Organon & Co.: Form 10-Q for the period ended Sep 30, 2026

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,” “possible,” “probable,” “outcome,” “likely,” “could,” “should,” “estimate,” “anticipate,” “plan,” “intend,” “would,” “future,” “target,” “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, uncertainties as to the timing of the proposed transaction with Sun Pharmaceutical Industries Limited (together with its subsidiaries and/or associated companies, “Sun Pharma”); the risk that the proposed transaction may not be completed on the anticipated terms in a timely manner or at all; the possibility that any or all of the remaining conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any remaining required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement, including in circumstances that would require us to pay a termination fee; the effect of the pendency of the proposed transaction on our ability to retain and hire key personnel, our ability to maintain relationships with our customers, suppliers and others with whom we do business, or our operating results and business generally; risks related to diverting management’s attention from our ongoing business operations; the risk that stockholder litigation in connection with the proposed transaction may result in significant costs of defense, indemnification and liability; certain restrictions during the pendency of the proposed transaction that may impact our ability to pursue certain business opportunities or strategic transactions; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of our common stock, including if the proposed transaction is not consummated; risks that the benefits of the proposed transaction are not realized when and as expected; the possibility that competing offers or acquisition proposals for Organon will be made; expanded brand and class competition in the markets in which we operate; 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 our customers and business partners; the impact of global business, political and macroeconomic conditions, including inflation, interest rate fluctuations, recessionary pressures, foreign currency exchange rates, volatile market conditions, and instability in the global banking system; global events, such as regional conflicts in the Middle East and elsewhere, including any resulting disruptions to manufacturing supply chains, distribution networks, logistics providers, raw material sourcing, or transportation; 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; our ability to refinance or repay indebtedness maturing in 2028 if the proposed transaction is not completed, and the resulting impact on our liquidity, financial condition and ability to continue as a going concern; 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; our ability to retain members of our senior management and other key employees; the failure of any supplier to provide substances, materials, or services as agreed, or otherwise meet their obligations to us; manufacturing performance issues at Company-owned and third-party facilities, operational disruptions, labor-related disruptions, or geopolitical events that affect the manufacture, supply, distribution, or availability of our products, the increased cost of supply, manufacturing, packaging, and operations, including as a result of volatility in commodity prices, fuel costs and shipping rates; 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 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; 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 healthcare 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, governmental agency staffing, operations and enforcement priorities, 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; reduced research and development investment and increased reliance on fewer research and development programs for new products to generate future revenue and replace existing products that come to the end of their market life cycle; future actions of third-parties, including significant changes in customer relationships or changes in the behavior and spending patterns of purchasers of healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and forgoing healthcare insurance coverage; legal factors, such as product liability claims, stockholder litigation, governmental investigations, and patent disputes; 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; 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; and other factors discussed in our most recently filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and subsequent filings, 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, 2025. Operating results discussed herein are not necessarily indicative of the results of any future period.

We are a global healthcare company with a primary focus on improving the health of women throughout their lives. 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 healthcare providers such as health maintenance organizations, pharmacy benefit managers and other institutions. We own and 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

Sun Pharma Transaction

On April 26, 2026, we entered into a definitive agreement with Sun Pharma under which Sun Pharma will acquire all of our outstanding shares of common stock for $14.00 per share in cash. Completion of the transaction is subject to customary closing conditions, including receipt of required regulatory approvals and approval by the Company’s stockholders. On July 23, 2026, the Company received stockholder approval at its special meeting of stockholders. The Company and Sun Pharma are continuing to work to satisfy the other conditions to closing. The transaction is expected to close by early 2027.

Business Development

Samsung Collaboration

On May 22, 2026, the Samsung Agreement was amended to include commercialization rights for Pyzchiva (ustekinumab biosimilar) in Canada. Samsung Bioepis retains full development, manufacturing, and regulatory responsibilities (“Amendment No. 8”). Pyzchiva was launched in Canada in the third quarter of 2026.

On May 26, 2026, the Samsung Agreement was amended to extend commercialization rights for certain biosimilar products, including Renflexis and Brenzys, in specified markets for up to seven years beyond the original contract term (“Amendment No. 9”).

In connection with Amendment No. 9, we are required to make fixed payments totaling $30 million over a nine-year period from 2026 through 2034. We recorded an intangible asset and corresponding liability of $20.8 million, the present value of the future payments. The intangible asset will be amortized over nine years.

The liability is accreted to its contractual value over time using the effective interest method, with accretion recognized within Interest expense to reflect the nature of the underlying arrangement.

