus on debt reduction. Organon’s leverage ratio is now expected to drop below 4.0x adjusted EBITDA (non-GAAP) by year-end 2025, which aligns with management’s emphasis on deleveraging over share buybacks or raising dividends at this time.
Outlook and what’s next
For the rest of fiscal 2025, Organon’s management raised its full-year revenue guidance to $6.275 billion–$6.375 billion from the previous range of $6.125 billion–$6.325 billion, mainly because the company has revised downward the impact of foreign exchange translation headwinds. Adjusted EBITDA margin (non-GAAP) guidance for full year 2025 remains unchanged at 31.0%–32.0%, and non-GAAP adjusted gross margin is also expected to hold steady. The outlook for nominal revenue growth, now (2.0%) to (0.4%), is slightly better than the previous (4.3%) to (1.2%) range because of a weakening U.S. dollar. Management confirmed its focus on reaching a net leverage ratio below 4.0x by year-end 2025, and expects over $900 million in free cash flow before one-time costs.
Looking further ahead, investors should watch the progress of new and recently launched products, such as Vtama and Tofidence, and whether fertility and women’s health continue to drive meaningful revenue. Risks remain in the established brands franchise as patent expiries and price pressures persist. Organon’s tight capital allocation and commitment to lowering debt restrict its ability for major acquisitions or increases in capital returns for now. With about 75% of revenue coming from outside the U.S. in 2024, the company is also exposed to shifts in currency rates and international healthcare policies, though 2025 guidance reflects some relief on that front.
The quarterly dividend was maintained at $0.02 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
