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PERRIGO Co plc (PRGO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered resilient profitability amid softer OTC consumption: net sales $1.04B (-4.1% YoY), adjusted EPS $0.80 (-1.2% YoY), and adjusted operating margin 16.6% (-20 bps YoY) . Store brand gained dollar, unit and volume share in 5 of 7 OTC categories and key brands gained share .
  • Guidance lowered: FY25 reported net sales growth to -2.5% to -3.0%, organic growth to -2.0% to -2.5%, and adjusted EPS to $2.70–$2.80; gross margin ~39% and operating margin ~15% maintained; net leverage now ~3.8x (vs ~3.5x prior) .
  • Strategic portfolio actions intensified: Perrigo initiated a strategic review of the Infant Formula business (expected ~$360M 2025 net sales, <10% of company), continues Oral Care review, and remains on track to close Dermacosmetics sale in Q1’26 .
  • Against Wall Street estimates, Q3 saw a small EPS beat and revenue/EBITDA misses; softness driven by category consumption and slower infant formula share rebuild, partially offset by cost discipline and supply chain savings . Estimates data from S&P Global are marked with an asterisk.

What Went Well and What Went Wrong

What Went Well

  • Share gains despite soft category demand: “We gained dollar, unit and volume share in five of seven store brand categories and grew share in our key brands” — CEO Patrick Lockwood‑Taylor . CSCA OTC net sales +0.6% YoY within segment driven by share gains and new wins .
  • Margin resilience and sequential improvement: Adjusted operating margin 16.6% (-20 bps YoY) with CSCA adjusted gross margin up 550 bps and operating margin up 760 bps sequentially vs Q2 2025 .
  • Cost programs tracking ahead: Supply Chain Reinvention and Project Energize delivered benefits; Energize has achieved ~$163M gross annual savings to date (above midpoint of $140–$170M target by 2026) .

What Went Wrong

  • Top-line pressure from consumption softness and portfolio reviews: Total net sales -4.1% YoY, with organic -4.4% (OTC -1.6% and -2.8% from Infant Formula/Oral Care under strategic review) .
  • Infant formula underperformed internal expectations: Slower store brand share rebuild and lower contract volumes vs strong prior-year restocking; SKU velocities below plan due to shelf position and space constraints (management Q&A) .
  • Tariff headwinds and category mix: Gross margin -110 bps YoY (mix shift to lower-margin store brand and divestiture impacts); updated tariff cost estimate now $40–$50M on a full-year basis (mitigation via pricing/insourcing in-flight) .

Financial Results

Consolidated performance vs prior quarters

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$1,043.9 $1,056.3 $1,043.3
Adjusted Diluted EPS ($USD)$0.60 $0.57 $0.80
Adjusted Gross Margin %41.0% 38.1% 39.9%
Adjusted Operating Margin %14.0% 12.8% 16.6%

Q3 2025 actual vs Street consensus

MetricConsensus*Actual
Adjusted EPS ($USD)0.770*0.80
Revenue ($USD Millions)1,097.1*1,043.3
EBITDA ($USD Millions)191.6*179.0*
  • Result: EPS beat (0.80 vs 0.77); revenue miss ($1.04B vs $1.10B); EBITDA miss. Values retrieved from S&P Global.*

Segment overview (Q3 2025)

SegmentNet Sales ($USD Millions)Reported Gross Margin %Adjusted Operating Margin %
CSCA (Americas)$645.6 31.8% 19.0%
CSCI (International)$397.7 43.1% 21.8%

CSCA category breakdown (Q3 YoY)

CategoryQ3 2024 ($MM)Q3 2025 ($MM)YoY Change
Upper Respiratory$120.9 $129.2 +6.8%
Digestive Health$113.5 $105.5 -7.0%
Nutrition$127.1 $99.8 -21.5%
Pain & Sleep-Aids$87.7 $88.6 +1.0%
Healthy Lifestyle$80.9 $77.5 -4.3%
Oral Care$66.9 $62.8 -6.2%
Skin Care$51.9 $58.9 +13.3%
Women’s Health$18.0 $19.0 +5.6%
VMS & Other$4.2 $4.3 +2.4%

CSCI category breakdown (Q3 YoY)

