Perrigo Q1 Earnings Surpass, Sales Miss Estimates

Perrigo Company plc PRGO reported adjusted earnings of 29 cents per share in the first quarter of 2024, beating the Zacks Consensus Estimate of 24 cents. Earnings were down 35.6% year over year, primarily due to a negative financial impact of 30 cents per share from infant formula.

Net sales declined 8.4% year over year to $1.08 billion, missing the Zacks Consensus Estimate of $1.09 billion. The downside was due to lower net sales in infant formula and the negative impact of purposeful SKU prioritization actions to enhance margins as part of the company's Supply Chain Reinvention Program undertaken in 2022.

During the quarter, sales declined 1.2% on account of exited product lines and 0.3% due to unfavorable currency movement. At constant currency (excluding foreign currency translation), sales fell 8.2%. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) were down 7.0% year over year.

Shares of Perrigo were down 2.7% in pre-market trading on May 7, likely due to lower-than-expected sales. Year to date, the stock hasrisen 3.9% compared with the industry's 2.5% growth.

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Segment Discussion

Perrigo reports its results under the following segments — Consumer Self Care Americas ("CSCA") and Consumer Self Care International ("CSCI").

CSCA: The segment's net sales in the first quarter of 2024 came in at $644.1 million, down 15.7% year over year. The downside was caused by inventory de-stocking at U.S. retail customers, which resulted in lower net sales of store brand offerings across most product categories.

CSCI: The segment reported net sales of $437.9 million, up 4.7% from the year-ago period's levels. Segment revenues benefited from growth in net sales of Skin Care and Women's Health categories, strategic pricing actions and new products. At constant-currency rates, sales were up 5.5% year over year. Organically, sales increased 7.0%.

2024 Guidance

Perrigo reiterated its previously issued financial guidance for 2024. Management expects total net sales growth to be flat year over year. Adjusted earnings per share EPS are expected to be between $2.50 and $2.65.

The adjusted tax rate is expected to be around 20.5%. Perrigo expects to record interest expenses of about $180 million.

Executive Transition for the CSCI Business

In a separate press release, Perrigo announced that Mr. Svend Andersen, Executive Vice President and President of CSCI, intends to retire from the company this year in December. He will be succeeded by Mr. Roberto Khoury, a consumer self-care veteran who has served in leadership roles in Kenvue and L'Oréal.

To ensure business continuity and a seamless transition, Mr. Andersen will continue to lead CSCI, working closely with Mr. Khoury until Aug 1, at which point the latter will assume the role of EVP and President of CSCI. Mr. Andersen will step down to serve in an advisory role until his retirement, which is expected on Dec 31, 2024.

 

Zacks Rank & Stocks to Consider

Perrigo currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the overall healthcare sector include ANI Pharmaceuticals ANIP, Ligand Pharmaceuticals LGND and United Therapeutics UTHR. While LGND and UTHR each sport a Zacks Rank #1 (Strong Buy) at present, ANIP carries a Zacks Rank #2 (Buy).

In the past 60 days, estimates for Ligand Pharmaceuticals' 2024 EPS have risen from $4.42 to $4.56. During the same period, EPS estimates for 2025 have improved from $5.11 to $5.27. Year to date, LGND's shares have risen 2.0%.

Earnings of Ligand Pharmaceuticals beat estimates in each of the last four quarters. Ligand delivered a four-quarter average earnings surprise of 84.81%.

In the past 60 days, estimates for United Therapeutics' 2024 EPS have improved from $23.15 to $23.88. During the same period, EPS estimates for 2025 have risen from $24.12 to $25.05. Year to date, shares of UTHR have inched up 18.5%.

Earnings of United Therapeutics beat estimates in each of the last four quarters. UTHR delivered a four-quarter average earnings surprise of 12.41%.

In the past 60 days, estimates for ANI Pharmaceuticals' 2024 EPS have risen from $4.40 to $4.44. During the same period, EPS estimates for 2025 have improved from $5.01 to $5.04. Year to date, shares of ANIP have rallied 22.2%.

Earnings of ANI Pharmaceuticals beat estimates in each of the last four quarters. ANI delivered a four-quarter average earnings surprise of 109.06%.

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