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What changed in PERRIGO Co plc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PERRIGO Co plc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+420 added−433 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)

Top changes in PERRIGO Co plc's 2023 10-K

420 paragraphs added · 433 removed · 90 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

2 edited+119 added−136 removed0 unchanged
Biggest changeAlthough we believe our tax estimates are reasonable and our tax filings are prepared in accordance with applicable tax laws, the final determination with respect to any tax audit or any related litigation could be materially different from our estimates or from our historical income tax provisions and accruals.
Biggest changeAdditionally, the final determination with respect to any tax audit, and any related litigation, could be materially different from our estimates or from our historical income tax provisions and accruals. Future period earnings may also be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments. Refer to Item 8. Note 18 for additional details on the Company's income taxes.
In addition, an adverse result with respect to any of such matters could ultimately require the use of corporate assets to pay assessments and related interest, penalties, or other amounts, and any such use of corporate assets would limit the assets available for other corporate purposes.
However, an adverse result with respect to our appeal of any material outstanding tax assessments or litigation, including securities or drug pricing matters and product liability cases, damages resulting from third-party claims, and related interest and/or penalties, could ultimately require the use of corporate assets to pay such assessments, and any such use of corporate assets would limit the assets available for other corporate purposes.
Removed
Item 1. Business - Significant Customers . Additionally, if we are unable to maintain adequately high levels of customer service over time, customers may choose to assess penalties (where such penalties are contractually permitted), obtain alternate sources for products, and/or end their relationships with us.
Added
Item 1. Note 1 8 for additional information. On December 20, 2023 the IRS Examination Team confirmed its application of interest rates agreed with IRS Appeals to all remaining tax years with deductible interest expense relating to such intercompany debt.
Removed
Our businesses could be adversely affected by deteriorating economic conditions in the countries in which we operate, and our results may be volatile due to these or other circumstances beyond our control. Our customers could be adversely impacted if economic conditions worsen in the U.S. or other countries in which we operate.
Added
RESULTS OF OPERATIONS Currency Translation Currency translation effects described below represent estimates of the net differences between translation of foreign currency transactions into U.S. dollars for the year ended December 31, 2023 at the average exchange rates for the reporting period and average exchange rates for the year ended December 31, 2022. 39 Perrigo Company plc - Item 7 Consolidated CONSOLIDATED Consolidated Financial Results Year Ended (in millions, except percentages) December 31, 2023 December 31, 2022 Net sales $ 4,655.6 $ 4,451.6 Gross profit $ 1,680.4 $ 1,455.4 Gross profit % 36.1 % 32.7 % Operating income $ 151.9 $ 78.9 Operating income % 3.3 % 1.8 % Net sales increased $204.0 million, or 4.6%, primarily due to: • $195.9 million increase from our acquisitions, comprised of ten additional months of Gateway (acquired on November 1, 2022) inclusive of an unfavorable impact of $9.2 million from a voluntary product recall and four additional months of HRA Pharma (acquired on April 29, 2022) inclusive of an unfavorable impact of $19.8 million due to distributor transitions as part of the integration strategy to capture synergies from the acquisition of HRA Pharma; and • $73.8 million increase, or 1.7%, due primarily to approximately $209 million in strategic pricing actions and higher sales volume in the Skin Care, Healthy Lifestyle and Upper Respiratory product categories.
Removed
In the U.S., our consumer self-care business does not advertise our store brand products like national brand companies and thus is largely dependent on retailer promotional activities to drive sales volume and increase market share. If our customers do not have the ability to invest in store brand promotional activities, our sales may suffer.
Added
E-commerce and new products also contributed to category growth.
Removed
Additionally, while we actively review the credit worthiness of our customers and suppliers, we cannot fully predict to what extent they may be negatively impacted by slowing economic growth.
Added
The increase was partially offset by lower net sales stemming from the evolving FDA regulatory expectations for infant formula manufacturing, declines in legacy nutrition in the CSCA segment due primarily to purposeful SKU prioritization actions to focus capacity on higher margin products and $9.4 million due to distributor transition in addition to the impacts noted above; partially offset by • $49.9 million decrease from exited product lines and $19.3 million decrease from the divestitures of the Latin American businesses and ScarAway ® brand asset in the prior year.
Removed
Our stock price may decline due to any earnings release or guidance that does not meet market expectations or other circumstances beyond our control, such as the severity, length and timing of the cough/cold/flu and allergy seasons, the timing of new product approvals and introductions by us and our competitors, and the timing of retailer promotional programs.
Added
Operating income increased $73.0 million, or 92.5%, due to: • $225.0 million increase in gross profit driven by higher net sales flow through and the benefits from our supply chain reinvention program primarily within CSCA.
Removed
A cybersecurity breach, disruption or misuse of our information systems, or our external business partners’ information systems could have a material adverse effect on our business.
Added
These were partially offset by lower infant formula productivity within U.S. nutrition stemming from the evolving FDA regulatory expectations for infant formula manufacturing and unfavorable cost of goods sold inflation primarily in Europe.
Removed
Our business operations are increasingly dependent upon information technology systems that are highly complex, interrelated with our external business partners, and may contain confidential information (including personal data, trade secrets or other intellectual property, or proprietary business information).
Added
Gross profit as a percentage of net sales increased 340 basis points compared to the prior year driven by strategic pricing actions, benefits from purposeful SKU prioritization actions and higher margin new products.
Removed
The nature of digital systems, both internally and externally, makes them potentially vulnerable to disruption or damage from human error and/or security breaches, which include, but are not limited to, ransomware, data theft, denial of service attacks, sabotage, industrial espionage, interruptions or other system issues, unauthorized access and computer viruses.
Added
These positive initiatives were partially offset by higher cost of goods sold inflation in the E.U. and lower manufacturing productivity in U.S. nutrition. • $152.0 million increase in operating expenses due primarily to $90.0 million in goodwill impairment charges related to the Rare Diseases reporting unit in the CSCI segment, the acquisition of HRA Pharma and Gateway, and higher employee expenses, partially offset by decreased acquisition and integration expenses compared to the prior year period. 40 Perrigo Company plc - Item 7 CSCA CONSUMER SELF-CARE AMERICAS Segment Financial Results Year Ended (in millions, except percentages) December 31, 2023 December 31, 2022 Net sales $ 2,962.3 $ 2,925.9 Gross profit $ 908.4 $ 787.2 Gross profit % 30.7 % 26.9 % Operating income $ 389.6 $ 366.1 Operating income % 13.2 % 12.5 % Net sales increased $36.4 million, or 1.2% primarily due to: • $127.6 million increase from our acquisitions, comprised of ten additional months of Gateway (acquired on November 1, 2022) inclusive of an unfavorable impact of $9.2 million from a voluntary product recall and four additional months of HRA Pharma (acquired on April 29, 2022); partially offset by • $38.1 million decrease, or 1.3%, due primarily to lower net sales stemming from the evolving FDA regulatory expectations for infant formula manufacturing and declines in legacy nutrition due primarily to purposeful SKU prioritization actions to focus capacity on higher margin products, partially offset by approximately $100 million of strategic pricing actions in addition to new products; and • $32.5 million decrease from exited product lines and $19.3 million decrease from the divestitures of the Latin American businesses and the ScarAway ® brand asset in the prior year.
Removed
Such events may be difficult to detect, and once detected, their impact may be difficult to assess and address. Cyber-attacks have become increasingly common. We have experienced immaterial business disruption, monetary loss and data loss as a result of phishing, business email compromise and other types of attacks.
Added
CSCA net sales by product category were as follows: Sales Year Ended (in millions, except percentages) December 31, 2023 December 31, 2022 $ Change % Change Nutrition $ 563.2 $ 564.6 $ (5.4) (1.0) % Upper Respiratory 559.2 520.4 42.8 8.2 % Digestive Health 505.3 495.5 9.8 2.0 % Pain and Sleep-Aids 396.4 412.2 (15.8) (3.8) % Oral Care 313.9 312.9 1.0 0.3 % Healthy Lifestyle 311.7 288.9 22.8 7.9 % Skin Care 196.2 187.8 8.4 4.5 % Women's Health 46.9 45.2 1.7 3.8 % Vitamins, Minerals, and Supplements ("VMS") 17.5 27.9 (10.4) (37.3) % Other CSCA 52.0 70.5 (18.5) (26.2) % Total CSCA $ 2,962.3 $ 2,925.9 $ 36.4 1.2% Sales in each category were driven primarily by: • Nutrition: Net sales of $563.2 million increased 8.2% driven by the Gateway acquisition and strong growth in contract infant formula, partially offset by lower net sales in legacy infant formula and lower manufacturing productivity stemming from the FDA's evolving industry guidelines on infant formula manufacturing; • Upper Respiratory: Net sales of $559.2 million decreased 1.0% due primarily to lower net sales of allergy products driven by a weaker and later start to the allergy season compared to the prior year, a voluntary OTC product recall, the divested Latin American businesses and exited product lines.
Removed
While we continue to employ resources to monitor our systems and protect our infrastructure, these measures may prove insufficient, and that could subject us to significant risks, including, without limitation: 24 Perrigo Company plc - Item 1A Risk Factors • Ransomware attacks, other cyber breaches or disruptions that impair our ability to develop products, meet regulatory approval requirements or deadlines, produce or ship products, take or fulfill orders, and/or collect or make payments on a timely basis; • System issues, whether as a result of an intentional breach, a natural disaster or human error that damage our reputation and cause us to lose customers, experience lower sales volume, and/or incur significant liabilities; • Significant expense to remediate the results of any attack or breach and to ensure compliance with any required disclosures mandated by the numerous global privacy and security laws and regulations; and • Interruptions, security breaches, or loss, misappropriation, or unauthorized access, use or disclosure of confidential information, which, individually or collectively, could result in financial, legal, business or reputational harm to us and could have a material adverse effect on our business, financial condition and results of operations.
