Organon & Co. Q1 Earnings: A Mixed Bag, But Here’s Why Investors Should Stay Tuned

Organon & Co. (OGN) just delivered a quarter that’s both a victory and a warning siren. The company beat adjusted EPS expectations handily, clocking in at $1.02 versus the $0.89 FactSet estimate. But revenue? That’s a different story. The $1.513 billion haul narrowly missed Street estimates by $7 million, underscoring a bumpy path ahead. Let’s unpack the numbers—and why this stock could still be worth watching.

The Good: Women’s Health Drives Growth

First, the silver lining: Women’s Health isOrganon’s engine right now. Sales here surged 12% ex-FX to $463 million, fueled by its Nexplanon® contraceptive implant. The product grew 14% ex-FX, with strong demand in the U.S. and Europe. As Cramer would say, “This is the cash cow that’s keeping the lights on!”

But not all is smooth here. NuvaRing® sales cratered 41% ex-FX due to generic competition in key markets. Still, the segment’s outperformance shows Nexplanon’s dominance is real—and could keep growing. The company expects it to deliver double-digit ex-FX growth for the full year.

The Bad: Biosimilars Tank, Established Brands Struggle

Now, the red flags. Biosimilars cratered 15% ex-FX, with Ontruzant® and Renflexis® facing headwinds. Ontruzant’s Brazil sales dropped after a prior-period “spike” normalized, while Renflexis suffered 17% ex-FX declines in the U.S. from pricing pressures. Even Hadlima®—a newer product—couldn’t offset the damage.

The Established Brands segment also stumbled, down 8% ex-FX. Atozet™ lost exclusivity in Europe, and Singulair® declined in China and Japan. While newer products like Vtama® (a psoriasis treatment) and Emgality® (migraine) are gaining traction, they’re not yet enough to reverse the slide.

Geography: U.S. Wins, Rest of World Struggles

The U.S. was a bright spot, with sales up 11% to $412 million. But Europe/Canada sank 12%, Asia Pacific/Japan fell 13%, and Latin America/Africa dropped 12%. This geographic split highlights Organon’s overreliance on the U.S. market—always a risk.

The Bottom Line: Can They Fix the Ship?

Organon’s management is betting on cost-cutting and strategic pivots to turn things around. They’ve cut the dividend to a penny a share (down from 28 cents) to preserve cash and aim to slash net leverage to below 4.0x by year-end. The free cash flow target—over $900 million before one-time costs—is ambitious but achievable if Vtama® hits its $150 million annual revenue goal.

However, the currency headwind—a projected $200 million drag—could crimp results unless exchange rates stabilize. And with gross margins shrinking to 55.6% (down from 59% a year ago) due to amortization costs, profitability remains a concern.

Conclusion: A Buy, a Sell, or a Hold?

Here’s the verdict: Organon is a stock to watch, but not a slam dunk buy yet. The positives? Nexplanon’s dominance, the Vtama® growth story, and a disciplined deleveraging plan. The negatives? Biosimilars’ freefall, geographic imbalance, and margin pressures.

If the company can execute on its cost cuts, capitalize on Nexplanon’s momentum, and see Vtama® hit its targets, the $6.125B–$6.325B revenue guidance might just hold. But given the narrow Q1 revenue miss and the uphill battle in biosimilars, investors should proceed with caution.

Bottom line: This is a “wait for the dip” stock. If OGN’s shares pull back below $10 (their 52-week low), it could be a buying opportunity. But until the Biosimilars turnaround materializes—or Vtama® delivers—stick with a hold rating for now.

Stay tuned—this story isn’t over yet.