Organon & Co. Q4 2025 Earnings Call Summary

Organon & Co. Q4 2025 Earnings Call Summary Moby Intelligence Fri, February 13, 2026 at 5:32 AM GMT+8 4 min read In this article:

OGN +4.67%

Organon & Co. Q4 2025 Earnings Call Summary - Moby

Strategic Performance and Operational Context

• Management attributed the 3% revenue decline in 2025 to the loss of exclusivity for Atozet and headwinds in the respiratory franchise, specifically policy-driven impacts on Singulair.

• The biosimilars franchise outperformed internal expectations, driven by Hadlima's 61% growth and successful expansion into new geographic markets like Canada and Puerto Rico.

• Operational efficiency was a primary focus, with over $200 million in cost savings achieved to keep adjusted EBITDA margins flat despite 150 basis points of gross margin degradation.

• The divestiture of the Jada system for $390 million and a reduction in the dividend payout ratio represent a strategic pivot toward balance sheet capacity and debt reduction.

• Management discontinued early-stage clinical programs to prioritize medical and regulatory support for existing market products and high-potential growth drivers like Vtama.

• The FDA approval to extend Nexplanon's duration from 3 to 5 years is viewed as a milestone to broaden the addressable market, particularly for overweight and obese patient populations.

• Strategic positioning in established brands now relies on leveraging global infrastructure to integrate low-incremental-cost assets like Emgality and Nilemdo.

2026 Outlook and Strategic Assumptions

• 2026 guidance assumes revenue and adjusted EBITDA will remain approximately flat at $6.2 billion and $1.9 billion, respectively, as FX tailwinds offset the loss of Jada revenue.

• Management anticipates a 75 to 100 basis point decline in adjusted gross margin for 2026, primarily driven by the release of accumulated foreign exchange translation on inventory.

• Nexplanon volume is expected to face a temporary headwind in 2026 due to a loss of reinsertions as the market transitions to the new 5-year label duration.

• The company expects to achieve net leverage below 4x by the end of 2026 through a combination of EBITDA performance and the application of divestiture proceeds to debt.

• Guidance for the fertility business assumes an increasingly competitive U.S. environment due to a competitor's new agreement with a federal Direct Access Program.

Risk Factors and Structural Adjustments

• A noncash goodwill impairment of $301 million was recorded in Q4 2025, reflecting the decline in stock price and underperformance in the U.S. market.

• The implementation of the OECD Pillar 2 global minimum tax is expected to drive the non-GAAP tax rate up to a range of 27.5% to 29.5% in 2026.

• A new Risk Evaluation and Mitigation Strategy (REMS) program for Nexplanon requires recertification of prescribers, though management expects minimal volume disruption during the transition.

• Manufacturing separation activities following the Merck spin-off are expected to cost approximately $100 million in 2026, with an associated increase in capital expenditures.

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Q&A Session Highlights

Scope and integrity of internal investigations into purchasing practices

• Management declined to provide additional details regarding a new matter brought to the Audit Committee's attention just prior to the call.

• The response effectively deflected questions regarding whether channel behavior issues previously identified in Nexplanon were present in the biosimilars business.

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Impact of FDA draft guidance on biosimilar comparative efficacy studies

• Management views the potential easing of regulatory requirements as an incremental benefit rather than a transformative shift for their business model.

• The strategy remains focused on selecting partners with optimal launch sequencing rather than relying on broad regulatory changes to boost margins.

Nexplanon volume bottlenecks and REMS certification friction

• Management expressed confidence that the 6-month grace period for the new REMS program is sufficient to recertify loyal prescribers without significant volume loss.

• The recertification process is described as a minor administrative requirement taking approximately 15 to 20 minutes for previously certified physicians.

Sustainability of operating margins amidst gross margin compression

• Management emphasized a philosophy of aggressive OpEx management to offset structural gross margin declines while protecting spend that directly links to revenue growth.

• While no specific long-term margin target was provided, the company is targeting another round of significant OpEx savings in 2026.

Market opportunity and peak revenue for denosumab biosimilars

• Management estimated peak revenues for the denosumab biosimilar portfolio to be approximately $100 million over a 5-year timeframe.

• The outlook accounts for a highly competitive pricing and volume environment against the reference products Prolia and Xgeva.

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