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; difficulties implementing or executing on our acquisition strategy, difficulties integrating such acquisitions (including our recent acquisition of Dermavant) or any other failure to recognize the benefits of such acquisitions; 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; recent Supreme Court decisions and other developments impacting regulatory agencies and their rule making, including related financial market reactions, tax planning and international trade practices; 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; the impact of…

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,” “potential,” “should,” “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, expanded brand and class competition in the markets in which Organon & Co. (“Organon,” the “Company,” “we,” “our,” or “us”) operates; trade protection measures and import or export licensing requirements, including the direct and indirect impacts of tariffs (including any potential pharmaceutical sector tariffs), trade sanctions or similar restrictions by the United States or other governments; changes in U.S. and foreign federal, state and local governmental funding allocations including the timing and amounts allocated to Organon’s customers and business partners; economic factors over which we have no control, including changes in inflation, interest rates, recessionary pressures, and foreign currency exchange rates; market volatility, downgrades to the U.S. government’s sovereign credit rating or its perceived creditworthiness, changing political or geopolitical conditions, market contraction, boycotts, and sanctions, as well as Organon’s ability to successfully manage uncertainties related to the foregoing; 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 retain market exclusivity for Nexplanon or to obtain an additional period of exclusivity in the United States for Nexplanon subsequent to the expiration of the rod patents in 2027; the continued impact of the September 2024 loss of exclusivity (“LOE”) for Atozet™ (ezetimibe and atorvastatin); restructurings or other disruptions at the U.S. Food and Drug Administration (“FDA”), the U.S. Securities and Exchange Commission and other U.S. and comparable government agencies; difficulties and uncertainties inherent in the implementation of our acquisition strategy or failure to recognize the benefits of such acquisitions; pricing pressures globally, including rules and practices of managed care groups, judicial dec…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a global health care company with a focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands. We have a portfolio of more than 60 medicines and products across a range of therapeutic areas. We sell these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. We operate six manufacturing facilities, which are located in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom. Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by, our group of companies.

Current wording

We are a global health care company with a primary focus on improving the health of women throughout their lives. We develop and deliver innovative health solutions through a portfolio of prescription therapies and medical devices within women’s health, biosimilars and established brands. We have a portfolio of more than 70 medicines and products across a range of therapeutic areas. We sell these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. We operate six manufacturing facilities, which are located in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom. Unless otherwise indicated, trademarks appearing in italics throughout this document are trademarks of, or are used under license by, our group of companies.

Previous wording

Worldwide sales were $4.8 billion for the nine months ended September 30, 2024, an increase of 3%, compared to 2023. Worldwide sales during the nine months ended September 30, 2024 were negatively impacted by approximately 2% or $76 million, due to unfavorable foreign exchange.

Current wording

Worldwide sales were $1.5 billion for the three months ended March 31, 2025, a decrease of 7%, compared to 2024. Worldwide sales during the three months ended March 31, 2025 were negatively impacted by approximately 3%, or $44 million, due to unfavorable foreign exchange rates.

Previous wording

Excluding foreign exchange, sales increases for the three months ended September 30, 2024 primarily reflect the performance of:

Current wording

Excluding the impact of foreign exchange rates, sales increases for the three months ended March 31, 2025, primarily reflect the performance of:

Previous wording

•Nexplanon, due to increased demand, favorable price and discount rates in the United States and increased demand in international markets and our institutional business in Africa;

Current wording

•Nexplanon, due to increased demand and favorable pricing in the United States and the acceleration of our institutional business in Africa in order to meet demand;

Previous wording

This performance was offset by decreases for the three months ended September 30, 2024 in:

Current wording

This performance was more than offset by decreases for the three months ended March 31, 2025 in:

Previous wording

•Ontruzant, due to the timing of tenders in Brazil and lower demand in the United States and Europe; and

Current wording

•Ontruzant, driven by the return to normalized levels of the contracted volume in Brazil and lower demand in the United States.