Added
These factors were partially offset by higher net sales of cough cold products, led by store brand Guaifenesin-based offerings, and the new product launch of store brand Cough Relief Liquid Honey ; 41 Perrigo Company plc - Item 7 CSCA • Digestive Health: Net sales of $505.3 million increased 2.0% due primarily to increased manufacturing capacity and demand for Polyethylene Glycol 3350 as well as new products, including Omeprazole Mini Capsules and Polyethylene Glycol 3350 Orange ; partially offset by the divested Latin American businesses; • Pain and Sleep-Aids: Net sales of $396.4 million decreased 3.8% due primarily to purposeful SKU prioritization actions in adult analgesic offerings to focus capacity on higher margin products as well as the divested Latin American businesses, partially offset by new products, including store brand Dual Action Acetaminophen 250mg and Ibuprofen 125mg Tablets, and higher demand for children's analgesics products; • Oral Care: Net sales of $313.9 million increased 0.3% due primarily to the normalization of supply chain disruptions that impacted net sales in the prior year and strong consumer demand for oral care products, partially offset by purposeful SKU prioritization actions; • Healthy Lifestyle: Net sales of $311.7 million increased 7.9% due primarily to higher volumes and market share gains in smoking cessation products; • Skin Care: Net sales of $196.2 million increased 4.5% due primarily to the addition of HRA Pharma brands, including Mederma ® and Compeed ® , partially offset by the divested Latin American businesses and ScarAway ® brand, and exited product lines; • Women's Health: Net sales of $46.9 million increased 3.8% due primarily to the addition of HRA Pharma brands, including ella ® , partially offset by purposeful SKU prioritization actions in feminine hygiene; • VMS and Other: Net sales of $69.5 million decreased 29.4% due primarily to the divested Latin American businesses and purposeful SKU prioritization actions.
Removed
We are also subject to numerous laws and regulations designed to protect personal data, such as the California Consumer Privacy Act in the U.S. and the European General Data Protection Regulation ("GDPR").
Added
Operating income increased $23.5 million, or 6.4%, due primarily to: • $121.2 million increase in gross profit driven by higher net sales flow through and the benefits from our supply chain reinvention program; partially offset by lower infant formula manufacturing productivity in U.S. nutrition stemming from the evolving FDA regulatory expectations for infant formula manufacturing.
Removed
These data protection laws introduced more stringent data protection requirements and significant potential fines, as well as increased our responsibility and potential liability in relation to personal data that we process and possess. We have put mechanisms in place to ensure compliance with applicable data protection laws but there can be no guarantee of their effectiveness.
Added
Gross profit as a percentage of net sales increased 380 basis points compared to the prior year driven by strategic pricing actions and benefits from purposeful SKU prioritization actions to focus capacity on higher margin products, partially offset by lower manufacturing productivity in U.S. nutrition. • $97.7 million increase in operating expenses due primarily to the addition of HRA Pharma and Gateway as well as higher advertising and promotion costs on branded business, and higher administration costs, partially offset by reduced distribution costs compared to the prior year.
Removed
We are dependent on the services of certain key personnel. We are dependent on the services of certain key personnel, and our future success will depend in large part upon our ability to attract and retain highly skilled employees.
Added
CONSUMER SELF-CARE INTERNATIONAL Segment Financial Results Year Ended (in millions, except percentages) December 31, 2023 December 31, 2022 Net sales $ 1,693.3 $ 1,525.7 Gross profit $ 772.0 $ 668.2 Gross profit % 45.6 % 43.8 % Operating income (loss) $ (35.2) $ (30.0) Operating income % (2.1) % (2.0) % Net sales increased $167.6 million, or 11.0% primarily due to: • $111.9 million, or 7.4%, net increase due primarily to approximately $108 million of strategic pricing actions, and higher sales volume in certain product categories driven by new products, partially offset by an unfavorable impact of $9.4 million due to distributor transitions as part of the integration strategy to capture synergies after the twelve month anniversary of the HRA Pharma acquisition; and 42 Perrigo Company plc - Item 7 CSCI • $68.3 million increase from twelve months HRA Pharma in the current year versus eight months in the prior year, inclusive of an unfavorable impact of $19.8 million due to distributor transitions as part of the integration strategy to capture synergies from the acquisition of HRA Pharma in addition to the impacts noted above; partially offset by • $17.5 million decrease from exited product lines.
Removed
Key functions for us include executive managers, operational managers, R&D scientists, information technology specialists, financial and legal specialists, regulatory professionals, quality compliance specialists, and sales/marketing personnel. If we are unable to attract or retain key qualified employees, our future operating results may be adversely impacted.
Added
CSCI net sales by product category were as follows: Sales Year Ended (in millions, except percentages) December 31, 2023 December 31, 2022 (1) $ Change % Change Skin Care $ 372.5 $ 334.6 $ 37.9 11.3 % Upper Respiratory 299.1 268.7 30.4 11.3 % Healthy Lifestyle 225.7 209.7 16.0 7.6 % Pain and Sleep-Aids 222.9 200.2 22.7 11.3 % VMS 185.5 183.9 1.6 0.9 % Women's Health 119.7 96.1 23.6 24.6 % Oral Care 101.5 94.8 6.7 7.1 % Digestive Health 41.0 35.5 5.5 15.5 % Other CSCI 125.4 102.2 23.2 22.7 % Total CSCI $ 1,693.3 $ 1,525.7 $ 167.6 11.0% (1) We updated our global reporting product categories as a result of our product portfolio reconfiguration.
Removed
Management transition creates uncertainties, and any difficulties we experience in managing such transitions may negatively impact our business. During 2022, Eduardo Bezerra was named Executive Vice President and Chief Financial Officer. Additionally, Kyle Hanson joined the Company as Executive Vice President, General Counsel and Corporate Secretary and Alison Ives was promoted to Executive Vice President and Chief Scientific Officer.
Added
These product category updates have been adjusted retroactively to reflect the changes and have no impact on historical financial position, results of operations, or cash flows. Refer to Item 8. Note 2 .
Removed
Changes in executive management create uncertainty. Moreover, changes in our company as a result of management transition could have a disruptive impact on our ability to implement, or result in changes to, our strategy and could negatively impact our business, financial condition and results of operations.
Added
Sales in each category were driven primarily by: • Skin Care: Net sales of $372.5 million increased 11.3%, inclusive of a 3.0% unfavorable effect of currency translation, driven primarily by the addition of HRA brands, including Compeed ® , and strong sales within the Sebamed and ACO brand lines; • Upper Respiratory: Net sales of $299.1 million increased 11.3%, inclusive of a 1.5% favorable effect of currency translation, due primarily to increased demand for cough/cold products, including Bronchostop and Coldrex stemming from a 2022/2023 strong cough/cold and flu season, and higher net sales of allergy products, including Beconase ; • Healthy Lifestyle: Net sales of $225.7 million increased 7.6%, inclusive of a 1.1% favorable effect of currency translation, due primarily to higher net sales of anti-parasite offerings, including Paranix and Jungle Formula , and higher demand for smoking cessation products, partially offset by lower category consumption in weight loss, impacting XLS Medical ; • Pain & Sleep-Aids: Net sales of $222.9 million increased 11.3%, inclusive of a 1.8% favorable effect of currency translation, due primarily to higher demand for Solpadeine , U.K. store brand products and higher net sales for Nytol ; • VMS : Net sales of $185.5 million increased 0.9%, inclusive of a 2.2% favorable effect of currency translation, due primarily to increased net sales of Davitamon and Abtei , partially offset by lower category consumption; • Women's Health : Net sales of $119.7 million increased 24.6%, inclusive of a 2.0% favorable effect of currency translation, due primarily to the addition of HRA brands, including ellaOne ® and NorLevo ® ; • Oral Care: Net sales of $101.5 million increased 7.1% inclusive of a 1.4% favorable effect of currency translation, due primarily to strong growth of store brand oral care products; • Digestive Health and Other: Net sales of $166.4 million increased 20.8%, inclusive of a 1.9% unfavorable effect of currency translation, due primarily to the addition of the HRA Pharma Rare Diseases portfolio in the Other category and higher net sales of store brand digestive health products and distribution brands. 43 Perrigo Company plc - Item 7 CSCI Operating income decreased $5.2 million, or 17.3%, due to: • $103.8 million increase in gross profit driven by higher net sales flow through and the addition of HRA Pharma, partially offset by cost of goods sold inflation.
Removed
Strategic Risks We may not realize the benefits of business acquisitions, divestitures, and other strategic transactions, which could have a material adverse effect on our operating results. In the normal course of business, we engage in discussions relating to possible acquisitions, divestitures, and other strategic transactions, some of which may be significant in size or impact.
Added
Gross profit as a percentage of net sales increased 180 basis points due primarily to strategic pricing actions and the acquisition of higher margin HRA products partially offset by less favorable product mix and higher cost of goods sold inflation; and • $109.0 million increase in operating expenses due primarily to $90.0 million in goodwill impairment charges related to the Rare Diseases reporting unit in the CSCI segment and higher selling and administrative expenses as a result of twelve months of HRA Pharma expenses in the current year versus eight months in the prior year, partially offset by lower operating expenses driven by HRA cost synergies realized as part of the integration actions and lower restructuring expenses compared to the prior year.
Removed
Transactions of this nature create substantial demands on management, operational resources, technology, and financial and internal control systems, and can be subject to government approvals or other closing conditions beyond the parties' control.