Amendment No. 9 also includes the return of commercialization rights to Samsung for certain oncology biosimilars, including Ontruzant and Aybintio, in specified ex‑U.S. markets such as Europe, Canada, and Brazil. These returns of rights are subject to defined, phased transition and cutover periods extending from 2026 through 2029, during which we may continue to commercialize products and fulfill contractual obligations.

On June 2, 2026, the Samsung Agreement was amended to include commercialization rights for Epyztek in Australia. Samsung Bioepis retains full development, manufacturing, and regulatory responsibilities (“Amendment No. 10”). Epyztek is expected to launch in Australia in the first half of 2027.

On September 11, 2026, the Samsung Agreement was amended to include additional dosage forms of Pyzchiva in Canada (“Amendment No. 11”).

Sebela Pharmaceuticals (“Sebela”)

On February 19, 2026, we entered into an exclusive license agreement with Sebela for the global rights to Miudella, a hormone-free copper intrauterine device (“IUD”) that was approved by the FDA on February 24, 2025 and is estimated to launch commercial sales in the United States in late 2026. Under the terms of the agreement, we paid $27.5 million in June 2026, with potential sales-based milestone payments of up to $505 million, and tiered double-digit royalties based on net sales. In the second quarter of 2026, we recognized an intangible asset of $27.5 million.

Laborie Medical Technologies Corporation (“Laborie”)

In January 2026, we divested Jada to Laborie for an aggregate payment of up to $465 million, comprised of consideration of $440 million, subject to certain closing adjustments, plus potential contingent consideration payments of up to $25 million based on the achievement of certain 2026 net sales targets. Approximately 100 Company employees transferred to Laborie as part of this transaction.

Upon the closing of the divestiture, we recognized a net gain on the sale of Jada of $81 million recognized in Other income, net in the Condensed Consolidated Statement of Income for the nine months ended September 30, 2026.

Operating Results

Sales Overview

($ in millions)

Worldwide sales were $1.6 billion for the three months ended September 30, 2026, a decrease of 2%, compared to 2025. Worldwide sales were positively impacted by approximately $12 million or 1%, due to favorable foreign exchange rates.

Excluding the impact of foreign exchange rates, sales decreases for the three months ended September 30, 2026 primarily reflect lower sales of:

• Ontruzant, due to lower tendered volume from Brazil’s Ministry of Health when compared with the same period in 2025;
• Nexplanon, primarily due to decreased physician demand in the United States following the five-year label approval as reinsertions have been delayed and there has been uncertainty around federal funding;
• Jada, due to no longer having sales following the divestiture of Jada to Laborie in January 2026; and
• certain Established Brands products within international markets, due to temporary supply chain and operational disruptions affecting availability.

This performance was offset by sales increases for the three months ended September 30, 2026 in:

• Hadlima, due to stronger demand in the United States and Puerto Rico;
• Bildyos/Bilprevda, as a result of the product launch in the third quarter of 2025; and
• Emgality, as a result of increased demand in various international markets.

Worldwide sales were $4.6 billion for the nine months ended September 30, 2026, a decrease of 2%, compared to 2025. Worldwide sales during the nine months ended September 30, 2026 were positively impacted by approximately $130 million, or approximately 3%, due to favorable foreign exchange rates.

Excluding the impact of foreign exchange rates, sales decreases for the nine months ended September 30, 2026, primarily reflect lower sales of:

• Nexplanon, primarily due to decreased physician demand in the United States following the five-year label approval as reinsertions have been delayed and there has been uncertainty around federal funding partially offset by increased demand and access in Brazil;
• Ontruzant, due to lower tendered volume from Brazil’s Ministry of Health when compared with the same period in 2025;
• Singulair® (montelukast), primarily attributable to decreased demand due to less favorable medical guidelines in certain international markets, most recently in China, and mandatory price reductions in China and Japan; and
• certain Established Brands products within international markets, due to temporary supply chain and operational disruptions affecting availability.

This performance was offset by sales increases for the nine months ended September 30, 2026 in:

• Hadlima, due to stronger demand in the United States and Puerto Rico;
• Bildyos/Bilprevda, as a result of the product launch in the third quarter of 2025; and
• Emgality, as a result of increased demand in various international markets.

Loss of exclusivity (“LOE”) negatively impacted sales of certain of our products by approximately $13 million and $23 million during the three and nine months ended September 30, 2026, respectively, based on the decrease in sales volume of those products compared to 2025. Volume-based procurement (“VBP”) in China negatively impacted sales by approximately $8 million and $15 million during the three and nine months ended September 30, 2026, respectively. We expect VBP to continue to negatively impact our general medicines product portfolio for the next several quarters.

