Organon & Co.

Previous wording

Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “forecast,” “intend,” “would,” “seek,” “continue,” and other words of similar meaning, or negative variations of any of the foregoing. These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Risks and uncertainties that may affect our future results include, but are not limited to, pricing pressures globally, including rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement and pricing in general; an inability to fully execute on our product development and commercialization plans in the United States, Europe, and elsewhere internationally; an inability to adapt to the industry-wide trend toward highly discounted channels; changes in tax laws or other tax guidance which could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; expanded brand and class competition in the markets in which Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) operates; global tensions, which may result in disruptions in the broader global economic environment; uncertainty regarding the U.S. federal budget and debt ceiling, and the impact of a potential U.S. federal government shutdown; governmental initiatives that adversely impact our marketing activities, particularly in China; volatility in our stock price; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; difficulties with performance of third parties we rely on for our business growth; the failure of any supplier to provide substances, materials, or services as agreed; the increased cost of supply, manufacturing, packaging, and operations; difficulties developing and sustaining relationships with commercial counterparties; competition from generic products as our products lose patent protection; any failure by us to obtain an additional period of market exclusivity in the United States for Nexplanon subsequent to the expiration of certain current patents in 2027; difficulties implementing or executing on our acquisition strategy or failure to recognize the benefits of such acquisitions; the impact of higher selling and promotional costs; and other factors discussed in our most recently filed Annual Report on Form 10-K and Current Reports on Form 8-K, including those discu…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “forecast,” “intend,” “would,” “seek,” “continue,” and other words of similar meaning, or negative variations of any of the foregoing. These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Risks and uncertainties that may affect our future results include, but are not limited to, pricing pressures globally, including rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement and pricing in general; an inability to fully execute on our product development and commercialization plans in the United States, Europe, and elsewhere internationally; an inability to adapt to the industry-wide trend toward highly discounted channels; changes in tax laws or other tax guidance which could adversely affect our cash tax liability, effective tax rates, and results of operations and lead to greater audit scrutiny; expanded brand and class competition in the markets in which Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) operates; global tensions, which may result in disruptions in the broader global economic environment; governmental initiatives that adversely impact our marketing activities, particularly in China; volatility in our stock price; political and social pressures, or regulatory developments, that adversely impact demand for, availability of, or patient access to contraception or fertility products; difficulties with performance of third parties we rely on for our business growth; the failure of any supplier to provide substances, materials, or services as agreed; the increased cost of supply, manufacturing, packaging, and operations; difficulties developing and sustaining relationships with commercial counterparties; competition from generic products as our products lose patent protection; any failure by us to obtain an additional period of market exclusivity in the United States for Nexplanon subsequent to the expiration of certain current patents in 2027; difficulties implementing or executing on our acquisition strategy or failure to recognize the benefits of such acquisitions; the impact of higher selling and promotional costs; the impact of cyberattacks or other events that may affect our information technology systems or those of third parties; and other factors discussed in our most recently filed Annual Report on Form 10-K and Current Reports on Form 8-K, including those discussed in…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

•Diprospan TM1 (betamethasone), due to recovery from the manufacturing issues resulting from the regulatory inspection finding at the Heist manufacturing location that impacted the manufacturing of selected injectable steroid brands in the first quarter of 2023 (the “Market Action”).

Current wording

•Diprospan™1 (betamethasone), due to recovery from the manufacturing issues resulting from the regulatory inspection finding at the Heist manufacturing location that impacted the manufacturing of selected injectable steroid brands in the first quarter of 2023 (the “Market Action”);

Previous wording

Combined global sales of Zetia® (ezetimibe), which is marketed as Ezetrol™in most countries outside the United States; and Vytorin® (ezetimibe / simvastatin), which is marketed as Inegy™ outside the United States, medicines for lowering LDL cholesterol, declined 5% for the three months ended March 31, 2024, compared to 2023, primarily driven by the decrease in demand in Japan and a decrease in price in several Asia Pacific markets.

Current wording

•Zetia® (ezetimibe), which is marketed as Ezetrol™ in most countries outside of the United States, and Vytorin® (ezetimibe / simvastatin), which is marketed as Inegy™ outside of the United States primarily driven by the decrease in demand in Japan, the negative impact of competition and the phasing of shipments related to the implementation of our Enterprise Resource Planning (“ERP”) system in several international markets.

Previous wording

•NuvaRing, due to ongoing generic competition and the negative impact of unfavorable discount rates in the United States.

