Organon & Co.OGN
Organon & Co. Debt Disclosure
Long-Term Debt, Short-Term Borrowings and Leases
Long-term debt and short-term borrowings consist of the following:
| ($ in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Senior Credit Agreement | |||||||||||
| Term Loan B Facility: | |||||||||||
SOFR plus 225 bps term loan due 2031 | $ | 1,543 | $ | 1,543 | |||||||
EURIBOR plus 275 bps euro-denominated term loan due 2031 (€717 million in 2025 and €724 million in 2024) | 843 | 755 | |||||||||
4.125% secured notes due 2028 | 2,100 | 2,100 | |||||||||
2.875% euro-denominated secured notes due 2028 (€1.25 billion) | 1,470 | 1,304 | |||||||||
5.125% notes due 2031 | 1,582 | 2,000 | |||||||||
6.750% secured notes due 2034 | 500 | 500 | |||||||||
7.875% notes due 2034 | 500 | 500 | |||||||||
Revenue Interest Purchase and Sale Agreement (1) | 179 | 165 | |||||||||
| NovaQuest Funding Agreement | — | 103 | |||||||||
| Other borrowings | 8 | 7 | |||||||||
| Other (discounts and debt issuance costs) | (81) | (97) | |||||||||
| Total principal long-term debt and short-term borrowings | $ | 8,644 | $ | 8,880 | |||||||
| Less: Current portion of long-term debt and short-term borrowings | 16 | 20 | |||||||||
| Total Long-term debt, net of current portion | $ | 8,628 | $ | 8,860 | |||||||
(1) Recognized at the amortized cost basis. The remaining principal is determined as the initial fair value less principal payments. As of December 31, 2025, 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.
Senior Credit Agreement
On June 2, 2021, Organon entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “Senior Credit Agreement”), providing for:
•a Term Loan B Facility (“Term Loan B Facility”), consisting of (i) a U.S. dollar denominated senior secured “tranche B” term loan (“U.S. Dollar Term Loan Facility”) in the amount of $3.0 billion, and (ii) a euro denominated senior secured “tranche B” term loan (“Euro Term Loan Facility”) in the amount of €750 million, in each case with a seven-year term that matures in 2028; and
•a Revolving Credit Facility (“Revolving Credit Facility” and, together with the Term Loan B Facility, the “Senior Credit Facilities”), in an aggregate principal amount of up to $1 billion, with a five-year term that matures in 2026.
On May 17, 2024, Organon entered into Amendment No. 2 to the Senior Credit Agreement (“Amendment No. 2”) which, among other things, (i) extended the maturity of the U.S. Dollar Term Loan Facility to May 17, 2031, (ii) extended the maturity of the revolving credit loans made under the Revolving Credit Facility to December 2, 2027, (iii) increased the maximum amount of the Revolving Credit Facility by $300 million and decreased the commitment fee payable in respect of the Revolving Credit Facility to 0.375%, (iv) removed the credit spread adjustment applicable to SOFR loans, and (v) reduced the interest rate in respect of the remaining $1.55 billion of loans under the U.S. Dollar Term Loan Facility (the “U.S. Dollar Term Loans”) from Term SOFR plus 3.0% to Term SOFR plus 2.50%.
On December 20, 2024, Organon entered into Amendment No. 3 to the Senior Credit Agreement (“Amendment No. 3”) which, among other things, (i) reduced the interest rate of the outstanding U.S. Dollar Term Loans from Term SOFR plus 2.50% to Term SOFR plus 2.25%, (ii) reduced the interest rate of the loans outstanding under the Euro Term Loan Facility (the “EUR Term Loans” and, together with the U.S. Dollar Term Loans, the “Term Loans”) from EURIBOR plus 3.0% to EURIBOR plus 2.75%, (iii) extended the maturity of the Euro Term Loan Facility to December 20, 2031, (iv) reduced the interest rate under the Revolving Credit Facility from Term SOFR plus 2.00% to Term SOFR plus 1.50%.
Borrowings made under the Senior Credit Agreement bear interest, in the case of:
•term loans under the Term Loan B Facility (i) denominated in U.S. Dollars, at 2.25% in excess of Term SOFR (subject to a floor of 0.50%), or 1.25% in excess of an alternate base rate (“ABR”), at Organon’s option and (ii) denominated in euros, at 2.75% in excess of EURIBOR (subject to a floor of 0.00%); and
•revolving loans under the Revolving Credit Facility (i) in U.S. Dollars, at 1.50% in excess of Term SOFR (subject to a floor of 0.00%), or 0.50% in excess of ABR, at Organon’s option and (ii) in euros, at 1.50% in excess of EURIBOR.