Added
Unallocated Expenses Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded above Operating income on the Consolidated Statements of Operations.
Removed
In the case of acquisitions, including the acquisition of HRA Pharma, we may face difficulties with integrating these businesses, managing expanded operations, achieving operating or financial synergies in expected timeframes or in new products or geographic markets.
Added
Unallocated expenses were as follows (in millions): Year Ended December 31, 2023 December 31, 2022 $ 202.4 $ 257.2 The decrease of $54.8 million in unallocated expenses during the year ended December 31, 2023 compared to the prior year period was due primarily to a decrease in acquisition and integration expenses associated with the HRA Pharma and Gateway acquisitions.
Removed
In the case of divestitures, including the separation of the Rx business, we may face difficulty in effectively transferring contracts, obligations, facilities, and personnel to the purchaser, while minimizing continued exposure to risks and liabilities of the divested business.
Added
Interest expense, net, Other (income) expense, net and (Gain) Loss on extinguishment of debt (Consolidated) Year Ended (in millions) December 31, 2023 December 31, 2022 Interest expense, net $ 173.8 $ 156.0 Other (income) expense, net $ (10.4) $ 53.1 (Gain) loss on extinguishment of debt $ (3.2) $ 8.9 Interest Expense, net The $17.8 million increase during the year ended December 31, 2023 compared to the prior year was due primarily to an increase in interest expense associated with an increase in outstanding borrowings under our Senior Secured Credit Facilities.
Removed
There are inherent uncertainties involved in identifying and assessing the value, strengths, and profit potential, as well as the weaknesses, risks, and contingent and other liabilities of acquisition targets, which can be affected by risks and uncertainties relating to government regulations and oversight as well as changes in business, industry, market or general economic conditions.
Added
Other (Income) Expense, Net The $63.5 million decrease in expense during the year ended December 31, 2023 compared to the prior year was due primarily to unfavorable changes in revaluation of foreign currency expense associated with the acquisition of HRA Pharma and termination expense of the forward currency options related to the acquisition of HRA Pharma in the prior year.
Removed
Moreover, the financing of any acquisition can have a material impact on our liquidity, credit ratings and financial position.
Added
(Gain) Loss on extinguishment of debt The $3.2 million gain on extinguishment of debt during the year ended December 31, 2023 is related to the debt refinancing and tender offer activity during the fourth quarter of 2023.
Removed
Alternatively, issuing equity to pay all or a portion of acquisition purchase price would dilute our existing shareholders. 25 Perrigo Company plc - Item 1A Risk Factors Acquisitions and divestitures also involve costs, including fees and expenses of financial advisors, lawyers, accountants, and other professionals, and can involve retention bonuses and other additional compensation of employees or increase turnover in personnel.
Added
The $8.9 million loss on extinguishment of debt during the year ended December 31, 2022 is related to the write-off of certain new and previously deferred financing fees and make whole payments due in connection with repaying outstanding borrowings prior to maturity (refer to Item 8.
Removed
Any of these risks or expenses could have a negative effect on our financial condition or results of operations. We have acquired significant assets that could become impaired or subject us to losses and may result in an adverse impact on our results of operations, which could be material.
Added
Note 12 ). 44 Perrigo Company plc - Item 7 Unallocated, Interest, Other, and Taxes Income Taxes (Consolidated) The effective tax rates were as follows: Year Ended December 31, 2023 December 31, 2022 47.2 % 5.9 % The effective tax rate on the pre-tax loss for the year ended December 31, 2023, increased when compared to the effective tax rate on the pre-tax loss for the year ended December 31, 2022, primarily due to audit settlements in the current year and changes in the jurisdictional mix of earnings, offset by the non-deductibility of certain charges and expenses in 2023.
Removed
We have recorded significant goodwill and intangible assets on our balance sheet as a result of previous acquisitions, which could become impaired and lead to material charges in the future. We perform an impairment analysis on intangible assets subject to amortization when there is an indication that the carrying amount of any individual asset may not be recoverable.
Added
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES Overview We finance our operations with internally generated funds, supplemented by credit arrangements with third parties and capital market financing. We routinely monitor current and expected operational requirements and financial market conditions to evaluate other available financing sources including term and revolving bank credit and securities offerings.
Removed
Any significant change in market conditions, estimates or judgments used to determine expected future cash flows that indicates a reduction in carrying value may give rise to impairment in the period that the change becomes known. Goodwill, indefinite-lived intangible asset, and definite-lived intangible asset impairments are recorded in Impairment charges on the Consolidated Statement of Operations.
Added
In determining our future capital requirements, we regularly consider, among other factors, known trends and uncertainties, such as the wars in Ukraine and Israel, inflation and interest rates, the status of material contingent liabilities, recent financial market volatility, the COVID-19 pandemic and other uncertainties.
Removed
As of December 31, 2022, the net book value of our goodwill and intangible assets were $3.5 billion and $3.3 billion, respectively. In the past three years, we have recognized a total of $173.1 million in asset impairments, across all segments and asset categories. Refer to Item 8. Note 9 for additional information related to our goodwill and intangible assets.
Added
Subject to relevant restrictions under our debt agreements, our cash requirements for other purposes and other factors management deems relevant, we may from time to time use available funds to redeem, repurchase or refinance our debt in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms we deem appropriate (which may be below par).
Removed
There can be no assurance that our strategic initiatives, including our Supply Chain Reinvention Program, will achieve their intended effects.
Added
Based on the foregoing, management believes that our operations and borrowing resources are sufficient to provide for our short-term and long-term capital requirements, as described below.
Removed
We are in the process of implementing certain initiatives, including our Supply Chain Reinvention Program, designed to increase operational efficiency and improve our return on invested capital by, among other goals, reducing portfolio complexity, investing in advanced planning capabilities, diversifying sourcing, and optimizing our manufacturing assets and distribution models.
Added
As such, we continue to evaluate the impact of the above factors on liquidity and may determine that modifications to our capital structure are appropriate if market conditions deteriorate, favorable capital market opportunities become available, or any change in conditions relating to the wars in Ukraine and Israel, inflation and interest rates, the status of material contingent liabilities, financial market volatility, the COVID-19 pandemic or other uncertainties have a material impact on our capital requirements.
Removed
We believe these initiatives will enhance our net sales, operating margins, and earnings; however, certain of these initiatives require substantial upfront costs, and there can be no assurance any of these initiatives will produce the anticipated benefits. Any delay or failure to achieve the anticipated benefits could have a material adverse effect on our projected results.
Added
Cash, Cash Equivalents and Restricted Cash Year Ended (in millions) December 31, 2023 December 31, 2022 Cash, cash equivalents and restricted cash $ 751.3 $ 600.7 Working capital (1) $ 935.9 $ 1,041.8 (1) Working capital represents current assets less current liabilities, excluding cash, cash equivalents and restricted cash, assets and liabilities held for sale, and excluding current indebtedness.
Removed
Executive Overview under the heading “Acquisitions, Disposals and Restructuring”, we estimate the total costs associated with our Supply Chain Reinvention Program, including capital investments, restructuring expenses, and implementation costs, to be approximately $350 million to $570 million by the end of 2028 and project that the program [could/should] generate up to $200 million to $300 million in annual savings by 2028, in each case if fully implemented.
Added
Cash, cash equivalents, restricted cash, cash flows from operations, and borrowings available under our credit facilities are expected to be sufficient to finance our liquidity and capital expenditures in both the short and long term.
Removed
However, if the program is not implemented successfully, or if circumstances outside of our control affect our costs over this time period, this program may not produce the anticipated benefits and/or may cost more to achieve.
Added
Although our lenders have made commitments to make funds available to us in a timely fashion under our revolving credit agreements and overdraft facilities, if economic conditions worsen or new information becomes publicly available impacting the institutions’ credit rating or capital ratios, these lenders may be unable or unwilling to lend money pursuant to our existing credit facilities.
Removed
In addition, implementing these changes will require a significant amount of management time and effort, which may disrupt our business or otherwise divert management’s attention from other aspects of our business, including our other strategic initiatives, possible organic or inorganic growth opportunities, and customer and vendor relationships.
Added
Should our outlook on liquidity requirements change substantially from current projections, we may seek additional sources of liquidity in the future. 45 Perrigo Company plc - Item 7 Financial Condition, Liquidity and Capital Resources Cash Flows The following table includes summarized cash flow activities: Year Ended (in millions) December 31, 2023 December 31, 2022 $ Change Net cash from operating activities $ 405.5 $ 307.3 $ 98.2 Net cash (for) from investing activities (77.5) (1,958.6) 1,881.1 Net cash (for) from financing activities (187.2) 421.6 (608.8) Effect of exchange rate changes on cash and cash equivalents 9.8 (48.9) 58.7 Net increase (decrease) in cash and cash equivalents $ 150.6 $ (1,278.6) $ 1,429.2 Net cash from Operating Activities The $98.2 million increase in operating cash inflow was primarily driven by an increase in cash flow from the change in net earnings after adjustments, partially offset by higher working capital needs, primarily related to timing of sales and payments received and made.
Removed
Any of the foregoing risks could materially adversely affect our business, results of operations, liquidity, and financial condition.
Added
Net cash (for) from Investing Activities The $1.9 billion increase in cash from investing cash flow was due primarily to the absence of $1.9 billion cash paid in the prior year for the acquisitions of HRA Pharma and a $16.5 million increase in proceeds from royalty rights primarily driven by higher milestone income related to legacy royalty rights in the current year.
Removed
Furthermore, while we have completed our transformation into a consumer-focused, self-care company, there can be no assurance that such transformation will receive the level of market support that we expect or that we will be able to achieve the anticipated operational, strategic and other benefits.
