Organon & Co.: Form 10-Q for the period ended Sep 30, 2025

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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,” “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 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; uncertainties surrounding the Audit Committee investigation described in our Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 27, 2025 (the “Form 8-K”); the impact of litigation, regulatory investigations and inquiries, and other legal matters, including risks to our reputation and relationships with customers, wholesalers, suppliers, and other business partners; risks related to potential disruptions to our business as a result of the leadership changes announced in the Form 8-K, including the risk that appointing a new Chief Executive Officer may take longer than anticipated; our ability to remediate the material weaknesses in internal control over financial reporting and the related costs and management resources in connection therewith, as well as our ability to maintain effective controls over financial reporting and disclosure controls and procedures in the future; our ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets; actions that may be taken by credit rating agencies that could negatively affect either our access to or terms of financing or our financial condition and liquidity; our ability to meet our revenue and growth expectations and outlook; unfavorable publicity and media reports; the potential impact that actions by activist stockholders could have on the pursuit of our business strategies; the loss of key personnel or highly skilled employees; 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, or otherwise meet their obligations to us; 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™*1 (ezetimibe and atorvastatin); the success of our efforts to adapt our business and sales strategies to address the changing market and regulatory landscape in order to achieve our business objectives and remain competitive; restructurings or other disruptions at the U.S. Food and Drug Administration (“FDA”), the U.S. Securities and Exchange Commission (“SEC”) 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 decisions and governmental laws and regulations related to or affecting Medicare, Medicaid and health care reform, pharmaceutical pricing and reimbursement, access to our products, international reference pricing, including Most-Favored-Nation drug pricing, and other pricing-related initiatives and policy efforts; the impact of higher selling and promotional costs; changes in government laws and regulations in the United States and other jurisdictions, including laws and regulations governing the research, development, approval, clearance, manufacturing, supply, distribution, and/or marketing of our products and related intellectual property, environmental regulations, and the enforcement thereof affecting our business; efficacy, safety or other quality concerns with respect to our marketed products, whether or not scientifically justified, leading to product recalls, withdrawals, labeling changes, or declining sales; delays or failures to demonstrate adequate efficacy and safety of our product candidates in pre-clinical and clinical trials, which may prevent or delay the development, approval, clearance, or commercialization of our product candidates; future actions of third-parties, including significant changes in customer relationships or changes in the behavior and spending patterns of purchasers of health care products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and forgoing health care insurance coverage; legal factors, including product liability claims, antitrust litigation and governmental investigations, including tax disputes, environmental claims and patent disputes with branded and generic competitors, any of which could preclude commercialization of products or negatively affect the profitability of existing products; lost market opportunity resulting from delays and uncertainties in clinical trials and the approval or clearance process of the FDA and other regulatory authorities; the failure by us or our third party collaborators and/or their suppliers to fulfill our or their regulatory or quality obligations, which could lead to a delay in regulatory approval or commercial marketing of our products; cyberattacks on, or other failures, accidents, or security breaches of, our or third-party providers’ information technology systems, which could disrupt our operations and those of third parties upon which we rely; increased focus on privacy issues in countries around the world, including the United States, the European Union, and China, and a more difficult legislative and regulatory landscape for privacy and data protection that continues to evolve with the potential to directly affect our business, including recently enacted laws in a majority of states in the United States requiring security breach notification; changes in tax laws including changes related to the taxation of foreign earnings; the impact of any future pandemic, epidemic, or similar public health threat on our business, operations and financial performance; loss of key employees or inability to identify and recruit new employees; changes in accounting pronouncements promulgated by standard-setting or regulatory bodies, including the Financial Accounting Standards Board and the SEC, that are adverse to us; volatility of commodity prices, fuel, shipping rates that impact the costs and/or ability to supply our products; and other factors discussed in our most recently filed Annual Report on Form 10-K (as amended), Quarterly Reports on Form 10-Q (as amended) and Current Reports on Form 8-K, including those discussed in the “Business,” “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those reports.

General

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist the reader in understanding our financial condition and results of operations. The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and with our audited financial statements, including the accompanying notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024, as amended. Operating results discussed herein are not necessarily indicative of the results of any future period.

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 our women’s health and general medicines portfolios. 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.

Recent Developments

Internal Investigation Relating to Internal Control Over Financial Reporting

On October 27, 2025, we announced an internal investigation conducted by the Audit Committee (the “Audit Committee”) of the Company’s Board of Directors (the “Board”) regarding our sales practices for wholesalers as described in the Form 8-K.

Overview of Audit Committee Investigation and Findings

As disclosed in the Form 8-K and Amendment No. 1 (the “10-K Amendment”), filed on November 10, 2025, to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Original Form 10-K”) and amendments (the “10-Q Amendments” and, together with the 10-K Amendment, the “Amendments”) to our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2025 and June 30, 2025 (such original filings, the “Original Form 10-Qs” and, together with the Original Form 10-K, the “Original Reports”), after concerns regarding our sales practices for wholesalers for Nexplanon were brought to the Board’s attention, the Audit Committee oversaw an independent, internal investigation into these sales practices. The Audit Committee’s investigation focused on our sales of Nexplanon to wholesalers. The investigation found that we asked two wholesalers in the United States to purchase greater quantities of Nexplanon at the end of the fourth quarter of 2022, the third and fourth quarters of 2024 and the first, second and third quarters of 2025 (collectively, the “Relevant Periods”) than they otherwise would have purchased based on wholesaler demand. In certain instances, we waived inventory management fee performance metrics associated with caps on days of inventory to allow wholesalers to be paid the inventory management fees they would have earned but for the Company’s ask to purchase additional inventory. As a result of these purchases, the United States wholesalers significantly decreased or even halted their purchases of Nexplanon during the early weeks of the following quarters until their days of inventory on hand were reduced to levels within the contractual range. Although the incremental amount of Nexplanon sales that occurred during the Relevant Periods represented less than 1% of our consolidated revenue for the year ended December 31, 2022 or December 31, 2024, as applicable (and less than 2% of the Company’s consolidated revenue for the relevant quarterly periods), based on the results of the investigation, we have determined that without these sales practices, our consolidated revenue for the fiscal year ended December 31, 2024 reported in the Original Reports (and certain of the other Relevant Periods) would have fallen short of our guidance range and/or certain external expectations. The Audit Committee investigation did not find that the use of these sales practices for wholesalers extended to sales other than sales of Nexplanon in the United States during the Relevant Periods, or that these sales practices for wholesalers were otherwise used for any other Company products.