Interest payments on the Term Loans are due monthly or quarterly, depending on the interest period selected. Principal payments on the Term Loans were based on 0.25% of the original principal amount outstanding on the closing date of the Senior Credit Agreement and due on the last business day of each March, June, September and December, commencing with the last business day of September 2021 (the “Principal Payments”). These Principal Payments are reduced by the amount of any prepayments. As a result of discretionary prepayments, the quarterly Principal Payments on the U.S. Dollar Term Loans are no longer required. Effective as of the December 20, 2024 closing date of Amendment No. 3, Principal Payments on the Euro Term Loans are based on the principal amount outstanding on the Amendment No. 3 effective date, which was €725.6 million. As a result of the prepayment to the Euro Term Loan Facility described below, the next quarterly Principal Payment will not be due until June 30, 2027.
On February 6, 2026, the Company made mandatory prepayments from the proceeds of the Jada System divestiture of $20.4 million on the U.S. Dollar Term Loans and €9.6 million on the Euro Term Loan Facility. Additional mandatory prepayments totaling $55 million are required across the Company’s senior secured notes within 450 days of the January 2026 closing of the Jada System divestiture. The Company expects the remaining net proceeds will be allocated to voluntary prepayments of outstanding debt.
On June 26, 2024, the Company made a discretionary prepayment of $7.5 million on the U.S. Dollar Term Loans.
For the year ended December 31, 2025 the Company had borrowings and repayments on the revolver of $1.1 billion and $1.1 billion, respectively. There were no outstanding balances under the Revolving Credit Facility as of December 31, 2025 or December 31, 2024.
The Senior Credit Agreement contains customary financial covenants, including a total leverage ratio covenant, which measures the ratio of (i) consolidated total debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, that must meet certain defined limits which are tested on a quarterly basis. In addition, the Senior Credit Agreement contains covenants that limit, among other things, Organon’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens. As of December 31, 2025, the Company is in compliance with all financial covenants and no default or event of default has occurred.
Notes
In April 2021, Organon Finance 1 LLC (“Organon Finance 1”), a subsidiary of Merck, issued €1.25 billion aggregate principal amount of 2.875% senior secured notes due 2028, $2.1 billion aggregate principal amount of 4.125% senior secured notes due 2028 and $2.0 billion aggregate principal amount of 5.125% senior unsecured notes due 2031 (collectively, the “Notes”). Interest payments are due semiannually on October 30 and April 30. As part of the Separation, on June 2, 2021, Organon and a wholly-owned Dutch subsidiary of Organon, (the “Dutch Co-Issuer”) assumed the obligations under the Notes as co-issuers, Organon Finance 1 was released as an obligor under the Notes, and certain subsidiaries of Organon agreed to guarantee the Notes. Each series of Notes was issued pursuant to an indenture dated April 22, 2021, between Organon and U.S. Bank National Association. Organon and the Dutch Co-Issuer assumed the obligations under the Notes pursuant to a first supplemental indenture to the relevant indenture, and the guarantors agreed to guarantee the Notes pursuant to a second supplemental indenture to the relevant indenture.
During the second quarter of 2024, Organon issued $500 million of 6.750% senior secured notes due 2034 (the “2034 Secured Notes”) and $500 million of 7.875% senior unsecured notes due 2034 (the “2034 Unsecured Notes” and, together with the Secured Notes the “2034 Notes”). Each series of notes is guaranteed by each of the entities that guarantees the Companies’ existing senior secured credit facilities (the “Credit Facilities”). Organon used the net proceeds from the sale of the 2034 Notes to repay a portion of its borrowings under the Credit Facilities’ U.S. dollar-denominated “tranche B” term loan and to pay the fees and expenses incurred in connection with the foregoing.
As of December 31, 2024, the Company recorded approximately $38 million of deferred debt issuance costs and discounts
related to the 2034 Notes, Amendment No. 2 and Amendment No. 3. Debt issuance costs and discounts are presented as a reduction of debt on the Consolidated Balance Sheets and are amortized as a component of interest expense over the term on the related debt using the effective interest method.
During the fourth quarter of 2025, the Company repurchased and cancelled $177 million of the Company’s 5.125% notes due in 2031 (“the 2031 Notes”) prior to maturity which resulted in a pre-tax gain on extinguishment of debt of $27 million, recorded in Other (income) expense, net in the Consolidated Statements of Income for the year ended December 31, 2025.
During the second quarter of 2025, the Company repurchased and cancelled $242 million of the Company’s 5.125% notes due in 2031 (“the 2031 Notes”) prior to maturity which resulted in a pre-tax gain on extinguishment of debt of $42 million, recorded in Other (income) expense, net in the Consolidated Statements of Income for the year ended December 31, 2025.
