Perrigo Company plc
Perrigo Company plc
02/26/2026 | Press release | Distributed by Public on 02/26/2026 12:35
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries.
The following Management's Discussion and Analysis ("MD&A") is intended to provide readers with an understanding of our financial condition, results of operations, and cash flows by focusing on changes in certain key measures from year to year. This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes found in Item 8of this report. See also "Cautionary Note Regarding Forward-Looking Statements." This discussion and analysis compares 2025 results to 2024. For discussion and analysis that compares 2024 results to 2023, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.
EXECUTIVE OVERVIEW
Perrigo is a leading pure-play self-care company with more than a century of providing high-quality health and wellness solutions to meet the evolving needs of consumers. As one of the originators of the over-the-counter ("OTC") self-care market, Perrigo is led by its vision "To Provide The Best Self-Care For Everyone"and its purpose to "Make Lives Better Through Trusted Health and Wellness Solutions, Accessible To All".
Perrigo works to fulfill its vision and purpose as a top-tier consumer self-care company with a focused portfolio based on consumer-led innovation, which meets societal needs for:
•Access: Perrigo's self-care products and solutions enhance the daily lives of millions of families, empowering them to take control of their health and wellness.
•Value: Perrigo delivers value by helping consumers proactively manage their well-being through affordable and effective self-care solutions.
•Reliability: Perrigo ensures the safety and effectiveness of its self-care solutions, best serving its consumers.
Perrigo provides access to trusted self-care solutions that can be used without the need to visit a health practitioner for a prescription. Guided by our vision and purpose, our strategic goal is to create sustainable and value accretive growth by 1) delivering consumer preferred brands and innovation, 2) driving category growth with our customers, 3) powering our business with our world-class, quality assured supply chain, including a focus on sustainability with meaningful goals to reduce greenhouse gas emissions, water, and waste, in addition to increasing the recyclability of our packaging, and 4) evolving our global organization to one cohesive operating model. Our unique competency is to deliver health and wellness solutions across multiple price and value tiers that improve access and choice for consumers.
Perrigo's broad offerings are well diversified across several major product categories as well as across geographies, primarily in North America and Europe, with no one product representing more than 5% of total revenue. In North America, Perrigo is the leading store brand private label provider of self-care products in many categories, including upper respiratory, healthy lifestyle and women's health, along with brands including Opill® and Mederma®. In Europe, our portfolio consists primarily of brands, including Compeed®, ellaOne®,Solpadeine®, Jungle Formula®, and ACO®.
Two key initiatives have been fundamental in advancing our self-care strategy - our Supply Chain Reinvention Program, a global supply chain efficiency program, and Project Energize, a global investment and efficiency program. In addition, we continue to invest in other initiatives, including innovation, information systems and tools, and our people to drive consistent and sustainable results.
Perrigo's unique complementary businesses enable each individually to play a specific reinforcing role, where 1) store brands generate cash for investments into the Company's key higher margin, higher growth brands, 2) branding and innovation capabilities deliver both brand and store brand demand generation designed to lead to stronger customer partnerships, 3) consumer-led innovation scaled across brands, store brands and geographies, and 4) leveraging global supply chain scale of more molecules at more price points to more consumers driving household penetration.
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Executive Overview
The Company's plan to drive cash flow and total shareholder return is anchored behind its 'Three-S' plan - 'Stabilizing' Consumer Self-Care Americas store brand and infant formula businesses; 'Streamlining' the global portfolio, enterprise operating model and Consumer Self-Care International business; and 'Strengthening' what is working by prioritizing and increasing investments behind key brands.
Our fiscal year begins on January 1 and ends on December 31. We end our quarterly accounting periods on the Saturday closest to the end of the calendar quarter, with the fourth quarter ending on December 31 of each year.
Our Segments
Our reporting and operating segments reflect the way our chief operating decision maker, who is our Chief Executive Officer ("CEO"), makes operating decisions, allocates resources and manages the growth and profitability of the Company. Our reporting and operating segments are:
•Consumer Self-Care Americas ("CSCA")comprises our consumer self-care business in the U.S. and Canada.
•Consumer Self-Care International ("CSCI")comprises our consumer self-care business outside of the U.S. and Canada, primarily in Europe and Australia.
For information on each segment, our business environment, and competitive landscape, refer to Item 1. Business. For results by segment and geographic locations see below Segment Resultsand Item 8. Note 2and Note 21.
Recent Developments
Segment Change
During the first quarter of 2026, we have begun transitioning from a geographic segment reporting structure to a category-based segment view, enabling us to better align our financial disclosures and operational analysis with our product offerings and strategic priorities. The change is being made to stay in alignment with the way our chief operating decision maker intends to make future operating decisions, allocate resources and manage the growth and profitability of the Company. The anticipated change is not expected to have any impact on the Company's historical consolidated financial position, results of operations, or cash flows.
Market Factors and Trends
Macroeconomic Uncertainty
Current macroeconomic conditions remain dynamic, including impacts from inflation and interest rates, volatile changes in foreign currency exchange rates, tariffs and other trade restrictions, political unrest and uncertainty and legislative and regulatory changes. Any causes of market size contraction could reduce our sales or erode our operating margin and consequently reduce our net earnings and cash flows. As a result of these dynamic conditions and uncertainties, we have modified, and may further modify, our operations and strategic initiatives, including by adjusting our investment priorities, reallocating resources, or delaying specific initiatives, such as deferring capital expenditures on the Nutrition Network Optimization project, initiating an enterprise-wide operational enhancement program, and seeking further working capital improvements.
Continuing uncertainties arising from increased tariffs on imported products could have an adverse effect on our Company. In 2025, the U.S. government announced new or additional tariffs on products imported from many countries and individualized "reciprocal" tariffs on countries with which the U.S. has the largest trade deficits. While some tariffs have become effective, others have been temporarily suspended, increased then reduced or permanently repealed. The U.S. government has announced trade agreements with various governments as well as additional tariffs on countries due to geo-political issues. As a result, there continues to be significant volatility and uncertainty regarding the scope, timing, implementation and effective rates of tariffs.
Based on current assessments, and excluding any potential impact from future pharmaceutical tariffs that may cover ingredients used in the manufacturing of OTC products, we estimate a gross increase to global cost of goods sold of approximately $30 million to $40 million, on a full-year basis beginning in 2026, updated from the previously estimated range of $50 million to $60 million. We continue to mitigate these impacts through a combination of strategic pricing actions, insourcing to our U.S.-based manufacturing facilities and other supply chain actions.
In addition, our interest expense is impacted by the overall global economic and interest rate environment. We manage interest rate risk through our capital structure and the use of interest rate swaps to fix the interest rate on greater than 90% of our outstanding debt.
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Executive Overview
War in Ukraine
The invasion of Ukraine by Russia and resulting economic and political sanctions imposed by the United States, United Kingdom, European Union, and other countries on Russia, Belarus, and occupied regions in Ukraine have negatively impacted our results from operations in the region. Future impacts are difficult to predict due to the high level of uncertainty related to the war's duration, evolution and resolution. If the conflict spreads or materially escalates, or economic conditions deteriorate, the impact on our business and results of operations could be material.
Middle East Conflicts
We continue to closely monitor the ongoing conflict and the social, political and economic environment in Israel and in the broader Middle East to evaluate the impacts on our operations and supply chain. Israel is a global technology research and development center that plays a critical role in the global Active Pharmaceutical Ingredients ("API") market, as a number of our key suppliers are located within Israel. The Company sources some raw materials and finished goods from suppliers in Israel for certain self-care products, including omeprazole. To date, Perrigo has confirmed that our suppliers in the region have active operations and continue to manufacture materials for us, and we have not received any reports of restrictions on imports or exports in Israel. However, there is potential for some disruption as it relates to in-country logistics, including freight. As a precaution, Perrigo has engaged alternate suppliers to help minimize a potential supply disruption. If the conflict spreads or materially escalates, or if the conflict leads to further volatility and uncertainty in financial markets or economic conditions, the impact on our business and results of operations could be material. For example, an escalation in military activity in the Red Sea region has the potential to disrupt supply chains and lead to further inflationary pressures which we are also continuing to monitor.
