Some four years into its run as an independent women’s health outfit, Organon is parting ways with its first CEO after an internal probe turned up evidence of suspect sales practices at the Merck spinout.
Organon’s chief executive Kevin Ali—who had been with the company since its 2021 debut—resigned from his role and exited the company’s board of directors on Sunday, Organon said in a securities filing (PDF). The company’s executive vice president and head of manufacturing and supply, Joseph Morrissey, has stepped up as interim CEO while Organon begins its search for a permanent leader.
Ali is out after an investigation by the company’s audit committee revealed Organon asked certain U.S. wholesalers to purchase more of the birth control implant Nexplanon than they otherwise needed over the course of multiple quarters in 2022, 2024 and 2025.
At times, the company encouraged those purchases by providing "incentive fees" linked to inventory management metrics, according to the filing.
Given the findings, Ali has agreed to forego severance or equity-related retirement benefits, Organon said.
The wholesaler arrangements played out at the end of 2022’s fourth quarter, the third and fourth quarters of 2024 and the first, second and third quarters of 2025, Organon explained in an Oct. 27 press release. The suspect wholesaler deals ultimately made up less than 1% of Organon’s consolidated revenue for 2022 and 2024 but did allow the company to meet guidance or certain external revenue expectations for the periods in question, the company admitted.
“The company’s board determined that these wholesaler sales practices were improper and certain of the company’s prior statements were inaccurate or incomplete,” Organon said in its release. “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.”
Aside from Ali’s departure, the audit has also prompted Organon to fire its head of U.S. commercial and government affairs. The investigation turned up “no finding” that Organon’s chief financial officer, Matthew Walsh, was “aware of improper wholesaler practices,” the company said in its release.
The news appears to have rattled investors, with Organon’s stock down nearly 20% in early trading Monday.
Nevertheless, the company appears determined to forge ahead and put the wholesaler plot behind it. Organon noted that in kick-starting a search for a permanent CEO to replace Ali, it will vet both internal and external candidates as well as retain a search firm to assist in the matter.
Furthermore, Organon noted that it plans to file its third-quarter earnings report on time and still intends to hold a call with investors to discuss the results.
As for the Organon manufacturing exec who will now captain the company until a permanent CEO successor is found, Morrissey has spearheaded global production and supply chain at the women’s health drugmaker for more than four years. He joined as part of Organon’s split from Merck, where he oversaw global animal health manufacturing and supply from 2017 through 2021. Prior to that, Morrissey served in multiple other manufacturing roles at Merck in areas like vaccine production and global facility management.
“I look forward to continuing to execute on Organon’s business strategy, including further delivering the business and driving cost savings while achieving revenue growth,” he said in Organon’s Monday announcement. “We believe Organon’s focus on operational execution, especially around our growth pillars, as well as reducing our debt ratios will drive long-term shareholder value.”
In its securities filing, Organon noted that its internal investigation is now “substantially complete,” although the company is continuing a review of its internal control over financial reporting. Based on the audit committee’s findings, Organon does not currently plan to restate or revise any of its previously issued earnings statements.
Meanwhile, the company’s wholesaler imbroglio bears some resemblance to an Alexion sales fraud investigation that played out in the back half of the last decade.
In late 2016, Alexion’s then-CEO and chief financial officer hit the exit amid an investigation by its audit and finance committee into potential sales misconduct around the complement inhibitor Soliris. Shortly thereafter, Alexion wrapped up its probe and determined that executives had pressed employees to get customers to place Soliris orders earlier than they would have otherwise.
This yielded extra revenues for Soliris known as “pull-in sales,” the investigation found. At the time, Alexion noted that the practice isn’t “inherently problematic or impermissible” if it doesn’t violate U.S. accounting rules, but it admitted that certain members of the drugmakers’ top brass violated internal policies and procedures.
The company blamed the misconduct on senior management’s failure to create an “appropriate ‘tone at the top’ for an effective control environment.”