Added
Capital expenditures totaled approximately $101.7 million in 2023. We anticipate 2024 capital expenditures to be between $130 million and $180 million, depending on the progression of infant formula plant investments, our Supply Chain Reinvention Program, Project Energize, and project timelines related to manufacturing productivity and efficiency upgrades, software and technology initiatives, and general plant maintenance.
Removed
Moreover, our business is now less diversified with a narrower focus, which could make us more susceptible to changing market conditions. The synergies and benefits expected from acquiring HRA Pharma and Gateway may not be realized in the amounts anticipated or at all and integrating HRA Pharma and Gateway's business may be more difficult, time consuming or costly than expected.
Added
We expect to fund these estimated capital expenditures with funds from operating cash flows. Net cash (for) from Financing Activities The $608.8 million decrease in financing cash flow was due primarily to a decrease in cash of $1.6 billion from the issuance of our Senior Secured Credit Facilities and related financing fees in the prior year.
Removed
We may experience challenges integrating the HRA Pharma and Gateway businesses and managing our expanded operations. Our ability to realize the benefits expected from the HRA Pharma and Gateway acquisitions will depend, in part, on our ability to successfully integrate the business, control costs and maintain growth.
Added
We refinanced a portion of the 3.900% Notes due in 2024 with a $300 million fungible add on to the existing 2022 Term B Loan in December 2023 (refer to Item 8. Note 12 ). Long term debt payments and payments for debt issuance costs decreased $666.2 million compared to the prior year.
Removed
Integrations can be complex and time consuming, and the integration may result in temporarily depressed sales while integration of supply chain and distribution channels take place.
Added
Additionally, we increased our dividend payment by $7.3 million compared to the prior year. Share Repurchases In October 2018, our Board of Directors authorized up to $1.0 billion of share repurchases with no expiration date, subject to the Board of Directors’ approval of the pricing parameters and amount that may be repurchased under each specific share repurchase program.
Removed
Any delays, additional unexpected costs, or other difficulties encountered in the integration process could have a material adverse effect on the Company’s revenues, expenses, operating results and/or financial condition. 26 Perrigo Company plc - Item 1A Risk Factors Even if integration occurs successfully, we may not achieve projected synergies or level of anticipated sales growth in new products, brands, or geographic markets within the anticipated timeframe, or at all.
Added
We did not repurchase any shares during the year ended December 31, 2023 or December 31, 2022. The future repurchase of shares, if any, is subject to the discretion of our Board of Directors. Dividends In January 2003, the Board of Directors adopted a policy of paying quarterly dividends.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRISK FACTORS SUMMARY OF RISK FACTORS Operational Risks • We face competition from other pharmaceutical and consumer packaged goods companies, which may threaten the demand for and pricing of our products. • If we do not continue to develop, manufacture, and market innovative products, introduce new line extensions, and expand into adjacent categories that meet customer demands, our net sales may be negatively impacted and we may lose market share. • We operate in highly regulated industries, and any inability to timely meet current or future regulatory requirements could have a material adverse effect on our business and operating results. • Limitations on reimbursement, continuing healthcare reforms, and changes to reimbursement methods in the United States and other countries may have an adverse effect on our financial condition and operating results. • If we fail to comply with the reporting and payment obligations under the Medicaid rebate program or other governmental purchasing and rebate programs, we could be subject to fines or penalties, which could be material. • Unfavorable publicity or consumer perception of the safety, quality, and efficacy of our products could have a material adverse effect on our business. • Lack of availability, or significant increases in the cost, of raw materials used in manufacturing our products could have a material adverse effect on our profit margins and operating results. • The effects of public health outbreaks, including pandemics such as COVID-19 and epidemics, and related public and governmental actions could have a material adverse impact on our operations and our business and financial condition in the future. • Disruption of our supply chain, including as a result of the COVID-19 pandemic or the war in Ukraine, could have a material adverse effect on our businesses, financial condition, results of operations and cash flows. • A disruption at any of our main manufacturing facilities could have a material adverse effect on our business, financial position, and results of operations. • Our business could be negatively affected by the performance of our collaboration partners and suppliers, and any such adverse impact could be material. • Our business depends upon certain customers for a significant portion of our sales, therefore our business would be adversely affected by a disruption of our relationship with these customers or any material adverse change in these customers' businesses.
Biggest changeRISK FACTORS SUMMARY OF RISK FACTORS Operational Risks • We face competition from other pharmaceutical and consumer packaged goods companies, which may threaten the demand for and pricing of our products. • If we do not continue to develop, manufacture, and market innovative products, introduce new line extensions, and expand into adjacent categories that meet customer demands, our net sales may be negatively impacted and we may lose market share. • We operate in highly regulated industries, and any inability to timely meet current or future regulatory requirements could have a material adverse effect on our business and operating results. • Limitations on reimbursement, continuing healthcare reforms, and changes to reimbursement methods in the United States and other countries may have an adverse effect on our financial condition and operating results. • Unfavorable publicity or consumer perception of the safety, quality, and efficacy of our products could have a material adverse effect on our business. • Lack of availability, or significant increases in the cost, of raw materials used in manufacturing our products could have a material adverse effect on our profit margins and operating results. • The effects of public health outbreaks, including pandemics such as COVID-19 and epidemics, and related public and governmental actions could have a material adverse impact on our operations and our business and financial condition in the future. 14 Perrigo Company plc - Item 1A Risk Factors • Disruption of our supply chain, including as a result of pandemics, global health crises, or wars or other civil unrest, including war in Ukraine, or in Gaza, could have a material adverse effect on our businesses, financial condition, results of operations and cash flows. • A disruption at any of our main manufacturing facilities could have a material adverse effect on our business, financial position, and results of operations. • Our business could be negatively affected by the performance of our collaboration partners and suppliers, and any such adverse impact could be material. • Our business depends upon certain customers for a significant portion of our sales, therefore our business would be adversely affected by a disruption of our relationship with these customers or any material adverse change in these customers' businesses. • Our businesses could be adversely affected by deteriorating economic conditions in the countries in which we operate, and our results may be volatile due to these or other circumstances beyond our control. • A cybersecurity breach, disruption or misuse of our information systems, or our external business partners’ information systems could have a material adverse effect on our business. • Management transition creates uncertainties, and any difficulties we experience in managing such transitions may negatively impact our business.
If our relationship with any of our significant customers, including the terms of doing business with the customers, changes significantly, or if one or more such customers were to experience difficulty in paying us on a timely basis, it could have a material adverse impact on us. Refer to
If our relationship with any of our significant customers, including the terms of doing business with the customers, changes significantly, or if one or more such customers were to experience difficulty in paying us on a timely basis, it could have a material adverse impact on us.
Our Perrigo-branded products compete against store brand, generic, and branded health and wellness products. In addition, our products sold under labels of others (store brand) compete against other store brands, generic, and branded health and wellness products. If we or our store brand customers are unable to compete successfully, our business may lose customers or face negative pricing pressures.
In addition, our products sold under labels of others (store brand) compete against other store brands, generic, and branded health and wellness products. If we or our store brand customers are unable to compete successfully, our business may lose customers or face negative pricing pressures.
Regulation Outside the U.S. We develop and manufacture products and market third-party manufactured products in regions outside the U.S., primarily Europe, Canada, and Australia, each of which has its own regulatory environment.
We develop and manufacture products and market third-party manufactured products in regions outside the U.S., primarily Europe, Canada, and Australia, each of which has its own regulatory environment.
Serious product quality concerns could also result in governmental actions against us that, among other things, could result in the suspension of production or distribution of our products, product seizures, loss of certain licenses, delays in the issuance of governmental approvals for new products, or other governmental penalties. 21 Perrigo Company plc - Item 1A Risk Factors • We cannot guarantee that counterfeiting, imitation or other tampering with our products will not occur or that we will be able to detect and resolve it, which could lead to death or injury of consumers and negatively impact our reputation. • Our nutritional product category is subject to certain consumer preferences and health and nutrition-related concerns, including the number of mothers who choose to use infant formula products rather than breastfeed their babies, which could change based on factors including increased promotion of the benefits of breastfeeding over the use of infant formula by private, public and government sources and changes in the number of families that are provided with infant formula by the U.S. federal government through the Women, Infants and Children program which we do not participate in. • With respect to our powdered infant formula products, a risk of contamination or deterioration may exist at each stage of the production cycle, including the purchase and delivery of raw materials, the processing and packaging of food products, and the use and handling by consumers, hospital personnel, and healthcare professionals.
Serious product quality concerns could also result in governmental actions against us that, among other things, 18 Perrigo Company plc - Item 1A Risk Factors could result in the suspension of production or distribution of our products, product seizures, loss of certain licenses, delays in the issuance of governmental approvals for new products, or other governmental penalties. • We cannot guarantee that counterfeiting, imitation or other tampering with our products will not occur or that we will be able to detect and resolve it, which could lead to death or injury of consumers and negatively impact our reputation. • Our nutritional product category is subject to certain consumer preferences and concerns, including the number of mothers who choose to use infant formula products rather than breastfeed their babies, which could change based on factors including increased promotion of the benefits of breastfeeding over the use of infant formula by private, public and government sources and changes in the number of families that are provided with infant formula by the U.S. federal government through the Women, Infants and Children program which we do not participate in. • With respect to our powdered infant formula products, a risk of contamination or deterioration may exist at each stage of the production cycle, including the purchase and delivery of raw materials, the processing and packaging of food products, and the use and handling by consumers, hospital personnel, and healthcare professionals.
If we are not the first to file our ANDA, the FDA may grant 180-day exclusivity to another company, thereby effectively delaying the launch of our product and/or possibly reducing our market share. • U.S. and global regulatory agencies regularly inspect our manufacturing facilities and the facilities of our third-party suppliers for GMP and other regulatory compliance.