Current wording

•NuvaRing, due to ongoing generic competition and the negative impact of increased government discount rates in the United States.

Previous wording

Worldwide sales were $1.6 billion for the three months ended March 31, 2024, an increase of 5% compared to 2023. Worldwide sales during the three months ended March 31, 2024 were negatively impacted by approximately 2%, or $30 million, due to unfavorable foreign exchange rates.

Current wording

Worldwide sales were $3.2 billion for the six months ended June 30, 2024, an increase of 3%, compared to 2023. Worldwide sales during the six months ended June 30, 2024 were negatively impacted by approximately 2% or $58 million, due to unfavorable foreign exchange.

Previous wording

•Cozaar® (losartan) and Hyzaar® (losartan / hydrochlorothiazide), driven by the negative impact of volume-based procurement (“VBP”) in China; and

Current wording

•Cozaar® and Hyzaar® (losartan and losartan / hydrochlorothiazide), driven by the negative impact of volume-based procurement (“VBP”) in China.

Previous wording

The loss of exclusivity negatively impacted sales of certain of our products by approximately $5 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, based on the decrease in volume period over period, mainly impacting Atozet TM 1 (ezetimibe and atorvastatin) and Rosuzet TM 1(ezetimibe and rosuvastatin) in Japan. VBP in China had a $7 million negative impact on our sales during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. We expect VBP to continue to impact our established brands product portfolio for the next several quarters.

Current wording

The loss of exclusivity (“LOE”) negatively impacted sales of certain of our products by approximately $7 million and $12 million during the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively, based on the decrease in volume period over period, mainly impacting Atozet TM 1 (ezetimibe and atorvastatin) in Japan. VBP in China had a $6 million and $13 million negative impact on our sales during the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively. We expect VBP to continue to impact our established brands product portfolio for the next several quarters.

Previous wording

Our operations include a portfolio of products. Highlights of the sales of our products for the three months ended March 31, 2024 and 2023 are provided below. See Note 5 “Product and Geographic Information” to the Condensed Consolidated Financial Statements for further details on sales of our products.

Current wording

Our operations include a portfolio of products. Highlights of the sales of our products for the three and six months ended June 30, 2024 and 2023 are provided below. See Note 5 “Product and Geographic Information” to the Condensed Consolidated Financial Statements for further details on sales of our products.

Previous wording

Worldwide sales of Nexplanon, a single-rod subdermal contraceptive implant, increased 33% for the three months ended March 31, 2024, compared to 2023, primarily due to the result of lower sales in the first quarter of 2023 due to distributor purchasing patterns associated with the timing of the increase in the list price of Nexplanon in the United States, coupled with favorable price and discount rates in the United States and the favorable timing of tenders to markets outside of the United States.

Current wording

Worldwide sales of Nexplanon, a single-rod subdermal contraceptive implant, increased 13% and 22% for the three and six months ended June 30, 2024, compared to 2023, respectively, primarily due to favorable price and discount rates in the United States, an increase in demand in our institutional business in Africa, and increased demand in our international markets. In addition, sales for the six months ended June 30, 2024, primarily related to customer buying patterns associated with our decision to forgo our normal Nexplanon list-price increase in 2023, which positively impacted the first quarter of 2024.

Previous wording

Worldwide sales of NuvaRing, a vaginal contraceptive product, declined 22% for the three months ended March 31, 2024, compared to 2023, due to ongoing generic competition and the negative impact of unfavorable discount rates in the United States. We expect a continued decline in NuvaRing sales as a result of generic competition.

Current wording

Worldwide sales of NuvaRing, a vaginal contraceptive product, declined 36% and 29% for the three and six months ended June 30, 2024, compared to 2023, respectively, due to ongoing generic competition and the negative impact of increased government discount rates in the United States. We expect a continued decline in NuvaRing sales as a result of generic competition.

Previous wording

Worldwide sales of Marvelon TM 1 (desogestrel and ethinyl estradiol pill) and Mercilon TM 1(desogestrel and ethinyl estradiol pill), combined oral hormonal daily contraceptive pills not approved or marketed in the United States but available in certain countries outside the United States, declined 12% for the three months ended March 31, 2024, compared to 2023, as a result of distributors’ buying patterns in Southeast Asia and China.

Current wording

Worldwide sales of Marvelon TM 1 (desogestrel and ethinyl estradiol pill) and Mercilon TM 1(desogestrel and ethinyl estradiol pill), combined oral hormonal daily contraceptive pills not approved or marketed in the United States but available in certain countries outside the United States, increased 38% and 10% for the three and six months ended June 30, 2024, compared to 2023, respectively, as a result of increased demand in various international markets.

