Perrigo Company plc (NYSE:PRGO) ('Perrigo' or 'the Company') announced that it is initiating a strategic review of its infant formula business. The review will assess a full range of alternatives. This review is aligned with Perrigo's 'Three-S' (Stabilize, Streamline, Strengthen) plan and reflects the Company's commitment to disciplined capital allocation and supporting improved return on invested capital and total shareholder return.
It will focus on a combination of accelerating cash flows and reassessing the Company's previously announced investment in this business of $240 million, while optimizing portfolio impact and focus. The infant formula business in 2025 is expected to generate net sales of approximately $360 million, or approximately 90% of Perrigo's global Nutrition category, equating to less than 10% of Perrigo's annual net sales. It has stabilized operations, is producing quality assured formula and remains the only large-scale U.S. store brand and contract manufacturer with a meaningful near-term innovation pipeline.
Perrigo will continue to serve parents and caregivers with safe, affordable infant formula throughout the review process. President and CEO Patrick Lockwood-Taylor commented, 'This proactive review is about discipline and ensuring the Company's portfolio is best positioned for sustainable growth and free cash flow generation. While our infant formula operations have stabilized, the external environment has quickly changed, making a fit with our consumer health OTC businesses less strategic.
Whatever path we choose, our corporate priorities are clear: reduce leverage, sustain our dividend policy, continue to deliver on customer partnerships and sharpen focus on our high-potential OTC portfolio to reach more consumers and drive household penetration.'No decision has been made, there is no definitive timetable for completing the strategic review, and there is no assurance the review will result in any changes or a transaction. The Company will not provide further updates unless and until it determines that further disclosure is appropriate or required based on then-current facts and circumstances.