If we are not the first to file our ANDA, the FDA may grant 180-day exclusivity to another company, thereby effectively delaying the launch of our product and/or possibly reducing our market share. • U.S. and global regulatory agencies regularly inspect our manufacturing facilities and the facilities of our third-party suppliers for good manufacturing practices ("GMP") and other regulatory compliance.
Nevertheless, discovery of previously unknown problems with raw materials, product manufacturing processes, or new data suggesting an unacceptable safety risk associated therewith, could result in a voluntary or mandatory withdrawal of the contaminated product from the marketplace, either temporarily or permanently.
Nevertheless, discovery of previously unknown problems with raw materials, product manufacturing processes, or new data suggesting an unacceptable safety risk, could result in a voluntary or mandatory withdrawal of the contaminated product from the marketplace, either temporarily or permanently.
Management's Discussion and Analysis - Executive Overview , going forward, variants of the COVID-19 disease or other public health incidents and the actions taken to slow their spread could have an adverse impact on our financial condition, our supply chains and other operations, our results of operations, consumer demand for our products and our ability to access capital.
Going forward, variants of the COVID-19 disease or other public health incidents and the actions taken to slow their spread could have an adverse impact on our financial condition, our supply chains and other operations, our results of operations, consumer demand for our products and our ability to access capital.
The failure of one of these facilities to comply with applicable laws and regulations may lead to a breach of representations made to our customers, or to regulatory or government action against us related to the products made in that facility, including suspension of or delay in regulatory approvals and product seizure, injunction, recall, suspension of production or distribution of our products, loss of licenses or other governmental penalties, or civil or criminal prosecution, which could result in increased cost, lost revenue, or reputational damage. • In 2020, regulatory agencies globally, including the FDA and EMA, issued guidance on assessing and controlling nitrosamine impurities in medicine products.
The failure of one of these facilities to comply with applicable laws and regulations may lead to a breach of representations made to our customers, or to regulatory or government action against us related to the products made in that facility, including suspension of or delay in regulatory approvals and product seizure, injunction, recall, suspension of production or distribution of our products, a total or partial shutdown of production in one or more facilities, loss of licenses or other governmental penalties, or civil or criminal prosecution, which could result in increased cost, lost revenue, or reputational damage. • Regulatory agencies globally, including the FDA and the European Medicines Agency, have issued guidance on assessing and controlling nitrosamine impurities in medicine products.
However, obtaining regulatory approval across various EU member states can present complex challenges. The registration file relating to any particular product must contain data related to product efficacy and 14 Perrigo Company plc - Item 1 Regulation safety, including results of clinical testing and/or references to medical publications, as well as detailed information regarding production methods and quality control.
However, obtaining regulatory approval across various EU member states can present complex challenges. The registration file relating to any particular product must contain data related to product efficacy and safety, including results of clinical testing and/or references to medical publications, as well as detailed information regarding production methods and quality control.
Commission Regulation EU No. 655/2013 establishes the common criteria and justification for claims to be used in the packaging and advertising of cosmetics products. 15 Perrigo Company plc - Item 1 Regulation Biocides Biocides in the EU market must comply with Regulation EU No. 528/2012 ("EU BPR") overseen by the European Chemicals Agency.
Commission Regulation EU No. 655/2013 establishes the common criteria and justification for claims to be used in the packaging and advertising of cosmetics products. Biocides Biocides in the EU market must comply with Regulation EU No. 528/2012 ("EU BPR") overseen by the European Chemicals Agency.
We rely on third parties to source many of our raw materials and to manufacture certain dosage forms that we distribute, such as inhalers and sterile injectables. Refer to Item 1. Business - Materials Sourcing .
We rely on third parties to source many of our raw materials and to manufacture certain dosage forms that we distribute. Refer to Item 1. Business - Materials Sourcing .
Necessary regulatory approvals may not be obtained in a timely manner, if at all. Even if we are successful in developing a product, our customers' failure to launch one of our products successfully, or delays in manufacturing developed products, could adversely affect our operating results.
Necessary regulatory approvals may not be obtained in a timely manner, if at all. Even if we are successful in developing a product, our customers' 16 Perrigo Company plc - Item 1A Risk Factors failure to launch one of our products successfully, or delays in manufacturing developed products, could adversely affect our operating results.
Moreover, a reclassification by Ireland could lead to reviews in other jurisdictions as well. • Our infant formula products may be subject to barriers or sanctions imposed by countries or international organizations limiting international trade and dictating the content of such products.
Sales of products containing codeine in Ireland were approximately $18 million in 2023. Moreover, a reclassification by Ireland could lead to reviews in other jurisdictions as well. • Our infant formula products may be subject to barriers or sanctions imposed by countries or international organizations limiting international trade and dictating the content of such products.
The regulations placed the certification requirement on the regulatory bodies of the exporting countries, which led to an API supply shortage in Europe as certain governments were not willing or able to comply with the regulation in a timely fashion, or at all.
The regulations placed the certification requirement on the regulatory bodies of the exporting countries, which led to an API supply shortage in Europe as certain governments 19 Perrigo Company plc - Item 1A Risk Factors were not willing or able to comply with the regulation in a timely fashion, or at all.
Negative consumer perception may arise from media reports, social media posts, product liability claims, regulatory investigations, or recalls affecting our products or our industry, any of which may reduce demand. • Our products involve risks such as product contamination, spoilage, mislabeling, and tampering that could require us to recall one or more of our products.
Negative consumer perception may arise from media reports, social media posts, product liability claims, regulatory investigations, or recalls affecting our products or our industry, any of which may reduce demand or could damage our reputation and adversely affect our business. • Our products involve risks such as product contamination, spoilage, mislabeling, and tampering that could require us to recall one or more of our products or could result in death or injury to consumers.
If we are unable to obtain necessary quotas for List I chemicals, we risk having delayed product launches or failing to meet commercial supply obligations. • Very recently the European Parliament voted of a proposal to extend the MDR transition periods until 2027-28, together with an extended validity of existing medical device certificates and the possibility to sell 20 Perrigo Company plc - Item 1A Risk Factors off existing medical device products until end of shelf-life.
If we are unable to obtain necessary quotas for List I chemicals, we risk having delayed product launches or failing to meet commercial supply obligations. • In 2023, the European Parliament voted on a proposal to extend the EU's Medical Device Regulation ("MDR") transition periods until 2027-2028, together with an extended validity of existing medical device certificates and the possibility to sell off existing medical device products until end of shelf-life.
Additional Global Regulations and Considerations We must comply with a variety of U.S. laws related to doing business outside of the U.S., including but not limited to, Office of Foreign Asset Controls; United Nations and EU sanctions; the Iran Threat Reduction and Syria Human Rights Act of 2012; rules relating to the use of certain “conflict minerals” under Section 1502 of the Dodd- Frank Wall Street Reform and Consumer Protection Act; and regulations enforced by the U.S.
If our products fail to meet the General Product Safety Directive, we may incur fines. 13 Perrigo Company plc - Item 1 Regulation Additional Global Regulations and Considerations We must comply with a variety of U.S. laws related to doing business outside of the U.S., including but not limited to, Office of Foreign Asset Controls; United Nations and EU sanctions; the Iran Threat Reduction and Syria Human Rights Act of 2012; rules relating to the use of certain “conflict minerals” under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and regulations enforced by the U.S.
Disruption of our supply chain, including as a result of the COVID-19 pandemic or the war in Ukraine, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our ability to manufacture, deliver and sell our products is critical to our success.
Disruption of our supply chain, including as a result of the pandemics, global health crises, or wars or other civil unrest, including the war in Ukraine, or in Gaza, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our ability to manufacture, deliver and sell our products is critical to our success.
Together, the General Product Safety Directive and sector specific legislation ensure the safety and traceability of products in the market (other than pharmaceuticals, medical devices, and food which are regulated under separate legislation). If our products fail to meet the General Product Safety Directive, we may incur fines.
Together, the General Product Safety Directive and sector specific legislation ensure the safety and traceability of products in the market (other than pharmaceuticals, medical devices, and food which are regulated under separate legislation).
Capital and Liquidity Risks • Our indebtedness could adversely affect our ability to implement our strategic initiatives. • We cannot guarantee that we will buy back our ordinary shares pursuant to our announced share repurchase plan or that our share repurchase plan will enhance long-term shareholder value. • Any additional shares we may issue could dilute your ownership in the Company. • We are incorporated in Ireland; Irish law differs from the laws in effect in the United States and may afford less protection to, or otherwise adversely affect, our shareholders. • We may be limited in our ability to pay dividends in the future. 18 Perrigo Company plc - Item 1A Risk Factors Operational Risks We face competition from other pharmaceutical and consumer packaged goods companies, which may threaten the demand for and pricing of our products.
Capital and Liquidity Risks • Our indebtedness could adversely affect our ability to implement our strategic initiatives. • We cannot guarantee that we will buy back our ordinary shares pursuant to our announced share repurchase plan or that our share repurchase plan will enhance long-term shareholder value. • Any additional shares we may issue could dilute your ownership in the Company. • We are incorporated in Ireland; Irish law differs from the laws in effect in the United States and may afford less protection to, or otherwise adversely affect, our shareholders. • We may be limited in our ability to pay dividends in the future.
We have one significant customer that represented 12.5% of our consolidated net sales for the year ended December 31, 2022. While we have other important customers, no other individual customer represents more than 10% of net sales. However, the loss of one or more of our customers could be material. We believe we have good relationships with all our customers.
While we have other important customers, no other individual customer represents more than 10% of net sales. However, the loss of one or more of our customers could be material. We believe we have good relationships with all our customers.