In connection with the investigation, the Audit Committee found that (i) our former Chief Executive Officer and leader of our U.S. commercial organization applied inappropriate pressure to achieve sales targets, which resulted in two United States wholesalers being asked to purchase inventory in excess of current customer demand for Nexplanon, (ii) our processes with respect to reporting and documenting the sales practices for wholesalers during the Relevant Periods, including with respect to inventory management fee performance metric waivers, were not followed, (iii) the former Chief Executive Officer did not reasonably ensure that relevant information was appropriately communicated; rather, relevant information was withheld from our independent directors, the Audit Committee, and the independent registered public accounting firm, and (iv) our former Chief Executive Officer and leader of our U.S. commercial organization engaged in inappropriate business conduct that violated our Code of Conduct. There were no investigative findings that other members of our executive leadership team, including the Company’s Chief Financial Officer, or any member of our accounting and financial reporting group involved in the preparation of our financial statements, were aware that these sales practices resulted in the United States wholesalers being asked to purchase inventory that exceeded their demand or contractual limits, or that waivers were given so that the United States wholesalers would continue to receive inventory management fees. The Audit Committee’s investigation is complete.

Based on the results of the Audit Committee’s investigation, we determined that these sales practices for wholesalers involving Nexplanon in the United States during the Relevant Periods were improper, and that certain of our prior disclosures relating to these sales practices for wholesalers and their effect upon revenues and product demand in our periodic filings were inaccurate or incomplete. As a result, we filed the Amendments.

Company Determinations Following the Audit Committee Findings

As disclosed in the Amendments, as a result of the investigation and the Audit Committee findings, our management, in consultation with the Audit Committee, has re-assessed the effectiveness of our disclosure controls and procedures and its internal control over financial reporting as of December 31, 2024.

As a result as reported in the Amendments, we concluded that there were material weaknesses in our internal control over financial reporting as of December 31, 2024 and that management’s assessment of our disclosure controls and procedures and our internal control over financial reporting as of December 31, 2024 that were included in Item 9A of the Original Form 10-K should no longer be relied upon, as a result of the material weaknesses disclosed in the 10-K Amendment.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. For additional information, see Part I, Item 4 of this report.

We have determined that there will be no restatement or revision to our previously issued financial statements, including those filed with the Original Reports.

Change in Management

In connection with the Audit Committee investigation, on October 26, 2025, (i) Kevin Ali resigned as Chief Executive Officer of the Company and as a member of the Board, (ii) Joseph Morrissey, the then-current Executive Vice President and Head of Manufacturing & Supply of the Company, was appointed Interim Chief Executive Officer (and principal executive officer) of the Company, (iii) Carrie S. Cox, Chair of the Board, was appointed Executive Chair for an interim period, and (iv) Robert Essner, a member of the Board, was appointed to the position of Lead Independent Director. Additionally and in connection with the Audit Committee investigation, on October 26, 2025, the Company terminated the employment of its Head of U.S. Commercial & Government Affairs.

Business Development

Biogen Inc. (“Biogen”)

In March 2025, we acquired from Biogen the regulatory and commercial rights in the United States for Tofidence, a biosimilar to Actemra2 (tocilizumab), for intravenous infusion. Tofidence, launched in the U.S. market in May 2024, is indicated in certain patients for the treatment of moderately to severely active rheumatoid arthritis, giant cell arthritis, polyarticular juvenile idiopathic arthritis, systemic juvenile idiopathic arthritis, and COVID-19. Under the terms of the agreement with Biogen, we paid an upfront payment of $51 million in July 2025, and will be obligated to pay tiered royalty payments based on net sales and tiered annual net sales milestone payments of up to $45 million from a previous in-license arrangement with Bio-Thera Solutions Ltd., the product developer for Tofidence. In the first quarter of 2025, we recognized an intangible asset of $51 million, related to the upfront payment to Biogen, which will be amortized over 10 years.

Other Macroeconomic Considerations

Geopolitical developments, global trade issues such as tariffs imposed by or on the United States, shifting U.S. federal and state government policies, policies hindering market access, and worsening macroeconomic conditions could impact our business and results of operations and may stress our working capital resources. While tariffs have not, to date, had a material impact on our business, future tariff actions could potentially have a significant effect on our supply chain and operating costs. Regulatory agency developments, including disruptions at the FDA and other agencies, could increase the time needed for review and approval of new drugs and medical devices, potentially impacting our ability to develop new drugs, delaying our product launches and impacting our business operations. Additionally, proposed cuts to Medicaid and changes in federal funding policies could reduce access to healthcare services for low-income individuals.

International reference pricing frameworks, including Most-Favored-Nation (“MFN”) mandates, may further constrain our pricing flexibility and commercial strategy. Voluntary price concessions in certain European markets and increased rebate negotiations across the European Union have introduced additional pressure on net pricing and margins. These developments may influence our commercial strategy, constrain pricing flexibility and delay product launches. For additional information, please refer to Item 1A — Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 and Part II. Item 1A below.

Operating Results

Sales Overview

($ in millions)

Worldwide sales were $1.6 billion for the three months ended September 30, 2025, an increase of 1%, compared to 2024. Worldwide sales were positively impacted by approximately 2% or $36 million, due to favorable foreign exchange rates.

