Perrigo Company’s (NYSE:PRGO) first-quarter 2016 earnings of $1.75 per share beat the Zacks Consensus Estimate of $1.73. Reported earnings, however, fell 5% from the year-ago figure.
Net sales in the reported quarter soared 32% to $1.38 billion, beating the Zacks Consensus Estimate of $1.35 billion.
Quarter in Detail
Perrigo reports revenues primarily from the following segments: Consumer Healthcare, Branded Consumer Healthcare (created as a result of the Mar 2015 Omega Pharma acquisition), Prescription (Rx) Pharmaceuticals, Specialty Sciences, and Other (which include the active pharmaceutical ingredients business).
We note that Perrigo is currently pursuing the sale of its Vitamins, Minerals and Supplements (VMS) business within the Consumer Healthcare segment. The first quarter of 2016 and 2015 net sales from the VMS business were $47 million and $38 million, respectively.
Excluding net sales contribution from VMS, adjusted net sales in the reported quarter came in at $1.34 billion, an increase of 32% from the year-ago period and 33% on a constant currency basis. It benefited from the inclusion of the Branded Consumer Healthcare segment and growth in Consumer Healthcare segment (excluding net sales from VMS). Also, the company benefited from new product sales, partially offset by absence of sales from discontinued products.
Consumer Healthcare: Perrigo reported adjusted Consumer Healthcare net sales in the first quarter of $653 million, up 1% from the year-ago period and 2% on a constant currency basis.
Revenues were driven by new product sales and an increase in existing product revenues (primarily in the infant formula and smoking cessation categories, offset partially by decreases in the analgesics and cough & cold categories mainly due to the extremely mild cough/cold season). These increases were offset partially by absence of sales from discontinued products.
Branded Consumer Healthcare: The company reported net sales of $318 million, which included new product sales as well as contributions from the GlaxoSmithKline plc (NYSE:GSK) portfolio and Yokebe acquisitions. Reported sales were however down 2.4% sequentially.
Rx Pharmaceuticals: The Rx Pharmaceuticals segment performed encouragingly during the quarter, with net sales rising 2% to $257 million driven by new product sales and from sales related to recent product acquisitions, partially offset by a decrease in sales of existing products.
Specialty Sciences: Segmental revenues comprised royalties of $88 million received by Perrigo on net sales of Biogen Inc.’s (NASDAQ:BIIB) multiple sclerosis drug Tysabri, up 7% year over year. Unfavorable foreign currency movements hurt revenues by $1 million.
Others accounted for the remaining revenues.
2016 Earnings Outlook Reaffirmed
Perrigo maintained its earnings guidance for 2016 that was provided late last month. The company continues to expect 2016 earnings in the range of $8.20 to $8.60 per share, representing year-over-growth of 8–13%. The Zacks Consensus Estimate for earnings is $8.45 per share.
Our Take
Perrigo’s first-quarter results were better than expected with the company beating on both top-and bottom-line estimates. We are pleased with the performance of the Consumer Healthcare, Branded Consumer Healthcare, Rx Pharmaceuticals and Specialty Sciences segments. We are also positive on the company’s focus on acquisition-driven growth. Moreover, the company’s restructuring plans to boost shareholder value look encouraging.
Perrigo is a Zack Rank #5 (Strong Sell). ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) is a better-ranked stock in the health care sector, sporting a Zacks Rank #1 (Strong Buy).
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