Perrigo says supply chain, mild cold season hurt Q3 2021 numbers

Private label over-the-counter medicine producer Perrigo said that decreased sales numbers were due to a variety of factors.
Zachary Russell
Associate Editor
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Perrigo, a private label producer of self-care products and over-the-counter medicine, reported its Q3 numbers from 2021.

 The company said that the ongoing COVID-19 pandemic led to the “disappointing results.” The Ireland-based manufacturer is the largest over-the-counter manufacturer in the United States, serving over 9,000 own brand SKUs.

“Our disappointing third quarter results reflect the continuing impacts of the challenging operating environment caused by the global COVID-19 pandemic that began in 2020, have continued in 2021 and are not indicative of our future growth potential,” said Perrigo president and CEO Murray Kessler. “These challenges fall into three categories for Perrigo: a historically weak cough/cold season affecting first quarter sales and manufacturing efficiencies, higher input costs and the sudden supply chain disruption, primarily in the form of a shortage of truck drivers, which began in the third quarter. In combination, these factors are forecasted to negatively impact total year adjusted diluted EPS by $0.79, which could only be partially offset, leading us to lower our earnings guidance." 

Initiatives that the company touted include the closed sale of Rx business for $1.6 billion, the announced acquisition of HRA Pharma for €1.8 billion, settling a €1.6 billion Irish tax assessment for a net cash outlay of €266 million, and being awarded €355 million from a Belgium arbitration decision.

Perrigo third quarter net sales were $1.04 billion, an increase of 4.0%. Organic net sales growth was 2.6%, despite an increase in unfulfilled orders of 4.3 percentage points as a result of supply chain disruptions. 

Reported operating income for Q3 was $438 million in 2021, compared to $79 million in 2020. Adjusted operating income was $112 million in 2021 and $141 million in 2020, a decrease of $29 million, or 20.6%. This decrease was driven by lower operating efficiencies resulting from the weak 2020-2021 cold season, and higher materials and freight expenses. 

Reported net loss was $54 million, or $0.40 per diluted share, compared to net income of $26 million, or $0.19 per diluted share in the prior year period. Third quarter 2021 adjusted net income was $61 million, or $0.45 per diluted share, compared to $83 million, or $0.60 per diluted share, last year due to the aforementioned factors.

Perrigo year-to-date net sales were $3.03 billion, or flat, compared to the prior year period, including a negative impact of 3.4 percentage points from the lack of need for cold medicine. Unfulfilled orders due to supply chain disruptions depressed growth by 1.4 percentage points.