Excluding the impact of foreign exchange rates, sales increases for the three months ended September 30, 2025 primarily reflect the performance of:

• Vtama, due to the acquisition of Dermavant in the fourth quarter of 2024, launch of the atopic dermatitis indication in adults and children two years of age and older in the United States and launch of the topical treatment of plaque psoriasis in adults in Canada in the third quarter of 2025;
• Hadlima® (adalimumab-bwwd), reflecting sales ramp up since its launch in July 2023 in the United States and a modest increase in international markets; and
• Emgality® 2 (galcanezumab-gnlm), due to the acquisition of the distribution and promotion rights from Lilly in 2024 in certain markets outside of the United States.

This performance was offset by decreases for the three months ended September 30, 2025 in:

• Singulair® (montelukast sodium), due to lower demand outside of the United States and the negative impact from price reductions in Japan and China;
• Atozet, primarily due to LOE in France, Spain and Japan, partially offset by increased demand in Asia Pacific, Latin America and China;
• Nexplanon, primarily due to lower demand and decreased funding of government programs in the United States, partially offset by increased demand in Brazil and the timing of tenders, primarily in Mexico. Nexplanon sales for the nine months ended September 30, 2025 included an estimated $17 million of sales resulting from the identified sales practices for wholesalers described in the “Recent Developments” section above, which was offset by an estimated $15 million of sales from such sales practices for wholesalers that were pulled forward into the year ended December 31, 2024, resulting in a net impact of $2 million for the nine months ended September 30, 2025. The impact was estimated using average daily sales, inventory levels at the wholesaler and days on hand at the wholesaler; and
• Dulera® (formoterol/fumarate dihydrate), primarily due to the loss of a customer contract in the first part of the year combined with increased discount rate pressure in the United States. In the third quarter, demand was further impacted by supply constraints.

Worldwide sales were $4.7 billion for the nine months ended September 30, 2025, a decrease of 2%, compared to 2024. Worldwide sales during the nine months ended September 30, 2025 were positively impacted by approximately $2 million, due to favorable foreign exchange rates.

Excluding the impact of foreign exchange rates, sales increases for the nine months ended September 30, 2025, primarily reflect the performance of:

• Vtama, due to the acquisition of Dermavant in the fourth quarter of 2024, launch of the atopic dermatitis indication in adults and children two years of age and older in the United States and launch of the topical treatment of plaque psoriasis in adults in Canada in the third quarter of 2025;
• Hadlima, reflecting sales ramp up since its launch in July 2023 in the United States and a modest increase in international markets; and
• Emgality, due to the acquisition of the distribution and promotion rights from Lilly in 2024 in certain markets outside of the United States.

This performance was more than offset by decreases for the nine months ended September 30, 2025 in:

• Atozet, primarily due to LOE in France, Spain and Japan, partially offset by increased demand in Asia Pacific, Latin America and China;
• Singulair, due to lower demand outside of the United States and the negative impact from price reductions in Japan and China; and
• Dulera, primarily due to the loss of a customer contract in the first part of the year combined with increased discount rate pressure in the United States. In the third quarter, demand was further impacted by supply constraints.

LOE negatively impacted sales of certain of our products by approximately $47 million and $170 million during the three and nine months ended September 30, 2025, respectively, based on the decrease in volume period over period. This was primarily driven by the LOE of Atozet in France, Spain and Japan and Rosuzet™ (ezetimibe and rosuvastatin) in Japan. Volume-based procurement (“VBP”) in China had an immaterial impact on our sales during the nine months ended September 30, 2025. We expect VBP to continue to impact our general medicines product portfolio for the next several quarters.

Due to changing market conditions, new and evolving U.S. and international tariffs, U.S. tax law changes and regulatory uncertainty that impact our business, as well as the pharmaceutical industry, we have been and will continue to adapt our business and sales strategies to address this changing landscape in order to achieve our business objectives and remain competitive. Such strategies may include implementing or continuing to assess product discount programs and wholesaler inventory levels under the relevant agreements or waivers of their terms for certain key products.

Our operations include a portfolio of products. Highlights of the sales of our products for the three and nine months ended September 30, 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.

Women’s Health

($ in millions)

Contraception

Worldwide sales of Nexplanon, a single-rod subdermal contraceptive implant, decreased 8% for the three months ended September 30, 2025, compared to 2024, primarily due to lower demand and decreased funding of government programs in the United States, partially offset by increased demand in Brazil and the timing of tenders, primarily in Mexico. Sales increased 1% for the nine months ended September 30, 2025, compared to 2024, primarily due to increased demand in Brazil and the timing of tenders in various international markets offset by lower demand and decreased funding of government programs in the United States. Nexplanon sales for the nine months ended September 30, 2025 included an estimated $17 million of sales resulting from the identified sales practices for wholesalers described in the “Recent Developments” section above, offset by an estimated $15 million of sales from such identified sales practices for wholesalers that were pulled forward into the year ended December 31, 2024, which resulted in a net impact of $2 million for the nine months ended September 30, 2025. For the three and nine months ended September 30, 2024 there was an estimated $5 million of Nexplanon sales resulting from the identified sales practices for wholesalers described in the “Recent Developments” section above. The impact was estimated using average daily sales, inventory levels at the wholesaler and days on hand at the wholesaler. The Company ceased the identified sales practices for wholesalers described in the “Recent Developments” section above, which will adversely impact the fourth quarter 2025 sales. With regard to Nexplanon’s five-year duration indication, we continue to have collaborative discussions with the FDA. Though we were recently notified that the agency needs more time to complete the review of our submission, the PDUFA three-month extension is not material to our original timeline, which was to launch in late 2025 or early 2026.

Worldwide sales of NuvaRing, a vaginal contraceptive product, increased 9% for the three months ended September 30, 2025, compared to 2024, due to increased demand in the United States, partially offset by ongoing generic competition. Sales declined 17% for the nine months ended September 30, 2025, compared to 2024, due to the loss of a customer contract in 2024 and ongoing generic competition, partially offset by favorable discount rates in the United States associated with a new agreement. We expect a continued decline in NuvaRing sales as a result of generic competition.

Worldwide sales of Marvelon™1 (desogestrel and ethinyl estradiol pill) and Mercilon™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 and nine months ended September 30, 2025, compared to 2024, respectively, as a result of favorable pricing in Asia Pacific offset by the phasing of shipments in various international markets. The nine months ended September 30, 2025 was impacted by increased demand in China.

Fertility

Worldwide sales of Follistim AQ, a fertility treatment, increased 1% and 20% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to increased demand in select international markets. The nine months ended September 30, 2025 was impacted by a one-time buy-in as a result of our exit from our interim operating model agreement in the United States with Merck related to this product during the fourth quarter of 2023, which resulted in lower sales in the first half of 2024.

Other Women’s Health

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 30% and 25% for the three and nine months ended September 30, 2025, compared to 2024, respectively. The sales increase is due to continued uptake in the United States following the Jada launch in early 2022. Subsequent to September 30, 2025, we entered into a definitive agreement to divest the Jada System to Laborie Medical Technologies Corporation. The transaction is expected to close in early 2026, subject to regulatory approvals and other customary closing conditions.

General Medicines

Biosimilars

($ in millions)

Renflexis® (infliximab-abda) is a biosimilar to Remicade2 (infliximab) for the treatment of certain autoimmune conditions. Sales declined 2% and 9% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to competitive pressure and unfavorable discount rates in the United States, partially offset by increased demand in Canada.

Hadlima is a biosimilar to Humira2 (adalimumab) for the treatment of certain autoimmune and autoinflammatory conditions. Sales increased 57% and 62% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to sales ramp up since its launch in July 2023 in the United States and a modest increase in international markets. We have commercialization rights to Hadlima in countries outside of the European Union, South Korea, China, Turkey, and Russia. Hadlima is currently approved in the United States, Australia, Canada, and Israel.

Ontruzant® (trastuzumab-dttb) is a biosimilar to Herceptin2 (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, 2025, compared to 2024, increased 54% due to increased demand and timing of tenders in Brazil partially offset by unfavorable pricing in Brazil. Sales for the nine months ended September 30, 2025, compared to 2024, declined 25%, due to competitive pressure in the United States, unfavorable pricing and lower tendered volume from Brazil’s Ministry of Health when compared with 2024. We have commercialization rights to Ontruzant in all countries except in South Korea and China.

Brenzys™ 1 (etanercept) is a biosimilar to Enbrel2 (etanercept) for the treatment of certain inflammatory diseases. Sales for the three and nine months ended September 30, 2025, compared to 2024, declined 13% and 5%, respectively, as a result of the timing of international tenders in Brazil, partially offset by increased demand in Asia Pacific. We have commercialization rights to Brenzys in countries outside of the United States, Europe, South Korea, China, and Japan.

Cardiovascular

($ in millions)

Sales of Atozet, a medicine for lowering LDL cholesterol, declined 24% and 35% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to LOE in France, Spain and Japan, partially offset by increased demand in Asia Pacific, Latin America and China. We anticipate a continued significant decline in sales of Atozet in 2025 due to LOE, which occurred late in the third quarter of 2024.

Combined global sales of Zetia® (ezetimibe) and Vytorin® (ezetimibe / simvastatin), medicines for lowering LDL cholesterol, increased 10% and 1% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily driven by increased demand in China, partially offset by the decrease in demand and pricing pressure in various international markets.

Combined global sales of Cozaar® (losartan potassium) and Hyzaar® (losartan potassium and hydrochlorothiazide), medicines for the treatment of hypertension, declined 7% and 11% for the three and nine months ended September 30, 2025, compared to 2024, respectively, driven by decreased demand in Japan and Latin America. Additionally, the nine months ended September 30, 2025 was impacted by decreased hospital demand in China.

Respiratory

($ in millions)

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 37% and 30% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to lower demand outside of the United States and the negative impact from price reductions in Japan and China.

Global sales of Nasonex, an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, declined 5% and 1% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to decreased demand and an increase in competitive pressure in various international markets.

Global sales of Dulera, which is also marketed as ZenhaleTM in certain markets outside of the United States, a combination medicine for the treatment of asthma, declined 31% and 22% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to the loss of a customer contract in the first part of the year combined with increased discount rate pressure in the United States. In the third quarter, demand was further impacted by supply constraints, which are expected to continue into the fourth quarter.

Non-Opioid Pain, Bone and Dermatology

($ in millions)

* Calculation not meaningful.

Sales of Arcoxia™ 1 (etoricoxib), a medicine for the treatment of arthritis and pain, increased 4% for the three months ended September 30, 2025, compared to 2024, due to the impact of foreign exchange offset by decreased demand in Latin America and the phasing of shipments in various international regions. Sales declined 8% for the nine months ended September 30, 2025, compared to 2024, primarily due to decreased demand in Latin America and Asia Pacific and the phasing of shipments in various international regions.

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 $34 million and $89 million for the three and nine months ended September 30, 2025, respectively as a result of our acquisition of Dermavant in the fourth quarter of 2024, launch of the atopic dermatitis indication in the United States and launch of the topical treatment of plaque psoriasis in adults in Canada in the third quarter of 2025.

Other

($ in millions)

Sales of Emgality, a medicine for the preventive treatment of migraine and Rayvow™ 2 (lasmiditan), a medicine for acute treatment of the headache phase of migraine attacks, increased for the three and nine months ended September 30, 2025, compared to 2024, as a result of our acquisition of the distribution and promotion rights from Lilly in 2024 in certain markets outside of the United States.

Gross Profit, Expenses and Other

($ in millions)

* Calculation not meaningful.

