Perrigo Reports Record Third Quarter Highlighted By 10% Organic Net Sales Growth

DUBLIN, Oct. 22, 2015 /PRNewswire/ --

Third Quarter Calendar Year 2015* Highlights:

• Delivered record third quarter net sales of $1.34 billion, comprised of $977 million from consumer-facing businesses
• Grew net sales by 41%, highlighted by organic net sales of $95 million, an increase of 10% from the prior year on a constant currency basis
• Adjusted net income increased 38% to a record $258 million, with adjusted diluted earnings per share of $1.76, up 26%
• Achieved record third quarter adjusted gross margin of 49% and record third quarter adjusted operating margin of 27%
• Reported third quarter GAAP net income of $113 million and GAAP diluted earnings per share of $0.77 with GAAP gross margin of 41% and GAAP operating margin of 14%
• Announced $2.0 Billion Share Repurchase Plan, including $500 Million in Q4 2015 that is Incremental to 2016 EPS Forecast of $9.30 per share
• Perrigo narrows full year 2015 adjusted EPS guidance range to $7.65 - 7.85, excluding the benefits from Share Repurchase Plan

*As previously disclosed, the Company is changing its fiscal year end from June to December 31.

Perrigo Company plc (NYSE: PRGO; TASE) today announced results for the third calendar quarter ended September 26, 2015.

Perrigo’s Chairman and CEO Joseph C. Papa commented, “The team delivered record third quarter performance. Looking at the results, net sales grew 44%, highlighted by consolidated organic growth of 10%, and Consumer Healthcare (“CHC”) growth of 8%, on a constant currency basis. Our world-class supply chain team demonstrated their expertise once again, helping to deliver CHC adjusted operating margin growth of 590 basis points over the prior year. The Rx segment continues its track record of impressive quarterly growth as net sales increased 34% versus last year. We continue to execute on our ‘Base Plus Plus Plus’ strategy, closing three acquisitions in the quarter that will build upon our global platform, as well as a licensing agreement this month that will give us new capabilities in the development of a portfolio of over-the-counter (OTC) extended release suspension products. Our durable business model and future growth prospects are self-evident as we continue to deliver value for our shareholders and provide “Quality Affordable Healthcare Products^®" to our customers and patients worldwide.”

Refer to Tables I, II, III and IV at the end of this press release for a reconciliation of non-GAAP adjustments to the current year and prior year periods and additional non-GAAP information. The Company’s reported results are summarized in the attached Condensed Consolidated Statements of Operations.

**This press release contains non-GAAP measures. The reconciliation of these measures to the most comparable GAAP measures is included at the end of this press release. As a part of these non-GAAP measures, we report sales performance using the financial measure of “constant currency”. We believe this provides meaningful information to assist our shareholders in understanding our financial results and true operational performance by assuming that foreign exchange rates had not changed between the prior and current period. The comparisons presented at constant currency reflect current year results translated at the prior year’s exchange rates. This includes the royalty revenue related to Biogen Inc.'s sales of its Multiple Sclerosis drug Tysabri^® included in the Specialty Sciences Segment.

Third Calendar Quarter Results

Net sales in the quarter were $1.34 billion, an increase of 41% on a reported basis. On a constant currency basis, net sales in the quarter increased 44% over the third quarter of 2015, attributable primarily to $302 million related to the inclusion of the Branded Consumer Healthcare (“BCH”) segment, 34% growth in the Rx segment and 8% growth in the CHC segment on a constant currency basis. New product sales were $114 million driven by $84 million from legacy Perrigo and a $31 million contribution from BCH. This increase was offset partially by $54 million in discontinued products. Net sales were impacted by $22 million of unfavorable foreign currency movements.

Excluding charges as outlined in Table I at the end of this release, third quarter calendar year 2015 adjusted net income increased 38% to $258 million or $1.76 per diluted share versus $1.40 for the same period last year.

Segment Results

Consumer Healthcare

Net sales were $675 million, an 8% increase on a constant currency basis, reflecting new product sales of $65 million and an increase in sales of existing products of $49 million (primarily in the gastrointestinal, infant formula and cough/cold categories). These increases were offset by discontinued products of $52 million, a decline of $27 million in existing products (primarily in animal health, diabetes and analgesics). Net sales were impacted by $14 million of unfavorable foreign currency movements.

Record adjusted gross profit margin of 36% increased 440 basis points compared to last year primarily due to product mix and manufacturing efficiencies.

Adjusted operating income of $139 million improved $45 million, or 48%, compared to the prior year due to higher gross profit contribution and relatively lower operating expenses compared to last year.

Branded Consumer Healthcare

Net sales of $302 million included new product sales of $31 million. Third calendar quarter adjusted gross profit percent to sales was 56% and adjusted operating income was $44 million, or 15% of sales.

Rx Pharmaceuticals

Net sales of $260 million, an increase of 34% over the prior year, were driven by an increase in existing products of $47 million and new product sales of $18 million.

Adjusted operating income of $110 million improved $28 million, or 34%, compared to the prior year, even after making enhanced R&D investments on new product development and investments in the specialty pharmaceuticals sales force.

Specialty Sciences

The Company recognized $85 million of royalty revenue related to Biogen Inc.'s global sales of its Multiple Sclerosis drug Tysabri^®. Net sales included $6 million in unfavorable foreign currency movements.

Actions to Deliver Shareholder Value Far Superior to Mylan Offer, Including a $2 billion Share Repurchase Plan

The Company today separately announced actions to drive substantial profit growth in calendar year 2016 and beyond. Please refer to the press release titled “Perrigo Taking Actions To Deliver Shareholder Value Far Superior to Mylan Offer” in the investor relations sections on www.perrigo.com for further information on calendar year 2016 guidance metrics and the benefits from the Share Repurchase Plan.

Non-GAAP guidance for calendar 2015 excludes, among other items listed on Table I, restructuring and unusual litigation charges, as well as costs associated with an unsolicited offer to acquire the Perrigo Company plc by Mylan N.V. (“Mylan”) and costs associated with the initiatives announced today in a separate press release. At this time, a reconciliation to GAAP for these measures for calendar 2015 is impracticable to provide given the uncertainty and potential variability of these items. The unavailable reconciling items could significantly impact the Company’s financial results.

A conference call will begin at 8:00 a.m. (ET) live via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID #54344799. A taped replay of the call will be available beginning at approximately 4:00 p.m. (ET) on October 22, 2015 until midnight on November 6, 2015.

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