Financial Analysis

Contingencies Organon is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters. Organon records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Individually significant contingent losses are accrued when probable and reasonably estimable. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. Given the nature of the litigation discussed in this note and the complexities involved in these matters, Organon is unable to reasonably estimate a possible loss or range of possible loss for such matters until Organon knows, among other factors, (i) which claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation, and (v) any other factors that may have a material effect on the litigation. Organons decision to obtain insurance coverage is dependent on market co …

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Long-Term Debt and Short-Term Borrowings Long-term debt and short-term borrowings consist of the following: ($ in millions) June 30, 2026 December 31, 2025 Senior Credit Agreement Term Loan B Facility: SOFR plus 225 bps term loan due 2031 $ 1,522 $ 1,543 EURIBOR plus 275 bps euro-denominated term loan due 2031 (707 million in 2026 and 717 million in 2025) 806 843 4.125% secured notes due 2028 2,100 2,100 2.875% euro-denominated secured notes due 2028 (1.25 billion) 1,425 1,470 5.125% notes due 2031 1,582 1,582 6.750% secured notes due 2034 500 500 7.875% notes due 2034 500 500 Revenue Interest Purchase and Sale Agreement (1) 182 179 Other borrowings 8 8 Other (discounts and debt issuance costs) (72) (81) Total principal long-term debt and short-term borrowings $ 8,553 $ 8,644 Less: Current portion of long-term debt and short-term borrowings 74 16 Total Long-term debt, net of current portion $ 8,479 $ 8,628 (1) Recognized at the amortized cost basis. The remaining principal is determined as the initial fair value less principal payments. As of June 30, 2026, the remaining principal of the revenue interest purchase and sale agreement (the RIPSA) that the Company assumed in connection with its 2024 acquisition of Dermavant is $156 million. The nature and terms of Organons long-term debt are described in detail in Note 12. Long-Term Debt and Leases in the Companys Annual Report on Form 10-K for the year ended December 31, 2025. On February 6, 2026, the Company made mandatory prep …

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Stock-Based Compensation Plans The Company grants stock option awards, restricted share units (RSUs), performance share units (PSUs), and cash awards pursuant to the 2021 Incentive Stock Plan. Stock-based compensation expenses incurred by the Company were as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2026 2025 2026 2025 Stock-based compensation expense recognized in: Cost of sales $ 4 $ 4 $ 7 $ 8 Selling, general and administrative 16 14 29 30 Research and development 5 4 8 8 Total $ 25 $ 22 $ 44 $ 46 Income tax benefits $ 5 $ 5 $ 9 $ 10 The fair value of options granted was determined using the following assumptions: Six Months Ended June 30, 2025 Expected dividend yield 7.41 % Risk-free interest rate 4.08 Expected volatility 40.25 Expected life (years) (1) 5.89 (1) The expected term was estimated using the historical option-exercise and settlement patterns, supplemented by a midpoint-based assumption applied to awards meeting a one-year post-grant eligibility filter. A summary of the equity award transactions for the six months ended June 30, 2026 is as follows: Stock Options RSUs PSUs (shares in thousands) Shares Weighted average exercise price Weighted average grant date fair value Shares Weighted average grant date fair value Shares Weighted average grant date fair value Outstanding as of January 1, 2026 7,519 $ 27.30 $ 6.99 9,716 $ 15.35 589 $ 23.61 Granted/Issued 13,585 6.02 2,128 8.27 Vested/Exercised (3,497) 17.81 (193) 23.20 Forfe …

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Taxes on Income The effective income tax rates were 41.3% and 37.0% for the three months ended June 30, 2026 and 2025, respectively, and 36.0% and 29.8% for the six months ended June 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 six month tax rate is the beneficial impact of the sale of the Jada System. 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 the Companys U.S. cash tax liability and income tax provision primarily reflected as an increase in the Companys interest expense limitation offset by a decrease in the Companys foreign income inclusions. …

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Recently Issued Accounting Standards Not Yet Adopted In October 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract . Among other things, the ASU adds the scope exception from derivative accounting for contracts that are not exchange-traded and have features based on operations or activities specific to one of the parties involved, reducing complexity and diversity in practice. The amendments in this ASU are effective for annual periods beginning on January 1, 2027, and should be applied on a prospective basis, with the option to apply the amendments on a modified retrospective basis; early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU No. 2025-06, IntangiblesGoodwill and OtherInternal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . The amendments modernize the accounting for internal-use software to better reflect contemporary development practices, such as agile and iterative methodologies. Key changes include revised cost capitalization thresholds, enhanced guidance for assessing development uncertainty, and new …

