Inve US ▾
PRPRGO

Perrigo (PRGO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Aug 5, 2026

Source: earnings call transcript

Executive summary

Perrigo Q2 FY26 — Market Share Gains Amidst Category Softness, Outlook Reaffirmed

Perrigo's Q2 FY26 results reflect a period of leadership transition and strategic execution, with Interim President and CEO Albert Manzone reaffirming commitment to the company's mission. Despite continued category softness and retailer destocking, the company demonstrated strong operational progress, achieving market share gains in both the U.S. and Europe. The Three-S plan (Stabilize, Streamline, Strengthen) is driving improvements, and the full-year outlook remains reaffirmed, with expectations for a stronger second half driven by innovation and demand generation.

Highlights

5

  • U.S. store brand OTC volumes grew 1.5% in categories declining 1.1%, leading to a 50 basis points market share gain.

  • European key brands grew 3.3% in categories declining 0.6%, resulting in a 50 basis points market share gain.

  • The Dermacosmetics divestiture generated $359 million in proceeds, primarily applied to debt reduction.

  • Infant Formula operating income improved by approximately $60 million year-over-year.

  • The operational enhancement program is on track to deliver $80 million to $100 million in savings by 2027.

Concerns

5

  • Core net sales declined 3.1% year-over-year.

  • Core organic net sales declined 3.5% year-over-year.

  • Retailer inventory reductions impacted sales by approximately 1.8%.

  • Core adjusted gross margin declined 250 basis points to 37%.

  • Core adjusted operating margin decreased 160 basis points to 13%.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Outlook (Core and all-in net sales, margin, EPS)
Reaffirmed
high materiality
High
Full-year 2026 Effective Tax Rate
Approximately 18%
medium materiality
High
Full-year 2026 Diluted Shares Outstanding
139.6 million shares
medium materiality
High
Full-year 2026 All-in EPS Impact from Planned Under-absorption
Approximately $0.60
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Self-Care
Operating income declined 16.2%, driven by lower net sales volumes, planned under-absorption from lower prior year sales, unfavorable mix, retailer inventory reductions in Europe, and a slower start to summer categories. Partially offset by operational enhancement program benefits.
———Declined $15M
Specialty Care
Operating income decreased around 28%, primarily due to lower profitability in Skin Health (slower summer, retailer inventory reductions, lower Minoxidil sales) and higher advertising and promotional investment for H2 growth initiatives, including Opill marketing. Also impacted by planned under-absorption.
Declined modestly——Decreased $18M
Infant Formula
Net sales grew 23% year-over-year, driven by timing of contract sales and growth in store brand formula. Operating income improved significantly due to capacity rationalization, improved efficiency, business stabilization, and lapping prior year production variability.
—23%—Improved by ~$60M
All Other
Operating income was consistent, driven by the net recognition of a $10 million tariff recovery and improved profitability in Oral Care, offsetting the impact of the Dermacosmetics divestiture.
———Consistent with prior year

Product announcements

ProductTypeDetails
Opillmilestone
Compeedexpansion
Store brand allergy businessmilestone

Deals & partnerships

Undisclosed Sale of Dermacosmetics business $359M

Divestiture of the Dermacosmetics business, generating significant upfront proceeds used to reduce debt.

Risks & headwinds

Uncertain consumer and economic environment Ongoing

Not quantified

Mitigation:Executing on controllable factors like market share gains, streamlining portfolio, and debt reduction.

Continued category softness Q2 FY26, expected to improve in H2

U.S. categories declined 1.1% in volume; Europe category value declined 0.6%

Mitigation:Expect category trends to keep improving as comparisons ease through the year; focus on innovation and demand generation.

Retailer inventory reductions Q2 FY26, most notably in Europe

Impacted sales by approximately 1.8%

Mitigation:Expected to subside as the company moves into the second half of the year.

Inflation and affordability concerns for consumers Second half of the year

Not quantified

Mitigation:Focusing on providing quality, affordable self-care products and partnering with retailers.

Planned under-absorption stemming from lower prior year sales volumes FY26

Unfavorable all-in EPS impact of approximately $0.60 in FY26 ($0.26 in Q1, $0.18 in Q2)

Mitigation:Partial reduction of under-absorption expected in the second half.

Macroeconomic pressures Ongoing, particularly in Europe

Not quantified

Mitigation:Taking a measured approach for the balance of the year, focusing on clear, quantifiable drivers for H2 improvement.

What to watch in Q3 FY26

Infant Formula strategic review outcome

Next quarter
Current Under review
Target Update on optimization, partnership, or divestiture

Why it matters

The outcome of this review will significantly impact portfolio focus and shareholder value.

With regard to our reviews that are going on, they are all proceeding well, and we will update you as soon as we have something to say.

Find out whether PRGO delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you provide an update on the infant formula strategic review, its progress, and timing for further updates?

The strategic reviews are proceeding well, and the company will provide updates as soon as information is available. The improved performance of the Infant Formula business provides more optionality for the review.

“With regard to our reviews that are going on, they are all proceeding well, and we will update you as soon as we have something to say.”

asked by Ethan Brown · answered by Albert Manzone

2 min read 5 chapters

Detailed narrative

Leadership Transition and Strategic Focus

Albert Manzone assumed the role of Interim President and CEO, emphasizing his commitment to Perrigo's mission and re-earning investor confidence. Having served on the Board since 2022, he brings over three decades of consumer business leadership experience. The Board was also strengthened with two new directors, Salman Amin and Omer Gajial, to guide value creation. Manzone highlighted the company's unique position as a leader in U.S. store brand OTC and European branded OTC, serving consumers across various price points.

Progress on the Three-S Plan

Perrigo reported continued progress on its 'Three-S' plan: Stabilize, Streamline, and Strengthen. Stabilization efforts have significantly improved service levels, with U.S. levels up 1,600 basis points to 91% and international levels up 1,000 basis points to 95% since 2023. Streamlining included $600 million in divestiture proceeds since 2024, mainly for debt reduction, and an operational enhancement program targeting $80 million to $100 million in savings by 2027. Strategic reviews for Infant Formula and Oral Care are ongoing to optimize, partner, or divest.

Market Dynamics and Share Gains

While overall consumption remains below historical averages, market trends improved sequentially through Q2 and into Q3. U.S. OTC volumes in Perrigo's categories turned positive in the four weeks ended July 19. Despite category softness, particularly in seasonal segments like cough, cold, pain, and allergy, Perrigo gained 50 basis points of market share in U.S. store brand OTC (volumes grew 1.5% in categories declining 1.1%) and 50 basis points in Europe (key brands grew 3.3% in categories declining 0.6%).

Q2 Financial Performance Overview

Core net sales declined 3.1% year-over-year, and Core organic net sales declined 3.5%, primarily due to category softness and retailer inventory reductions impacting sales by approximately 1.8%. All-in net sales declined 3.2%, with strong 23% growth in Infant Formula partially offsetting the Dermacosmetics divestiture. Core adjusted EPS was $0.46 and all-in adjusted EPS was $0.50, exceeding expectations due to one-time cost benefits, including a $10 million tariff recovery and a $6 million CEO transition benefit.

Strategic Reviews and Capital Allocation

Strategic reviews for Infant Formula and Oral Care are progressing, with management emphasizing a disciplined approach focused on enhancing shareholder value. The Infant Formula business has seen improved stability and efficiency through capacity rationalization and innovation. The company remains focused on strengthening its balance sheet and de-leveraging, applying Dermacosmetics proceeds to debt reduction. Capital allocation priorities include growth investments, debt reduction, and shareholder returns, with the dividend assessed quarterly.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.