Previous wording

Worldwide sales of Follistim AQ, a fertility treatment, declined 17% for the three months ended March 31, 2024, compared to 2023, due to a one-time buy-in as a result of the exit of the Interim Operating Model Agreement (“IOM Agreement”) in the United States with Merck & Co. (“Merck”), during the fourth quarter and the negative impact of unfavorable discount rates in the United States.

Current wording

Worldwide sales of Follistim AQ, a fertility treatment, declined 11% and 13% for the three and six months ended June 30, 2024, compared to 2023, respectively, due to a one-time buy-in as a result of the exit of the Interim Operating Model Agreement in the United States with Merck & Co.,Inc. (“Merck”), during the fourth quarter of 2023.

Previous wording

Worldwide sales of ganirelix acetate injection, a fertility treatment, declined 2% for the three months ended March 31, 2024, compared to 2023, primarily due to unfavorable discount rates, partially offset by increased volume in the United States.

Current wording

Worldwide sales of ganirelix acetate injection, a fertility treatment, declined 20% and 12% for the three and six months ended June 30, 2024, compared to 2023, respectively, primarily due to generic competition.

Previous wording

Worldwide sales of Jada, a device intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, increased 84% for the three months ended March 31, 2024, compared to 2023. The sales increase is due to continued uptake in the United States following the Jada launch in early 2022.

Current wording

Worldwide sales of Jada, a device intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted, increased 31% and 52% for the three and six months ended June 30, 2024, compared to 2023, respectively. The sales increase is due to continued uptake in the United States following the Jada launch in early 2022.

Previous wording

Renflexisis a biosimilar to Remicade 2 (infliximab) for the treatment of certain autoimmune conditions. Sales increased 12% for the three months ended March 31, 2024, compared to 2023, driven primarily by continued demand growth in Canada and demand growth in the United States, partially offset by an increase in discount rates. We have commercialization rights to Renflexis in countries outside of Europe, Korea, China, Turkey, and Russia.

Current wording

Renflexisis a biosimilar to Remicade 2 (infliximab) for the treatment of certain autoimmune conditions. Sales declined 2% for the three months ended June 30, 2024, compared to 2023, driven primarily by an increase in discount rates in the United States, partially offset by continued demand growth in Canada. Sales increased 5% for the six months ended June 30, 2024, compared to 2023, driven primarily by continued demand growth in Canada and demand growth in the United States, partially offset by an increase in discount rates in the United States. We have commercialization rights to Renflexis in countries outside of Europe, Korea, China, Turkey, and Russia.

Previous wording

Ontruzant is a biosimilar to Herceptin 2 (trastuzumab) for the treatment of HER2-overexpressing breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Sales for the three months ended March 31, 2024, compared to 2023, increased 86% driven by increased demand due to a government tender in Brazil partially offset by the negative impact of unfavorable discount rates in the United States. We have commercialization rights to Ontruzant in all countries except in Korea and China.

Current wording

Ontruzant is a biosimilar to Herceptin 2 (trastuzumab) for the treatment of HER2-overexpressing breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Sales for the three and six months ended June 30, 2024, compared to 2023, increased 46% and 62%, respectively, driven by increased demand due to a government tender in Brazil partially offset by the negative impact of unfavorable discount rates in the United States and lower demand in Europe. We have commercialization rights to Ontruzant in all countries except in Korea and China.

Previous wording

Brenzys is a biosimilar to Enbrel 2 (etanercept) for the treatment of certain inflammatory diseases. Sales in the three months ended March 31, 2024, compared to 2023, increased 25% driven by the timing of government orders in Brazil. We have commercialization rights to Brenzys in countries outside of the United States, Europe, Korea, China, and Japan.

Current wording

Brenzys is a biosimilar to Enbrel 2 (etanercept) for the treatment of certain inflammatory diseases. Sales in the three months ended June 30, 2024, compared to 2023, remained relatively consistent. Sales in the six months ended June 30, 2024, compared to 2023, increased 13% driven by the timing of government orders in Brazil. We have commercialization rights to Brenzys in countries outside of the United States, Europe, Korea, China, and Japan.

Previous wording

Hadlima is a biosimilar to Humira 2 (adalimumab) for the treatment of certain autoimmune and autoinflammatory conditions. We have commercialization rights to Hadlima in countries outside of the EU, Korea, China, Turkey, and Russia. We recorded sales of $30 million during the three months ended March 31, 2024, reflecting an increase due to the launch in the United States in July 2023 and a modest increase in international markets. Hadlima is currently approved in the United States, Australia, Canada, and Israel.