Inflationary Costs and Supply Chain
Supply chain disruptions continue in specific categories such as agricultural commodities due to climate impacts, and supply chain shortages, the conflicts between Russia and Ukraine, the Middle East Conflict and geopolitical tensions. Inflationary pressures are still a factor on cost in major economies globally across food, energy and labor. While global inflation is expected to fall, U.S. inflation is now predicted to stay above previous expectations. We previously experienced employment vacancies and attrition in the labor market which negatively impacted productivity and drove wage rate increases and other retention benefits. We implemented a series of actions to substantially mitigate these and other inflationary cost pressures, such as strategic pricing and our Supply Chain Reinvention Program. Benefits from our actions have substantially offset the impacts of inflation to date. However, future supply chain disruptions and inflationary pressures from the continuation of the conflicts between Russia and Ukraine, any escalating conflicts in the Middle East, persistent geopolitical tensions and the impact of tariff and trade policy are uncertain.
Foreign Exchange
We have both translation and transaction exposure to the fluctuation of exchange rates. Translation exposures relate to exchange rate impacts of measuring income statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency. Transaction exposures relate to 1) the impact from input costs that are denominated in a currency other than the local reporting currency and 2) the revaluation of transaction-related working capital balances denominated in currencies other than the functional currency. Significant exchange rate fluctuations, especially in the Euro or the British Pound Sterling, have had, and could continue to have, a significant impact on our net sales, net earnings and cash flows.
Infant Formula
As part of its efforts to prevent supply interruptions and risk of Cronobacterspp. illnesses associated with powdered infant formula, in March 2023, the Federal Drug Administration ("FDA") released an "Immediate National Strategy to Increase the Resiliency of the U.S. Infant Formula Market" and issued a letter to the powdered infant formula industry to share information to assist the industry in improving the microbiologic safety of powdered infant formula. In response to those changes, we made considerable investments in all our infant formula manufacturing sites. These investments included, among other things, enhancing our cleaning and sanitation protocols, our environmental monitoring programs, and quality oversight, as well as increasing the number of quality and operations personnel at the sites, including enhanced cleaning and sanitation protocols, enhancements to our environmental monitoring programs, enhanced quality oversight and additional quality and operations personnel. These changes have resulted in higher costs and lower manufacturing output and production yields across our infant formula network. In March 2025, the U.S. Department of Health and Human Services (HHS) launched
Operation Stork Speed, a regulatory initiative aimed at strengthening the safety, quality, transparency, and resilience
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Executive Overview
of the U.S. infant formula supply. This initiative intends to review the nutrients used in infant nutrition, expand testing
for contaminants, and enhance labelling expectations, and will evaluate potential future regulatory updates. In addition, Operation Stork Speed extends the FDA's personal importation policy, which allows individuals to import certain infant formula products for personal use, thereby potentially increasing competitive pressures in the U.S. infant formula market. Together, these measures may introduce new compliance and regulatory obligations and may affect competitive dynamics in the U.S. market.
As previously disclosed, we received a warning letter from the FDA on August 30, 2023 relating to the Perrigo Wisconsin infant formula facility, which we acquired in November 2022. While we worked to resolve the issues raised in the August 30 letter, on November 29, 2023, we received notice from the FDA of additional inspection observations relating to Perrigo Wisconsin. Consistent with our commitment to quality, we temporarily paused all production at that facility and conducted an extended site-wide assessment and cleaning.
We also bolstered our internal resources and brought in additional outside expertise to help revise, enhance and strengthen comprehensive standards and processes across our infant formula network, including in some instances, pausing production for comprehensive cleaning and infrastructure improvements. All planned large-scale manufacturing plant resets have been completed, we have implemented quality enhancements, including further protocol, process and procedural improvements at the site level, and all sites are producing reliable, quality-assured product.
In October and November 2024, the FDA conducted its first inspection of the Perrigo Wisconsin infant formula facility since the November 2023 inspection. Following this 2024 inspection, the FDA did not issue written observations via Form FDA 483. In February 2026, the FDA conducted an additional inspection of the Perrigo Wisconsin infant formula facility and issued a Form 483. The matters raised in the February 2026 Form 483 do not relate to a production batch or an actual or potential recall of past production. We have initiated corrective actions and will continue to work collaboratively with the FDA.
We incurred certain extraordinary non-recurring costs associated with the remediation and enhancement actions described above and the evolving U.S. infant formula regulatory landscape, including consulting and legal fees relating to our responses to the FDA and the development and institution of new protocols across our infant formula manufacturing sites, as well as other costs relating to the extended cleaning and sanitization and the pausing and restarting of production. Cash costs to achieve this remediation plan were approximately $22.6 million with approximately 95% of such costs incurred during the year ended December 31, 2024.
We have been focusing on rebuilding market share, while managing the additional cost and production processes. Although we have gained market share in non-WIC infant formula powder, heightened competition from existing and new entrants, particularly as a result of continued regulatory forbearance allowing imported infant formulas has led to increased supply of infant formula in the United States, and the previously disclosed lost distribution of the Good Start®brand have hindered our efforts to recover our previous market share. On November 5, 2025, we announced a strategic review of our infant formula business focused on a combination of accelerating cash flows and reassessing the previously announced investment in this business, while optimizing portfolio impact and management focus. See Nutrition Network Optimization; Strategic Reviewbelow.
Restructuring
Supply Chain Reinvention Program
In 2022, we initiated a Supply Chain Reinvention Program to reduce structural costs, improve profitability and our service levels to our retail partners, and strengthen our resiliency by streamlining and simplifying our global supply chain. Through this initiative, we have reduced portfolio complexity, invested in advanced planning capabilities, diversified sourcing, and optimized our manufacturing assets and distribution models. The program objectives are now realized with approximately $157 million of annualized benefits (not including related depreciation expense on capital investments) achieved by the end of fiscal year 2025. Total costs incurred over the same period including capital investments, restructuring expenses and implementation costs totaled approximately $286 million. For the remaining project wind-down activities, we anticipate less than $10 million of additional costs to be incurred through fiscal year 2026.
Project Energize
As part of our sustainable, value accretive growth strategy, we launched Project Energize in the first quarter of 2024 - a global investment and efficiency program to drive the next evolution of capabilities and organizational agility. This three-year program was expected to produce significant benefits in our long-term business performance by enabling
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Executive Overview
our One Perrigo growth strategy, increasing organizational agility and mitigating impacts from stabilizing and strengthening the infant formula business. As of December 31, 2025, Project Energize had achieved these objectives and has substantively completed.
Project Energize delivered approximately $167 million of annualized pre-tax savings as of the end of fiscal year 2025, within the estimated range of $140 million to $170 million expected by the end of 2026. Reinvestment savings of $35 million over the same period are within the estimated range of approximately $40 million to $60 million. Restructuring and related charges associated with these actions were approximately $138 million over the same period are within the estimated range of $140 million to $160 million. For the remaining project wind-down activities, we anticipate less than $10 million of additional costs to be incurred through fiscal year 2026.
Nutrition Network Optimization; Strategic Review
In 2025, Perrigo initiated the Nutrition Network Optimization project to optimize our infant formula manufacturing footprint, upgrade packaging capabilities, harmonize quality processes, and enhance our research and development capabilities. On November 5, 2025, we announced a strategic review of our infant formula business. The review will assess a full range of alternatives and is aligned with Perrigo's 'Three-S' (Stabilize, Streamline, Strengthen) plan and reflects our commitment to disciplined capital allocation and supporting improved return on invested capital and total shareholder return. It will focus on a combination of accelerating cash flows and reassessing the previously announced investment in this business of $240 million, while optimizing portfolio impact and management focus.
