PBH Cuts FY2027 Outlook as Acquisitions Lift Q2 Revenue 23%

Prestige Consumer Healthcare (PBH) lowered its fiscal 2027 revenue, adjusted earnings and cash-flow outlook after reporting acquisition-led growth in the second quarter. Revenue rose 22.7% to $336.3 million, but organic revenue declined 1.6% because of sales timing, while the company expects lower second-half sales of Clear Eyes compared with the prior year.

PBH now expects fiscal 2027 revenue of approximately $1.28 billion to $1.29 billion, down from its previous range of $1.29 billion to $1.315 billion. Organic revenue is projected to be approximately flat, compared with the prior outlook for growth of about 1% to 3%. Excluding Clear Eyes, organic revenue is expected to increase about 2%.

The company also reduced its adjusted diluted earnings forecast to $4.48 to $4.55 per share from $4.55 to $4.65, citing the revenue adjustment and higher interest expense. Adjusted free cash flow is now expected to be at least $265 million, compared with the previous forecast of at least $270 million. PBH continues to expect a gross margin slightly above 57% and approximately $190 million of fiscal-year revenue from the Breathe Right and LaCorium acquisitions.

Acquisitions drive second-quarter growth

Revenue from acquisitions totaled $65.1 million in the quarter ended September 30, 2026. Excluding acquisitions and foreign-exchange effects, organic revenue was $271.2 million, down from $275.6 million a year earlier. The company attributed the decline to sales timing and said underlying consumption in its base business remained in line with expectations.

Growth during the quarter was led by TheraTears, Dramamine, Compound W and Hydralyte. PBH said the Breathe Right and LaCorium acquisitions were performing in line with its expectations. Operations related to Breathe Right were largely consolidated as of August, and the main integration is expected to be completed by the end of the fiscal third quarter, with additional synergies targeted over the following 12 to 18 months.

LaCorium, acquired on July 1 for approximately $150 million, expands PBH’s presence in Australian skin-care categories through brands including Dermal Therapy. Management plans to support the business with marketing and efficacy-focused product development, while also considering longer-term geographic expansion opportunities for Flexitol.

Adjusted gross margin increased to 57.7% from 55.3% a year earlier. Adjusted operating income rose 29.1% to $102.9 million, while adjusted EBITDA increased 30.1% to $113 million, lifting the adjusted EBITDA margin to 33.6% from 31.7%. Adjusted diluted EPS rose to $1.13 from $1.07.

On a GAAP basis, net income declined to $25.3 million from $42.2 million, and diluted EPS fell to $0.53 from $0.86. The company’s non-GAAP adjustments included an inventory fair-value step-up, costs associated with acquisitions and expenses related to remediation and idle capacity at the acquired Pillar5 manufacturing facility. Net interest expense increased to $30 million from $10 million.

For the first half, revenue increased 15% to $602 million, including about $71 million from acquisitions. Organic revenue grew 0.7%, supported by gains in North America, organic growth in the international segment and strong Hydralyte sales. E-commerce retail sales increased 14% from the prior-year period, with PBH citing investments in product-page content, media and online promotional events.

Cash flow and Clear Eyes supply remain priorities

First-half adjusted free cash flow fell 8% to $123 million because of working-capital timing. Net debt stood at $2.1 billion as of September 30 following the LaCorium transaction. The acquisition was financed with cash on hand and an incremental draw on a seven-year term loan. PBH also issued $400 million of eight-year unsecured notes in July to replace an upcoming maturity, leaving the company with no debt maturities until 2031.

Management said reducing leverage will be the primary use of free cash flow for the remainder of fiscal 2027.

PBH is also investing in Pillar5 to expand internal eye-care manufacturing capacity and improve the supply consistency of Clear Eyes. The company expects Clear Eyes revenue to remain below the prior-year level in the second half, making the timing, cost and effectiveness of the facility improvements important to its recovery plans.

Key uncertainties identified by the company include its ability to increase Clear Eyes supply while meeting regulatory and product-quality requirements, potential recalls or other supply disruptions, acquisition integration, inflation and tariffs, customer ordering patterns, foreign-exchange movements, competitive pressure, indebtedness and changes in interest rates.