Perrigo Company (PRGO) Q2 2026 Earnings Report

The call balanced clear operational progress and strategic actions against ongoing top-line and margin pressures. Positive indicators include market share gains, substantial service-level improvements, a recovering Infant Formula business (+23% sales, +$60M operating income), acceleration of a scalable innovation pipeline, targeted cost-savings ($80–$100M program) and the use of $359M divestiture proceeds to reduce debt. Offsetting these positives were a 3%+ decline in net sales, 250 basis points of gross margin compression, notable retailer destocking (≈1.8% headwind), specialty segment weakness and an expected ~$0.60 EPS headwind in 2026 from under-absorption. Management maintained full-year guidance and emphasized that results are weighted to a stronger second half, signaling cautious optimism but acknowledging remaining execution and demand risks.

Perrigo reiterated its full‑year 2026 outlook — maintaining Core and all‑in net sales, margin and EPS guidance and noting results are weighted to the second half — and said second‑half improvement is expected from innovation, distribution and demand‑generation, easing category comparisons and operational actions; Q2 metrics included Core net sales down 3.1% (Core organic -3.5%) and all‑in net sales down 3.2%, Core adjusted EPS $0.46 and all‑in adjusted EPS $0.50, Core adjusted gross margin down 250 bps to 37% (all‑in gross margin 35.6%), Core adjusted operating margin 13% (down 160 bps) and all‑in operating margin 12.2% (down 60 bps), while Infant Formula grew 23% and its operating income improved ~ $60M, Self‑Care all‑in operating income fell $15M (16.2%) and Specialty Care operating income declined ~$18M (~28%); management warned planned under‑absorption will negatively affect 2026 all‑in EPS by ~ $0.60 (with $0.26 in Q1 and $0.18 in Q2 recognized), but expects partial reduction in the second half plus benefits from an $80–100M operational enhancement program (by 2027), lower interest from applying the $359M Dermacosmetics proceeds mostly to debt (total divestiture proceeds since 2024 ≈ $600M), Q2 cash from operations $83M, CapEx $14M, dividends returned $40M, cash $400M, total debt $3.3B, updated diluted shares ~139.6M and a lowered full‑year effective tax rate estimate to ≈18% (from ≈20%), noting one‑time Q2 benefits of roughly $10M tariff recovery and $6M CEO‑transition OpEx.