Current wording

Hadlima is a biosimilar to Humira 2 (adalimumab) for the treatment of certain autoimmune and autoinflammatory conditions. We have commercialization rights to Hadlima in countries outside of the EU, Korea, China, Turkey, and Russia. We recorded sales of $28 million and $58 million during the three and six months ended June 30, 2024, respectively, reflecting an increase due to the launch in the United States in July 2023. In addition, sales for the six months ended June 30, 2024 were impacted by a modest increase in international markets. Hadlima is currently approved in the United States, Australia, Canada, and Israel.

Previous wording

Sales of Atozet, a medicine for lowering LDL cholesterol, increased 3% for the three months ended March 31, 2024, compared to 2023, primarily due to increased demand in Europe partially offset by LOE in Japan. We anticipate LOE in certain markets in Europe to commence in the third quarter of 2024.

Current wording

Sales of Atozet, a medicine for lowering LDL cholesterol, declined 2% and remained consistent for the three and six months ended June 30, 2024, compared to 2023, respectively, primarily due to LOE in Japan and the timing of tenders in the Latin America region partially offset by increased demand in Europe. We anticipate LOE in certain markets in Europe to commence late in the third quarter of 2024.

Previous wording

Combined global sales of Cozaar and Hyzaar, medicines for the treatment of hypertension, declined 21% for the three months ended March 31, 2024, compared to 2023, driven by the negative impact of VBP in China.

Current wording

Combined global sales of Cozaar and Hyzaar, medicines for the treatment of hypertension, declined 16% and 19% for the three and six months ended June 30, 2024, compared to 2023, respectively, driven by the negative impact of VBP in China.

Previous wording

Worldwide sales of Singulair, a once-a-day oral medicine for the chronic treatment of asthma and for the relief of symptoms of allergic rhinitis, declined 18% for the three months ended March 31, 2024, compared to 2023, due to decreased demand and price decreases in Japan and the timing of tenders.

Current wording

Worldwide sales of Singulair® (montelukast sodium), a once-a-day oral medicine for the chronic treatment of asthma and for the relief of symptoms of allergic rhinitis, increased 16% for the three months ended June 30, 2024, compared to 2023, due to increased demand in China and phasing of shipments related to the implementation of our ERP system in various international markets, partially offset by mandatory price decreases in Japan. Sales declined 5% for the six months ended June 30, 2024, compared to 2023, due to decreased demand and price decreases in Japan, partially offset by increased demand in China.

Previous wording

Global sales of Nasonex® (mometasone), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, increased 8% for the three months ended March 31, 2024, due to increased demand across our international markets.

Current wording

Global sales of Nasonex® (mometasone), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, declined 9% for the three months ended June 30, 2024, due to the phasing of shipments related to the implementation of our ERP system in various international markets. Sales remained consistent for the six months ended June 30, 2024, due to increased demand across our international markets offset by the phasing of shipments related to the implementation of our ERP system in various international markets.

Previous wording

Global sales of Dulera® (formoterol/fumarate dihydrate), a combination medicine for the treatment of asthma, increased 20% for the three months ended March 31, 2024, compared to 2023, primarily due to the favorable impact of increased demand in the United States and Canada.

Current wording

Global sales of Dulera® (formoterol/fumarate dihydrate), which is also marketed as Zenhale™ in certain markets outside of the United States, a combination medicine for the treatment of asthma, remained relatively consistent for the three months ended June 30, 2024, compared to 2023. Sales increased 8% for the six months ended June 30, 2024, compared to 2023, primarily due to the favorable impact of increased demand in the United States and Canada.

Previous wording

Sales of Arcoxia™¹(etoricoxib), a medicine for the treatment of arthritis and pain, increased 7% for the three months ended March 31, 2024, compared to 2023, primarily due to an increase in demand and favorable pricing in the Asia Pacific region.

Current wording

Sales of Arcoxia™¹ (etoricoxib), a medicine for the treatment of arthritis and pain, declined 7% for the three months ended June 30, 2024, compared to 2023, primarily due to a decrease in demand in various international markets. Sales remained consistent for the six months ended June 30, 2024, compared to 2023, primarily due to favorable pricing in the Asia Pacific region offset by a decrease in demand in various international markets and the impact of foreign exchange.