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Third-Party Arrangements On June 2, 2021, Organon and Merck entered into a Separation and Distribution Agreement (the Separation and Distribution Agreement). Pursuant to the Separation and Distribution Agreement, Merck agreed to spin off the Organon products into Organon, a new, publicly-traded company (the Separation). The Separation was completed pursuant to the Separation and Distribution Agreement and other agreements with Merck related to the Separation. As of June 30, 2026, only one jurisdiction remains under an Interim Operating Model Agreement. Under the manufacturing and supply agreements, the Company manufactures certain products for Merck, or its applicable affiliate, and Merck manufactures certain products for the Company, or its applicable affiliate. For details on the rights and responsibilities of the parties under the agreements, refer to Note 17 Third-Party Arrangements to the audited Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2025. The amounts due under such agreements were: ($ in millions) June 30, 2026 December 31, 2025 Due from Merck in Accounts receivable $ 143 $ 98 Due to Merck in Accounts payable 374 337 Sales and cost of sales resulting from the manufacturing and supply agreements with Merck were: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2026 2025 2026 2025 Sales $ 13 $ 19 $ 26 $ 37 Cost of sales 10 16 21 32 …

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Restructuring During the first quarter of 2026, the Company implemented restructuring initiatives that will result in an approximate 3% headcount reduction, to streamline and optimize the Company's research and development and manufacturing operations, focusing on enhancing efficiency and aligning resources with strategic priorities. The Restructuring costs primarily consist of employee termination benefits and other associated expenses. During the first quarter of 2025, the Company implemented restructuring initiatives to drive an enterprise-wide operating model optimization that resulted in an approximate 6% headcount reduction. The restructuring activities were initiated to streamline and simplify the Companys operating model to create more efficient processes and a simplified structure. Restructuring costs include separation costs associated with manufacturing-related headcount reductions. The following is a summary of changes in severance liabilities related to the restructuring activities included within Accrued and other current liabilities : June 30, 2026 December 31, 2025 Beginning balance $ 8 $ 14 Severance & severance related costs 31 95 Cash payments and other (23) (101) Ending balance $ 16 $ 8 Organon expects the remaining severance payments associated with the restructuring activities to be paid within the next twelve months. …

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Product and Geographic Information Revenues of the Companys products were as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 ($ in millions) U.S. Intl Total U.S. Intl Total U.S. Intl Total U.S. Intl Total Womens Health Nexplanon/Implanon NXT $ 129 $ 101 $ 230 $ 163 $ 77 $ 240 $ 256 $ 175 $ 431 $ 339 $ 148 $ 488 Follistim AQ 17 43 59 30 43 74 38 82 120 65 77 142 NuvaRing 9 18 27 7 21 28 14 37 51 13 37 50 Ganirelix Acetate Injection 2 24 26 3 25 27 4 48 52 7 47 54 Marvelon/Mercilon 32 32 33 33 58 58 72 72 Jada (3) 18 18 5 5 33 33 Other Womens Health ( 1) 15 29 45 14 27 42 33 58 90 30 57 86 General Medicines Biosimilars Renflexis 44 21 65 46 17 63 87 36 122 90 30 120 Hadlima 55 24 79 36 14 50 106 40 146 69 27 96 Ontruzant 5 1 6 5 26 31 9 2 11 8 41 49 Brenzys 14 14 22 22 34 34 36 36 Bildyos/Bilprevda 14 5 19 20 15 35 Other Biosimilars (1) 10 2 12 3 4 7 15 5 20 3 10 13 Established Brands Cardiovascular Atozet 80 80 86 86 165 165 162 162 Zetia 2 95 96 1 72 74 3 181 183 3 156 159 Cozaar/Hyzaar 2 48 50 2 54 56 5 103 107 4 107 111 Vytorin 1 20 21 1 26 27 2 40 42 2 48 50 Rosuzet 5 5 6 6 11 11 10 10 Other Cardiovascular (1) 1 23 25 1 33 34 1 50 53 1 64 65 Respiratory Singulair 2 46 48 2 64 66 4 84 88 4 136 140 Nasonex 58 58 66 66 123 123 137 137 Dulera 30 11 41 32 9 41 53 23 76 66 19 84 Clarinex 1 30 30 1 33 34 2 60 61 1 67 68 Other Respiratory (1) 16 1 18 11 3 14 27 3 30 21 6 27 Non-Opioid Pain, Bone and Dermatology Arcoxia 69 69 63 63 128 128 124 124 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing