Perrigo Reports Third Quarter 2026 Financial Results From Continuing Operations

Perrigo posts weaker Q3 results and sells Infant Formula business for up to $175 million.

What the company is saying

Perrigo frames its third quarter as a period of sequential improvement in areas it controls, despite reporting lower sales and margins. Interim CEO Albert Manzone highlights market share gains in U.S. store brand OTC and key European brands, crediting innovation and marketing for these advances. The company positions the divestiture of its Infant Formula business as a strategic move to simplify its portfolio, sharpen focus on higher-return self-care categories, and improve margins while reducing future capital expenditures. Management attributes the declines in sales and profitability to lower consumption in self-care, more cautious retailer inventory ahead of cough and cold season, softness in Europe, and lower contract manufacturing volumes. The company acknowledges the impact of divestitures and planned under absorption in Infant Formula, and adjusts its full-year outlook to reflect these realities. The tone is measured, with an emphasis on long-term positioning and operational discipline, while also noting ongoing strategic review of the Oral Care business.

What the data suggests

All In net sales for Q3 2026 were $989 million, down 5.2% year-over-year, while Core net sales fell 1.7% to $908 million. Reported gross margin dropped 370 basis points to 32.4%, and reported operating margin fell 460 basis points to 2.3%. Reported diluted EPS swung from $0.09 to a loss of $(0.10). All In adjusted diluted EPS was $0.60, down 25% from $0.80, and Core adjusted EPS was $0.61, down 9% from $0.67. Segment results show declines in Self Care (net sales down 3.2%, adjusted operating income down 19.4%), Specialty Care (net sales down 4.6%, adjusted operating income down 24.2%), and Infant Formula (net sales down 9.6%, adjusted operating income negative). Net cash from operating activities was $96 million, with $18 million in capex and $40 million returned to shareholders. The company holds $437 million in cash and $3.3 billion in debt. The announced sale of the Infant Formula business is for up to $175 million ($40 million upfront, $135 million contingent on milestones through 2030), with an expected impairment loss of $275–$375 million in Q4. Updated 2026 guidance lowers EPS expectations, with All In adjusted EPS now $2.25–$2.45 and Core $2.15–$2.35. The data show a clear deterioration in performance, with management’s explanations focused on external demand softness, inventory caution, and divestiture impacts.

Analysis

The announcement is factual and measured, with no evidence of exaggerated or promotional language. The majority of the content is focused on realised financial results for Q3 2026, which show clear deterioration in sales, margins, and earnings. Forward-looking statements are limited to the expected impairment loss from the Infant Formula divestiture and updated EPS guidance for fiscal 2026, both of which are standard disclosures in a quarterly update. The divestiture agreement is a realised milestone, though most of the consideration is contingent and long-dated. There is no attempt to overstate the benefits or downplay the negative trends; the tone remains neutral and transparent. No large new capital outlay is announced, and the impairment is a non-cash charge. The gap between narrative and evidence is minimal, with the company openly acknowledging both challenges and strategic actions.

Risk flags

• ●Operational performance is deteriorating, with declines in sales, margins, and earnings across key segments. This trend, if sustained, could undermine the company’s ability to deliver on its profitability and deleveraging goals.
• ●The divestiture of the Infant Formula business includes $135 million in contingent consideration tied to net sales milestones through 2030, introducing uncertainty around the total proceeds ultimately received.
• ●A significant impairment loss of $275–$375 million is expected in Q4 2026, which will impact reported earnings and may affect investor perception of management’s capital allocation decisions.
• ●High leverage remains a concern, with total debt at $3.3 billion and net leverage targeted at 4.0x adjusted EBITDA, limiting financial flexibility if operating trends do not improve.
• ●The ongoing strategic review of the Oral Care business introduces additional uncertainty regarding future portfolio composition and potential further restructuring or asset sales.

Bottom line

Perrigo’s Q3 2026 results show weakening fundamentals, with lower sales, margins, and earnings across most segments. The sale of the Infant Formula business is a major portfolio move, but most of the $175 million consideration is contingent and long-dated, and the company will book a substantial impairment loss in Q4. Management’s narrative of portfolio focus and operational discipline is credible in its acknowledgment of challenges, but the numbers point to ongoing headwinds and limited near-term upside. High leverage and continued softness in core markets add to the risk profile. Investors should watch for the realization of contingent proceeds from the divestiture, evidence of margin improvement, and updates on the Oral Care review. The most important takeaway is that while Perrigo is taking steps to simplify and refocus, the core business is under pressure and the benefits of these actions will take time to materialize.

Announcement summary

(NYSE: PRGO) Perrigo Company plc announced financial results from continuing operations for the third quarter ended September 26, 2026. The company reported All In net sales of $989 million, a 5.2% decrease year-over-year, and Core net sales of $908 million, down 1.7%. All In reported gross margin was 32.4%, down 370 basis points, and reported operating margin was 2.3%, down 460 basis points. Reported diluted EPS was $(0.10) compared to $0.09 in the prior year. All In adjusted diluted EPS was $0.60, a 25.0% decrease from $0.80 in the prior year, while Core adjusted EPS was $0.61, down 9.0% from $0.67. Organic net sales for All In were $994 million, down 1.9%, and for Core were $913 million, down 1.1%. Segment net sales for the quarter were: Self Care $613 million (down 3.2%), Specialty Care $182 million (down 4.6%), Infant Formula $81 million (down 9.6%), and All Other $113 million (down 13.1%). Segment adjusted operating income was: Self Care $105 million (down 19.4%), Specialty Care $32 million (down 24.2%), Infant Formula $(1) million, All Other $27 million (up 18.4%), and consolidated adjusted operating income was $129 million (down 25.5%). Net cash from operating activities was $96 million, capital expenditures were $18 million, and $40 million was returned to shareholders through dividends. Cash and cash equivalents as of September 26, 2026 were $437 million, and total debt was $3.3 billion. The company announced an agreement to divest its Infant Formula business for up to $175 million, consisting of $40 million upfront and up to $135 million contingent on net sales milestones through 2030. Perrigo expects to recognize an impairment loss between $275.0 million and $375.0 million related to the divestiture. The company updated its fiscal 2026 outlook: All In adjusted EPS is expected to be $2.25 to $2.45, and Core adjusted EPS $2.15 to $2.35. Other assumptions for 2026 include net interest expense of approximately $162 million, adjusted effective tax rate of approximately 14.0%, adjusted weighted average shares outstanding of approximately 140 million, net leverage of approximately 4.0 times adjusted EBITDA, and cash from operating activities as a percentage of adjusted net income in the low-to-mid-60% range. The company’s strategic review of its Oral Care business remains ongoing. The Infant Formula business will be reported as discontinued operations beginning with the fourth quarter and full-year 2026 reporting.

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