Revenue Interest Purchase and Sale Agreement
In connection with the Dermavant acquisition, Organon assumed a revenue interest purchase and sale agreement (the “RIPSA”) with XYQ Luxco, NovaQuest Co-Investment Fund XVII, L.P., an affiliate of NovaQuest Capital Management, LLC, and MAM Tapir Lender, LLC, an affiliate of Marathon Asset Management, L.P., together with U.S. Bank National Association, as collateral agent. Under the terms of the RIPSA, Organon is obligated to pay quarterly royalties equal to $1.5 million through 2026. After 2026, quarterly royalties are based on a capped single-digit revenue interest in net sales of Vtama for all dermatological indications in the United States. Aggregate royalty payments under the RIPSA are capped at $344 million.
The RIPSA is accounted for as debt and was initially recognized at fair value of $156 million. Over the term of the arrangement, the effective interest rate will be updated prospectively each reporting period based on the carrying amount of the debt, and the estimated timing and remaining cash flows related to the debt.
Funding Agreement with NovaQuest
In connection with the Dermavant acquisition, Organon assumed the funding agreement with NovaQuest Co-Investment Fund VIII, L.P. (“NovaQuest”). Under the agreement, Organon was required to make quarterly payments totaling $118 million in aggregate, to be paid through 2028, with payments totaling $6 million in 2025, $21 million in 2026, $57 million in 2027 and $34 million in 2028. The debt was initially recognized at fair value of $102 million.
During the second quarter of 2025, the Company voluntarily repaid and terminated the funding agreement with NovaQuest (the “NovaQuest Funding Agreement”) valued at $103 million. The termination resulted in a pre-tax gain on extinguishment of debt of $4 million, recorded in Other (income) expense, net in the Consolidated Statements of Income for the year ended December 31, 2025.
Long-term debt was recorded at the carrying amount. The estimated fair value of long-term debt (including current portion) is as follows:
| ($ in millions) | Fair Value Measurement Level | December 31, 2025 | December 31, 2024 | |||||||||||||||||
Long-term debt | 2 | $ | 7,922 | $ | 8,354 | |||||||||||||||
Long-term debt (RIPSA & NovaQuest)(a) | 3 | 136 | 268 | |||||||||||||||||
(a) During the second quarter of 2025, the Company voluntarily repaid and terminated the funding agreement with NovaQuest.
Level 2 was estimated using inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the liability. Level 3 was estimated using unobservable inputs.
The Company made interest payments related to its debt instruments of $463 million for the year ended December 31, 2025. The average maturity of the Company’s long-term debt as of December 31, 2025 is approximately 4.5 years and the weighted-average interest rate on total borrowings as of December 31, 2025 is 4.9%.
The schedule of principal payments required on long-term debt and short-term borrowings for the next five years, exclusive of $23 million of accrued interest related to the RIPSA, and thereafter are as follows:
| ($ in millions) | |||||
| 2026 | $ | 10 | |||
| 2027 | 10 | ||||
| 2028 | 3,580 | ||||
| 2029 | 10 | ||||
| 2030 | 21 | ||||
| Thereafter | 5,071 | ||||
Leases
Operating lease costs were $70 million, $63 million and $67 million for the year ended December 31, 2025, 2024, and 2023, respectively.
None of the Company’s lease agreements contain variable lease payments. Sublease income is immaterial and there are no sale-leaseback transactions. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Cash paid for amounts included in the measurement of operating lease liabilities was $52 million, $52 million and $56 million for the year ended December 31, 2025, 2024 and 2023, respectively. Operating lease assets obtained in exchange for new operating lease liabilities were $37 million, $25 million and $25 million for the year ended December 31, 2025, 2024 and 2023, respectively, and primarily consists of real estate operating leases. As of December 31, 2025 and 2024, the Company did not have any arrangements that met the criteria for classification as finance leases.
Supplemental balance sheet information related to operating leases is as follows:
| ($ in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| $ | 155 | $ | 157 | ||||||||
| Liabilities | |||||||||||
| 40 | 44 | ||||||||||
| 116 | 112 | ||||||||||
| $ | 156 | $ | 156 | ||||||||
| Weighted-average remaining lease term (years) | 4.6 | 5.2 | |||||||||
| Weighted-average discount rate | 5.5% | 5.1% | |||||||||
Maturities of operating lease liabilities as of December 31, 2025 are as follows ($ in millions):
| 2026 | $ | 47 | |||
| 2027 | 41 | ||||
| 2028 | 35 | ||||
| 2029 | 20 | ||||
| 2030 | 16 | ||||
| Thereafter | 17 | ||||
| Total lease payments | $ | 176 | |||
| Less: Imputed interest | 20 | ||||
| $ | 156 | ||||
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.