CategoryQ3 2024 ($MM)Q3 2025 ($MM)YoY Change
Skin Care$91.0 $91.7 +0.7%
Upper Respiratory$86.1 $80.6 -6.4%
Pain & Sleep-Aids$56.9 $56.3 -1.0%
Healthy Lifestyle$53.2 $52.8 -0.6%
VMS$43.0 $40.0 -7.0%
Women’s Health$32.2 $29.9 -7.4%
Oral Care$23.3 $23.9 +2.3%
Digestive Health & Other$30.6 $22.5 -26.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Net Sales GrowthFY 20250% to 3% -2.5% to -3.0% Lowered
Organic Net Sales GrowthFY 20251.5% to 4.5% -2.0% to -2.5% Lowered
Adjusted Gross MarginFY 2025~40% ~39% Lowered
Adjusted Operating MarginFY 2025~15% ~15% Maintained
Adjusted EPSFY 2025$2.90–$3.10 $2.70–$2.80 Lowered
Interest Expense ($MM)FY 2025—~$155 New detail
Adjusted Effective Tax RateFY 2025—~18.5% New detail
Adjusted Weighted Avg Shares (MM)FY 2025—~138.5 New detail
Net Leverage (Adj. EBITDA)FY 2025~3.5x ~3.8x Higher
Dividend PolicyOngoingQuarterly dividend; commitment to sustain Sustain dividend policy (CEO) Affirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3)Trend
OTC category consumptionQ1: Growth then softening; Q2: soft seasonal demand Marked softening from Aug–Oct; dynamic/unpredictable; not structural (CEO) Softer near term
Store brand share gainsQ1/Q2: Share gains in US OTC Six consecutive months of volume share gains; gains in 5 of 7 categories Improving
Infant formulaQ1: recovery; Q2: scrap drove margin hit Strategic review; slower share rebuild; lower contract volumes; SKU velocity below plan Strategic pivot
Supply chain reinventionBenefits flowing in Q1/Q2 On track; $150–$200M benefits by year-end (CEO) Positive execution
Project Energize (cost program)Savings tracking; reaffirmed ~$163M gross annual savings achieved; above midpoint Ahead of plan
Tariffs/macro costsQ1: $145–$155M full-year estimate Updated to $40–$50M full-year; mitigation via pricing/insourcing Improving outlook
EU brands performanceQ1/Q2: CSCI organic growth (Pain & Sleep; Healthy Lifestyle) CSCI net sales -4.5% YoY; cough/cold incidence lower; supply constraints resolved in Women’s Health Mixed/soft
Innovation/AMPQ2: upgraded brand-building; AMP reallocation New products (NiQuitin Citrus Mini, Bronchostop Max 8in1, Coldrex Sinumax); ~$30M sales from AMP reallocations Ongoing investments

Management Commentary

  • “We gained dollar, unit and volume share in five of seven store brand categories and grew share in our key brands, a clear sign that consumers are choosing Perrigo products at the shelf.” — Patrick Lockwood‑Taylor, CEO .
  • “We’re adjusting our full-year 2025 outlook to reflect infant formula industry dynamics and soft OTC consumption trends... to support expected mid-to-high single-digit adjusted EPS growth for the year.” — CEO .
  • On Infant Formula review: “This proactive review is about discipline... reduce leverage, sustain our dividend policy, continue to deliver on customer partnerships and sharpen focus on our high-potential OTC portfolio.” — CEO .
  • CFO on margins: “Gross margin for the quarter declined 110 bps due to... lower net sales and divestitures and exited products; mix shift to relatively lower‑margin store brands.” — Eduardo Bezerra .

Q&A Highlights

  • Infant formula performance: Share near ~16%; rebuild to ~18–20% over 12 months possible; SKU velocity below plan due to shelf positioning and space (retailer) constraints; competitive pressure from imports; contract volumes lighter vs strong prior year .
  • CSCI trajectory: Women’s Health supply issues resolved; expecting sequential net sales pickup in Q4 (+5–6%) vs Q3 on seasonality and supply normalization .
  • OTC consumption drivers: Multiple tactical factors (features, displays, pricing); hypothesis of pantry drawdown; cough/cold season down vs LY; management views changes as non-structural (expects normalization) .
  • Tariffs: ~$40–$50M full-year gross COGS headwind (Q4 impact begins); mitigation already in flight (pricing, insourcing, supplier actions); no expected lag in pricing catch-up .

Estimates Context

  • Q3 2025 vs consensus: EPS $0.80 vs $0.77* (beat), revenue $1,043M vs $1,097M* (miss), EBITDA $179M* vs $192M* (miss). Drivers: softer OTC consumption (US and EU), slower infant formula share and contract volumes; offsets from Energize and supply chain savings . Values retrieved from S&P Global.*
  • Near-term estimates likely to move down on revenue and EBITDA given reduced FY25 outlook, tariff headwinds, and infant formula review; EPS supported by cost discipline and margin maintenance (~15% operating margin target) .

Key Takeaways for Investors

  • Portfolio pivot unfolding: Strategic review of Infant Formula (sub-10% of sales) and continued Oral Care review sharpen OTC focus and could be catalysts; Dermacosmetics sale proceeds earmarked for deleveraging (Q1’26 close on track) .
  • Guidance reset reduces revenue growth expectations but maintains operating margin discipline (~15%); monitor execution of pricing/insourcing to offset tariff costs in Q4/Q1 .
  • Share gains are meaningful and broad-based (5 of 7 OTC categories), supporting a trade-down and value thesis as macro conditions remain soft .
  • Infant formula trajectory is key swing factor: shelf positioning/space and competitive imports weigh on near term; strategic review lowers risk of prolonged drag on growth/cash .
  • Cost programs are delivering: Supply Chain Reinvention and Project Energize ahead of plan, underpinning margins and EPS resilience despite volume pressure .
  • Watch EU cough/cold normalization and Women’s Health supply resolution for CSCI rebound in Q4; management expects sequential improvement .
  • Balance sheet: YTD operating cash flow $63M; cash $432M; total debt $3.64B; net leverage guided ~3.8x — deleveraging relies on portfolio actions and disciplined capex .
All quantitative information from company documents includes citations. S&P Global consensus and actual values marked with * and accompanied by this disclaimer: Values retrieved from S&P Global.

Additional Data Points

  • Adjusted EPS impacts: +$0.03 FX tailwind and -$0.02 divestitures/exited products in Q3 .
  • Cash and dividends: YTD operating cash flow $63M; YTD capex $67M; $119M returned via dividends; cash $432M; total debt $3.64B .