Due to changing market conditions, including ongoing regional conflicts in the Middle East and elsewhere, 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.

Highlights of the sales of our products for the three and nine months ended September 30, 2026 and 2025 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, declined 10% and 11% for the three and nine months ended September 30, 2026, compared to 2025, respectively, primarily due to decreased physician demand in the United States following the five-year label approval as reinsertions have been delayed and there has been uncertainty around federal funding. In 2025, we submitted a similar application for a five-year duration period of use to the EU and UK Health Authorities. The application for five-year duration was approved for the UK in April, 2026. The EU application is currently under review, with potential approval in 2027, subject to health authority review and approval. Outside of the U.S., sales for the nine months ended September 30, 2026 were positively impacted by increased demand and access in Brazil, which we expect to continue for the remainder of 2026.

Worldwide sales of NuvaRing, a vaginal contraceptive product, declined 2% for the three months ended September 30, 2026, compared to 2025, due to decreased demand in various international markets. Sales of NuvaRing, increased 1% for the nine months ended September 30, 2026, compared to 2025, due to the favorable impact of foreign exchange offset by decreased demand in various international markets.

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, declined 10% and 17% for the three and nine months ended September 30, 2026, compared to 2025, respectively, as a result of decreased demand and market contraction in China.

Fertility

Worldwide sales of Follistim AQ, a fertility treatment, increased 6% for the three months ended September 30, 2026, compared to 2025, as a result of increased demand and favorable discount rates in the United States, partially offset by decreased demand in China. Sales of Follistim AQ, declined 9% for the nine months ended September 30, 2026, compared to 2025, as a result of competitive pricing pressures in the United States and decreased demand in China partially offset by increased demand and favorable discount rates in the United States.

Other Women’s Health

In January 2026, we completed the sale of Jada to Laborie and, thereafter, no longer actively sold Jada. As a result, worldwide sales of Jada significantly declined for the three and nine months ended September 30, 2026, compared to 2025, respectively.

General Medicines

Biosimilars

($ in millions)

* Calculation not meaningful.

Renflexis is a biosimilar to Remicade2 (infliximab) for the treatment of certain autoimmune conditions. Sales declined 5% and remained consistent for the three and nine months ended September 30, 2026, compared to 2025, 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 35% and 45% for the three and nine months ended September 30, 2026, compared to 2025, respectively, due to stronger demand in the United States and Puerto Rico. 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 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 and nine months ended September 30, 2026, compared to 2025, declined 77%, due to lower tendered volume from Brazil’s Ministry of Health when compared with the same periods in 2025. We have commercialization rights to Ontruzant in all countries except in South Korea and China.

Brenzys is a biosimilar to Enbrel2 (etanercept) for the treatment of certain inflammatory diseases. Sales for the three and nine months ended September 30, 2026, compared to 2025, declined 5%, as a result of the timing of shipments in Brazil and decreased demand in the Asia Pacific region. We have commercialization rights to Brenzys in countries outside of the United States, Europe, South Korea, China, and Japan.

Bildyos injection 60 mg/mL and Bilprevda injection 120 mg/1.7 mL, are biosimilars to Prolia and Xgeva, respectively, for all indications of the reference products. Sales were $24 million and $60 million for the three and nine months ended September 30, 2026, respectively, as a result of the product launch in the third quarter of 2025.

Established Brands

International revenue during the period was partially constrained by various supply-related challenges affecting the Company's ability to fully meet customer demand, primarily for certain of our Established Brands products. While some of these challenges surfaced in prior periods, the current period had compounding constraints across the supply chains and resulted in an unfavorable impact estimated to be approximately less than 2% to the Company’s consolidated revenue for the three and nine months ended September 30, 2026. These challenges included the impact of manufacturing disruptions at a key contract manufacturer, temporary operational constraints at certain facilities, labor-related disruptions at a third-party logistics provider, and geopolitical disruptions (the “Supply Constraints”). Management continues to implement mitigation strategies designed to improve production and supplier reliability, strengthen supply chain resilience, and support future demand. While certain of these challenges have been resolved, full recovery of the supply chains remain on-going.

Cardiovascular

($ in millions)

Sales of *Atozet™*¹ (ezetimibe and atorvastatin), a medicine for lowering LDL cholesterol, decreased 10% and 3% for the three and nine months ended September 30, 2026, compared to 2025, due to unfavorable pricing in Europe and the impact of the Supply Constraints, partially offset by increased demand in Korea and China.

