Perrigo (NYSE:PRGO) reported lower third-quarter sales and earnings as cautious retailer inventory decisions and weakness in Europe weighed on results, even as the self-care company gained market share and narrowed its core sales decline.
The company updated its 2026 outlook to reflect an agreement to divest its infant formula business, a more measured retailer inventory buildup ahead of cough and cold season, and continued softness among European consumers. Beginning with fourth-quarter and full-year reporting, infant formula will be classified as discontinued operations.
Interim President and CEO Albert Manzone said Perrigo’s operating performance improved sequentially during the year, but that the company needs to simplify its operations and deliver more consistent results.
“Over time, Perrigo has become too complex,” Manzone said. “The business has not been integrated to the degree it needs to be, and that complexity has made it harder for our teams to execute with the necessary speed and focus.”
Quarterly sales and margins decline
Third-quarter net sales on an all-in basis fell 5.2% from a year earlier to $989 million. Core net sales declined 1.7%, an improvement from declines of 8.3% in the first quarter and 3.1% in the second. Core organic net sales fell 1.1%.
CFO Eduardo Bezerra said softer consumption and more cautious retailer inventory positioning represented an approximately 2-percentage-point headwind to growth, while lower contract manufacturing volumes contributed a further 1-point headwind. Innovation and market share gains contributed approximately 1.5 points of growth, he said.
Self-care net sales fell 3.2%, with declines concentrated in upper respiratory, pain and sleep products. Specialty care sales dropped 4.6%, as growth in women’s health and some skin health brands was more than offset by lower sales of other skin products.
Core adjusted operating margin fell 210 basis points from a year earlier to 14.3%, although it rose from 13.4% in the second quarter. Core adjusted earnings per share were 61 cents, down 6 cents. A lower adjusted effective tax rate benefited core earnings by approximately 10 cents per share, including a year-to-date catch-up, Bezerra said.
All-in adjusted diluted earnings per share fell to 60 cents from 80 cents. That figure included approximately 12 cents per share of unfavorable impact from planned underabsorption in infant formula. The third-quarter all-in results included the formula business.
Outlook reflects formula divestiture
For 2026, Perrigo expects core reported net sales to decline 2.5% to 3.6% and core adjusted diluted earnings per share of $2.15 to $2.35. The company expects core adjusted operating margin of 14% to 15%.
On an all-in basis, which now excludes infant formula but includes other divestitures, Perrigo forecasts a reported sales decline of 4.6% to 5.7%, adjusted operating margin of 14.3% to 15.3% and adjusted diluted earnings per share of $2.25 to $2.45. The core outlook continues to exclude infant formula and previously announced divestitures.
Bezerra said early fourth-quarter cough and cold incidence trends had been favorable, but retailers built less inventory than Perrigo had previously assumed after two seasons of softer category volumes. Manzone said retailers had not loaded up for the season as they had in the past, rather than actively reducing inventories during the third quarter.
If the season strengthens, retailers could replenish stock, Manzone said, though he could not determine whether that would affect fourth-quarter sales or sales in the first quarter of 2027.
Portfolio review and market share gains
Perrigo has sold its dermacosmetics business, announced the agreement to divest infant formula and continues to review oral care. Manzone said the infant formula transaction should simplify operations, improve margins and reduce expected capital spending. He said the oral care process remains ongoing.
Bezerra said infant formula had been consuming cash this year and that the divestiture would significantly reduce future capital requirements. Perrigo expects to deploy net proceeds in line with priorities that include business growth and debt reduction. At quarter-end, the company had $437 million in cash and $3.3 billion in total debt.
Manzone pointed to share gains as evidence that Perrigo’s stabilization, streamlining and strengthening plan is making progress. U.S. store-brand over-the-counter volume grew 2% in the quarter, with share increasing 30 basis points. In Europe, value sales of key brands grew 6.5%, and those brands gained 80 basis points of share.
The company’s Operational Enhancement Program generated $42 million in savings through the first nine months and remains on track to deliver approximately $60 million to $80 million for the year, Manzone said. Perrigo also plans to invest in innovation, distribution and demand generation, including e-commerce, which represented 22% of its U.S. volume, up from approximately 13% in 2022.
About Perrigo (NYSE:PRGO)
Perrigo Company plc is a global consumer self-care company that develops, manufactures and markets over-the-counter health products, wellness products and personal care items. Its portfolio includes products for allergy, pain relief, digestive health, skin care, smoking cessation, women’s health and other everyday health needs, along with vitamins, nutritional supplements and infant nutrition products.
Perrigo supplies products under its own brands, acquired brands and retailer-owned private-label labels.