Operational Enhancement Program
Building on the 'Streamlining' actions within our Three-S Plan, the Company has launched a two-year, enterprise-wide operational enhancement program to create a more agile, more resilient platform positioned for growth in our core business. The program is designed to streamline operations in response to near-term industry pressures, including soft consumer consumption leading to lower volumes, while freeing up capital to further invest behind our key brands and store brands.
We expect the program to enhance organizational effectiveness by evolving our structure to improve agility, accelerate decision-making and better leverage technology. As part of this effort, the Company expects to reduce approximately 7% of its current workforce. The program will also target operational cost reductions mainly in our supply chain and distribution network.
The Company anticipates gross pre-tax annual run rate cost savings of $80 million to $100 million from the program, the majority of which are expected to be achieved in 2026. Cash costs to achieve these savings are expected to range between $80 million and $90 million.
For further details on our restructuring charges, refer to Item 8. Note 18.
Divestitures
On April 11, 2025, we completed the sale of the Richard Bittner Business AG, an Austrian contract manufacturing entity (the "Richard Bittner Business") to HBI Health & Beauty Innovations Limited for total consideration of $14.4 million, net of cash delivered. The sale resulted in a pre-tax loss of $1.6 million, net of professional fees, recorded in Other (income) expense, net on the Consolidated Statements of Operations within our CSCI segment.
The assets associated with this business were reported within our CSCI segment. We determined the carrying value of the net assets held for sale of this business exceeded their fair value less costs to sell, resulting in a total impairment charge of $3.1 million during the twelve months ended December 31, 2025, inclusive of a goodwill impairment charge of $1.2 million. Refer to Item 8. Note 3and Note 10for additional details of the divestiture and impairments recognized as a result of the sale.
Goodwill Impairment
During the three months ended December 31, 2025, our CSCA and CSCI reporting units had an indication of potential impairment due to a sustained decrease in share price, lower expected cash flows principally related to infant formula market dynamics and a change in near-term expectations of the broader self-care market for both the Americas and International business. The quantitative impairment test indicated that the carrying amount of our CSCA and CSCI reporting units exceeded their estimated fair value. As such, management recognized a goodwill impairment of $917.1 million for CSCA, resulting in $1,168.8 million of goodwill in this reporting unit after the impairment and recognized a goodwill impairment of $407.1 million for CSCI, resulting in $881.3 million of goodwill
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Executive Overview
in this reporting unit after the impairment as of December 31, 2025. See Critical Accounting Estimatesand Item 8. Note 10.
In connection with the January 1, 2026 segment reorganization (see Item 8. Note 22), the Company will change from two reporting segments to three reporting segments.
On reorganization, the Company is required to reallocate goodwill from its existing two reporting units to its six new reporting units. We are also required to determine the estimated fair values and reassign assets and liabilities to the respective reporting units. Even though the aggregate estimated fair value and carrying value of the Company's reporting units remains unchanged from December 31, 2025, the allocations to the new reporting units may occur disproportionately. Because the total reporting unit fair values were written down to their carrying values as of December 31, 2025, the new reporting units could inherently have carrying values that exceed their fair value after the reallocation.
As a result of the segment reorganization, we currently estimate that structural non-cash goodwill impairment charges may range up to $350 million and would be recognized in the first quarter of 2026.
RESULTS OF OPERATIONS
Currency Translation
Any currency translation effects described below represent estimates of the net differences between translation of foreign currency transactions into U.S. dollars for the year ended December 31, 2025 at the average exchange rates for the reporting period and average exchange rates for the year ended December 31, 2024.
CONSOLIDATED
Consolidated Financial Results
| Year Ended | |||||||||||
| (in millions, except percentages) | December 31, 2025 | December 31, 2024 | |||||||||
| Net sales | $ | 4,253.1 | $ | 4,373.4 | |||||||
| Gross profit | $ | 1,494.5 | $ | 1,542.7 | |||||||
| Gross profit % | 35.1 | % | 35.3 | % | |||||||
| Operating income (loss) | $ | (1,122.2) | $ | 112.9 | |||||||
| Operating income % | (26.4) | % | 2.6 | % | |||||||
Net sales decreased $120.3 million, or 2.8%, primarily due to:
•$103.6 million decrease, or 2.4%, driven by lower net sales of $51.5 million in Digestive Health, lower net sales of $41.0 million in Nutritionprimarily due to infant formula, lower net sales inOral Care, and the absence of the prior-year Opill®launch stocking benefit of $15.0 million. These were partially offset by higher net sales in Upper Respiratory. Net sales across the rest of the business were roughly flat as soft OTC category consumption was offset by store brand dollar, unit and volume share gains and dollar share gains across key brands; and
•$66.5 million decrease due to the prior year divestitures of the HRA Pharma Rare Diseases Business (the "Rare Diseases Business") and the Orion Laboratories Hospital & Specialty Business (the "Hospital & Specialty Business") and the sale of branded products within our CSCI segment; partially offset by
•$49.8 million increase from favorable foreign currency translation.
Operating income decreased $1,235.1 million, or 1,094.0%, due to:
•$48.2 million decrease in gross profit due primarily to lower global OTC sales volumes, the impact of divested businesses and exited products of $41.6 million, and net impact of pricing actions. These factors were partially offset by $29.7 million from favorable currency translation, new products and benefits from the Supply Chain Reinvention Program. Gross profit as a percentage of net sales decreased 20 basis points compared to the prior year due to the same factors that impacted gross profit; and
•$1,186.9 million increase in operating expenses driven by the $1.3 billion goodwill impairment charge.
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CSCA
CONSUMER SELF-CARE AMERICAS
Segment Financial Results
| Year Ended | |||||||||||
| (in millions, except percentages) | December 31, 2025 | December 31, 2024 | |||||||||
| Net sales | $ | 2,585.3 | $ | 2,693.7 | |||||||
| Gross profit | $ | 754.9 | $ | 779.1 | |||||||
| Gross profit % | 29.2 | % | 28.9 | % | |||||||
| Operating income (loss) | $ | (669.0) | $ | 269.9 | |||||||
| Operating income % | (25.9) | % | 10.0 | % | |||||||
Net sales decreased $108.4 million, or 4.0% primarily due to:
•$107.8 million decrease, or 4.0%, driven by lower net sales of $55.4 million in Digestive Health, lower net sales of $41.0 million in Nutritiondriven by infant formula, lower net sales in Oral Care and the absence of the prior-year Opill®launch stocking benefit of $15.0 million. These were partially offset by higher net sales inUpper Respiratory. Net sales from the rest of the CSCA business were down as soft OTC category consumption was partially offset by accelerating store brand volume share gains.