Cost of Sales

Cost of sales increased 13% and 7% for the three and nine months ended September 30, 2025, compared to 2024. Cost of sales for the three and nine months ended September 30, 2025, includes amortization associated with the inventory fair value adjustment related to the Dermavant acquisition of $12 million and $31 million, respectively, an impairment charge in the nine months ended September 30, 2025 related to a currently marketed women’s health product of $9 million and amortization of intangible assets of $52 million and $155 million, respectively. Cost of sales for the three and nine months ended September 30, 2024 includes amortization of intangible assets of $35 million and $102 million, respectively. In addition, the three and nine months ended September 30, 2025 were impacted by increased costs to optimize our manufacturing and supply network and unfavorable foreign exchange rates. Separation costs associated with manufacturing-related headcount reductions have been incurred and are reflected in Restructuring costs.

Gross Profit

Gross profit decreased 7% and 9% for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to increased costs to optimize our manufacturing and supply network, the impact of unfavorable price, unfavorable product mix and foreign exchange translation offset by an increase in volume.

Selling, General and Administrative

Selling, general and administrative expenses decreased 2% and remained consistent for the three and nine months ended September 30, 2025, compared to 2024, respectively, due to lower costs related to the prior year implementation of our ERP system offset by increased costs associated with the promotion of our recently acquired products and Nexplanon and reserves for legal settlements.

Research and Development

Research and development expenses decreased 24% and 19% for the three and nine months ended September 30, 2025, compared to 2024, respectively, primarily due to a decrease in headcount related expenses and clinical study activity. In July 2025, we announced that the Phase 2 ELENA proof-of-concept study evaluating the investigational candidate OG-6219 in endometriosis-related pain did not meet its primary efficacy endpoint. Based on these results, we made the decision to discontinue the OG-6219 clinical development program.

Acquired In-Process Research and Development and Milestones

For the nine months ended September 30, 2025, we recognized $6 million in acquired in-process research and development and milestones, related to the exit of our agreement with Centergene, due to the evolving fertility landscape in China. For the three months ended September 30, 2024, acquired in-process research and development and milestones of $51 million primarily represents 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 represents 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.

Restructuring Costs

For the nine months ended September 30, 2025, we incurred restructuring costs of $88 million comprised primarily of headcount-related restructuring expense associated with restructuring initiatives that were aimed at driving operational efficiencies in 2025. The restructuring activities combined with our other cost savings initiatives are expected to result in approximately $200 million of annual savings. For the nine months ended September 30, 2024 we incurred restructuring costs of $23 million, comprised of headcount-related restructuring expense related to the optimization of our internal operations, primarily within the research and development function.

Interest Expense

Interest expense increased 2% for the three months ended September 30, 2025, compared to 2024, and reflects interest related to the debt acquired as part of the Dermavant acquisition, partially offset by lower interest rates as a result of refinancing a portion of our long-term debt in the prior year and the repurchase and cancellation of the 2031 Notes. Interest expense decreased 1% for the nine months ended September 30, 2025, compared to 2024, and reflects lower interest rates as a result of refinancing a portion of our long-term debt in the prior year and the repurchase and cancellation of the 2031 Notes combined with lower reference rates on our variable rate debt, offset by interest related to the debt acquired as part of the Dermavant acquisition and previously unamortized debt issuance fees of approximately $2 million associated with the repurchase and cancellation of $242 million of the 2031 Notes.

Exchange Losses

Exchange losses increased for the three and nine months ended September 30, 2025, compared to 2024, primarily due to unfavorable movements in certain foreign currencies relative to the U.S. dollar. While the U.S. dollar weakened overall during 2025, several currencies in which we have exposure experienced adverse shifts, resulting in increased losses.

Other (Income) Expense, net

Other (income) expense, net was impacted for the three months ended September 30, 2025, by the fair value adjustments and accretion of the Dermavant acquisition contingent consideration, related to changes in the timing of expected commercial milestones based on updated sales forecasts. Other (income) expense, net was impacted for the nine months ended September 30, 2025, by a $46 million pre-tax gain related to the repurchase and cancellation of approximately $242 million of the 2031 Notes and the repayment and termination of the NovaQuest Funding Agreement and the fair value adjustments and accretion of the Dermavant acquisition contingent consideration, related to changes in the timing of expected commercial milestones based on updated sales forecasts.

Taxes on Income

The effective income tax rates were 34.0% and (73.7)% for the three months ended September 30, 2025 and 2024, respectively, and 31.6% and (11.3)% for the nine months ended September 30, 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 reversal of a valuation allowance, the favorable closure of two non-U.S. tax audits and a return to provision adjustment for an entity in Switzerland.

On July 4, 2025, U.S. House Resolution 1, referred to as the One Big Beautiful Bill Act (“OBBBA”), was signed into law. The OBBBA includes significant corporate tax provisions such as modifications to interest deductibility, the option to fully expense U.S.-based R&D costs, and changes to the taxation of foreign earnings. For 2025, any impact of the OBBBA is immaterial. For 2026 and beyond, we are evaluating the impacts of the OBBBA on our U.S. cash tax liability and income tax provision.

Liquidity and Capital Resources

As of September 30, 2025, we had cash and cash equivalents of $672 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.

Working capital is defined as current assets less current liabilities and was $2.02 billion and $1.63 billion as of September 30, 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; milestone payments; net repayments of debt; and increased inventory associated with the acquisition of the Oss Biotech Site.

We have accounts receivable factoring agreements with financial institutions in certain countries. Under these agreements, we have factored $268 million and $186 million of our accounts receivable as of September 30, 2025 and December 31, 2024, respectively. See Note 11 “Financial Instruments” to the Condensed Consolidated Financial Statements for information on the Company’s’ accounts receivable factoring and related agreements.

Net cash provided by operating activities was $559 million for the nine months ended September 30, 2025, compared to $549 million for the same period in the prior year due to lower operating income, partially offset by our active cash cycle management.

