Organon CEO Kevin Ali to resign after probe into contraceptive sales

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(Reuters) -Organon said on Monday CEO Kevin Ali will resign from his role, after an internal investigation into sales of its Nexplanon contraceptive implant to wholesalers pointed to “improper” practices.

Shares of the women’s health-focused drugmaker were down 23% in premarket trading.

An audit committee found certain U.S. wholesalers were asked to purchase more Nexplanon than needed at the end of several quarters between 2022 and 2025.

“While the findings to date do not necessitate a restatement or revision to any previously issued financial statements, the company is taking remedial actions to improve its financial controls and address any material weaknesses,” Organon said.

The practices represented less than 1% of annual consolidated revenue for 2022 and 2024, Organon said, adding it helped meet forecasts and external revenue expectations.

Ali has agreed he will not be entitled to severance or equity-related retirement benefits in connection with his resignation, the company added.

He will be replaced by Joseph Morrissey, currently executive vice president and head of manufacturing and supply, on an interim basis, effective immediately.

Organon’s board chair Carrie Cox will assume additional responsibilities as executive chair to support Morrissey, and the company has also begun a search for a permanent CEO.

Morrissey, who has spent over four years in his current role, is a former Merck executive with more than 30 years of experience.

Organon also said it “terminated the employment of its Head of U.S. Commercial & Government Affairs” after the investigation.

The company said it intends to file its third-quarter filing on time.

(Reporting by Puyaan Singh in Bengaluru; Editing by Devika Syamnath and Krishna Chandra Eluri)