CSCA net sales by product category were as follows:
| Sales | Year Ended | ||||||||||||||||||||||
| (in millions, except percentages) | December 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||||||||||||
| Upper Respiratory | $ | 529.5 | $ | 500.3 | $ | 29.1 | 5.8 | % | |||||||||||||||
| Digestive Health | 442.1 | 497.4 | (55.4) | (11.1) | % | ||||||||||||||||||
| Nutrition | 408.5 | 449.5 | (41.0) | (9.1) | % | ||||||||||||||||||
| Pain and Sleep-Aids | 332.5 | 345.5 | (12.9) | (3.7) | % | ||||||||||||||||||
| Healthy Lifestyle | 316.4 | 306.8 | 9.5 | 3.1 | % | ||||||||||||||||||
| Oral Care | 256.9 | 275.4 | (18.6) | (6.7) | % | ||||||||||||||||||
| Skin Care | 214.9 | 220.1 | (5.2) | (2.4) | % | ||||||||||||||||||
| Women's Health | 72.4 | 81.1 | (8.7) | (10.7) | % | ||||||||||||||||||
| Vitamins, Minerals, and Supplements ("VMS") | 7.2 | 14.5 | (7.3) | (50.3) | % | ||||||||||||||||||
| Other CSCA | 4.8 | 3.1 | 1.7 | 54.8 | % | ||||||||||||||||||
| Total CSCA | $ | 2,585.3 | $ | 2,693.7 | $ | (108.3) | (4.0)% | ||||||||||||||||
Sales in each category were driven primarily by:
•Upper Respiratory:Net sales of $529.5 million increased 5.8% due primarily to increased distribution of both cough cold and allergy products, higher first-quarter incidence levels of cough cold compared to the prior year leading to higher net sales, and greater sell-in to customers of cough cold products in the fourth quarter;
•Digestive Health:Net sales of $442.1 million decreased 11.1% due primarily to lower consumption of proton pump inhibitors for heartburn, as well as the net impact of pricing actions, which were partially offset by higher net sales in laxatives, including Polyethylene Glycol 3350;
•Nutrition:Net sales of $408.5 million decreased 9.1% due primarily to infant formula driven by previously disclosed lost distribution of the Good Start®brand and lower contract manufacturing volumes, partially offset by double-digit growth in store brand infant formula;
•Pain and Sleep-Aids: Net sales of $332.5 million decreased 3.7% due primarily to net lost distribution of lower margin products, lower category consumption of children's analgesics medicines and lower dollar share compared to prior year, partially offset by new business awards;
•Healthy Lifestyle: Net sales of $316.4 million increased 3.1% due primarily to new distribution wins and increased consumer demand for smoking cessation products;
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CSCA
•Oral Care:Net sales of $256.9 million decreased 6.7% due primarily to previously disclosed lost distribution of lower-margin products as the business focused on enhancing margin while balancing the unfavorable impacts of tariffs;
•Skin Care:Net sales of $214.9 million decreased 2.4% due primarily to lower distribution of Minoxidil at one customer, partially offset by growth in the Mederma®brand;
•Women's Health: Net sales of $72.4 million decreased 10.7% due primarily to the prior year reflecting the strong initial retailer stocking of Opill®, which launched in March 2024, of $15.0 million; and
•VMS and Other:Net sales of $12.0 million decreased 31.8% due primarily to volume declines in the VMS category.
Operating income decreased $938.9 million, or 347.9%, due primarily to:
•$24.2 million decrease in gross profit driven primarily by lower global OTC sales volumes of $39.5 million and net impacts from pricing investments to drive volume, partially offset by benefits from the Supply Chain Reinvention Program of $13.0 million and $9.1 million in benefits from augmenting and strengthening the infant formula network. Gross profit as a percentage of net sales increased 30 basis points compared to the prior year driven primarily by the benefits from augmenting and strengthening the infant formula network.
•$914.7 million increase in operating expenses driven by the $917.1 million goodwill impairment charge.
CONSUMER SELF-CARE INTERNATIONAL
Segment Financial Results
| Year Ended | |||||||||||
| (in millions, except percentages) | December 31, 2025 | December 31, 2024 | |||||||||
| Net sales | $ | 1,667.7 | $ | 1,679.6 | |||||||
| Gross profit | $ | 739.7 | $ | 763.5 | |||||||
| Gross profit % | 44.4 | % | 45.5 | % | |||||||
| Operating income (loss) | $ | (228.8) | $ | 105.0 | |||||||
| Operating income % | (13.7) | % | 6.3 | % | |||||||
Net sales decreased $11.9 million, or 0.7% primarily due to:
•$66.5 million decrease due to the prior year divestitures of the Rare Diseases Business and the Hospital & Specialty Business and the sale of branded products; partially offset by
•$50.4 million increase from favorable foreign currency translation.
CSCI net sales by product category were as follows:
| Sales | Year Ended | ||||||||||||||||||||||
| (in millions, except percentages) | December 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||||||||||||
| Skin Care | $ | 407.7 | $ | 410.0 | $ | (2.4) | (0.6) | % | |||||||||||||||
| Upper Respiratory | 288.2 | 282.1 | 6.0 | 2.1 | % | ||||||||||||||||||
| Pain and Sleep-Aids | 235.4 | 222.2 | 13.3 | 6.0 | % | ||||||||||||||||||
| Healthy Lifestyle | 231.5 | 225.8 | 5.7 | 2.5 | % | ||||||||||||||||||
| VMS | 161.2 | 173.5 | (12.3) | (7.1) | % | ||||||||||||||||||
| Women's Health | 143.5 | 132.8 | 10.7 | 8.0 | % | ||||||||||||||||||
| Oral Care | 97.5 | 99.4 | (2.0) | (2.0) | % | ||||||||||||||||||
| Digestive Health | 40.3 | 36.5 | 3.8 | 10.4 | % | ||||||||||||||||||
| Other CSCI | 62.4 | 97.3 | (34.8) | (35.8) | % | ||||||||||||||||||
| Total CSCI | $ | 1,667.7 | $ | 1,679.6 | $ | (11.9) | (0.7)% | ||||||||||||||||
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CSCI
Sales in each category were driven primarily by:
•Skin Care:Net sales of $407.7 million decreased 0.6%, inclusive of a 2.4% favorable effect of currency translation, due primarily to lower net sales in the ACO®franchise, partially offset by higher net sales and new products in the Compeed®franchise;
•Upper Respiratory: Net sales of $288.2 million increased 2.1%, inclusive of a 4.0% favorable effect of currency translation, due primarily to lower net sales of cough cold products stemming from lower incidence of cough cold throughout the E.U. compared to the prior year, as well as an unfavorable impact of 1.5% from divested businesses and exited product lines. These were partially offset by improved supply of key products, including the Physiomer®brand;
•Pain & Sleep-Aids:Net sales of $235.4 million increased 6.0%, inclusive of a 4.0% favorable effect of currency translation, due primarily to restored supply of the Solpadeine®brand;
•Healthy Lifestyle:Net sales of $231.5 million increased 2.5%, inclusive of a 0.6% favorable effect of currency translation, due primarily to new products in the Jungle Formula®franchise;
•VMS: Net sales of $161.2 million decreased 7.1%, inclusive of a 3.9% favorable effect of currency translation, due primarily to reduced strategic focus on nutraceutical products within the category;
•Women's Health: Net sales of $143.5 million increased 8.0%, inclusive of a 4.2% favorable effect of currency translation, due primarily to market share gains in ellaOne®;
•Oral Care: Net sales of $97.5 million decreased 2.0% inclusive of a 3.9% favorable effect of currency translation, due primarily to lower net sales of store brand products; and
•Digestive Health and Other:Net sales of $102.7 million decreased 23.2%, inclusive of a 2.1% favorable effect of currency translation, due primarily to the divestiture of the Rare Diseases Business, partially offset by higher net sales of store brand digestive health products.
Operating income decreased $333.8 million, or 317.9%, due to:
•$23.8 million decrease in gross profit due primarily to the impact of divested businesses and exited products of $41.6 million, lower global OTC sales volumes, and unfavorable costs of goods sold inflation. These factors were partially offset by $27.4 million from favorable currency translation, new products, strategic pricing actions, and benefits from the Supply Chain Reinvention Program. Gross profit as a percentage of net sales decreased 110 basis points compared to the prior year due to the same factors that impacted gross profit; and
•$310.0 million increase in operating expenses driven by the $407.1 million goodwill impairment charge.
Unallocated Expenses
Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded in Operating income on the Consolidated Statements of Operations. Unallocated expenses were as follows (in millions):
| Year Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| $ | 224.3 | $ | 262.1 | |||||
The decrease of $37.8 million in unallocated expenses during the year ended December 31, 2025 compared to the prior year period was due primarily to lower variable employee expenses, as well as lower restructuring costs associated primarily with Project Energize.
Interest expense, net, Other (income) expense, net and Loss on extinguishment of debt (Consolidated)
| Year Ended | |||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Interest expense, net | $ | 162.5 | $ | 187.8 | |||||||
| Other (income) expense, net | $ | 13.2 | $ | (0.9) | |||||||
| Loss on extinguishment of debt | $ | - | $ | 6.7 | |||||||
Perrigo Company plc - Item 7
Unallocated, Interest, Other, and Taxes
Interest Expense, net
The $25.3 million decrease during the year ended December 31, 2025 compared to the prior year was due primarily to the absence of interest expense associated with the de-designation of interest rate swap agreements in the prior year and a decrease in interest expense associated with a decrease in outstanding borrowings under our Senior Secured Credit Facilities.
