By Nate Wolf

Organon & Co CEO Kevin Ali resigned after an internal board investigation found what the drugmaker called improper sales practices to boost quarterly results in recent years.

Organon asked U.S. wholesalers to buy more of the birth-control implant Nexplanon than they needed at the end of six separate quarters across 2022, 2024, and 2025, including the three most recent quarters, the investigation found, according to a Monday securities filing by the company.

In some cases, the wholesalers were able to receive incentive fees they otherwise wouldn't have earned in exchange for accepting the Nexplanon sales, the investigation concluded. The sales enabled Organon to "meet guidance and/or certain external revenue expectations," the filing said.

"The Board determined that these wholesaler sales practices were improper, and that certain of the Company's prior statements were inaccurate or incomplete," the filing said.

Ali agreed to give up severance and equity-related retirement benefits as part of his resignation, Organon said. Joseph Morrissey, Organon's current head of manufacturing and supply, will take over as interim CEO. The company also said it fired its head of U.S. commercial and government affairs.

Organon stock plummeted 25% to $6.90 on Monday, putting it on pace to close at the lowest on record, according to Dow Jones Market Data. Shares are now down more than 50% this year.

Executives across industries are under intense pressure to meet Wall Street's expectations, particularly in an era of dizzying valuations. But the wholesaler workaround represented "an egregious breakdown in internal controls," wrote Piper Sandler analyst David Amsellem in a research note Monday.

The firm double-downgraded Organon to Underweight from Overweight and slashed its target for the price to $5 from $18. Organon has a long road to recovery, if it gets there at all, Piper Sandler said.

"This is the kind of malfeasance that can render a company/stock as uninvestable for an extended period," Amsellem wrote. "The process of restoring that trust will understandably be lengthy and laborious."

Organon stressed that the improper sales accounted for less than 1% of total revenue in 2022 and 2024 and less than 2% in any particular quarter. But the top-line impact isn't as significant as the conclusion that management acted improperly to meet expectations, Piper Sandler said.

In addition, Nexplanon is a relatively high-margin product that likely accounted for around 14% to 17% of the company's earnings before interest, taxes, depreciation, and amortization last year, Amsellem said. It seemed "more than a bit disingenuous" to not also mention the effect on earnings, he wrote.

Organon didn't immediately respond to Barron's requests for comment.

The company is still reviewing its internal controls over financial reporting, raising the possibility that more instances of wrongdoing could be uncovered, Piper Sandler added.

Write to Nate Wolf at nate.wolf@barrons.com

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October 27, 2025 13:26 ET (17:26 GMT)

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