Net cash used in investing activities was $325 million for the nine months ended September 30, 2025, compared to $217 million for the same period in the prior year, primarily due to increased milestone payments.

Net cash used in financing activities was $374 million for the nine months ended September 30, 2025, compared with $286 million for the same period in the prior year primarily driven by the repurchase and cancellation of $242 million of the 2031 Notes and the payment and termination of the NovaQuest Funding Agreement, partially offset by borrowings on our Revolving Credit Facility, decreased dividend payments in the current year and no debt issuance costs compared to the prior period.

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 with 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.

Our contractual obligations as of September 30, 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 September 30, 2025, total potential payments for contractual milestones are $2.6 billion. Potential amounts to be paid through the remainder of 2025 is approximately $20 million. As of September 30, 2025, other than the update for contractual milestones, there have been no material changes to our contractual obligations outside of the ordinary course of business.

During the third quarter of 2025, we paid cash dividends of $0.02 per share. On November 10, 2025, the Board of Directors declared a quarterly dividend of $0.02 for each issued and outstanding share of our common stock. The dividend is payable on December 11, 2025, to stockholders of record at the close of business on November 20, 2025.

We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such transactions, if any, may be material, and will depend upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Critical Accounting Estimates

Our significant accounting policies, which include management’s best estimates and judgments, are included in Note 2 “Summary of Accounting Policies” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. See Note 2 “Basis of Presentation” to the Condensed Consolidated Financial Statements for information on the adoption of new accounting standards during 2025. There have been no changes to our accounting policies as of September 30, 2025. A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates are disclosed in the Critical Accounting Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Organon’s Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, see Note 2 “Basis of Presentation” to the Condensed Consolidated Financial Statements included in this report.

There have been no changes to our market risk during the quarter ended September 30, 2025. For a discussion of our exposure to market risk, refer to our market risk disclosures set forth under Item 7A.—Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2024.

Overview

As previously disclosed in the Form 8-K and in the Amendments, after concerns regarding the Company’s sales practices for wholesalers for Nexplanon were brought to the Board’s attention, the Audit Committee oversaw an independent, internal investigation into these sales practices. The Audit Committee’s investigation focused on the Company’s sales of Nexplanon to wholesalers. The investigation found that the Company asked two wholesalers in the United States to purchase greater quantities of Nexplanon during the Relevant Periods than they otherwise would have purchased based on wholesaler demand. In certain instances, the Company waived inventory management fee performance metrics associated with caps on days of inventory to allow wholesalers to be paid the inventory management fees they would have earned but for the Company’s ask to purchase additional inventory. As a result of these purchases, the United States wholesalers significantly decreased or even halted their purchases of Nexplanon during the early weeks of the following quarters until their days of inventory on hand were reduced to levels within the contractual range. Although the incremental amount of Nexplanon sales that occurred during the Relevant Periods represented less than 1% of the Company’s consolidated revenue for the year ended December 31, 2022 or December 31, 2024, as applicable (and less than 2% of the Company’s consolidated revenue for the relevant quarterly periods, including the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025), based on the results of the investigation, the Company has determined that without these sales practices, the Company’s consolidated revenue for the fiscal year ended December 31, 2024 reported in the Original Form 10-K (and certain of the other Relevant Periods, including the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025) would have fallen short of the Company’s guidance range and/or certain external revenue expectations.

Based on the results of the Audit Committee’s investigation as further set forth in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments,” the Company determined that these sales practices for wholesalers involving Nexplanon in the United States during the Relevant Periods were improper, and that certain of the Company’s prior disclosures relating to these sales practices for wholesalers and their effect upon revenues and product demand in its periodic filings were inaccurate or incomplete. The Company identified material weaknesses in its internal control over financial reporting, as described in the Amendments and elsewhere in this report.

Quarterly Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Interim Chief Executive Officer (“CEO”) (our principal executive officer) and Chief Financial Officer (“CFO”) (our principal financial officer), as appropriate to allow timely decisions regarding required disclosure, and ensure that information required to be disclosed in the reports we file or submit is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Our management, with the participation of the Interim CEO and the CFO, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025 in connection with the filing of this report. Based on this evaluation, the Interim CEO and the CFO concluded that our disclosure controls and procedures were not effective as of September 30, 2025 due to the material weaknesses in internal control over financial reporting as described below.

Notwithstanding the material weaknesses described below, management has concluded that its condensed consolidated financial statements included in this report are not materially misstated and fairly present, in all material respects, our condensed consolidated financial position as of September 30, 2025 and December 31, 2024, and results of operations for the three and nine months ended September 30, 2025 and 2024.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Based on the evaluation described above, we identified the following material weaknesses in the Company’s internal control over financial reporting:

• The Company failed to set an appropriate tone at the top. Specifically, our former CEO and leader of the Company’s U.S. commercial organization applied inappropriate pressure to achieve sales targets through sales of Nexplanon to two United States wholesalers above demand and engaged in inappropriate business conduct that violated the Company’s Code of Conduct.
• The material weakness with respect to our tone at the top contributed to an additional material weakness of not maintaining effective controls related to information and communication. The Company did not design and maintain effective controls related to the information and communication component of the COSO Framework. Specifically, the former CEO and certain senior members of the Company’s U.S. commercial organization did not ensure appropriate communication with, or provide complete information to, the Company’s Disclosure Committee and the financial reporting group to evaluate disclosures and financial reporting conclusions related to sales practices for wholesalers.

For additional information, please see Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

These material weaknesses did not result in misstatements of our previously reported historical consolidated financial statements, including those filed with the Original Reports. Each of these material weaknesses could result in a misstatement of substantially all account balances or disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan and Activities

To address the material weaknesses in internal control over financial reporting, the Company, with the oversight of its Audit Committee, has developed a remediation plan, which is described below.