Previous wording

The loss of exclusivity (“LOE”) negatively impacted sales of certain of our products by approximately $3 million and $15 million during the three and nine months ended September 30, 2024, compared to the three and nine months ended September 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 $13 million negative impact on our sales during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. VBP in China did not have an impact for the three months ended September 30, 2024. We expect VBP to continue to impact our established brands product portfolio for the next several quarters.

Current wording

LOE negatively impacted sales of certain of our products by approximately $63 million during the three months ended March 31, 2025, based on the decrease in volume period over period. This was primarily driven by the LOE of Atozet in France and Rosuzet™ (ezetimibe and rosuvastatin) in Japan. Volume-based procurement (“VBP”) in China had an immaterial impact on our sales during the three months ended March 31, 2025. 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 and nine months ended September 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.

Current wording

Our operations include a portfolio of products. Highlights of the sales of our products for the three months ended March 31, 2025 and 2024 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 10% and 17% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to increased demand, favorable price and discount rates in the United States and increased demand in international markets. In addition, sales for the three months ended September 30, 2024, were partially offset by the timing of tenders in Latin America, and sales for the nine months ended September 30, 2024, were impacted by an increase in demand in our institutional business in Africa.

Current wording

Worldwide sales of Nexplanon, a single-rod subdermal contraceptive implant, increased 13% for the three months ended March 31, 2025, compared to 2024, primarily due to increased demand and favorable pricing in the United States and the acceleration of our institutional business in Africa in order to meet demand.

Previous wording

Worldwide sales of NuvaRing, a vaginal contraceptive product, declined 45% and 34% for the three and nine months ended September 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.

Current wording

Worldwide sales of NuvaRing, a vaginal contraceptive product, declined 43% for the three months ended March 31, 2025, compared to 2024, 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, remained consistent for the three months ended September 30, 2024, compared to 2023. Sales increased 6% for the nine months ended September 30, 2024, compared to 2023, as a result of increased demand in various international markets.

Current wording

Worldwide sales of Marvelon™(desogestrel and ethinyl estradiol pill) and Mercilon™(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 19% for the three months ended March 31, 2025, compared to 2024, as a result of increased demand and the phasing of shipments in China.

Previous wording

Worldwide sales of Follistim AQ, a fertility treatment, increased 16% for the three months ended September 30, 2024, compared to 2023, due to increased demand in the United States and launches in various international markets, partially offset by unfavorable discount rates in the United States. Sales declined 4% for the nine months ended September 30, 2024, compared to 2023, due to a one-time buy-in as a result of our exit from our Interim Operating Model Agreement in the United States with Merck & Co., Inc. (“Merck”), during the fourth quarter of 2023 and unfavorable discount rates in the United States, partially offset by increased demand in the United States and launches in various international markets.

Current wording

Worldwide sales of Follistim AQ, a fertility treatment, increased 49% for the three months ended March 31, 2025, compared to 2024, due to a one-time buy-in as a result of our exit from our interim operating model agreement in the United States with Merck during the fourth quarter of 2023, which resulted in lower sales in the first quarter of 2024, demand increase and favorable discount rates in the United States.

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 24% and 40% for the three and nine months ended September 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.

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 20% for the three months ended March 31, 2025, compared to 2024. The sales increase is due to continued uptake in the United States following the Jada launch in early 2022 and favorable price and discount rates in the United States.

Previous wording

Renflexisis a biosimilar to Remicade 2 (infliximab) for the treatment of certain autoimmune conditions. Sales increased 3% and 4% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to continued demand growth in the United States and Canada, partially offset by unfavorable discount rates in the United States. 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 18% for the three months ended March 31, 2025, compared to 2024, primarily due to unfavorable discount rates in the United States.

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 $40 million and $98 million during the three and nine months ended September 30, 2024, respectively, 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 European Union, South Korea, China, Turkey, and Russia. We recorded sales of $47 million during the three months ended March 31, 2025, reflecting sales that have continued to

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 September 30, 2024, compared to 2023, declined 49%, due to the timing of tenders in Brazil and lower demand in the United States and Europe. Sales for the nine months ended September 30, 2024, compared to 2023, increased 15%, driven by increased demand as a result of tenders in Brazil partially offset by lower demand in the United States and Europe. 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 months ended March 31, 2025, compared to 2024, declined 54%, following the return to normalized levels of the contracted volume in Brazil and lower demand in the United States. We have commercialization rights to Ontruzant in all countries except in South Korea and China.