Tax Related Risks • The resolution of uncertain tax positions, including the Notices of Proposed Adjustments and ongoing disputes with U.S. and foreign tax authorities, could be unfavorable, which could have a material adverse effect on our business. • Changes to tax laws and regulations or the interpretation thereof could have a material adverse effect on our results of operations and the ability to utilize cash in a tax efficient manner. • Our effective tax rate or cash tax payment requirements may change in the future, which could adversely impact our future results of operations.
Disputes with insurers on the scope of existing policies may limit the coverage available under such policies. 15 Perrigo Company plc - Item 1A Risk Factors Tax Related Risks • The resolution of uncertain tax positions and ongoing disputes with U.S. and foreign tax authorities could be unfavorable which could have a material adverse effect on our business. • Changes to tax laws and regulations or the interpretation thereof could have a material adverse effect on our results of operations and the ability to utilize cash in a tax efficient manner. • Our effective tax rate or cash tax payment requirements may change in the future, which could adversely impact our future results of operations.
Moreover, our infant formula products require certain key raw ingredients that are derived from raw milk, which is influenced by factors beyond our control including seasonal and environmental factors, governmental agricultural and environmental policy, and global demand.
Moreover, our infant formula products require certain key raw ingredients that are derived from raw milk, which is influenced by factors beyond our control including seasonal and environmental factors, governmental agricultural and environmental policy, and global demand. Due to these factors, we cannot guarantee that there will be sufficient supplies of these key ingredients to produce infant formula.
Changes in laws, regulations, and practices in the countries in which we operate, which may be impacted by political pressure and other factors outside of our control, may be difficult or expensive for us to comply with, could restrict or delay our ability to manufacture, distribute, sell or market our products, and may adversely affect our revenue, operating 19 Perrigo Company plc - Item 1A Risk Factors results, and financial condition or impose significant administrative burdens.
Changes in laws, regulations, and practices in the countries in which we operate, including changes in interpretation of existing regulations (which may have retroactive effect), may be difficult or expensive for us to comply with, could restrict or delay our ability to manufacture, distribute, sell or market our products, and may adversely affect our revenue, operating results, and financial condition or impose significant administrative burdens.
There is a growing focus on environmental impact of self-care products, their ingredients, components, packaging, manufacturing, and disposal. This focus could lead to new requirements and restrictions in the coming years across all product categories described below.
There is a growing focus on environmental impact of self-care products, their ingredients, components, packaging, manufacturing, and disposal. This focus could lead to new requirements and restrictions in the coming years across all product categories. • U.S. law encourages generic competition by providing eligibility for first generic marketing exclusivity if certain conditions are met.
While utilization of our products under the Medicaid program is limited, our products generally are subject to state Medicaid program payment methodologies, and may be subject to reimbursement pressures beyond our control.
While utilization of our products under the Medicaid program is limited, our products generally are subject to state Medicaid program payment methodologies, and may be subject to reimbursement pressures beyond our control. Unfavorable publicity or consumer perception of the safety, quality, and efficacy of our products could have a material adverse effect on our business.
The risk of such impacts would be increased by continued consolidation in the sector in which our customers operate. • Our businesses could be adversely affected by deteriorating economic conditions in the countries in which we operate, and our results may be volatile due to these or other circumstances beyond our control. • A cybersecurity breach, disruption or misuse of our information systems, or our external business partners’ information systems could have a material adverse effect on our business. • We are dependent on the services of certain key personnel. • Management transition creates uncertainties, and any difficulties we experience in managing such transitions may negatively impact our business. 17 Perrigo Company plc - Item 1A Risk Factors Strategic Risks • We may not realize the benefits of business acquisitions, divestitures, and other strategic transactions, which could have a material adverse effect on our operating results. • We have acquired significant assets that could become impaired or subject us to losses and may result in an adverse impact on our results of operations, which could be material. • There can be no assurance that our strategic initiatives, including our Supply Chain Reinvention Program, will achieve their intended effects. • The synergies and benefits expected from acquiring HRA Pharma and Gateway may not be realized in the amounts anticipated or at all and integrating HRA Pharma and Gateway's business may be more difficult, time consuming or costly than expected. • Failure to effectively monitor and respond to ESG matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations.
Strategic Risks • We may not realize the benefits of business acquisitions, divestitures, and other strategic transactions, which could have a material adverse effect on our operating results. • We have acquired significant assets that could become impaired or subject us to losses and may result in an adverse impact on our results of operations, which could be material. • There can be no assurance that our strategic initiatives, including restructurings, will achieve their intended effects. • The synergies and benefits expected from acquiring HRA Pharma and Gateway may not be realized in the amounts anticipated or at all and integrating HRA Pharma and Gateway's business may be more difficult, time consuming or costly than expected. • Failure to effectively monitor and respond to ESG matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations.
If certain of our infant formula products are found or alleged to have suffered contamination or deterioration, whether or not under our control, our reputation and our infant formula product category sales could be materially adversely affected. • Our CSCI segment's financial success is dependent on positive brand recognition, which results in part from large investments in marketing over a period of years.
If certain of our infant formula products are found or alleged to have suffered contamination or deterioration, whether or not under our control, our reputation and our infant formula product category sales could be materially adversely affected. As described in Part II.
OTC In the EU, as well as many other locations around the world, the manufacture and sale of medicinal products are regulated in a manner substantially similar to that of the U.S. requirements, which generally prohibit the handling, manufacture, marketing, and importation of any medicinal product unless it is properly registered in accordance with applicable law.
Other regulatory agencies, organizations and legislation that may impact our business include, but are not limited to privacy regulations, transparency laws, anti-bribery laws, and rules and regulations on infant formula. 12 Perrigo Company plc - Item 1 Regulation European Union In the EU, as well as many other locations around the world, the manufacture and sale of medicinal products are regulated in a manner substantially similar to that of the U.S. requirements, which generally prohibit the handling, manufacture, marketing, and importation of any medicinal product unless it is properly registered in accordance with applicable law.
We have entered into strategic alliances with partners and suppliers to develop, manufacture, market and/or distribute certain products, or components of our products in various markets. We commit substantial effort, funds and other resources to these various collaborations. There is a risk that our investments in these collaborative arrangements will not generate financial returns.
We commit substantial effort, funds and other resources to these various collaborations. There is a risk that our investments in these collaborative arrangements will not generate the anticipated financial returns.
The Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, has recommended changes to numerous long-standing tax principles. Changes include imposing a global minimum corporation tax of 15% and introducing new filing obligations.
Tax Regulations Recent Changes to Tax Laws, Regulations and Related Interpretations The Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, has recommended changes to numerous long-standing tax principles. In particular, the OECD's Pillar Two initiative introduces a global per-country minimum tax of 15%.
A significant disruption at one or more of these facilities, whether due to fire, natural disaster, power loss, intentional acts of vandalism, climate change, war, terrorism, insufficient quality, or pandemic could materially and adversely affect our business. 23 Perrigo Company plc - Item 1A Risk Factors Our business could be negatively affected by the performance of our collaboration partners and suppliers, and any such adverse impact could be material.
Refer to Item 1. Business - Manufacturing and Distribution for more information. A significant disruption at one or more of these facilities, whether due to fire, natural disaster, power loss, intentional acts of vandalism, climate change, war, terrorism, insufficient quality, or pandemic could materially and adversely affect our business.
As the COVID-19 pandemic has shown, the global economy and the self-care markets in which we compete are susceptible to impacts from public health crises. During the initial year of the COVID-19 pandemic, we experienced a dramatic reduction in cough, cold, and flu illnesses as actions were taken and restrictions were imposed at the outset of the COVID-19 pandemic.
As the COVID-19 pandemic has shown, the global economy and the self-care markets in which we compete are susceptible to impacts from public health crises.
Our business depends upon certain customers for a significant portion of our sales, therefore our business would be adversely affected by a disruption of our relationship with these customers or any material adverse change in these customers' businesses. The risk of such impacts would be increased by continued consolidation in the sector in which our customers operate.
Our business depends upon certain customers for a significant portion of our sales, therefore our business would be adversely affected by a disruption of our relationship with these customers or any material adverse change in these customers' businesses. We have one significant customer that represented 11.8% of our consolidated net sales for the year ended December 31, 2023.
Due to these factors, we cannot guarantee that there will be sufficient supplies of these key ingredients to produce infant formula. 22 Perrigo Company plc - Item 1A Risk Factors The effects of public health outbreaks, including pandemics such as COVID-19 and epidemics, and related public and governmental actions could have a material adverse impact on our operations and our business and financial condition in the future.
The effects of public health outbreaks, including pandemics such as COVID-19 and epidemics, and related public and governmental actions could have a material adverse impact on our operations and our business and financial condition in the future.
Any such reassessment could lead to OTC products reverting to prescription. For example, as described in Item 1. Business - Government Regulation and Pricing , Irish regulators are undertaking a formal review of non-prescription codeine products, which could result in the reclassification of codeine to prescription only after a brief transition period.
Business - Government Regulation and Pricing , Irish regulators are undertaking a formal review of non-prescription codeine 17 Perrigo Company plc - Item 1A Risk Factors products, which could result in the reclassification of codeine to prescription only after a brief transition period. A final opinion is expected in the first quarter of 2024.
A disruption at any of our main manufacturing facilities could have a material adverse effect on our business, financial position, and results of operations. Our manufacturing operations are concentrated in a few locations. Refer to Item 1. Business - Manufacturing and Distribution for more information.
Moreover, if these supply chain disruptions worsen, our results of operations could be further impacted. 20 Perrigo Company plc - Item 1A Risk Factors A disruption at any of our main manufacturing facilities could have a material adverse effect on our business, financial position, and results of operations. Our manufacturing operations are concentrated in a few locations.
