Perrigo Q3 Sales, Adjusted EPS Fall as 2026 Outlook Is Revised

Perrigo said third-quarter 2026 sales and adjusted earnings declined as softer consumer demand, cautious retailer inventory positioning and unfavorable product mix weighed on results. The consumer self-care company also revised its full-year outlook to reflect the planned divestiture of its Infant Formula business, continued softness in Europe and retailers’ more measured inventory levels ahead of the cough-and-cold season.

Core net sales, which exclude Infant Formula and previously announced divestitures, fell 1.7% year over year to $908 million. Core organic sales declined 1.1%. On an all-in basis, net sales decreased 5.2% to $989 million, reflecting the same operating pressures as well as lower Infant Formula sales and divestitures.

Core adjusted diluted earnings per share fell 9% to $0.61 from $0.67 a year earlier. All-in adjusted EPS declined 25% to $0.60 from $0.80. Perrigo attributed the earnings pressure primarily to lower sales volumes, unfavorable mix and increased advertising and promotional spending, partly offset by cost savings, operational execution and lower tax expense.

Margins pressured despite sequential improvement

Core adjusted operating income decreased 14.4% to $130 million, while all-in adjusted operating income fell 25.5% to $129 million. Core adjusted gross margin contracted 140 basis points to 37.9%, and core adjusted operating margin declined 210 basis points to 14.3%.

All-in adjusted gross margin fell 360 basis points to 36.3%, while adjusted operating margin dropped 370 basis points to 13.1%. The all-in results also included planned under-absorption related to Infant Formula and the effects of divested operations.

Despite the year-over-year declines, Perrigo reported sequential improvement in its core business. Core net sales increased from $842 million in the first quarter and $907 million in the second quarter to $908 million in the third quarter. Core adjusted operating margin rose from 12.8% in the first quarter and 13% in the second quarter to 14.3%.

The company said category conditions also improved sequentially during 2026, although consumption remained a headwind. Its Operational Enhancement Program generated $42 million of savings through the first nine months, and Perrigo remains on track to deliver approximately $60 million to $80 million of savings for the full year.

Share gains offset weaker consumption and inventory pressure

Self Care sales were affected by softer category consumption and lower retailer inventory ahead of the cough-and-cold season. Specialty Care benefited from strength in Women’s Health, but that momentum was offset by lower volumes of store-brand and contract-manufactured Minoxidil.

Perrigo nevertheless gained share in several priority areas. U.S. store-brand over-the-counter volume grew 2% in the third quarter, compared with 0.6% growth for the relevant categories, lifting the company’s volume share by 30 basis points. Women’s Health, cough-and-cold, smoking cessation, pain and sleep aids, digestive health and allergy products recorded volume growth and share gains, while Skin Health and oral electrolytes declined and lost share.

Key European brands increased value sales by 6.5% in the latest available three-month period and gained 80 basis points of value share, despite continued softness in the broader European business.

E-commerce also represented a larger part of Perrigo’s U.S. operations. It accounted for 22% of U.S. volume year to date, up from 19% in 2025, while the company said its U.S. e-commerce share exceeded its share across the broader measured retail market.

Infant Formula sale advances portfolio simplification

After the quarter ended, Perrigo agreed to divest its Infant Formula business for $40 million in upfront cash and as much as $135 million in contingent payments tied to performance milestones through 2030. The transaction is part of the company’s effort to become a simpler, more focused consumer self-care business. Its strategic review of Oral Care remains underway.

Perrigo ended the quarter with $437 million of cash. Third-quarter operating cash flow was $96 million, while capital expenditures totaled $18 million and dividend payments were $40 million. Management said its capital-allocation priorities include supporting sustainable growth, reducing total debt and net leverage, and maintaining financial flexibility.

Full-year outlook revised

For 2026, Perrigo now expects core reported net sales to decline 3.6% to 2.5%, compared with its previous range of a 3% decline to 1% growth. Core organic net sales are expected to decrease 3.8% to 2.7%.

The company forecasts a core adjusted gross margin of 37.5% to 38.5% and a core adjusted operating margin of 14% to 15%. Core adjusted diluted EPS is expected to be $2.15 to $2.35, compared with the prior range of $2.25 to $2.55.

The updated all-in outlook, which no longer includes Infant Formula following its classification as discontinued operations, calls for reported net sales to decline 5.7% to 4.6%. Perrigo expects an all-in adjusted gross margin of 37.8% to 38.8%, an adjusted operating margin of 14.3% to 15.3%, and adjusted diluted EPS of $2.25 to $2.45. The outlook assumes an exchange rate of approximately $1.12 per euro.

Execution of the Infant Formula divestiture remains subject to closing conditions and required third-party approvals. Perrigo also identified supply-chain disruption, tariffs and changing trade relations, currency and interest-rate fluctuations, pricing pressure, competition, regulatory uncertainty, product recalls, geopolitical conflicts and the execution of its restructuring and portfolio initiatives among the factors that could affect its results.