Perrigo Completes Divestment of HRA Pharma Rare Diseases Business
Perrigo Company plc (NYSE PRGO), a leader in Consumer Self-Care Products, has finalized the sale of its HRA Pharma Rare Diseases business to Esteve Healthcare for a total of up to €275 million. The deal includes an upfront cash payment of €190 million with adjustments, and potential earnout payments of up to €85 million based on sales milestones. Proceeds are expected to be used for debt repayment. In 2023, the divested business generated €50 million in net sales and €20 million in adjusted EBITDA. This transaction was anticipated in Perrigo's 2024 financial outlook.
- Perrigo secured up to €275 million from the divestment.
- Received €190 million upfront cash payment.
- Potential to earn up to €85 million in milestone payments.
- Proceeds to be used for debt repayment.
- Divested business generated €50 million in net sales and €20 million in adjusted EBITDA in 2023.
Perrigo's divestment of the HRA Pharma Rare Diseases business to Esteve Healthcare for up to
From a financial health perspective, this move is aligned with Perrigo's strategic focus on its core Consumer Self-Care Products segment. Reinforcing this focus can potentially lead to a more streamlined business model and improved operational efficiency. The divestment allows Perrigo to redeploy resources towards operations that have better growth prospects and higher margins.
However, it's important to note that the HRA Pharma Rare Diseases business achieved net sales of approximately
Overall, this transaction is likely positive for Perrigo in the short-term due to debt reduction, but the long-term impact will depend on how effectively the company reinvests the proceeds.
Divesting a rare diseases segment reflects Perrigo's decision to concentrate on its core strengths in Consumer Self-Care Products. This can be a strategic move to capture a larger share in a growing market. The Consumer Self-Care Products industry has been expanding, driven by increasing consumer awareness and preference for over-the-counter health solutions. By reallocating focus and resources, Perrigo may position itself better to capitalize on these trends.
However, the sale to Esteve Healthcare also indicates that the rare diseases segment, while profitable, might not align with Perrigo's long-term growth strategy. This could suggest that Perrigo sees more significant growth opportunities in other areas. Investors should watch for how Perrigo's market positioning evolves and whether the company makes any notable acquisitions or product innovations in the Consumer Self-Care space.
While this divestment could streamline operations, it’s important to monitor whether the projected debt repayment leads to tangible financial improvements. The move might make Perrigo more appealing to a specific investor demographic interested in consumer health trends.
The impact from this transaction was included in the Company's previously issued 2024 outlook. In 2023, the HRA Pharma Rare Diseases business delivered net sales of approximately
About Perrigo
Perrigo Company plc (NYSE: PRGO) is a leading provider of Consumer Self-Care Products and over-the-counter (OTC) health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed. Visit Perrigo online at www.perrigo.com.
Perrigo Forward-Looking Statements
Certain statements in this press release are "forward-looking statements." These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "forecast," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or the negative of those terms or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control, including: supply chain impacts on the Company's business, including those caused or exacerbated by armed conflict, trade and other economic sanctions and/or disease; general economic, credit, and market conditions; the impact of the wars in Ukraine and the
PERRIGO COMPANY PLC | ||||
RECONCILIATION OF NON-GAAP MEASURES | ||||
(in thousands) | ||||
(unaudited) | ||||
Twelve Months Ended | ||||
HRA Rare Diseases | December 31, 2023 | |||
Loss from continuing operations(1) | $ (84,097) | |||
Income tax expense(2) | 5,410 | |||
Interest expense, net | — | |||
Depreciation and amortization | 9,655 | |||
EBITDA | (69,032) | |||
Impairment charges | 89,978 | |||
Adjusted EBITDA | 20,946 | |||
(1) The Rare Diseases reporting unit was a fully integrated component of the CSCI segment, and as a result reported values were not separately tracked. Loss from continuing operations is estimated for this purpose as revenue less cost of goods sold (determined in each case in accordance with | ||||
(2) Calculation of the effective tax rate for the Rare Disease business is impractical. Accordingly, Income tax expense is estimated for this purpose based on the French corporate income tax rate in effect during the period, which we believe is a reasonable approximation of the effective tax rate that would be applicable to the business on a stand-alone basis. | ||||
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SOURCE Perrigo Company plc
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