Hendrickson named CEO of Perrigo as Papa resigns; Company downgrades guidance, citing issues in Europe

Hendrickson named CEO of Perrigo as Papa resigns; Company downgrades guidance, citing issues in Europe
John Hendrickson was named CEO of Perrigo Co. plc.

 

ALLEGAN — Perrigo Co. plc today quickly named John Hendrickson as chief executive officer following the resignation of Chairman and CEO Joe Papa.

The leadership change comes as Perrigo projects lower-than-expected earnings for the first quarter because of problems in Europe.

A 27-year veteran of the company who has served as president since October, Hendrickson takes over immediately following Papa’s departure Sunday to become CEO of Quebec-based Valeant Pharmaceuticals International Inc.

“John is an exceptional leader who is passionate about our mission, committed to our core values, and with his breadth of experience, is uniquely qualified to successfully lead Perrigo into the future,” Laurie Brlas, an independent director at Perrigo, said in a statement. Brlas was elected Perrigo’s board chair in the wake of Papa’s departure.

“He has made exceptional contributions to the business during his 27-year tenure, including leading our U.S. Consumer Healthcare business, and we are confident that he has the industry expertise and the operational track record to continue to drive growth,” Brlas said.

Hendrickson was named president of Perrigo last fall amid the successful effort to fend off hostile takeover bid by Mylan NV. He previously served as executive vice president of global operations and supply chain from 2006 to October 2015 and has held numerous other leadership positions, including running the U.S. Consumer Healthcare division from 2003 to 2006.

“I am privileged to have been chosen as the Chief Executive Officer to lead our great company forward. Perrigo’s long-tenured and cohesive leadership team has successfully positioned the company for a great future,” Hendrickson said this morning in a statement announcing the CEO succession. “As we implement our strategic plans across the organization, we are aware that we need to execute against our goals with a renewed sense of focus and operational discipline.”

In announcing the leadership change, Perrigo said it will release first quarter sales and earnings May 12. The company expects to report net sales $1.33 billion to $1.35 billion with adjusted earnings of $1.71 to $1.77 per diluted share.

Perrigo significantly lowered full-year earnings expectations to $8.20 to $8.60 per share. The lower guidance is “based on preliminary estimates” and compares to net income of $7.59 in 2015.

In reporting 2015 results in February, Perrigo projected 2016 net income of $9.50 to $9.80 per share. The company attributed the lower guidance to “pricing expectations in our Rx segment due to industry and competitive pressures in the sector.”

“The remainder of the reduction is primarily due to weaker-than-expected performance within the (branded consumer health care) segment for the next three quarters and lower expectations for consolidated new product launches,” Perrigo said in its statement.

The Dublin-based Perrigo, which maintains a headquarters in Allegan, also cited an impairment in the branded consumer health care division in Europe from the acquisition of Omega Pharma NV a year ago.

“The company is in the process of assessing whether and to what extent an impairment exists and expects to complete its assessment and determine any impairment by May 12,” the company said in a statement. “At this time, the company cannot estimate the range of the possible impairment and any such charges could be material and have a significant impact on the company’s financial results.”

Today’s announcement sent Perrigo’s share price falling. In pre-market trading, Perrigo shares were down more than 12 percent prior this morning’s market opening.