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Perrigo Company plc Reports First Quarter 2016 Financial Results

DUBLIN, May 12, 2016 /PRNewswire/ -- Perrigo Company plc (NYSE: PRGO; TASE) today announced results for the first quarter ended April 2, 2016.

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Perrigo Company

Perrigo's CEO John T. Hendrickson commented, "It is an honor and privilege to be the tenth and newest CEO of Perrigo and I see a bright future for this great company. During my 27-year tenure, we have experienced numerous highs and lows, but the strength of our consolidated business model has always prevailed. The power of Perrigo lies in the foundation of our Consumer Healthcare business, which continues to experience record operating performance, combined with our unique Rx portfolio and the broad European reach of the Branded Consumer Healthcare business. The Rx segment delivered strong margins in an increasingly challenging pricing and competitive environment. While the BCH business continues to grow, there are challenges that our European team, led by EVP and General Manager Sharon Kochan, is already working hard to address.

In addition, as part of my strategy to improve shareholder value across our global platform, I am pleased to announce that Judy Brown will take on an expanded role as EVP, Business Operations and CFO. In this role, Judy will have leadership of our Global Product Portfolio and Global Shared Services platform complementing her responsibilities for corporate development, finance, strategy and communications. I look forward to being out on the road with Judy to meet with our shareholders in the coming months. The business that we have built over the past 129 years and our talented employees around the world have positioned Perrigo well for the future."

Refer to Tables I, II, III, and IV at the end of this press release for a reconciliation of non-GAAP adjustments to the current year and prior year periods and additional non-GAAP information. The Company's reported results are included in the attached Condensed Consolidated Statements of Operations, Balance Sheet and Statements of Cash Flows.

First Quarter Results

Perrigo Company plc

(in millions, except earnings per share amounts)

(see the attached Tables I and IV for reconciliation to GAAP numbers)

(YoY % change may not calculate due to rounding)




First Quarter
Ended


First Quarter
Ended


YoY


4/2/2016


3/28/2015


% Change

Reported Net Sales

$1,383


$1,049


32

%

Adjusted Net Income

$251


$249


1

%

Adjusted Diluted EPS

$1.75


$1.85


(5)

%

Adjusted Diluted Shares

143.6


134.5


7

%








Reported Net Loss

$(133)


$(95)


(40)

%

Reported Diluted EPS

$(0.93)


$(0.67)


39

%

Reported Diluted Shares

143.2


140.8


2

%


First Quarter
Ended


First Quarter
Ended


YoY


Constant
Currency


4/2/2016


3/28/2015


% Change


% Change

Adjusted Net Sales Excluding VMS*

$1,336


$1,012


32

%


33

%











*Adjusted net sales excludes first quarter 2016 and 2015 net sales from VMS of $47 million and $38 million, respectively. The VMS business is currently held for sale.

Excluding any net sales contribution from VMS, adjusted net sales in the quarter were $1.34 billion, an increase of 33%, on a constant currency basis over the first quarter of 2015. This increase is attributable primarily to $318 million related to the inclusion of the BCH segment and 2% growth in the CHC segment on a constant currency basis, excluding net sales from VMS. New product sales were $74 million (including BCH new product sales of $31 million), which were offset partially by $39 million in discontinued products.

Excluding charges as outlined in Table I at the end of this release, first quarter 2016 adjusted net income increased 1% to $251 million or $1.75 per diluted share versus $1.85 for the same period last year.