Combined global sales of Zetia® (ezetimibe), which is marketed as Ezetrol™ in most countries outside the United States; and of Vytorin® (ezetimibe / simvastatin), which is marketed as Inegy™ outside the United States, which are medicines for lowering LDL cholesterol, increased 7% and 8% for the three and nine months ended September 30, 2026, compared to 2025, respectively, primarily driven by increased demand in China partially offset by the impact of the Supply Constraints.

Combined global sales of Cozaar® (losartan) and Hyzaar® (losartan / hydrochlorothiazide), which are medicines for the treatment of hypertension, declined 8% and 5% for the three and nine months ended September 30, 2026, compared to 2025, respectively, driven by decreased demand in various international markets.

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, declined 15% and 31% for the three and nine months ended September 30, 2026, compared to 2025, respectively, primarily attributable to decreased demand due to less favorable medical guidelines in certain international markets, most recently in China, and price reductions in China and Japan.

Global sales of Nasonex® (mometasone furoate), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, increased 8% for the three months ended September 30, 2026, compared to 2025, due to increased demand in China, offset by competitive pressure in various international markets. Sales of Nasonex declined 5% for the nine months ended September 30, 2026, compared to 2025, due to competitive pressure in various international markets and the impact of the Supply Constraints, partially offset by increased demand in China.

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, increased 5% for the three months ended September 30, 2026, compared to 2025, primarily due to recovery from the impact of the Supply Constraints that occurred in the third quarter of 2025. Global sales of Dulera declined 6% for the nine months ended September 30, 2026, compared to 2025, primarily due to decreased demand in the United States.

Non-Opioid Pain, Bone and Dermatology

($ in millions)

Sales of Arcoxia™ ¹ (etoricoxib), a medicine for the treatment of arthritis and pain, decreased 3% for the three months ended September 30, 2026, compared to 2025, due to the impact of the Supply Constraints and decreased demand in Mexico. Sales of Arcoxia increased 1% for the nine months ended September 30, 2026, compared to 2025, due to the impact of foreign exchange partially offset by the impact of the Supply Constraints and decreased demand in Mexico.

Sales of Vtama, a cream for the topical treatment of plaque psoriasis and atopic dermatitis, also known as eczema, increased 21% and 15% for the three and nine months ended September 30, 2026, compared to 2025, respectively, due to increased demand and favorable discount rates in the United States, partially offset by the reduced demand in Japan. We anticipate launching Vtama in certain international markets in 2026 and beyond, subject to health authority reviews and approvals.

Other

($ in millions)

Sales of Emgality, a medicine for the preventive treatment of migraine, increased 16% and 33% for the three and nine months ended September 30, 2026, compared to 2025, respectively, as a result of increased demand in various international markets.

Gross Profit, Expenses and Other

($ in millions)

* Calculation not meaningful.

Cost of Sales

Cost of sales decreased 5% and 2% for the three and nine months ended September 30, 2026, compared to 2025, respectively, driven by our product mix and the impact of foreign exchange. Cost of sales for the three and nine months ended September 30, 2026 includes amortization associated with the inventory fair value adjustment related to the Dermavant acquisition of $0 and $7 million, respectively, and amortization of intangible assets of $48 million and $141 million, respectively. 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.

Gross Profit

Gross profit increased 1% for the three months ended September 30, 2026, compared to 2025, due to the impact of favorable changes in net pricing and foreign exchange, offset by unfavorable volume and product mix. Gross profit decreased 3% for the nine months ended September 30, 2026 compared to 2025 due to the impact of unfavorable volume, pricing and product mix and unfavorable foreign exchange.

Selling, General and Administrative

Selling, general and administrative expenses increased 1% for the three months ended September 30, 2026 compared to 2025, due to increased costs associated with the pending transaction with Sun Pharma, offset by reduced headcount-related costs and lower spending as part of our ongoing cost-saving and restructuring initiatives. Selling, general and administrative expenses decreased 1% for the nine months ended September 30, 2026 compared to 2025, due to reduced headcount-related costs and lower spending as part of our ongoing cost-saving and restructuring initiatives partially offset by increased costs associated with the pending transaction with Sun Pharma.

Research and Development

Research and development expenses decreased 1% and 3% for each of the three and nine months ended September 30, 2026 compared to 2025, respectively, primarily due to reduced headcount-related costs related to our restructuring initiatives and a decrease in clinical study activity. During 2025, we discontinued the clinical development programs for investigational candidates OG-6219 and OG-7191.

