ALLEGAN — A sales spike in the early weeks of the COVID-19 pandemic followed by a mild flu season during lockdown restrictions reduced Perrigo Co. plc’s quarterly sales to start 2021.
Perrigo this morning said it generated $1.01 billion in sales for the first quarter, a 6.8-percent decline from the $1.06 billion in the same period of 2020.
The first quarter sales results aligned with Perrigo’s expectations and “were significantly distorted by COVID-related consumer pantry loading in the year-ago quarter.” Consumers stocked up on medications early in the pandemic, which was followed “by a historically weak cough and cold season this year,” President and CEO Murray Kessler said.
“Reported numbers this quarter don’t tell the real story,” Kessler told brokerage analysts in a conference call to discuss results. “Importantly, our business remains strong.”
Comparable sales for January and February of this year were up compared to 2020, but the increase was not enough to offset the effect of pandemic stockpiling in March of last year. Sales in March 2021 were off by 23 percent, “which pulled down the entire first quarter,” Kessler said.
Perrigo’s net income for the first quarter also declined to $38.1 million, or 28 cents per diluted share, from $106.4 million, or 77 cents per diluted share, in the same period a year ago.
The first quarter results exclude the Rx generic drug division that Perrigo is selling for $1.55 billion to New York-based private investment firm Altaris Capital Partners LLC. The division is now listed on the balance sheet as discontinued operations.
Sales for Perrigo should trend back to historically normal patterns in the second half of 2021, Kessler said. Perrigo, which is domiciled in Dublin, Ireland, but operated from Allegan, expects 3-percent organic annual sales growth this year. Adjusted for the sale of the Rx generic drug division and other factors, the company expects mid single-digit operating income and earnings per share growth for the year.
Kessler declared the three-year, $1 billion transformation strategy that Perrigo put in place two years ago as nearly complete with the pending sale of the generic drug division. The plan is ahead of schedule by a year and has transformed Perrigo into a “self-care” company primarily producing store-brand, over-the-counter medications for consumers.
“I believe Perrigo is at an inflection point right now,” Kessler said. “Perrigo is now a pure-play consumer self-care company.”
In the earnings release, Perrigo also said it signed a licensing agreement with Burt’s Bees for a line of organic baby formulas and “nature-based remedies” for children. Perrigo will bring its R&D, regulatory, and sales and marketing capabilities to the partnership with Burt’s Bees, whose branding will be on the products.
Over two years, Perrigo divested three business lines for $2 billion and made seven acquisitions, including the $750 million deal in 2019 for Grand Rapids-based Ranir Global Holdings LLC, a maker of oral care products. Proceeds from divestitures have gone to make bolt-on acquisitions.
Once the sale of the generic drug division closes, likely in the third quarter, Perrigo will have more than $2 billion available “to invest to further build our business,” Kessler said.
“We have made the necessary investments in infrastructure, capabilities, talent and capacity, and as a result have restored Perrigo to growth, all while weathering the storm of a horrific global pandemic,” Kessler said in the earnings statement. “From where I sit, Perrigo is re-born.”
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