Previous wording

Sales of Diprospan, a corticosteroid approved for treatment of a wide range of inflammatory conditions, increased 103% for the three months ended March 31, 2024, compared to 2023, due to recovery from the manufacturing issues resulting from the Market Action. In the first quarter of 2023, we resolved the regulatory inspection findings. We expect sales recovery to continue over the course of 2024.

Current wording

Sales of Diprospan, a corticosteroid approved for treatment of a wide range of inflammatory conditions, increased 196% and 146% for the three and six months ended June 30, 2024, compared to 2023, respectively, due to recovery from the manufacturing issues resulting from the Market Action. In the first quarter of 2023, we resolved the regulatory inspection findings. We expect sales recovery to continue over the course of 2024.

Previous wording

Worldwide sales of Proscar® (finasteride), a medicine for the treatment of symptomatic benign prostate enlargement, for the three months ended March 31, 2024 compared to 2023, were substantially consistent.

Current wording

Worldwide sales of Proscar® (finasteride), a medicine for the treatment of symptomatic benign prostate enlargement, for the three and six months ended June 30, 2024, compared to 2023, were substantially consistent.

Previous wording

Cost of sales increased 15% for the three months ended March 31, 2024, compared to 2023, primarily due to an increase in sales, unfavorable product mix, foreign exchange translation and higher inflation impacts to material and distribution costs.

Current wording

Cost of sales increased 4% and 9% for the three and six months ended June 30, 2024, compared to 2023, respectively, primarily due to unfavorable product mix, foreign exchange translation and higher inflation impacts to material and distribution costs.

Previous wording

Selling, general and administrative expenses decreased 1% for the three months ended March 31, 2024, compared to 2023, due to lower promotional costs and lower costs associated with the implementation of our ERP system.

Current wording

Selling, general and administrative expenses decreased 3% and 2% for the three and six months ended June 30, 2024, compared to 2023, respectively, due to lower costs associated with the implementation of our ERP system.

Previous wording

Research and development expenses decreased 13% for the three months ended March 31, 2024, compared to 2023, primarily due to a decrease in clinical study activity and lower personnel costs due to a reduction in headcount.

Current wording

Research and development expenses decreased 9% and 11% for the three and six months ended June 30, 2024, compared to 2023, respectively, primarily due to lower personnel costs due to a reduction in headcount related to our restructuring initiatives. In addition, the six months ended June 30, 2024, were impacted by a decrease in clinical study activity.

Previous wording

For the three months ended March 31, 2024, acquired in-process research and development and milestones of $15 million due to the research and development milestones related to Henlius which were determined to be probable of being achieved. For the three months ended March 31, 2023 acquired in-process research and development and milestones of $8 million represents the upfront and development milestones related to the Claria transaction.

Current wording

For the three months ended June 30, 2024, acquired in-process research and development and milestones of $15 million represent the research and development milestones of $5 million for Henlius and $10 million for Cirqle, which were determined to be probable of being achieved. For the six months ended June 30, 2024, acquired in-process research and development and milestones of $30 million represent the research and development milestones of $20 million for Henlius and $10 million for Cirqle, which were determined to be probable of being achieved. For the six months ended June 30, 2023 acquired in-process research and development and milestones of $8 million represents the upfront and development milestones related to the Claria transaction.

Previous wording

For the three months ended March 31, 2024, we incurred $23 million of headcount-related restructuring expense related to the ongoing optimization of our internal operations, primarily the research and development function.

Current wording

For the six months ended June 30, 2024, we incurred $23 million of headcount-related restructuring expense related to the ongoing optimization of our internal operations, primarily the research and development function.

Previous wording

Interest expense remained consistent for the three months ended March 31, 2024, compared to 2023.

Current wording

Interest expense remained consistent for the three and six months ended June 30, 2024, compared to 2023. Interest expense for the three and six months ended June 30, 2024 reflects the inclusion of approximately $4 million in debt issuance costs related to the refinancing of our long-term debt offset by lower interest rates on the refinanced debt and our cross-currency swaps. Beginning in May 2024, the difference between the interest rate received of 7.3125% and paid of 5.8330% under the cross-currency swap agreements is recorded in Interest expense.

Previous wording

For the three months ended March 31, 2024, the change in exchange losses was driven by less volatility in foreign exchange rates compared to the prior year.

Current wording

For the three and six months ended June 30, 2024, the reduction in exchange losses was driven by less volatility in foreign exchange compared to the prior year and the favorable changes in spot rates of our forward contracts.

