• Delivered first quarter 2017 GAAP ("reported") net sales of $1.2 billion, led by consumer-facing businesses net sales of $958 million
• Realized first quarter reported net income of $72 million and reported earnings per share ("EPS") of $0.50
• Achieved adjusted net income of $150 million and adjusted diluted EPS of $1.05
• First quarter cash flow from operations was $195 million; cash flow from operations of 272% as a percentage to net income and 130% as a percentage to adjusted net income
• CHCI profit improvement plan yielding positive results

Outlook:

• The Company expects calendar year 2017 reported diluted EPS to be in the range of $1.82 to $2.17 and reaffirms adjusted diluted EPS to be in the range of $4.15 to $4.50

Perrigo Company plc (NYSE; TASE: PRGO) today announced results for the first quarter ended April 1, 2017.

Perrigo CEO John T. Hendrickson commented, "I am pleased that our consolidated first quarter 2017 top and bottom line results were consistent with our plan, with our operations continuing to deliver strong cash flow conversion. I continue to anticipate 2017 will be a year of execution to reestablish our foundation, with a projected return to consolidated growth in 2018. First quarter CHC International GAAP operating margin was 0.1%. Our consumer-facing businesses delivered strong adjusted margins as actions we have taken in our CHC International segment resulted in adjusted operating margin expansion of 130 basis points to 13.8%. RX GAAP operating income was $88 million. RX adjusted operating income was roughly in line with last year, excluding Entocort® from both years, as our proactive approach to improve the cost structure in RX partially offset price erosion in the segment. Actions taken this quarter by the Perrigo leadership team to improve our cost structure have established a more efficient operating platform that enables margin expansion with new product launches. In addition, we continue to make progress on our debt pay down strategy. I am also pleased that with today's first quarter 2017 Form 10-Q filing, the Company is now up to date on filing its periodic reports with the Securities and Exchange Commission. We are capitalizing on our unique business model and focusing on Perrigo's core strengths in providing Quality Affordable Healthcare Products® to customers, patients and families around the globe."

Refer to Tables I - VII at the end of this press release for a reconciliation of non-GAAP adjustments to the current year and prior year periods and additional non-GAAP information. The Company's reported results are included in the attached Condensed Consolidated Statements of Operations and Balance Sheets.

First Quarter Results

Reported net sales for the first quarter of 2017 were $1.2 billion, a decrease of 11% from the prior year. The decrease was primarily due to lower year-over-year contributions from 1) net sales of existing products of $72 million 2) the U.S. Vitamin, Mineral, and Supplement (VMS) business of $47 million, which was sold in the third quarter of 2016, 3) the exit of the European distribution businesses of $38 million, 4) Entocort® of $25 million, 5) unfavorable foreign currency movements of $22 million, and 6) discontinued products of $13 million. These effects were partially offset by new product sales of $62 million.

Prior year first quarter adjusted net sales were $1.3 billion, which excluded $47 million of contributions from the U.S. VMS business. Excluding the year-over-year impact of the exited European distribution businesses, Entocort® and unfavorable foreign currency movements outlined above, net sales were lower by approximately 2%.

Reported net income was $72 million, or $0.50 per share versus a net loss of $529 million, or $3.70 per share, in the prior year. Excluding charges as outlined in Table I at the end of this release, first quarter 2017 adjusted net income was $150 million, or $1.05 per share, versus adjusted net income of $189 million, or $1.32 per share for the same period last year.

Segment Results

Reported net sales in the CHCA segment were lower by 9% primarily due to the sale of the U.S. VMS business in the third quarter of 2016, which was included in the prior year. Reported net sales for the first quarter were $583 million compared to prior year adjusted net sales of $592 million, a decrease of 1% on a constant currency basis. Cough and cold sales were higher in the quarter due to the relatively more severe cough and cold season versus the prior year and new product sales of $25 million were driven by continued strong net sales of the store brand version of Flonase®. These positive drivers were more than offset by lower sales of existing products of $28 million primarily in the antacids, smoking cessation and infant nutrition categories, along with discontinued products of $5 million.

The CHCA segment achieved first quarter reported gross profit margin of 32.3%, an increase of 160 bps over the prior year, and an adjusted gross profit margin of 34.5%, which was consistent with the prior year. Contributions from new products and supply chain and manufacturing efficiencies were balanced against price erosion in certain OTC categories.

Reported operating margin was 12.9%. Adjusted operating margin of 20.2% was consistent with the prior year.

Reported net sales decreased 15% compared to the first quarter of 2016, and net sales on a constant currency basis declined 10%. Excluding year-over-year contributions of $38 million from the exited unprofitable European distribution businesses and unfavorable foreign currency movements of $20 million, net sales decreased approximately 2%. A decrease in net sales of existing products of $19 million primarily due to lower sales in Germany and Belgium, and discontinued products of $8 million were offset partially by new product sales of $20 million.

First quarter reported gross margin was 45.2%. Adjusted gross margin was 50.7%, an increase of approximately 240 bps over the previous year as the Company exited the unprofitable distribution businesses and realized benefits from insourcing production of certain products. These benefits were partially offset by lower net sales in Germany and Belgium and the unfavorable effects of foreign currency in the quarter.

Reported operating margin was 0.1% compared to (90.2)% in the previous year primarily due to impairments of $404 million realized in 2016. Adjusted operating margin was 13.8%, an improvement of 130 bps, due to the improvement of gross profit margin and lower operating expenses as a result of cost improvement initiatives across the business and better alignment of promotional investments with sales.

Reported net sales in the first quarter were $217 million, a 12% decrease compared to last year due primarily to lower Entocort® net sales year-over-year of $25 million and lower sales of existing products of $22 million, due primarily to price erosion, both of which were consistent with our expectations. Partially offsetting these declines were $17 million in new product sales.

First quarter reported gross margin was 44.3% and adjusted gross margin was 54.4%. These gross margin decreases were primarily due to Entocort® competition and price erosion.

Reported operating margin of 40.5% included approximately $22 million of income related to the sale of certain Abbreviated New Drug Applications, partially offset by restructuring charges of approximately $6 million related to the specialty pharma sales force. Adjusted operating margin was impacted primarily due to Entocort® competition, as base price erosion was largely offset by the proactive approach to restructure the specialty pharma sales force.

Guidance

The Company continues to expect calendar 2017 net sales to be in the range of $4.6 billion to $4.8 billion. Calendar 2017 GAAP diluted EPS is expected to be in the range of $1.82 to $2.17 and the Company continues to expect adjusted diluted EPS to be in the range of $4.15 to $4.50, including contributions from the Israel API business and excluding the charges outlined in Table I at the end of this release.

Conference Call

The Company will host a conference call at 8:30 a.m. ET (5:30 a.m. PT), May 31, 2017. The conference call will be available live via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID #26810305. A taped replay of the call will be available beginning at approximately 12:00 p.m. (ET) Wednesday, May 31 until midnight Friday, June 9, 2017. To listen to the replay, dial 800-585-8367, International 404-537-3406, and use access code #26810305.