Investment Thesis
Organon faces significant financial stress with a dangerously high debt-to-equity ratio of 11.49x and interest coverage of only 0.8x, indicating the company cannot cover interest expenses from operating income. The 78.4% year-over-year decline in net income combined with declining revenues suggests fundamental business deterioration that is not offset by reasonable profitability margins.
OGN Strengths
- Solid gross margin of 53.3% demonstrates pricing power and cost management in pharmaceutical operations
- Positive free cash flow of $538M provides some financial flexibility despite leverage concerns
- Adequate liquidity with current ratio of 1.82x and quick ratio of 1.23x for near-term obligations
OGN Risks
- Critical debt-to-equity ratio of 11.49x indicates extreme financial leverage with minimal equity cushion
- Interest coverage ratio of 0.8x means operating income cannot cover interest payments, raising default risk concerns
- Severe net income decline of 78.4% YoY combined with revenue contraction of 2.9% signals operational distress and potential market share loss
- Low net margin of 3.0% and ROA of 1.5% show poor returns on total assets despite reasonable operating margins
Key Metrics to Watch
- Interest coverage ratio trend - critical improvement needed above 1.5x to ensure debt sustainability
- Operating cash flow sustainability - must remain above $600M to service debt and maintain operations
- Debt-to-equity reduction path - company needs strategic deleveraging or risk covenant violations
- Revenue stabilization - current -2.9% YoY decline must reverse to demonstrate business viability
OGN Financial Metrics
OGN Profitability Ratios
OGN Balance Sheet & Liquidity
OGN 5-Year Financial Trend
5-Year Trend Summary: Organon & Co.'s revenue has declined by 18% over the 5-year period, indicating business contraction. The most recent EPS of $3.99 reflects profitable operations.
OGN Growth Metrics (YoY)
OGN Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $1.6B | $160.0M | $0.61 |
| Q2 2025 | $1.6B | $145.0M | $0.56 |
| Q1 2025 | $1.5B | $87.0M | $0.33 |
| Q3 2024 | $1.5B | $58.0M | $0.23 |
| Q2 2024 | $1.6B | $195.0M | $0.75 |
| Q1 2024 | $1.5B | $177.0M | $0.69 |
| Q3 2023 | $1.5B | $58.0M | $0.23 |
| Q2 2023 | $1.6B | $234.0M | $0.92 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
OGN Capital Allocation
OGN SEC Filings
Access official SEC EDGAR filings for Organon & Co. (CIK: 0001821825)