Previous wording

Brenzys is a biosimilar to Enbrel 2 (etanercept) for the treatment of certain inflammatory diseases. Sales in the three and nine months ended September 30, 2024, compared to 2023, increased 98% and 38%, respectively, 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 for the three months ended March 31, 2025, compared to 2024, declined 39%, as a result of the timing of international tenders in Brazil. We have commercialization rights to Brenzys in countries outside of the United States, Europe, South Korea, China, and Japan.

Previous wording

Latin America region partially offset by increased demand in certain markets in Europe. We anticipate a significant decline in sales beginning in the fourth quarter of 2024 due to LOE, which occurred late in the third quarter, in certain markets in Europe.

Current wording

Sales of Atozet, a medicine for lowering LDL cholesterol, declined 42% for the three months ended March 31, 2025, compared to 2024, primarily due to LOE in France and Spain, partially offset by increased demand in South Korea and the Asia Pacific cluster. We anticipate a continued significant decline in sales of Atozet in 2025 due to LOE, which occurred late in the third quarter of 2024, in certain markets in Europe.

Previous wording

Combined global sales of Zetiaand Vytorin, medicines for lowering LDL cholesterol, increased 5% for the three months ended September 30, 2024, compared to 2023, primarily driven by increased demand in China partially offset by unfavorable pricing in Japan. Sales declined 9% for the nine months ended September 30, 2024, compared to 2023, primarily driven by the decrease in demand and unfavorable pricing in Japan, partially offset by increased demand in China.

Current wording

Combined global sales of Zetia® (ezetimibe) and Vytorin® (ezetimibe / simvastatin), medicines for lowering LDL cholesterol, declined 4% for the three months ended March 31, 2025, compared to 2024, primarily driven by the decrease in demand and pricing pressure in various international markets, partially offset by increased demand in China.

Previous wording

Combined global sales of Cozaar and Hyzaar, medicines for the treatment of hypertension, declined 13% and 17% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to the unfavorable pricing in Japan. Sales for the nine months ended September 30, 2024 were impacted by VBP in China.

Current wording

Combined global sales of Cozaar®(losartan potassium) and Hyzaar® (losartan potassium and hydrochlorothiazide), medicines for the treatment of hypertension, declined 18% for the three months ended March 31, 2025, compared to 2024, driven by decreased demand in China and Japan and mandatory annual price reductions in Japan.

Previous 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, decreased 7% for the three months ended September 30, 2024, compared to 2023, due to unfavorable pricing in Japan and China. Sales decreased 5% for the nine months ended September 30, 2024, compared to 2023, due to decreased demand and price decreases in Japan.

Current 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, decreased 24% for the three months ended March 31, 2025, compared to 2024, due to the lower rate of respiratory infections in China when compared to 2024, lower demand in Japan and the impact of the mandatory annual price reductions in Japan.

Previous wording

Global sales of Nasonex® (mometasone), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, increased 5% and 1% for the three and nine months ended September 30, 2024, compared to 2023, respectively, due to increased demand across international markets partially offset by the phasing of shipments in various international markets.

Current wording

Global sales of Nasonex® (mometasone), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, declined 7% for the three months ended March 31, 2025, compared to 2024, due to the prior year phasing of shipments related to the implementation of our enterprise resource planning (“ERP”) system in various international markets.

Previous 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 September 30, 2024, compared to 2023. Sales increased 5% for the nine months ended September 30, 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 TM in certain markets outside of the United States, a combination medicine for the treatment of asthma, declined 22% for the three months ended March 31, 2025, compared to 2024, primarily due to the loss of a customer contract, discount rate pressure in the United States and decreased demand in Canada.

Previous wording

Sales of Arcoxia™¹ (etoricoxib), a medicine for the treatment of arthritis and pain, increased 8% and 2% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to increased demand in China and favorable pricing in the Asia Pacific region partially offset by a decrease in demand in various international markets.

Current wording

Sales of Arcoxia™ 1(etoricoxib), a medicine for the treatment of arthritis and pain, declined 18% for the three months ended March 31, 2025, compared to 2024, primarily due to the phasing of shipments in various international regions.

Previous wording

On October 28, 2024, Organon acquired Dermavant, a company dedicated to developing and commercializing innovative therapeutics in immuno-dermatology. Dermavant’s novel product, Vtama® (tapinarof) cream, 1%, for the topical treatment of mild, moderate, and severe plaque psoriasis in adults, was approved by the U.S. Food and Drug Administration (FDA) in May 2022. It is currently being reviewed by the FDA for the treatment of atopic dermatitis, also known as eczema, in adults and children 2 years of age and older. Atopic dermatitis is one of the most common inflammatory dermatological conditions in adults, presenting a higher disease burden for women compared to men.

Current wording

Sales of Vtama, a cream for the topical treatment of mild, moderate, and severe plaque psoriasis in adults and atopic dermatitis, also known as eczema, in adults and children two years of age and older, were $24 million for the three months ended March 31, 2025. Vtama is a product that we acquired as part of our acquisition of Dermavant in the fourth quarter of 2024.

Previous wording

Gross profit for the three and nine months ended September 30, 2024, compared to 2023, was impacted by increased sales due to volume, partially offset by unfavorable product mix and price, foreign exchange translation and higher inflation impacts to material and distribution costs.

Current wording

Gross profit decreased 12% for the year ended March 31, 2025, compared to 2024, due to the impact of unfavorable price and decreased sales due to volume and foreign exchange translation.

Previous wording

Research and development expenses decreased 19% and 14% for the three and nine months ended September 30, 2024, compared to 2023, respectively, primarily due to a decrease in clinical study activity and lower personnel costs due to a reduction in headcount related to our restructuring initiatives.

Current wording

Research and development expenses decreased 14% for the three months ended March 31, 2025, compared to 2024, primarily due to a decrease in clinical study activity.

Previous wording

For the three months ended September 30, 2024, acquired in-process research and development and milestones of $51 million primarily represent the research and development milestones related to our agreement with Henlius, which were determined to be probable of being achieved. For the nine months ended September 30, 2024, acquired in-process research and development and milestones of $81 million primarily represent the research and development milestones of $70 million for our agreement with Henlius and $10 million for our agreement with Cirqle, which were determined to be probable of being achieved. For the nine months ended September 30, 2023 acquired in-process research and development and milestones of $8 million represent the upfront and development milestones related to the Claria transaction.

Current wording

For the three months ended March 31, 2025, we recognized $6 million in acquired in-process research and development and milestones, related to the exit of our current agreement with Centergene, due to the evolving fertility landscape in China. We will continue to assess and evaluate future commercial opportunities with Centergene. For the three months ended March 31, 2024 acquired in-process research and development and milestones of $15 million represents the research and development milestones related to Henlius that were determined to be probable of being achieved.

Previous wording

For the nine months ended September 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.

Current wording

For the three months ended March 31, 2025, we incurred $86 million of headcount-related restructuring expense associated with restructuring initiatives that were aimed at driving operational efficiencies in 2025. The restructuring activities combined with other Company cost savings initiatives are expected to result in approximately $200 million of annual savings. For the three months ended March 31, 2024 we incurred $23 million of headcount-related restructuring expense related to the optimization of our internal operations, primarily the research and development function.

Previous wording

The effective income tax rates were (11.3)% and 16.1% for the nine months ended September 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.

Current wording

The effective income tax rate was 13.4% and 14.7% for the three months ended March 31, 2025 and 2024, 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 2025 year-to-date effective tax rate driven by a tax amortization benefit. The favorable impact to the 2024 year-to-date effective tax rate was driven by the favorable closure of the two non-U.S. tax audits and a return to provision adjustment for an entity in Switzerland.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $763 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 March 31, 2025, we had cash and cash equivalents of $547 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, strategic business development transactions and the payment of dividends. 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 is defined as current assets less current liabilities and was $2.0 billion and $1.6 billion as of September 30, 2024 and December 31, 2023, respectively. The increase in working capital was primarily driven by increased cash from positive cash flows, inventory purchases, and current assets due to the timing of tax payments and a decline in our payables, due to the timing of payments.

Current wording

Working capital is defined as current assets less current liabilities and was $1.76 billion and $1.63 billion as of March 31, 2025 and December 31, 2024, respectively. Working capital was impacted by our active cash cycle management, which includes the factoring of receivables and timing of vendor payments, as well as an increase in receivables due to the timing of shipments, a lower cash balance due to milestone payments and the timing of annual incentive compensation payments in the first quarter of 2025.

Previous wording

Net cash provided by operating activities was $549 million for the nine months ended September 30, 2024, compared to $402 million for the same period in the prior year. The increase in cash provided by operating activities was primarily attributable to the increase in our operating results, which was the result of increased sales period over period.

Current wording

Net cash provided by operating activities was $75 million for the three months ended March 31, 2025, compared to $76 million for the same period in the prior year due to lower operating income offset by our active cash cycle management.

Previous wording

Net cash used in investing activities was $217 million for the nine months ended September 30, 2024, compared to $179 million for the same period in the prior year, primarily due to the $73 million upfront payments related to the agreement with Lilly and the additional $26 million payments related to milestones, partially offset by lower capital spending as a result of the completion of the implementation of our ERP system.

Current wording

Net cash used in investing activities was $172 million for the three months ended March 31, 2025, compared to $96 million for the same period in the prior year, primarily due to increased milestone payments, partially offset by lower capital spending as a result of the completion of the implementation of our ERP system.

Previous wording

As part of our post-spinoff plan, we have approved an initiative to further optimize our manufacturing and supply network. As part of this initiative, we will continue to separate our supply chain through planned exits from supply agreements from Merck through 2031. This will enable us to redefine our appropriate sourcing strategy, and move to fit-for-purpose supply chains, while focusing on delivering efficiencies. We anticipate we will incur costs associated with this separation, including but not limited to accelerated depreciation, exit premiums and fees, technology transfer costs, stability and qualification batch costs, one-time resourcing costs, regulatory and filing costs, capital investment, and inventory stock bridges.

Current wording

As part of our post-spinoff plan, we have an ongoing initiative to further optimize our manufacturing and supply network. As part of this initiative, we will continue to separate our supply chain through planned exits from supply agreements from Merck through 2031. This will enable us to redefine our appropriate sourcing strategy, and move to fit-for-purpose supply chains, while focusing on delivering efficiencies. We anticipate we will incur costs associated with this separation, including but not limited to accelerated depreciation, exit premiums and fees, technology transfer costs, stability and qualification batch costs, one-time resourcing costs, regulatory and filing costs, capital investment, and inventory stock bridges.

Previous wording

Our contractual obligations as of September 30, 2024, which require material cash requirements in the future, consist of contractual milestones, purchase obligations and lease obligations. During the fourth quarter, we anticipate paying higher cash taxes than the fourth quarter of 2023. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 for further details. As of September 30, 2024, there have been no material changes to our contractual obligations outside of the ordinary course of business.

Current wording

Our contractual obligations as of March 31, 2025, which require material cash requirements in the future, consist of contractual milestones, purchase obligations and lease obligations. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 for further details. As of March 31, 2025, there have been no material changes to our contractual obligations outside of the ordinary course of business.

Previous wording

During the third quarter of 2024, we paid cash dividends of $0.28 per share. On October 31, 2024, the Board of Directors declared a quarterly dividend of $0.28 for each issued and outstanding share of our common stock. The dividend is payable on December 12, 2024, to stockholders of record at the close of business on November 12, 2024.

Current wording

During the first quarter of 2025, we paid cash dividends of $0.28 per share. On May 1, 2025, the Board of Directors declared a quarterly dividend of $0.02 for each issued and outstanding share of our common stock, which reduces the quarterly dividend from $0.28 per share. We anticipate redirecting the funds from the dividend payment to the repayment and/or repurchase of debt. The dividend is payable on June 12, 2025, to stockholders of record at the close of business on May 12, 2025.