Other (Income) Expense, net
The $14.1 million decrease in income during the year ended December 31, 2025 compared to the prior year was due primarily to unfavorable changes in revaluation of foreign currency contracts associated with the planned divestiture of the Dermacosmetics Business, the absence of prior year gain recognized on the sale of the Rare Diseases Business, and the loss recognized on the sale of the Richard Bittner Business.
Loss on extinguishment of debt
The $6.7 million loss on extinguishment of debt during the year ended December 31, 2024 was primarily related to the unamortized fees associated with the partial payment on the Term Loan B Facility (refer to Item 8. Note 13).
Income Taxes (Consolidated)
The effective tax rates were as follows:
| Year Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| (8.0) | % | (99.3) | % | |||||
The effective tax rate on the pre-tax loss for the year ended December 31, 2025 decreased when compared to the effective tax rate on the pre-tax loss for the year ended December 31, 2024, primarily due to the impact of the One Big Beautiful Bill Act ("OBBBA") in 2025 and the net impact of an intercompany intellectual property sale in 2024, offset by the establishment of a full valuation allowance in the United States and the impact of the goodwill impairment charges in 2025.
On July 4, 2025, the OBBBA was signed into law. The OBBBA includes significant changes to federal tax law and permanently extends or modifies various provisions from the 2017 Tax Cuts and Jobs Act, including, but not limited to, deductions for federal bonus depreciation, domestic research and development expenditures, and certain changes, some taxpayer-favorable and others not, for determining the limitation on business interest expense. We evaluated the OBBBA provisions enacted and determined they resulted in a tax benefit of $21.7 million for 2025, primarily due to the increased realizability of deferred tax assets associated with interest expense carryforwards following the restoration of depreciation and amortization in the Section 163(j) business interest expense limitation calculation. The remaining provisions of the OBBBA have multiple effective dates, with certain provisions effective in 2025 and others implemented over subsequent years. We are not anticipating the remaining provisions of the OBBBA to have a material effect on our consolidated financial statements.
We evaluate our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. Due to the weight of objectively verifiable negative evidence, we believe it is more likely than not that our U.S. federal and state deferred tax assets will not be realized as of December 31, 2025.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
Overview
We finance our operations with internally generated funds, supplemented by credit arrangements with third parties and capital market financing. We routinely monitor current and expected operational requirements and financial market conditions to evaluate other available financing sources including term and revolving bank credit and securities offerings. In determining our future capital requirements, we regularly consider, among other factors,
Perrigo Company plc - Item 7
Financial Condition, Liquidity and Capital Resources
known trends and uncertainties, such as the geopolitical environment, inflation and interest rates, the status of material contingent liabilities, financial market volatility, tariffs and potential tariff and trade policies and other uncertainties. Subject to relevant restrictions under our debt agreements, our cash requirements for other purposes and other factors management deems relevant, we may from time to time use available funds to redeem, repurchase or refinance our debt in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms we deem appropriate (which may be below par).
Based on the foregoing, management believes that our operations and borrowing resources are sufficient to provide for our short-term and long-term capital requirements, as described below. However, an adverse result with respect to our appeal of any material outstanding tax assessments or litigation, including securities or drug pricing matters and product liability cases, damages resulting from third-party claims, and related interest and/or penalties, could ultimately require the use of corporate assets to pay such assessments, and any such use of corporate assets would limit the assets available for other corporate purposes. As such, we continue to evaluate the impact of the above factors on liquidity and may determine that modifications to our capital structure are appropriate if market conditions deteriorate, favorable capital market opportunities become available, or any change in conditions relating to the war in Ukraine and conflicts in the Middle East, a government shutdown in the United States or elsewhere, inflation and interest rates, the status of material contingent liabilities, financial market volatility, tariffs, potential tariff and trade policies or other uncertainties have a material impact on our capital requirements.
Cash and Cash Equivalents
| Year Ended | |||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
|
Cash and cash equivalents
|
$ | 531.6 | $ | 558.8 | |||||||
|
Working capital(1)
|
$ | 1,043.7 | $ | 915.3 | |||||||
(1)Working capital represents current assets less current liabilities, excluding cash and cash equivalents, excluding assets and liabilities held for sale and excluding current indebtedness.
Cash, cash equivalents, cash flows from operations, and borrowings available under our credit facilities are expected to be sufficient to finance our liquidity and capital expenditures in both the short and long term. Although our lenders have made commitments to make funds available to us in a timely fashion under our revolving credit agreements and overdraft facilities, if economic conditions worsen or new information becomes publicly available impacting the institutions' credit rating or capital ratios, these lenders may be unable or unwilling to lend money pursuant to our existing credit facilities. Should our outlook on liquidity requirements change substantially from current projections, we may seek additional sources of liquidity in the future.
Cash Flows
The following table includes summarized cash flow activities:
| Year Ended | |||||||||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | $ Change | ||||||||||||||
| Net cash from operating activities | $ | 238.5 | $ | 362.9 | $ | (124.4) | |||||||||||
| Net cash (for) from investing activities | (75.4) | 78.8 | (154.2) | ||||||||||||||
| Net cash for financing activities | (220.5) | (611.0) | 390.5 | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 32.5 | (23.2) | 55.7 | ||||||||||||||
|
Net decrease in cash and cash equivalents
|
$ | (24.9) | $ | (192.5) | $ | 167.6 | |||||||||||
Net cash from Operating Activities
The $124.4 million decrease in operating cash inflow was primarily driven by a decrease in cash flow from the change in net earnings after adjustments for items including impairment, depreciation and amortization, and restructuring.
Perrigo Company plc - Item 7
Financial Condition, Liquidity and Capital Resources
Net cash (for) from Investing Activities
The $154.2 million decrease in cash from investing cash flow was due primarily to the absence of the proceeds from the sale of the Rare Diseases and Hospital & Specialty Businesses and the six branded products in the prior year period. These were partially offset by the absence of the settlement of foreign currency derivatives in the prior year period, as well as net proceeds received in the current period related to the sale of the Richard Bittner Business.
Capital expenditures totaled $93.4 million in 2025. We anticipate 2026 capital expenditures to be between $90 million and $130 million, depending on project timelines related to manufacturing productivity and efficiency upgrades, software and technology initiatives, and general facility maintenance. We expect to fund these estimated capital expenditures with funds from operating cash flows.
Net cash for Financing Activities
The $390.5 million increase in financing cash flow was due primarily to larger one-time payments in the prior year period on the Senior Secured Credit Facilities compared to the current year, partially offset by the prior year period issuance of the 2032 Notes. Additionally, we increased our dividend payment by $6.8 million compared to the prior year.
Share Repurchases
In October 2018, our Board of Directors authorized up to $1.0 billion of share repurchases with no expiration date, subject to the Board of Directors' approval of the pricing parameters and amount that may be repurchased under each specific share repurchase program. We did not repurchase any shares during the year ended December 31, 2025or December 31, 2024. The future repurchase of shares, if any, is subject to the discretion of our Board of Directors.
Dividends
In January 2003, the Board of Directors adopted a policy of paying quarterly dividends. We paid dividends as follows:
| Year Ended | |||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||
| Dividends paid (in millions) | $ | 159.3 | $ | 152.5 | |||||||
| Dividends paid per share | $ | 1.16 | $ | 1.10 | |||||||
The declaration and payment of dividends, if any, is subject to the discretion of our Board of Directors and will depend on our earnings, financial condition, availability of distributable reserves, capital and surplus requirements, and other factors our Board of Directors may consider relevant.
Borrowings and Capital Resources
Note Issuances
On September 17, 2024, Perrigo Finance issued the 2032 Notes as defined in Item 8. Note 13. The 2032 Notes are fully and unconditionally guaranteed on a senior unsecured basis by Perrigo and its subsidiaries that provide guarantees under Perrigo's Senior Secured Credit Facilities (as defined below). Net proceeds from the 2032 Notes were used to prepay a portion of the Term Loan B Facility (as defined below) on September 19, 2024 and the remaining proceeds were used to fund the redemption of $700 million of the 4.375% Notes due 2026 on October 2, 2024. As a result of the redemption, we recognized an extinguishment loss of $6.7 million during the prior year.