We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses described above. Actions taken to date include:

• The appointment of a new Interim CEO, the termination and appointment of a new Head of U.S. Commercial & Government Affairs, the appointment of an Executive Chair and the appointment of a Lead Independent Director.

In addition to the remedial actions taken to date, the Company is taking, or plans to take, the following actions, among others, to remediate the material weaknesses identified herein:

• Enhance the Company’s Code of Conduct to clarify responsibilities related to the Company’s financial reporting and disclosures, including awareness of the options to raise concerns or questions to management, human resources, compliance, legal, the technical accounting department and/or through the SpeakUp Tool, which is available globally as an alternate, confidential channel for raising concerns;
• Enhance compliance training and communication on the Company’s Code of Conduct regarding ethical tone and corporate culture and enhance training for commercial and finance personnel regarding appropriate business practices;
• Enhance the Company’s Annual Ethics and Policy Certifications;
• Implement additional representations within the Company’s Quarterly Financial Certification Questionnaire relating to the disclosures of misleading business practices;
• Enhance existing Disclosure Committee responsibilities to include among other requirements, additional questions and more information regarding the representations being made, and provide incremental training on these responsibilities;
• Implement additional and enhance existing sub-certifications and internal management representation letters, including providing training on the purpose of the sub-certification and the process for evaluating the representations;
• Enhance controls and implement written policies and procedures to provide governance, oversight and guidelines for timely communication of management fee arrangements with wholesalers; and
• Evaluate and enhance internal controls related to sales monitoring.

Management continues to evaluate the effectiveness of these remedial measures and expects to continue implementing improvements to the Company’s internal control over financial reporting. The process of designing and maintaining effective internal control over financial reporting is a continuous effort that requires management to anticipate and react to changes in our business, economic, and regulatory environments and to expend significant resources. As we continue to evaluate our internal control over financial reporting, we may take additional actions to remediate the material weaknesses or modify the remediation actions described above.

Quarterly Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as set forth below, there have been no material changes in our risk factors from those disclosed in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2024, as amended.

The self-initiated Audit Committee internal investigation has been time-consuming and expensive and may result in additional expense and/or litigation.

After concerns regarding the Company’s sales practices for wholesalers for Nexplanon were brought to the Board’s attention, the Audit Committee oversaw an independent, internal investigation into these sales practices.

The Audit Committee’s investigation focused on the Company’s sales of Nexplanon to wholesalers. The investigation has found that the Company asked two wholesalers in the United States to purchase greater quantities of Nexplanon at the end of the Relevant Periods than they otherwise would have purchased based on wholesaler demand. In certain instances, the Company waived inventory management fee performance metrics associated with caps on days of inventory to allow wholesalers to be paid the inventory management fees they would have earned but for the Company’s ask to purchase additional inventory.

As a result of these purchases, the United States wholesalers significantly decreased or even halted their purchases of Nexplanon during the early weeks of the following quarters until their days of inventory on hand were reduced to levels within the contractual range. Although the incremental amount of Nexplanon sales that occurred during the Relevant Periods represented less than 1% of the Company’s consolidated revenue for the year ended December 31, 2022 or December 31, 2024, as applicable (and less than 2% of the Company’s consolidated revenue for the relevant quarterly periods), based on the results of the investigation, the Company has determined that without these improper sales practices for wholesalers, the Company’s consolidated revenue for the fiscal year ended December 31, 2024 reported in the Original Form 10-K (and certain of the other Relevant Periods) would have fallen short of the Company’s guidance range and/or certain external expectations. While we have taken certain actions aimed at preventing the use of such improper sales practices for wholesalers (including the appointment of a new Interim CEO, the termination and appointment of a new Head of U.S. Commercial & Government Affairs, the appointment of an Executive Chair and the appointment of a Lead Independent Director) and are in the process of implementing additional measures, there is no assurance that these actions and procedures will continue to be effective over time.

Additionally, while the Audit Committee’s investigation is complete, the Company has identified material weaknesses in its internal control over financial reporting as described in Part I, Item 4 of this report and, as a result, the Company’s management has determined that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2024 or as of September 30, 2025. To address the ineffective disclosure controls and procedures and internal control over financial reporting due to the material weaknesses, the Company, with the oversight of its Audit Committee, has developed a remediation plan, which is described in Part I, Item 4 of this report. In accordance with the remediation plan, we continue to evaluate our policies and procedures and we are actively engaged in remedial activities to strengthen the Company’s internal control environment, which include, but are not limited to, the activities described in Part I, Item 4 of this report. As we execute on our remediation plan, there can be no assurance that we will not discover additional matters that we will need to address that could have an adverse impact on us, our business and/or our results of operations, including determining that further changes to our internal controls are required. We have incurred significant expenses, including audit, legal, forensic accounting, consulting and other professional fees, in connection with the Audit Committee investigation and related matters, and we may incur additional time and expense as a result of the investigation and our efforts to address the investigation results. The incurrence of significant additional expense, or the requirement that management and the Board continue to devote significant time that could reduce the time available to execute on our business strategies, could have an adverse effect on our business, results of operations and financial condition.

We voluntarily contacted the SEC staff to advise that we had an internal Audit Committee investigation as described in this report. We cannot guarantee that we will not receive inquiries from the SEC or any other regulatory authorities regarding the investigation, or that we will not be subject to future claims, investigations or proceedings. Any future inquiries from the SEC or other regulatory authorities, or future claims or proceedings or any related regulatory investigation will, regardless of the outcome, likely consume a significant amount of our internal resources and result in additional legal and accounting costs. We can provide no assurances as to the outcome of any governmental investigation.

In addition, we may be subject to potential legal proceedings arising out of our announcement of the Audit Committee investigation and/or findings of the investigation. Any future litigation, investigation or other actions that may be filed or initiated against us or our officers or directors, may be time consuming and expensive. We cannot predict what losses we may incur in these litigation matters, and contingencies related to our obligations under the federal and state securities laws, or in other legal proceedings or governmental investigations or proceedings related to these matters.

