Organon's fourth quarter was met with a negative market reaction as operational challenges and shifting demand patterns weighed on results. Management pointed to continued pricing pressure, loss of exclusivity for key drugs like Atozet, and policy-related headwinds for Nexplanon in the U.S. as major drivers of the year-on-year revenue decline. Interim CEO Joe Morrissey emphasized that biosimilars, particularly Hadlima, and new product launches provided some offset, but cost containment efforts and product mix shifts could not fully mitigate gross margin compression. CFO Matthew Walsh described the gross margin decline as “primarily driven by pricing pressure and unfavorable product mix.”
Is now the time to buy OGN? Find out in our full research report (it’s free for active Edge members).
Organon (OGN) Q4 CY2025 Highlights:
- Revenue: $1.51 billion vs analyst estimates of $1.51 billion (5.3% year-on-year decline, in line)
- Adjusted EPS: $0.63 vs analyst expectations of $0.73 (13.3% miss)
- Adjusted EBITDA: $383 million vs analyst estimates of $390.2 million (25.4% margin, 1.8% miss)
- EBITDA guidance for the upcoming financial year 2026 is $1.9 billion at the midpoint, in line with analyst expectations
- Operating Margin: 14.4%, down from 18.1% in the same quarter last year
- Market Capitalization: $1.94 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Organon’s Q4 Earnings Call
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Umer Raffat (Evercore ISI) questioned the thoroughness of the company’s internal investigations into channel behavior issues. Board Chair Carrie Cox declined further comment, citing the sensitivity of ongoing matters.
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Michael Nedelcovych (TD Cowen) asked about the impact of recent FDA biosimilar guidance and Nexplanon’s 2026 contribution. Interim CEO Joe Morrissey described changes as “incremental,” while CFO Matthew Walsh expects Nexplanon sales to remain roughly flat, balancing ex-U.S. growth with U.S. headwinds.
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Bhavin Patel (Bank of America) pressed management on whether cost savings were offsetting underlying EBITDA declines and on the potential for Nexplanon REMS program friction. Walsh said savings were reinvested in growth, and R&D head Juan Camilo Ferreira expressed confidence in the recertification process limiting disruption.
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Ethan Brown (JPMorgan) inquired about long-term margin trends and Nexplanon’s five-year label impact. Walsh stressed ongoing cost efficiency efforts and noted the largest reinsertion headwind would be in 2026, with less impact in subsequent years.
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Alexandra von Riesemann (Piper Sandler) asked about pressure points in established brands and Vtama’s competitive positioning. Morrissey expects stabilization in established brands as respiratory risks diminish, while Walsh projected Vtama to grow in line with peers despite competitive pressures.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be tracking (1) execution of further cost reduction initiatives and their impact on margin stability, (2) volume and pricing trends for Nexplanon outside the U.S. as well as biosimilar adoption in new markets, and (3) stabilization in the established brands portfolio, especially in respiratory and fertility segments. Developments in the Nexplanon REMS program and debt reduction progress will also be important indicators.
Organon currently trades at $7.41, down from $7.69 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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