Credit Agreements
On April 20, 2022, we and our indirect wholly-owned subsidiary, Perrigo Investments, LLC (the "Borrower") entered into the senior secured credit facilities, which consisted of (i) a $1.0 billion five-year revolving credit facility (the "Revolver"), (ii) a $500.0 million five-year Term Loan A facility (the "Term Loan A Facility" and the Term A Loans thereunder, the "Term A Loans"), and (iii) a $1.1 billion seven-year Term Loan B facility (the "Term Loan B Facility" and the Term B Loans thereunder borrowed on April 20, 2022, the "2022 Term B Loans" and, together with the
Perrigo Company plc - Item 7
Financial Condition, Liquidity and Capital Resources
Revolver and Term Loan A Facility, the "Senior Secured Credit Facilities"), pursuant to a Credit Agreement (the "Credit Agreement").
On December 15, 2023, we and the Borrower entered into Amendment No. 1 and Incremental Assumption Agreement (the "Amendment") to the Credit Agreement. The Amendment provided for a fungible add on to the 2022 Term B Loans in an aggregate principal amount of $300.0 million (the "2023 Incremental Term B Loans"). The terms of the 2023 Incremental Term B Loans, including pricing and maturity, are identical to the 2022 Term B Loans. The net proceeds from the 2023 Incremental Term B Loans were used to settle the cash tender offer by Perrigo Finance for $300.0 million in aggregate principal amount of 3.900% Senior Notes due 2024 ("2024 Notes"). The tender offer was settled on December 15, 2023, and Perrigo Finance accepted for purchase $300.0 million of the 2024 Notes and paid approximately $295.1 million in aggregate cash consideration (excluding accrued interest).
On December 15, 2024, we and the Borrower entered into Amendment No. 2 to the Credit Agreement, which established a new tranche of loans under the Term B Facility (the "Term B Loans") and which refinanced all of the 2023 Incremental Term B Loans and the 2022 Term B Loans outstanding under the Credit Agreement in the aggregate amount of $984.7 million. The Term B Loans will mature on April 20, 2029. Refer to Item 8. Note 13.
Our short term debt as of December 31, 2025 of $36.6 million is comprised of (i) amortization payments for the Term A Loans and the Term B Loans and (ii) lease payments.
Term Loans and Notes
As of December 31, 2025 and December 31, 2024, we had $1,394.3 millionand $1,429.1 million, respectively, outstanding under ourTerm Loan A Facility and Term Loan B Facility.
The interest rate net of derivatives results in a fixed rate on a substantial portion of our long-term debt, the earliest of which matures in April 2027.
We are in compliance with all the covenants under our debt agreements as of December 31, 2025.
Loans under the Credit Agreement bear interest at a rate equal to, at the Borrower's option and depending on the currency borrowed, either the adjusted Term SOFR Rate, adjusted EURIBOR Rate, adjusted Daily Simple RFR or ABR (each as defined in the Credit Agreement), in each case, plus an applicable margin. Applicable margins and fees are outlined below:
| Applicable Margins | |||||||||||||||||
|
Term SOFR Rate, EURIBOR Rate and Daily Simple RFR
|
Prime Rate and Daily Simple RFR
|
Per Annum Commitment Fee(2)
|
|||||||||||||||
|
Term A Loans(1)
|
2.000% - 1.750% | 1.000% - 0.750% | - | ||||||||||||||
|
Term B Loans
|
2.000% | 1.000% | - | ||||||||||||||
|
Revolver(1)
|
2.000% - 1.375% | 1.000% - 0.375% | 0.250% - 0.175% | ||||||||||||||
(1) Applicable margins are dependent upon our total net leverage ratio
(2) Payable on the undrawn amount
The Credit Agreement is guaranteed by us and certain of our wholly-owned subsidiaries organized in the U.S., Ireland, Belgium, England and Wales (subject to certain exceptions) (the "Guarantor Subsidiaries" and together with the Company, the "Guarantors" and together with the Borrower, the "Loan Parties"). The Loan Parties' obligations under the Credit Agreement are secured, subject to customary permitted liens and other exceptions, by a security interest in all tangible and intangible assets of the Loan Parties, except for certain excluded assets. We may make voluntary prepayments at any time without payment of a premium or penalty, subject to certain exceptions, and are required to make certain mandatory prepayments of outstanding indebtedness under the Credit Agreement in certain circumstances. Principal repayments of the Term Loan B Facility, which are due quarterly, are equal to 1.0% per annum (adjusted, in the case of incremental loans, to enable fungibility), with any remaining balance payable on the maturity date. Principal repayments of the Term Loan A Facility, which are due quarterly, began in September 2022 and are equal to (i) for the first year anniversary of the Closing Date (as defined in the Credit Agreement), 2.5% per annum of the original principal amount of the Term Loan A Facility incurred and (ii) after the first year anniversary of the Closing Date, 5.0% per annum of the original principal amount of the Term Loan A Facility incurred, with any remaining balance payable on the maturity date. The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Borrower and
Perrigo Company plc - Item 7
Financial Condition, Liquidity and Capital Resources
its restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of junior indebtedness and dividends and other distributions. The Credit Agreement contains financial covenants that require the Borrower and its restricted subsidiaries to (a) not exceed a maximum first lien secured net leverage ratio of 3.00 to 1.00 at the end of each fiscal quarter and (b) not fall below a minimum interest coverage ratio of 3.00 to 1.00 at the end of each fiscal quarter, provided that such covenants apply only to the Revolver and the Term Loan A Facility. The Credit Agreement also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations. If we consummate certain qualifying acquisitions during the term of the loan, we can elect to increase the maximum first lien secured net leverage ratio to 3.25 to 1.00 for the quarter in which the acquisition occurs and the three following fiscal quarters thereafter.
Leases
We had $190.5 million and $195.1 million of lease liabilities and $179.3 million and $186.9 million of lease assets as of December 31, 2025 and December 31, 2024, respectively. For information on our operating and finance lease obligations and the amount and timing of future payments refer to Item 8. Note 9.
Available Resources
We have overdraft facilities available that we use to support our cash management operations. We report any balances outstanding in "Other Financing" in Item 8. Note 13. There were no borrowings outstanding under the overdraft facilities as of December 31, 2025 and December 31, 2024.
There were no borrowings outstanding under the Revolver as of December 31, 2025 or December 31, 2024. We are subject to certain financial covenants in the Revolver and Credit Agreement. As of December 31, 2025, we were in compliance with all such covenants under our debt agreements.
Credit Ratings
Our credit ratings on December 31, 2025 were Ba3 (stable), BB- (stable), and BB (stable), by Moody's Investor Services, S&P Global Ratings ("S&P"), and Fitch Ratings Inc. ("Fitch"), respectively. On December 12, 2025, Moody's Investor Services downgraded our issuer credit rating to Ba3 from Ba2 and adjusted the rating outlook to stable.
Due to the downgrade by Moody's Investor Services, the interest rate on the 3.150% Senior Notes due 2030 will increase from 4.900% to 5.150% for payments made after June 15, 2026. Interest rate adjustments for the 3.150% Senior Notes due 2030 are subject to a 2.0% cap above the original 3.150% interest rate, ensuring that the interest rate does not exceed the 5.150%. This adjustment is contingent upon certain rating events, as outlined in the Note's Supplemental Indenture No. 3, dated as of June 19, 2020, among Perrigo Finance Unlimited Company, Perrigo Company plc and Wells Fargo Bank, National Association, serving as trustee.
Credit rating agencies review their ratings periodically, and therefore, the credit rating assigned to us by each agency may be subject to revision at any time. Accordingly, there can be no assurance that our credit ratings will remain as disclosed above. Factors that can affect our credit ratings include, but are not limited to, changes in operating performance, the economic environment, our financial position, and changes in business strategy. If changes in our credit ratings were to occur, they could impact, among other things, future borrowing costs, access to capital markets, and vendor financing terms. A credit rating is not a recommendation to buy, sell or hold securities.
