Perrigo Company (PRGO) Q4 2025 earnings summary

Executive summary

• Achieved strong market share gains in U.S. and E.U. OTC and improved in-store execution despite overall market softness and infant formula headwinds, with FY2025 adjusted EPS at $2.75, up 7% year-over-year and in line with revised guidance.

• Advanced the Three-S plan (simplify, streamline, strengthen), including portfolio focus, operational efficiency, and major initiatives totaling $320 million in benefits.

• Announced divestiture of Dermacosmetics business, expected to close in Q2 2026, with proceeds to reduce debt; continued assessment of Infant Formula and Oral Care businesses.

• Launched new operational enhancement program targeting $80–$100 million in annualized pre-tax savings and a 7% global workforce reduction.

• Transitioning to new reporting segments in 2026: Self Care, Specialty Care, and Infant Formula, aligning with the commercial operating model.

Financial highlights

• FY2025 adjusted EPS was $2.75 (up 7.0%), CORE adjusted EPS $2.52 (up 14.0%), and adjusted operating income $622 million (up 2.3%).

• FY2025 net sales were $4.25 billion, down 2.8% year-over-year; Q4 net sales were $1.11 billion, down 2.5% year-over-year.

• GAAP results include a $1.3 billion goodwill impairment charge in 2025, with potential for up to $350 million more in Q1 2026 due to segment realignment.

• Ended 2025 with $532 million in cash, $239 million in operating cash flow, and a net leverage ratio of 4x.

• Total debt at year-end was $3.64 billion.

Outlook and guidance

• FY2026 CORE organic net sales growth expected between -3.5% and +0.5%; adjusted EPS guidance of $2.25–$2.55; all-in net sales growth projected at -5.5% to -1.5%, with EPS of $2.00–$2.30.

• CORE gross margin expected at 39%-40%, operating margin at 15%-16%; all-in gross margin at 36.5%-37.5%, operating margin at 12.5%-13.5%.

• Operating cash flow conversion expected in the mid-60% range for 2026, with net leverage to remain flat or improve slightly.

• Interest expense for FY2026 projected at $156 million; adjusted effective tax rate at 20%.

• Second half of 2026 expected to show improvement as temporary headwinds dissipate and innovation, geographic expansion, and distribution gains accelerate.