Earnings Highlights and Review: Perrigo Reported Better-than-Expected Quarterly Results

LONDON, UK / ACCESSWIRE / June 20, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Perrigo Co. PLC (NYSE: PRGO), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=PRGO, following the Company’s release of its first quarter fiscal 2017 financial results on May 30, 2017. The drug Company’s sales declined y-o-y. Perrigo also re-affirmed its adjusted earnings guidance for calendar 2017. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

Perrigo’s reported net sales for Q1 2017 were $1.19 billion, reflecting a drop of 11% compared to net sales of $1.35 billion in Q1 2016. The Company’s prior year’s Q1 adjusted net sales were $1.30 billion, which excluded $47 million of contributions from the US VMS business. Excluding the y-o-y impact of the exited European distribution businesses, Entocort® and unfavorable foreign currency movements, net sales was lower by approximately 2%. Perrigo’s sales numbers surpassed analysts’ estimates of $1.18 billion.

For Q1 2017, Perrigo reported net income of $72 million, or $0.50 per share, versus a net loss of $529 million, or $3.70 per share, in Q1 2016. The Company’s adjusted net income for the reported quarter was $150 million, or $1.05 per share, versus adjusted net income of $189 million, or $1.32 per share, for the year ago comparable period. Perrigo’s earnings exceeded expectations of $.1.05 per share.

Segment Results

During Q1 2017, Perrigo’s Consumer Healthcare Americas (CHCA) segment’s net sales totaled $583 million, down 9% compared to net sales of $639 million in Q1 2016, primarily due to the sale of the US VMS business in Q3 2016 which contributed $47 million. The Company’s sales were down 1% compared to adjusted net sales of $592 million in the prior year’s corresponding quarter on a constant currency basis. The CHCA segment achieved Q1 2017 gross profit margin of 32.3%, an increase of 160 bps over Q1 2016, while it recorded an adjusted gross profit margin of 34.5%, consistent with the prior year’s same quarter. The segment’s reported operating margin was 12.9% for Q1 2017, while adjusted operating margin totaled 20.2%.

Perrigo’s Consumer Healthcare International (“CHCI”) segment’s net sales declined 15% to $375 million. Excluding y-o-y contributions of $38 million from the exited unprofitable European distribution businesses and unfavorable foreign currency movements of $20 million, the segment’s net sales decreased approximately 2%.

For the CHCI segment, Q1 2017 reported gross margin was 45.2%, down 20 basis points compared to gross margin of 45.4%. The division’s adjusted gross margin totaled 50.7% in the reported quarter, an increase of approximately 240 bps over the previous year as the Company exited the unprofitable distribution businesses and realized benefits from in-sourcing production of certain products. CHCI’s reported operating margin was 0.1% compared to negative operating margin of 90.2% in the year ago same quarter, primarily due to impairments of $404 million realized in 2016. The segment’s adjusted operating margin was 13.8% in Q1 2017, an improvement of 130 bps, due to the improvement of gross profit margin and lower operating expenses as a result of cost improvement initiatives across the business and better alignment of promotional investments with sales.

During Q1 2017, Perigee’s Prescription Pharmaceuticals (RX) unit posted net sales of $217 million, down 12% compared to sales of $248 million, principally attributed to lower Entocort® net sales and lower sales of existing products, due primarily to price erosion, both of which were consistent with the Company’s expectations.

The RX segment recorded gross margin of 44.3% in Q1 2017, down 720 basis points compared to gross margin of 51.5% in Q1 2016, while the Company’s adjusted gross margin totaled 54.4%. These gross margin decreases were primarily due to Entocort® competition and price erosion. The segment posted operating margin of 40.5% in Q1 2017, which included approximately $22 million of income related to the sale of certain Abbreviated New Drug Applications, partially offset by restructuring charges of approximately $6 million related to the specialty pharmacy sales force.

Guidance

Perrigo reiterated its expectation for calendar 2017 net sales to be in the range of $4.6 billion to $4.8 billion. The Company’s GAAP diluted EPS for calendar 2017 is expected to be in the range of $1.82 to $2.17, while it is projecting adjusted diluted EPS to be in the range of $4.15 to $4.50.

Retirement of CEO

On June 06, 2017, Perrigo announced the forthcoming retirement of Chief Executive Officer John T. Hendrickson. The Company stated that Mr. Hendrickson will remain with the Company until his replacement is appointed, as well as up to 60 days following to ensure a smooth and successful transition. Perrigo noted that a search committee of the Board of Directors has been created and will begin conducting a thorough process to identify Mr. Hendrickson’s replacement.

Stock Performance

On Monday, June 19, 2017, the stock closed the trading session at $73.14, marginally rising 0.16% from its previous closing price of $73.02. A total volume of 1.07 million shares have exchanged hands. Perrigo’s stock price advanced 3.74% in the last one month and 6.90% in the past three months. The stock has a dividend yield of 0.88%. At Monday’s closing price, the stock’s net capitalization stands at $10.46 billion.

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