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 Suzhou Centergene Pharmaceuticals, due to the evolving fertility landscape in China.

Restructuring Costs

For the nine months ended September 30, 2026, we incurred restructuring costs of $31 million related to our 2026 restructuring initiatives to streamline and optimize our research and development and manufacturing operations, focusing on enhancing efficiency and aligning resources with strategic priorities. 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.

Interest Expense

Interest expense decreased 17% and 15% for the three and nine months ended September 30, 2026, compared to 2025, respectively, due to the repurchase and cancellation of approximately $419 million of the Company’s 5.125% notes due in 2031 (the “2031 Notes”) during the second and fourth quarters of 2025, mandatory prepayments to our term loans in the first quarter of 2026 and lower reference rates on our USD-denominated variable rate debt.

Exchange Losses

Exchange losses were favorable for the three months ended September 30, 2026 and unfavorable for the nine months ended September 30, 2026, compared to 2025. This was primarily due to movements in certain foreign currencies relative to the U.S. dollar.

Other Income, net

Other income, net was impacted for the three months ended September 30, 2026 by $10 million related to 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, net was impacted for the nine months ended September 30, 2026 by an $81 million net gain related to the divestiture of Jada to Laborie in the first quarter of 2026, $6 million related to 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 offset by $17 million due to an unfavorable resolution of a working capital matter related to the Dermavant acquisition.

Taxes on Income

The effective income tax rates were 35.7% and 34.0% for the three months ended September 30, 2026 and 2025, respectively, and 35.8% and 31.6% for the nine months ended September 30, 2026 and 2025, 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 valuation allowance recorded against non-deductible U.S. interest expense. Also included in the nine month tax rate is the beneficial impact of the sale of Jada. There was a favorable impact to the 2025 year-to-date effective tax rate driven by a tax amortization benefit.

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 2026 and beyond, the impacts of the OBBBA are reflected in our U.S. cash tax liability and income tax provision primarily reflected as an increase in our interest expense limitation offset by a decrease in our foreign income inclusions.

Liquidity and Capital Resources

As of September 30, 2026, we had cash and cash equivalents of $1.46 billion. 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. Our ability to raise new capital or refinance our debt will depend on the capital markets and our financial condition at such times.

Working capital is defined as current assets less current liabilities and was $2.72 billion and $1.96 billion as of September 30, 2026 and December 31, 2025, respectively. Working capital was positively impacted by our active cash cycle management, which includes the factoring of receivables and timing of vendor payments and the proceeds from the divestiture of Jada.

We have accounts receivable factoring agreements with financial institutions in certain countries. Under these agreements, we have factored $212 million and $217 million of our accounts receivable as of September 30, 2026 and December 31, 2025, respectively. See Note 11 “Financial Instruments” to the Condensed Consolidated Financial Statements for information on our accounts receivable factoring and related agreements.

Net cash provided by operating activities was $702 million for the nine months ended September 30, 2026, compared to $559 million for the same period in the prior year due to our active cash cycle management.

Net cash provided by investing activities was $266 million for the nine months ended September 30, 2026, compared to $325 million used in investing activities for the same period in the prior year, primarily due to proceeds from the divestiture of Jada and decreased milestone payments in the current year.

Net cash used in financing activities was $55 million for the nine months ended September 30, 2026, compared with $374 million for the same period in the prior year, primarily driven by decreased repayments of debt in the current year and decreased dividend payments.

As part of our post-spinoff plan to further optimize our manufacturing and supply network, 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 continuing to 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, 2026, 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, 2025 for further details. As of September 30, 2026, there have been no material changes to our contractual obligations outside of the ordinary course of business.

During the third quarter of 2026, we paid cash dividends of $0.02 per share. On October 30, 2026, 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 10, 2026, to stockholders of record at the close of business on November 9, 2026.

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, 2025. See Note 2 “Basis of Presentation” to the Condensed Consolidated Financial Statements for information on the adoption of new accounting standards during 2026. There have been no changes to our accounting policies as of September 30, 2026. A discussion of accounting estimates considered critical because of the potential for a significant impact on the Condensed Consolidated 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, 2025.

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, 2026. 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, 2025.

Our management, with the participation of our Chief Executive Officer (“CEO”) (our principal executive officer) and Chief Financial Officer (“CFO”) (our principal financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2026. Based upon that evaluation, our CEO and our CFO concluded that, as of September 30, 2026, the end of the period covered by this report, our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO and our CFO, as appropriate, to allow timely decisions regarding required disclosure.

During the quarter ended September 30, 2026, 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.

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, 2025 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.