Item 1A. Risk Factors - Operational Risks . Other U.S. Regulations and Organizations We are subject to various other federal, state, non-governmental, and local agency rules and regulations. Compliance with the laws and regulations regarding the manufacture and sale of our current products and the discovery, development, and introduction of new products requires substantial effort, expense and capital investment.
("USP"). Compliance with the laws and regulations regarding the manufacture and sale of our current products and the discovery, development, and introduction of new products requires substantial effort, expense and capital investment. Regulation Outside the U.S.
During 2022, we experienced supply chain disruptions, including constraints in availability of freight containers and truck drivers, record delays at global shipping ports, and volatility in both cost and availability of agricultural, oil and paper based commodities driven by the war in Ukraine, which led to higher unfilled customer orders and higher input costs compared to the prior year.
Over the course of 2022 and 2023, supply chain disruptions, including volatility in both cost and availability of agricultural, oil and paper-based commodities driven by the war in Ukraine, have led to higher input costs.
Medical Devices The EU has enacted into law numerous directives and adopted many harmonizing standards pertaining to a wide range of industrial products, including medical devices.
Health ministries are authorized to cancel the registration of a product if it is found to be harmful or ineffective or if it is manufactured or marketed other than in accordance with registration conditions. Medical Devices The EU has enacted into law numerous directives and adopted many harmonizing standards pertaining to a wide range of industrial products, including medical devices.
While we believe these actions will continue to improve our ability to ship, however, there can be no assurances that we will be able to meet demand due to supply chain constraints. Moreover, if these supply chain disruptions worsen, our results of operations could be further impacted.
Benefits from our actions have begun to substantially offset inflationary pressures, and the global freight constraints in availability of freight containers and truck drivers are normalizing. While we believe these actions will continue to improve our ability to ship, however, there can be no assurances that we will be able to meet demand due to supply chain constraints.
Business - Government Regulation and Pricing , we participate in various U.S. government healthcare programs and are subject to associated price reporting, payment, and other compliance obligations.
When covering our products, these programs regulate the amount pharmacies and other healthcare providers are paid for our products. We participate in multiple programs, and are subject to associated price reporting, payment, and other compliance obligations under each. Other U.S.
Other regulatory agencies, organizations and legislation that may impact our business include, but are not limited to: • Privacy Regulations - We are subject to numerous global laws and regulations designed to protect personal data, such as the European General Data Protection Regulation (“GDPR”).
We are also subject to numerous laws and regulations designed to protect personal data, such as the California Consumer Privacy Act in the U.S. and the European General Data Protection Regulation ("GDPR").
If governments enhance regulations on the infant formula industry by, for example, requiring additional testing or compulsory batch-by-batch inspection, our sales and operating margins in this category could be adversely affected. • The regulation of List I chemicals complicate our supply chain, and adverse regulatory actions may result in temporary or permanent interruption of distribution of our products, withdrawal of our products from the market, or other penalties.
If governments enhance regulations on the infant formula industry through actions such as requiring additional testing or compulsory batch-by-batch inspection, or impose additional requirements on manufacturing practices, our sales and operating margins in this category could be adversely affected as it is costly to comply with such new regulations or requirements, and to develop compliant products and processes for our infant formula products.
Removed
Other regulatory agencies, organizations, legislation, regulations and laws that may impact our business include, but are not limited to: • Physician Payment Sunshine Act and Similar State Laws - This act and similar state laws require certain pharmaceutical manufacturers to engage in extensive tracking of payments or transfers of value to physicians and teaching hospitals, maintenance of a payment database and public reporting of the payment data. • Foreign Corrupt Practices Act of 1977 ("FCPA") - This act and other similar anti-bribery laws prohibit companies and their intermediaries from providing money or anything of value to officials of foreign governments, foreign political parties or designated public international organizations with the intent to obtain or retain business or seek a business advantage. • Federal Trade Commission ("FTC") - This agency oversees the advertising and other promotional practices of consumer products marketers.
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Item 1A. Risk Factors - Operational Risks for related risks. 10 Perrigo Company plc - Item 1 Regulation United States Regulation U.S. Food and Drug Administration Under the Federal Food, Drug and Cosmetic Act, as amended ("FFDCA") FDA has jurisdiction over OTC drug products, Active Pharmaceutical Ingredients ("API"), medical devices, cosmetics, and foods including dietary supplements and infant formula products.
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The FTC considers whether a product’s claims are substantiated, truthful and not misleading.
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The FDA’s jurisdiction can include the manufacturing, testing, labeling, packaging, storage and distribution of these products. We are committed to consistently providing our customers with high quality products that adhere to the various regulations promulgated by the FDA. The FDA conducts periodic compliance inspections of our facilities and processes.
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The FTC also reviews mergers and acquisitions of companies exceeding specified thresholds and investigates certain business practices relevant to the healthcare industry. • International Organization for Standardization ("ISO") - The ISO Standards specify requirements for a Quality Management System that demonstrates the ability to consistently provide products that meet customer and applicable regulatory standards and includes processes to ensure continuous improvement.
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If the FDA or comparable regulatory authority becomes aware of new safety information about any of our products, these authorities may require further inspection, enhancement to manufacturing controls, labeling changes, additional testing requirements, restrictions of indicated uses or marketing, post-approval studies or post-market surveillance.
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Our infant formula manufacturing sites are ISO 9001-2008 Certified for Quality Management Systems. ISO inspections are conducted at least annually. • United States Pharmacopoeia Convention, Inc. ("USP") - The USP is a non-governmental, standard-setting organization.
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Active Pharmaceutical Ingredients ("API") Third parties develop and manufacture APIs for use in certain of our pharmaceutical products that are sold in the U.S. and other global markets. API manufacturers typically submit a drug master file to the FDA that provides proprietary information related to the API manufacturing process.
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The FFDCA incorporates by reference the USP quality and testing standards and monographs as the standard that must be met for the listed drugs, unless compliance with those standards is specifically disclaimed on the product’s labeling. USP standards exist for most Rx and OTC pharmaceuticals and many nutritional supplements.
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The FDA inspects the manufacturing facilities to assess compliance and the facilities and procedures must be compliant before API may be imported into the U.S. Medical Devices We are subject to the Medical Device Amendments of 1976 to the FFDCA and its subsequent amendments in the U.S.
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The FDA typically requires USP compliance as part of cGMP compliance. • Health Insurance Portability and Accountability Act ("HIPAA") - HIPAA is a set of regulations designed to protect personal information and data collected and stored in medical records.
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The regulations issued thereunder provide for regulation by the FDA of the design, manufacture and marketing of medical devices, including some of our products marketed under our oral care and OTC businesses. All of our current medical devices fall under Class I or Class II of the regulations.
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It established a national standard to be used in all doctors' offices, hospitals and other businesses where personal medical information is stored. In addition to protecting personal medical information, HIPAA also gives patients the right to view their medical records and request changes if the data is incorrect.
Added
These devices are also subject to other general controls established by the FDA, such as registration, listing, labeling, and reporting obligations. Infant Formula The FDA’s Center for Food Safety and Applied Nutrition is responsible for the regulation of infant formula.
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We could be subject to criminal penalties if we knowingly obtain individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or for aiding and abetting the violation of HIPAA. • Consumer Product Safety Commission ("CPSC") - The CPSC has published regulations requiring child resistant packaging on certain products including pharmaceuticals and dietary supplements.
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The Office of Nutrition, Labeling and Dietary Supplements ("ONLDS") has labeling responsibility for infant formula, while the Office of Food Additive Safety ("OFAS") has program responsibility for food ingredients and packaging.
Removed
The manufacturer of any product that is subject to any CPSC rule, ban, standard or regulation must certify that, based on a reasonable testing program, the product complies with CPSC requirements. 13 Perrigo Company plc - Item 1 Regulation • California Safe Drinking Water and Toxic Enforcement Act ("Prop 65") - Prop 65 is a right-to-know warnings law that allows the state attorney general and private enforcers to sue on behalf of the public claiming the products in question sold in California violate the law by exposing consumers to toxic chemicals in levels above those allowed by regulation without carrying warnings. • California Consumer Privacy Act ("CCPA") - CCPA went into effective on January 1, 2020, which enhanced the data protection rights of residents in California.
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The ONLDS evaluates whether an infant formula manufacturer has met the requirements under the FFDCA and consults with the OFAS regarding the safety of ingredients in infant formula and of packaging materials for infant formula.
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This law increases our responsibility and potential liability related to personal data of California residents that we process.
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Before marketing a particular infant formula, the manufacturer must provide regulatory agencies assurance of the nutritional quality of that particular formulation consistent with the FDA’s labeling, nutrient content, and manufacturer quality control requirements.
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On January 1, 2023 the California Privacy Rights Act went into effect and expands upon the CCPA and data privacy right protections. • Other State Agencies - We are subject to regulation by numerous other state health departments, insurance departments, boards of pharmacy, state controlled substance agencies, state consumer health and safety regulations, and other comparable state agencies, each of which have license requirements and fees that vary by state.
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A manufacturer must notify the FDA at least 90 days before the marketing of any infant formula that differs fundamentally in processing or in composition from any previous formulation produced by the manufacturer.
Removed
The GDPR introduced more stringent data protection requirements in the European Union ("EU"), as well as substantial fines for breaches of the data protection rules.
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We actively monitor this process and make the appropriate adjustments to remain in compliance with current FDA rules regarding current Good Manufacturing Practice ("cGMP"), quality control procedures, quality factors, notification requirements, and reports and records for the production of infant formulas.
