What happened
Shares of Organon (OGN 1.75%) fell 15% on Thursday. The pharmaceutical company, which focuses on women's health therapies, established medicines, and biosimilars, reported fourth-quarter and full-year numbers that came in below analysts' consensus expectations. The stock ended the session at $24.87, down by almost 30% over the past year. Its 52-week low was $22.88, and its 52-week high was $39.48.
So what
Organon, which was spun off from Merck in 2021, disappointed investors with its full-year and fourth-quarter results.
In the fourth quarter, the company's revenue of $1.48 billion was down 7% year over year, and its net income of $108 million was down 46.5%. While sales of Organon's biosimilars rose 13% in the quarter to $134 million, sales of its established brands fell 14% to $888 million. Revenues from its women's health segment were up 4% to $433 million, thanks in large part to growth in sales from the contraceptive Nexplanon.
Full-year revenue fell 2% to $6.174 billion, and net income fell 32% to $917 million. The company offered revenue guidance for 2023 of between $6.15 billion and $6.45 billion.
Now what
Despite its declining sales, this healthcare stock may be worth buying on the dip. That revenues from its established brands are falling isn't a big surprise -- it's one reason why Merck spun off the division into a separate company. However, Organon has more than 60 products and a small but growing pipeline, so it is worth a second look, particularly since it trades at just a little more than 6 times earnings and remains profitable. It also pays a quarterly dividend of $0.28 a share that yields roughly 3.8% at its current share price, more than double the S&P 500 average.