Previous wording

The effective income tax rates were 14.7% and 24.6% for the three months ended March 31, 2024 and 2023, respectively. These effective income tax rates reflect the beneficial impact of foreign earnings, offset by the impact of U.S. inclusions under the Global Intangible Low-Taxed Income regime and a partial valuation allowance recorded against non-deductible U.S. interest expense. The 2024 year-to-date effective tax rate favorable impact is primarily attributable to the favorable closure of two non-U.S. tax audits.

Current wording

The effective income tax rates were 16.0% and 14.4% for the six months ended June 30, 2024 and 2023, respectively. These effective income tax rates reflect the beneficial impact of foreign earnings, offset by the impact of U.S. inclusions under the Global Intangible Low-Taxed Income regime and a partial valuation allowance recorded against non-deductible U.S. interest expense. There was a favorable impact to the 2024 year-to-date effective tax rate which was driven by the favorable closure of the two non-US tax audits and a return to provision adjustment for the Switzerland entity.

Previous wording

Effective January 1, 2024, multiple jurisdictions, most notably, a majority of the European Union member states, implemented the Organization for Economic Co-operation and Development’s (“OECD”) Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least €750 million. We have evaluated the effect of this for the first quarter of 2024 and do not expect a material impact.

Current wording

Effective January 1, 2024, multiple jurisdictions, most notably, a majority of the European Union member states, implemented the Organization for Economic Co-operation and Development’s (“OECD”) Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least €750 million. We have evaluated the effect of this for the first two quarters of 2024 and do not expect that it will have a material effect on a full year basis.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $575 million. We have historically generated and expect to continue to generate positive cash flow from operations. Our ability to fund our operations and anticipated capital needs is reliant upon the generation of cash from operations, supplemented as necessary by periodic utilization of our Revolving Credit Facility. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings, payment of dividends and strategic business development transactions. We believe that our financing arrangements, future cash from operations, and access to capital markets will provide adequate resources to fund our future cash flow needs.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $704 million. We have historically generated and expect to continue to generate positive cash flow from operations. Our ability to fund our operations and anticipated capital needs is reliant upon the generation of cash from operations, supplemented as necessary by periodic utilization of our revolving credit facility. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings, payment of dividends and strategic business development transactions. We believe that our financing arrangements, future cash from operations, and access to capital markets will provide adequate resources to fund our future cash flow needs.

Previous wording

Working capital was $1.7 billion and $1.6 billion as of March 31, 2024 and December 31, 2023, respectively. The increase in working capital was primarily driven by a decline in payables.

Current wording

Working capital is defined as current assets less current liabilities and was $1.8 billion and $1.6 billion as of June 30, 2024 and December 31, 2023, respectively. The increase in working capital was primarily driven by a decline in our payables, due to the timing of payments, and accrued expenses, primarily due to the timing of annual incentive compensation payments in the first quarter of 2024.

Previous wording

Net cash provided by operating activities was $76 million for the three months ended March 31, 2024 compared to $114 million for the same period in the prior year. The decrease in cash provided by operating activities was primarily attributable to the changes in working capital balances, offset by an increase in net income.

Current wording

Net cash provided by operating activities was $408 million for the six months ended June 30, 2024, compared to $141 million for the same period in the prior year. The increase in cash provided by operating activities was primarily attributable to the timing of collections of accounts receivable.

Previous wording

Net cash used in investing activities was $96 million for the three months ended March 31, 2024 compared to $54 million for the same period in the prior year, primarily due to the $50 million upfront payment related to the agreement with Lilly in the first quarter of 2024.

Current wording

Net cash used in investing activities was $142 million for the six months ended June 30, 2024, compared to $124 million for the same period in the prior year, primarily due to the $50 million upfront payment related to the agreement with Lilly in the first quarter of 2024, partially offset by lower capital spending as a result of the completion of the implementation of our ERP system.

Previous wording

Net cash used in financing activities was $74 million for the three months ended March 31, 2024 compared to $326 million for the same period in the prior year. The decrease in cash used in financing activities was driven by the $250 million voluntary prepayment on the U.S. Dollar-denominated term loan in 2023.

Current wording

Net cash used in financing activities was $208 million for the six months ended June 30, 2024, compared to $414 million for the same period in the prior year. The decrease in cash used in financing activities was driven by the $250 million voluntary prepayment on the U.S. dollar-denominated term loan in the six months ended June 30, 2023, compared to a $7.5 million voluntary prepayment on the U.S. dollar-denominated term loan and $36 million of debt issuance costs related to the long-term debt refinancing in the six months ended June 30, 2024.