Perrigo Q3 2026: EPS Beat Masks a Lowered Full-Year Outlook

Perrigo's adjusted EPS of $0.60 beat the $0.52 consensus estimate, but investors should know exactly what drove it. About $0.10 of that beat came from an unusually low adjusted effective tax rate, while the quarter also absorbed roughly $0.12 of planned under-absorption within the Infant Formula segment. Strip those two items out and the underlying result looks much closer to expectations.

Revenue of $988.6 million came in missing expectations against the $995.9 million consensus and fell 5.2% year over year. Retailers pulled back on stocking ahead of cough and cold season, particularly in Upper Respiratory and Pain and Sleep categories, which weighed on Core net sales. Softer European consumer demand added further pressure, and every reporting segment declined, with the All Other segment falling 13.1% and Infant Formula dropping 9.6%.

The clearest strategic development came after the quarter closed: Perrigo agreed to sell its Infant Formula business for up to $175 million, structured as $40 million upfront plus up to $135 million in contingent payments tied to net sales milestones through 2030. CEO Albert Manzone described the deal as an important step in evolving Perrigo into a more focused consumer self-care company, one expected to enhance margins, reduce future capital expenditures, and support continued deleveraging. Investors will want to keep an eye on the stock in Q4, though, because the sale is expected to trigger an impairment loss of $275 million to $375 million on Infant Formula held-for-sale measurement.

Management trimmed the full-year Core adjusted EPS guidance range to $2.15 to $2.35, down from a prior range of $2.25 to $2.55, and guided Core net sales growth to negative 3.6% to negative 2.5% for the year. The company cited the divestiture, more measured retailer inventory positioning, and continued European softness as the drivers of the revision. Net leverage sits at approximately 4.0 times adjusted EBITDA on total debt of $3.3 billion, so the deleveraging narrative tied to the Infant Formula sale carries real balance-sheet significance.

On the positive side, Perrigo reported market share gains in U.S. store brand OTC and in key European brands, with Women's Health a bright spot led by ellaOne share gains and continued Opill growth. Operating cash flow of $96 million represented an 86% improvement year over year, and capital expenditures of $18 million were down nearly 18%, consistent with management's cost discipline message. The Operational Enhancement Program also contributed savings during the quarter.