Segment Results

Consumer Healthcare

Consumer Healthcare Segment

(in millions)

(see the attached Tables II and IV for reconciliation to GAAP numbers)

(YoY % change may not calculate due to rounding)




First Quarter
Ended


First Quarter
Ended


YoY


4/2/2016


3/28/2015


% Change

Reported Net Sales

$700


$685


2 %

Adjusted Gross Profit

$221


$222


(1) %

Adjusted Gross Margin

33.8 %


32.4 %


140 bps

Adjusted Operating Income

$122


$122


1 %

Adjusted Operating Margin

18.7 %


17.8 %


90 bps







Reported Gross Profit

$214


$212


1 %

Reported Gross Margin

30.5 %


30.9 %


(40) bps

Reported Operating Income

$103


$104


(2) %

Reported Operating Margin

14.6 %


15.2 %


(60) bps


First Quarter
Ended


First Quarter
Ended


YoY


Constant
Currency


4/2/2016


3/28/2015


% Change


% Change

Adjusted Net Sales Excluding VMS*

$653


$647


1

%


2

%











*Adjusted net sales excludes first quarter 2016 and 2015 contributions from VMS of $47 million and $38 million, respectively. The VMS business is currently held for sale.

Adjusted net sales in the first quarter grew 2% on a constant currency basis over the first quarter of 2015, excluding net sales from VMS in both periods. This increase reflects new product sales of $31 million and a net increase in sales volumes of existing products of $17 million (primarily in the infant formula and smoking cessation categories, offset partially by decreases in the analgesics and cough & cold categories primarily due to the extremely mild cough/cold season). These increases were offset partially by discontinued products of $32 million.

Despite the extremely mild cough/cold season, the CHC segment achieved a solid first quarter adjusted gross profit margin of 33.8%, an increase of 140 basis points compared to last year, driven by improved product mix and supply chain efficiencies.

Adjusted operating margin increased 90 bps to 18.7% compared to the prior year due to higher gross profit contribution and relatively flat operating expenses.

Branded Consumer Healthcare Segment

(in millions)

(see the attached Table II for reconciliation to GAAP numbers)




First Quarter
Ended


4/2/2016

Net Sales

$318

Adjusted Gross Profit

$165

Adjusted Gross Margin

51.9 %

Adjusted Operating Income

$25

Adjusted Operating Margin

7.8 %



Reported Gross Profit

$157

Reported Gross Margin

49.3 %

Reported Operating Loss

$(483)

Reported Operating Margin

(152.0) %

Net sales of $318 million in the first quarter included new product sales of $31 million, as well as a contribution of $37 million from the GSK portfolio and Yokebe acquisitions.

First quarter adjusted gross profit percent to sales was 51.9% and adjusted operating income was $25 million, or 7.8%.

Rx Pharmaceuticals Segment

(in millions)

(see the attached Tables II and IV for reconciliation to GAAP numbers)

(YoY % change may not calculate due to rounding)




First Quarter
Ended


First Quarter
Ended


YoY


Constant
Currency


4/2/2016


3/28/2015


% Change


% Change

Net Sales

$257


$252


2 %


2 %

Adjusted Gross Profit

$157


$160


(2) %



Adjusted Gross Margin

61.0 %


63.5 %


(250) bps



Adjusted Operating Income

$117


$120


(3) %



Adjusted Operating Margin

45.6 %


47.8 %


(220) bps











Reported Gross Profit

$127


$142


(10) %



Reported Gross Margin

49.6 %


56.3 %


(670) bps



Reported Operating Income

$87


$100


(13) %



Reported Operating Margin

34.0 %


39.7 %


(570) bps



Net sales in the first quarter of $257 million, an increase of 2%, were driven by new product sales of $11 million and sales of $46 million related to recent product acquisitions, which were offset partially by a decrease in sales of existing products of $50 million.

First quarter adjusted operating income of $117 million decreased by 3% compared to the prior year, primarily driven by industry pricing and competitive pressures.

Specialty Sciences Segment

(in millions)

(see the attached Tables II and IV for reconciliation to GAAP numbers)

(YoY % change may not calculate due to rounding)




First Quarter
Ended


First Quarter
Ended


YoY


Constant
Currency


4/2/2016


3/28/2015


% Change


% Change

Net Sales

$88


$82


7

%


9 %

Adjusted Gross Profit

$88


$82


7

%



Adjusted Gross Margin

100.0 %


100.0 %


bps



Adjusted Operating Income

$86


$79


9

%



Adjusted Operating Margin

97.4 %


95.8 %


...

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