Guarantor Financial Information
As detailed in Item 8. Note 13, the Guarantor Subsidiaries and the Borrower provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 5.300% Notes due 2043 issued by the Company, and the Loan Parties provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 4.900% Notes due 2030, the 5.375% Euro Notes due 2032, the 6.125% USD Notes due 2032, and the 4.900% Notes due 2044 issued by Perrigo Finance.
Perrigo Company plc - Item 7
Financial Condition, Liquidity and Capital Resources
The guarantees of the Guarantor Subsidiaries, the Company and the Borrower are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The guarantees of the Guarantor Subsidiaries, the Company and the Borrower rank senior in right of payment to any future subordinated indebtedness of the Company, equal in right of payment with all of the Company's existing and future senior indebtedness and effectively subordinated to any of the Company's existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.
Basis of Presentation
The following tables include summarized financial information of the obligor groups of debt issued by Perrigo Finance and the Company. The summarized financial information of each obligor group is presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with U.S. GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.
The summarized balance sheet information for the consolidated obligor group of debt issued by Perrigo Finance and the Company is presented in the table below:
| Year Ended | |||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Current assets | $ | 1,919.1 | $ | 1,792.5 | |||||||
| Non-current assets | $ | 3,959.8 | $ | 4,284.5 | |||||||
| Current liabilities | $ | 720.6 | $ | 731.8 | |||||||
| Non-current liabilities | $ | 10,216.1 | $ | 12,144.5 | |||||||
| Due to non-guarantors | $ | 6,020.6 | $ | 8,131.3 | |||||||
The summarized results of operations information for the consolidated obligor group of debt issued by Perrigo Finance and the Company is presented in the table below:
| Year Ended | |||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Total revenues | $ | 3,064.7 | $ | 3,118.4 | |||||||
| Gross profit | $ | 911.8 | $ | 944.6 | |||||||
| Operating income (loss) | $ | (17.6) | $ | (27.8) | |||||||
| Net income (loss) | $ | 791.2 | $ | (147.5) | |||||||
| Revenue from non-guarantors | $ | 374.3 | $ | 529.3 | |||||||
| Operating expenses to non-guarantors | $ | (1.3) | $ | (1.8) | |||||||
| Other (income) expense to non-guarantors | $ | (1,072.1) | $ | (182.9) | |||||||
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Contractual Obligations
Our enforceable and legally binding obligations as of December 31, 2025 are set forth in the following table. Some of the amounts included in this table are based on management's estimates and assumptions about these obligations, including the duration, the possibility of renewal, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the enforceable and legally binding obligations actually paid in future periods may vary from the amounts reflected in the table (in millions):
Perrigo Company plc - Item 7
Financial Condition, Liquidity and Capital Resources
| Payment Due | |||||||||||||||||||||||||||||
| 2026 | 2027-2028 | 2029-2030 | After 2030 | Total | |||||||||||||||||||||||||
|
Short and long-term debt (1)
|
$ | 275.6 | $ | 837.2 | $ | 1,940.1 | $ | 1,905.8 | $ | 4,958.7 | |||||||||||||||||||
|
Finance lease obligations
|
2.1 | 3.6 | 3.3 | 5.7 | 14.7 | ||||||||||||||||||||||||
|
Purchase obligations (2)
|
275.2 | - | - | - | 275.2 | ||||||||||||||||||||||||
|
Operating leases (3)
|
31.5 | 55.1 | 36.3 | 85.3 | 208.2 | ||||||||||||||||||||||||
| Other contractual liabilities reflected on the consolidated balance sheets: | |||||||||||||||||||||||||||||
|
Deferred compensation and benefits (4)
|
- | - | - | 58.9 | 58.9 | ||||||||||||||||||||||||
|
Other (5)
|
125.9 | 47.1 | - | - | 173.0 | ||||||||||||||||||||||||
| Total | $ | 710.3 | $ | 943.0 | $ | 1,979.7 | $ | 2,055.7 | $ | 5,688.7 | |||||||||||||||||||
(1)Short-term and long-term debt includes interest payments, which were calculated using the effective interest rate at December 31, 2025.
(2)Consists of commitments for both materials and services.
(3)Used in normal course of business, principally for warehouse facilities and computer equipment.
(4)Includes amounts associated with non-qualified plans related to deferred compensation, executive retention and post-employment benefits. Of this amount, we have funded $35.3 million, which is recorded in Other non-current assets on the balance sheet. These amounts are assumed payable after five years, although certain circumstances, such as termination, would require earlier payment.
(5)Primarily includes consulting fees, legal settlements, restructuring accruals, insurance obligations, and electrical and gas purchase contracts, which were accrued in Other current liabilities and Other non-current liabilities at December 31, 2025 for all years.
We fund our U.S. qualified profit-sharing and investment plan in accordance with the Employee Retirement Income Security Act of 1974 regulations for the minimum annual required contribution and Internal Revenue Service regulations for the maximum annual allowable tax deduction. We are committed to making the required minimum contributions, which we expect to be approximately $37.9 million over the next 12 months. Future contributions are dependent upon various factors, including employees' eligible compensation, plan participation and changes, if any, to current funding requirements. Therefore, no amounts were included in the Contractual Obligations table above. We generally expect to fund all future contributions with cash flows from operating activities.
As of December 31, 2025, we had approximately $391.8 million of liabilities for uncertain tax positions, including interest and penalties. These liabilities have been excluded from the Contractual Obligations table above, and the related tax benefits have not been recognized, due to uncertainty as to the amounts and timing of settlement with taxing authorities.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which affect the reported earnings, financial position and various disclosures. Critical accounting estimates involve a significant level of uncertainty and could have a material impact on results. These estimates are based on judgment and available information. Actual results could differ materially from the estimates.
Income Taxes
We earn income in numerous countries and this income is subject to the laws of taxing jurisdictions within those countries. Significant judgement is required in determining our worldwide effective tax rate, provision for income taxes and recording the related deferred tax assets and liabilities. Our annual effective tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes. Also inherent in determining our annual effective tax rate are judgements and assumptions related to, among other things, the recoverability of certain deferred tax balances, primarily net operating loss and other carryforwards; our ability to uphold certain tax positions; adjustments to estimated taxes upon finalization of various tax returns; changes in available tax credits, grants and other incentives; changes in stock-based compensation expense; changes in U.S. GAAP; expiration of or the inability to renew tax rulings or tax holiday incentives; and the repatriation of earnings with respect to which we have not previously provided taxes. There are inherent uncertainties related to the interpretations of tax regulations in the jurisdictions in which we operate and our interpretation of transfer pricing standards. These judgments and estimates made at a point in time may change based on the outcome of tax audits and changes to, or further interpretations of, regulations. If such changes take place, there is a risk that our tax rate may increase or decrease in any period, which would impact our earnings. Future business results may affect deferred tax liabilities or the valuation of deferred tax assets over time. For the
Perrigo Company plc - Item 7
Critical Accounting Estimates
year ended December 31, 2025, we recorded a net increase in valuation allowances of $129.9 million primarily related to the change in realizability of our deferred tax assets in the U.S.
Additionally, the final determination with respect to any tax audit, and any related litigation, could be materially different from our estimates or from our historical income tax provisions and accruals. Future period earnings may also be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments. Refer to Item 8. Note 19for additional details on the Company's income taxes.
