Perrigo (PRGO) Financials

Over the last four years, Perrigo (NYSE:PRGO) has shown a mixed financial performance with some signs of revenue pressure, increasing expenses, and ongoing profitability challenges, but also maintaining substantial asset bases and continuing dividend payments.

Revenue and Profitability Trends:

• Operating revenue has generally remained above $1 billion per quarter, demonstrating stable but slightly fluctuating sales volumes.
• Gross profit margins have been relatively steady, with quarterly gross profit hovering around $350 million to $430 million, indicating consistent cost control in production and sales.
• Net income has been negative in most quarters since mid-2022, with significant losses in Q2 and Q3 2024 (over $100 million losses) and continuing negative trends into 2025.
• Operating expenses, including selling, general & administrative (SG&A) and marketing costs, have increased in recent quarters, with SG&A reaching above $130 million and marketing expenses rising over $170 million in some quarters, pressuring operating income.
• Research and development expenses (R&D) have been stable in the $25 million to $32 million range, indicating sustained investment in product development.
• Restructuring charges and impairment expenses have appeared intermittently, adding to operating expenses and reflecting ongoing business adjustment costs.
• Interest and investment income/expense have shown sizeable negative amounts (e.g., interest expense around $40-43 million, and notable negative investment income), affecting overall profitability.

Cash Flow and Financial Health:

• Depreciation and amortization expenses are consistently high (around $80 million per quarter), which is a non-cash charge helping provide tax benefits and reflecting ongoing capital investments.
• Operating cash flow has fluctuated greatly, with positive inflows in some quarters (e.g., $312 million in Q4 2024), but also large negative outflows (e.g., -$64.5 million in Q1 2025), showing volatility in cash generation.
• Capital expenditures remain steady around $20-$30 million quarterly, resulting in consistent cash outflows for property, plant, and equipment.
• Investing activities have included acquisitions and disposals but not at scale sufficient to markedly change asset base recently.
• Financing activities have mostly involved repayment of debt and dividend payments, with repayments increasing dramatically in some quarters (e.g., over $1 billion paid down in Q4 2024), putting pressure on liquidity.
• The company’s cash and equivalents declined substantially from above $1.4 billion in Q3 2024 to about $410 million by Q1 2025, raising potential liquidity concerns.

Balance Sheet Analysis:

• Total assets remain strong at nearly $10 billion by Q1 2025, supported by significant goodwill and intangible assets (over $5.8 billion combined), underscoring Perrigo’s investment in acquisitions and brand value.
• Current assets include a large inventory base (~$1.15 billion), which requires careful management to avoid obsolescence or write-downs.
• Total liabilities remain high at around $5.4 billion, with long-term debt constituting a significant portion (~$3.6 billion), which implies ongoing financial obligations and interest costs.
• Shareholders’ equity is around $4.3 billion, moderately down from prior quarters due to losses, but still provides a cushion relative to liabilities.
• Dividend payments have remained steady at $0.27 to $0.29 per share per quarter, representing a continuing commitment to shareholder returns despite earnings challenges.

Summary:

Perrigo has sustained stable revenue levels and consistent gross profits, but profitability has been under significant pressure, with net losses seen frequently in the recent year. Increasing operating expenses and financing costs, along with heavy debt repayments, have strained cash flow and liquidity. The company's large asset base and commitment to dividends present stability, but ongoing restructuring charges and impairments suggest the company is still undergoing significant transformation. Retail investors should watch for improvements in net income and operating cash flow, as well as further balance sheet strengthening, as key indicators for a potential turnaround.