Any legal proceedings, if decided adversely to us, could result in significant monetary damages, penalties and reputational harm, and will likely involve significant defense and other costs. We have entered into indemnification agreements with each of our directors and certain of our officers, and our Amended and Restated Bylaws require us to indemnify each of our directors and officers. Further, our insurance may not cover all claims that have been or may be brought against us, and insurance coverage may not continue to be available to us at a reasonable cost. As a result, we may be exposed to substantial uninsured liabilities, including pursuant to our indemnification obligations, which could adversely affect our business, prospects, results of operations and financial condition.

The Company identified material weaknesses in the Company’s internal control over financial reporting, which could impact the Company’s ability to report its results of operations and financial condition accurately and in a timely manner.

In connection with the Audit Committee investigation, the Company identified material weaknesses in the Company’s internal control over financial reporting. For a description of these material weaknesses, see “Controls and Procedures” in Part I, Item 4 of this report. While the Company has developed a remediation plan, the material weaknesses cannot be considered remediated until the applicable remedial control is implemented and operates for a sufficient period of time to allow management to conclude, through testing, that this remediation plan is implemented and the control is operating effectively. The material weaknesses, if not fully addressed, could result in a material misstatement of the Company’s annual or interim financial statements, and the Company may be unable to remediate these material weaknesses in a timely manner, which could adversely impact the accuracy and timeliness of future reports and filings the Company makes with the SEC. Any such failure could result in litigation or regulatory actions by the SEC or other regulatory authorities, which could further result in loss of investor confidence, a decline in the price of our common stock, delisting of our securities, harm to our reputation and financial condition and/or diversion of financial and management resources from the operation of our business.

Key products generate a significant amount of our profits and cash flows, and any events that adversely affect the markets for our leading products could adversely affect our results of operations and financial condition.

Our ability to generate profits and operating cash flow depends largely upon the continued profitability of our key products, such as Nexplanon, Arcoxia, Singulair and the ezetimibe family of products. As a result of our dependence on key products, any event that adversely affects any of these products or the markets for any of these products could adversely affect our sales, results of operations or cash flows. These adverse events could include increased costs associated with manufacturing, product shortages, increased generic or over-the-counter availability of our products or competitive products, the discovery of previously unknown side effects or enhanced safety warnings, results of post-approval trials, increased competition from the introduction of new, more effective treatments and discontinuation or removal from the market of these products for any reason. In addition, recent adverse market and political events could negatively impact our key products and/or our business, results of operation and financial condition as a whole. These recent adverse events may include, among other things, U.S. and international tariffs or other protectionist trade measures, the recent changes to U.S. tax laws, healthcare and regulatory reforms, including those relating to insurance coverage, and other U.S. and international regulatory changes, including changes in regulatory enforcement landscape. We also expect that competition will continue to adversely affect the sales of our key products (including generic competition as a result of LOE in 2024 for Atozet and if we are unable to obtain an additional period of market exclusivity for Nexplanon).

To address such adverse effects and remain competitive, we have and will continue to adapt our business and sales practices for wholesalers, particularly in connection with our key products. These business and sales practices for wholesalers have historically included product discount programs and discussing with wholesalers whether to increase their inventory levels either within or above the agreed upon product inventory levels under the relevant agreement terms or pursuant to waivers. In the United States, the current structure of our arrangements provides us with data on inventory levels at our wholesalers, which is closely monitored and reviewed with the goal of ensuring that inventory levels are appropriate and reasonable in the normal course of business. Additionally, with respect to markets outside of the United States, inventory levels are also reviewed to the extent information is available by market or customer type. However, even with available inventory data, if we do not accurately predict inventory levels or we otherwise determine that inventory levels of our wholesalers should increase due to either customer demand or demand generated via the sales practices for wholesalers, then this may result in the inventory of our wholesalers exceeding customer demand at the time. However, if demand does not keep pace with the additional inventory purchases, then channel inventory for such products could grow in any particular quarter, which could adversely affect corresponding product revenues and/or rate of returns, and could result in a greater amount of product expirations, reduced inventory purchases in subsequent months and/or product discounts being recorded in subsequent quarters. Moreover, if we choose to eliminate or adjust the use of these strategies or if wholesalers decrease their inventory levels, this could contribute to our quarterly and/or annual revenue failing to meet our expectations.

Recent health care reform initiatives focused on the cost of prescription drugs may have a material adverse effect on our business and results of operations.

Governments globally, as well as payors in the U.S., are increasingly using a variety of measures to control costs, including, among others, legislative or regulatory pricing reforms, drug formularies. In the United States, there have been significant and wide-ranging federal policy and legislative reforms impacting drug pricing and reimbursement. For example, in April 2025, the U.S. presidential administration issued an executive order with multiple directives aimed at lowering drug prices, including refining the Medicare drug price negotiation program established by the Inflation Reduction Act of 2022; accelerating competition for high-cost prescription drugs by accelerating approval of generics and biosimilars and facilitating the process for re-classifying prescription drugs as over-the-counter drugs; and increasing drug importation. In May 2025, the U.S. presidential administration issued another executive order that directed government agencies and officials to identify MFN pricing targets for prescription drugs (and looked to pharmaceutical manufacturers to make significant progress towards delivering target prices to patients); prevent foreign countries from disproportionately shifting the cost of global pharmaceutical research and development to the United States; and facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers to sell their products to patients at the MFN price. In addition, in July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA includes significant corporate tax provisions such as modifications to interest deductibility, the option to fully expense U.S.-based R&D costs, and changes to the taxation of foreign earnings. We expect to see continued focus by the U.S. government and states on regulating drug pricing and access to medicine, any of which could impair our ability to compete and have a material adverse impact on our business, financial condition, and results of operations.