Legal Contingencies
We are involved in product liability, patent, commercial, regulatory and other legal proceedings that arise in the normal course of business. Other than loss contingencies that are assumed in business combinations for which we can reliably estimate the fair value, we record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range and no amount within that range is a better estimate, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. We evaluate our exposure to loss based on the progress of each contingency, experience in similar contingencies and consultation with our legal counsel and have established reserves for certain of our legal matters. We re-evaluate all contingencies as additional information becomes available and adjustments are made to ensure estimates reflect an accurate liability until the contingency in question is ultimately settled. We do not incorporate insurance recoveries into our reserves for legal contingencies. We separately record receivables for amounts due under insurance policies when we consider the realization of recoveries for claims to be probable, which may be different than the timing in which we establish the loss reserves. Given the uncertainties inherent in complex litigation and other contingencies, these evaluations can involve significant judgement about future events. The ultimate outcome of any litigation or other contingency may be material to our results of operations, financial condition and cash flows. At December 31, 2025 and 2024, the loss accrual for litigation contingencies reflected on the balance sheet in Other accrued liabilities was $59.0 million and $76.8 million, respectively. Refer to Item 8. Note 20for additional details on the Company's contingencies.
Acquisition Accounting
We account for acquired businesses using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the specifically identified assets is recorded as goodwill. If the acquired net assets do not constitute a business, or substantially all of the fair value is in a single asset or group of similar assets, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, acquired IPR&D with no alternative future use is charged to expense at the acquisition date.
Significant judgment is required in estimating the fair value of intangible assets and in assigning their respective useful lives. The acquired intangible assets can include customer relationships, trademarks, trade names, brands, developed product technology and IPR&D assets. For acquisitions accounted for as business combinations, IPR&D is considered to be an indefinite-lived intangible asset until the research is completed, at which point it then becomes a definite-lived intangible asset, or is determined to have no future use and is then impaired and charged to expense. There are several methods that can be used to determine the fair value of our intangible assets. We typically use an income approach to value the specifically identifiable intangible assets which is based on forecasts of the expected future cash flows. We have historically used a relief from royalty or multi-period excess earnings methodology. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management. We typically consult with an independent advisor to assist in the valuation of these intangible assets. Significant estimates and assumptions inherent in the valuations include discount rates, revenue growth assumptions and expected profit margins. We consider marketplace participant assumptions in determining the amount and timing of future cash flows along with the length of our customer relationships, attrition, product or technology life cycles, barriers to entry and the risk associated with the cash flows in concluding upon our discount rate. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, we may record adjustments to the purchase accounting. In addition, unanticipated market or macroeconomic events and circumstances may occur that could affect the accuracy or validity of the estimates and assumptions used at the time of the acquisition.
Our assessment as to the useful lives of intangible assets is based on a number of factors including competitive environment, market share, trademark, brand history, underlying product life cycles, operating plans and the
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Critical Accounting Estimates
macroeconomic environment of the countries in which the trademarked or branded products are sold. Determining the useful life of an intangible asset requires judgement, as different assets will have different useful lives or may even have an indefinite life. Definite-lived intangible assets are amortized to expense over their estimated useful life.
Goodwill
Goodwill represents amounts paid for an acquisition of a business in excess of the fair value of net assets received. We perform annual goodwill impairment testing on the first day of the fourth quarter, or more frequently if events suggest impairment may exist. During the fourth quarter, we observed a sustained decrease in share price, lower expected cash flows principally related to infant formula market dynamics and a change in expectations of the broader self-care market for both the Americas and International business, which we considered a triggering event. Therefore, we performed an impairment test as of December 31, 2025, in addition to our annual test performed as of September 28, 2025. As of December 31, 2025, we have two reporting units. Our CSCA operating segment is equivalent to our CSCA reporting unit, and our CSCI operating segment is equivalent to our CSCI reporting unit.
The test for impairment requires us to make several significant assumptions that impact our estimate of the fair value of a reporting unit, including the perpetual growth rate and discount rate. These assumptions are considered critical due to the sensitivity of changes in these assumptions to the related estimate of fair value. The discount rates used in testing each of our reporting units' goodwill for impairment during our testing were based on the weighted average cost of capital determined for each of our reporting units. In our impairment test as of December 31, 2025, discount rates ranged from 11.00% to 11.50%, and perpetual growth rates were 2.50%. In our annual impairment test as of September 29, 2024, discount rates ranged from 10.50% to 11.25%, and perpetual growth rates were 2.50%.
Our CSCA and CSCI reporting units had indications of potential impairment during the three months ended December 31, 2025, primarily driven by a sustained decrease in share price, lower expected cash flows principally related to infant formula market dynamics and a change in expectations of the broader self-care market for both the Americas and International business. We prepared quantitative analyses as of December 31, 2025 and determined the carrying value of the CSCA and CSCI reporting units exceeded their estimated fair value. We recognized a goodwill impairment of $917.1 million for CSCA, resulting in $1,168.8 million of goodwill in this reporting unit after the impairment and recognized a goodwill impairment of $407.1 million for CSCI, resulting in $881.3 million of goodwill in this reporting unit after the impairment. We continue to monitor the progress of our reporting units and assess them for potential impairment should impairment indicators arise, as applicable, and at least annually during our fourth quarter impairment testing.
The cash flow forecasts used for our reporting units include assumptions about future activity levels in the near term and longer-term. If growth in our reporting units is lower than expected, we may experience deterioration in our cash flow forecasts that may indicate goodwill in one or more reporting units is impaired in future impairment tests. An increase in the discount rate could negatively impact the estimated fair value of the reporting units and lead to future impairment. Furthermore, our estimates of fair value give consideration to the level of implied control premium, which is the amount a buyer is willing to pay over the current market price of a company (i.e. market capitalization) to acquire a controlling interest. We may experience further sustained decreases in our market capitalization which could imply an impairment of one or more of our reporting units.
The goodwill impairment that we recorded in the CSCA and CSCI reporting units during the fourth quarter of the year ended December 31, 2025 adjusted the carrying values of the reporting units to their estimated fair values. An increase in the discount rate over the next twelve months could negatively impact the estimated fair value of the reporting units and lead to a future impairment. Certain macroeconomic factors which are not controlled by the reporting units, such as rising inflation or interest rates, could cause an increase in the discount rate to occur. Deterioration in performance of our reporting units over the next twelve months, such as lower than expected revenue or profitability that has a sustained impact on future periods, could also represent potential indicators of impairment requiring further impairment analysis. We have experienced significant decreases in our market capitalization. Given the sensitivity of assumptions on control premium, further decreases in our market capitalization in the next twelve months, could represent a potential impairment indicator requiring further impairment analysis.
During the three months ending June 29, 2024, we recorded goodwill impairment charge of $22.1 million related to our now divested Rare Disease reporting unit. During the three months ended September 28, 2024, we recorded an impairment charge of $5.4 million for our CSCI reporting unit related to the now divested Hospital & Specialty
Perrigo Company plc - Item 7
Critical Accounting Estimates
disposal group. During the three months ending December 31, 2025 we recorded goodwill impairment charges of $1.3 billion for our CSCA and CSCI reporting units related to sustained decrease in share price, lower expected cash flows principally related to infant formula market dynamics and a change in expectations of the broader self-care market for both the Americas and International business. We continue to monitor the progress of our reporting units and assess them for potential impairment should impairment indicators arise, as applicable, and at least annually during our fourth quarter impairment testing.
See Item 8. Note 10and Note 11for further information.
In connection with the January 1, 2026 segment reorganization (seeItem 8. Note 22), the Company will change from two reporting segments to three reporting segments.
On reorganization, the Company is required to reallocate goodwill from its existing two reporting units to its six new reporting units. We are also required to determine the estimated fair values and reassign assets and liabilities to the respective reporting units. Even though the aggregate estimated fair value and carrying value of the Company's reporting units remains unchanged from December 31, 2025, the allocations to the new reporting units may occur disproportionately. Because the total reporting unit fair values were written down to their carrying values as of December 31, 2025, the new reporting units could inherently have carrying values that exceed their fair value after the reallocation.
As a result of the segment reorganization, we currently estimate that structural non-cash goodwill impairment charges may range up to $350 million and would be recognized in the first quarter of 2026.
Recently Issued Accounting Standards Pronouncements
See Item 8. Note 1for information regarding recently issued accounting standards.
Perrigo Company plc published this content on February 26, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 26, 2026 at 18:36 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]