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Organon's (OGN) Q2 Earnings & Revenues Surpass Estimates

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Organon & Co. (OGN - Free Report) reported second-quarter 2021 adjusted earnings of $1.72 per share, which beat the Zacks Consensus Estimate of $1.49 per share. The company reported earnings of $2.52 per share in the year-ago quarter.

Total revenues in the second quarter were $1.60 billion, up from $1.53 billion in the year-ago quarter. Total revenues in the second quarter increased 5% year over year on a reported basis. Sales also beat the Zacks Consensus Estimate of $1.54 billion.

Shares of Organon were up in pre-market trading.

Along with earnings release, Organon declared its inaugural quarterly dividend of $0.28 per share of its issued and outstanding common stock.

All growth rates mentioned below are on a year-over-year and  reported basis.

Quarter in Detail

The company records revenues under its three business franchisees, namely – Women’s Health, Biosimilars and Established Brands.

In the reported quarter, Women’s Health sales were $417 million, up 19% from the year-ago quarter, driven by strong growth in Nexplanon, a single-rod subdermal contraceptive implant. Growth in fertility also contributed to Women’s Health revenues in the quarter. Sales of Follistim, AQ Cartridge (follitropin beta injection) were positively impacted by a combination of COVID-19 recovery and increased demand during the quarter.

Biosimilars revenues were $86 million, up 43% from the year-ago quarter, driven by continued demand growth for Renflexis (infliximab-abda) and strong uptake of Ontruzant (trastuzumab-dttb) in the United States. This was partially offset by a decrease in sales in the EU, due to increasing competitive pressures.

Biosimilars revenues were $1.04 billion, down 4% from the year-ago quarter, owing to the loss of exclusivity of Zetia (ezetimibe) in Japan. Established Brands represents a broad portfolio of medicines, which generally are beyond market exclusivity, like leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management, for which generic competition varies from market to market.

Research and development costs were $76 million, up 49% on a yearly basis, while selling, general and administrative expenses rose 46.5% year over year to $416 million.

We remind investors that, in June 2021, pharma giant Merck (MRK - Free Report) completed the spinoff of its Women’s Health unit, legacy drugs and biosimilar products into a new publicly traded company called Organon.

2021 Guidance

Organon reaffirmed the financial guidance it provided earlier this year. The company expects revenues in the range of $6.1-$6.4 billion for 2021, unchanged from the previous projection.

Adjusted EBITDA margin is expected in the range of 36%-38%, while non-GAAP tax rate is projected between 17.5%-19.5%, both unchanged from the previous expectation.

Zacks Rank & Stocks to Consider

Organon currently carries a Zacks Rank #3 (Hold). Top-ranked stocks in the healthcare sector include Catalent, Inc. (CTLT - Free Report) and Vertex Pharmaceuticals Incorporated (VRTX - Free Report) , both carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Catalent’s earnings estimates have been revised 0.7% upward for 2021 and 2.6% for 2022 over the past 60 days. The stock has surged 13.5% year to date.

Vertex earnings estimates have been revised 9.4% upward for 2021 and 5.5% for 2022 over the past 60 days.