Removed
The GDPR increased our responsibility and potential liability in relation to personal data that we process, and we have put in place appropriate mechanisms to comply with the GDPR. • Transparency Laws - In various jurisdictions in which we operate, we are subject to the laws and regulations aimed at increasing transparency of financial relationships between healthcare professionals and pharmaceutical/medical device manufacturers.
Added
In addition, the FFDCA requires infant formula manufacturers to test product composition during production and shelf-life; to keep records on production, testing, and distribution of each batch of infant formula; to use cGMP and quality control procedures; and to maintain records of all complaints and adverse events, some of which may reveal the possible existence of a health hazard.
Removed
These acts require certain pharmaceutical manufacturers to engage in extensive tracking of payments or transfers of value to healthcare professionals. • Anti-Bribery Laws - Various jurisdictions in which we operate have laws and regulations, including the U.K.
Added
The FDA conducts yearly inspections of all facilities that manufacture infant formula, inspects new facilities during early production runs, and collects and analyzes samples of infant formula. U.S.
Removed
Bribery Act 2010 and the Irish Criminal Justice (Corruption Offenses) Act 2018, aimed at preventing and penalizing corrupt and anticompetitive behavior. • Rules and Regulations Infant Formula - Outside of the U.S., country-specific regulations define the requirements that we must comply with regarding the manufacturing, testing, labeling, packaging, storage, distribution, and promotion of infant formula.
Added
Department of Agriculture The Organic Foods Production Act enacted under Title 21 of the 1990 Farm Bill established uniform national standards for the production and handling of foods labeled as "organic." Our infant formula manufacturing sites in Vermont, Ohio and Wisconsin adhere to the standards of the U.S.
Removed
We are subject to ongoing periodic inspection through these complex regulations, including by the Canadian Food Inspection Agency ("CFIA"). European Union On July 14, 2021, the European Commission adopted a set of proposals to ensure polices are aligned with the goal of reducing net greenhouse gas emissions by at least 55% by 2030 – the EU Green Deal.
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Department of Agriculture ("USDA") National Organic Program for production, handling, and processing to maintain the integrity of organic products and are USDA-certified, enabling them to produce and label organic products for U.S. and Canadian markets. 11 Perrigo Company plc - Item 1 Regulation U.S. Environmental Protection Agency The U.S.
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Health ministries are authorized to cancel the registration of a product if it is found to be harmful or ineffective or if it is manufactured or marketed other than in accordance with registration conditions. The legislation governing the European pharmaceutical industry is subject to an ongoing consultation and extensive review.
Added
Environmental Protection Agency ("EPA") is the main regulatory body in the United States governing environmental regulation.
Removed
Updates to the existing pharmaceutical law are anticipated to be implemented in 2023. These updates could bring opportunity in terms of increased flexibility in some areas but also risk as certain aspects of the law are made more restrictive.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur primary facilities by geographic area were as follows at December 31, 2022: Country Number of Facilities Segment(s) Supported Ireland 1 CSCA, CSCI United States 44 CSCA, CSCI France 7 CSCI Belgium 5 CSCI China 5 CSCA, CSCI United Kingdom 5 CSCI Germany 4 CSCI Switzerland 4 CSCI Austria 3 CSCI Italy 3 CSCI Australia 2 CSCI Greece 2 CSCI Spain 2 CSCI 35 Perrigo Company plc - Item 2 We believe that our production facilities are adequate to support the business, and our property and equipment are well maintained.
Biggest changeOur primary facilities by geographic area were as follows at December 31, 2023: Country Number of Facilities Segment(s) Supported Ireland 1 CSCA, CSCI United States 41 CSCA, CSCI France 8 CSCI Belgium 5 CSCI China 5 CSCA, CSCI United Kingdom 5 CSCI Germany 4 CSCI Switzerland 4 CSCI Austria 3 CSCI Hong Kong 2 CSCI Finland 2 CSCI Portugal 2 CSCI Australia 2 CSCI Greece 2 CSCI Spain 2 CSCI 33 Perrigo Company plc - Item 2 We believe that our production facilities are adequate to support the business, and our property and equipment are well maintained.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeQuantitative and Qualitative Disclosures About Market Risk 54 Item 8. Financial Statements and Supplementary Data 55
Biggest changeQuantitative and Qualitative Disclosures About Market Risk 53 Item 8. Financial Statements and Supplementary Data 54 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 118 Item 9A. Controls and Procedures 119 Item 9B. Other Information 119
Item 3. Legal Proceedings 36 Item 4. Mine Safety Disclosures 36 Additional Item. Information About Our Executive Officers 36 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 Item 6. [Reserved] 37 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A.
Item 3. Legal Proceedings 34 Item 4. Mine Safety Disclosures 34 Additional Item. Information About Our Executive Officers 34 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 Item 6. [Reserved] 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeBezerra held a number of positions of increasing responsibility at Monsanto company from 1998 to 2019. 48 James E. Dillard III James E. Dillard III was named Executive Vice President and President, Consumer Self-Care Americas in October 2021 and previously served as Executive Vice President, Chief Scientific Officer from January 2019 until October 2021.
Biggest changeBezerra held a number of positions of increasing responsibility at Monsanto company from 1998 to 2019. 49 Catherine T. Schmelter Ms. Schmelter was named Executive Vice President and President Consumer Self-care Americas in September 2023. Prior to joining Perrigo, Ms. Schmelter was most recently at Treehouse Foods, where she served as Chief Transformation Officer. Prior to Treehouse Foods, Ms.
Ives previously served as Vice President Regulatory Affairs, Consumer Self-Care International from December 2017 to September 2020 and Vice President, Consumer Self-Care Americas, from September 2020 until May 2022. 42 Ronald C. Janish Mr. Janish was named Chief Transformation Officer in January 2019 and Executive Vice President of Global Operations and Supply Chain in October 2015.
Ives previously served as Vice President Regulatory Affairs, Consumer Self-Care International from December 2017 to September 2020 and Vice President, Consumer Self-Care Americas, from September 2020 until May 2022. 43 Ronald C. Janish Mr. Janish was named Chief Transformation Officer in January 2019 and Executive Vice President of Global Operations and Supply Chain in October 2015.
Prior to that she served as Vice President and Head of Global Patient Safety from January 2014 until November 2015. 53 Robert Willis Mr. Willis was named Executive Vice President and Chief Human Resources Officer in March 2019 after serving as Vice President of Human Resources Global Businesses for nearly six years. Prior to joining Perrigo, Mr.
Prior to that she served as Vice President and Head of Global Patient Safety from January 2014 until November 2015. 54 Robert Willis Mr. Willis was named Executive Vice President and Chief Human Resources Officer in March 2019 after serving as Vice President of Human Resources Global Businesses for nearly six years. Prior to joining Perrigo, Mr.
Andersen served as Executive Vice President - Europe for LEO-Pharma from December 2015 to May 2016. 61 Eduardo Bezerra Eduardo Bezerra joined Perrigo in May 2022 as Executive Vice President and Chief Financial Officer. Mr. Bezerra previously served as Senior Vice President and Chief Financial Officer for Del Monte Fresh Produce, Inc., from 2019 to 2022. Before that, Mr.
Andersen served as Executive Vice President - Europe for LEO-Pharma from December 2015 to May 2016. 62 Eduardo Bezerra Eduardo Bezerra joined Perrigo in May 2022 as Executive Vice President and Chief Financial Officer. Mr. Bezerra previously served as Senior Vice President and Chief Financial Officer for Del Monte Fresh Produce, Inc., from 2019 to 2022. Before that, Mr.
He formerly served as Senior Vice President and Chief Information Officer from October 2006 to November 2015. 65 Kyle L. Hanson Kyle L. Hanson joined Perrigo in June 2022 as Executive Vice President, General Counsel and Corporate Secretary. Ms.
He formerly served as Senior Vice President and Chief Information Officer from October 2006 to November 2015. 66 Kyle L. Hanson Kyle L. Hanson joined Perrigo in June 2022 as Executive Vice President, General Counsel and Corporate Secretary. Ms.
Hanson previously served as Senior Vice President, General Counsel and Secretary for Wolverine Worldwide, Inc., from 2018 to 2022. 58 Alison Ives Alison Ives was appointed Executive Vice President and Chief Scientific Officer in June 2022. Ms.
Hanson previously served as Senior Vice President, General Counsel and Secretary for Wolverine Worldwide, Inc., from 2018 to 2022. 59 Alison Ives Alison Ives was appointed Executive Vice President and Chief Scientific Officer in June 2022. Ms.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ADDITIONAL ITEM. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers and their ages and positions as of February 24, 2023 were: Title and Business Experience Age Svend Andersen Mr. Andersen was named Executive Vice President and President, Consumer Self-Care International in February 2017. Prior to joining Perrigo in May 2016, Mr.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ADDITIONAL ITEM. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers and their ages and positions as of February 23, 2024 were: Title and Business Experience Age Svend Andersen Mr. Andersen was named Executive Vice President and President, Consumer Self-Care International in February 2017. Prior to joining Perrigo in May 2016, Mr.
Willis gained more than 20 years of experience in Human Resources leadership through roles with Fawaz Alhokair Group, GE Capital, DoubleClick, and Norkom Technologies. 54 36 Perrigo Company plc - Item 5 PART II.
Willis gained more than 20 years of experience in Human Resources leadership through roles with Fawaz Alhokair Group, GE Capital, DoubleClick, and Norkom Technologies. 55 34 Perrigo Company plc - Item 5 PART II.
He served as Senior Vice President of International and Rx Operations from 2012 until 2015. 57 Murray S. Kessler Mr. Kessler was appointed President, Chief Executive Officer and Board Member of Perrigo Company plc, effective October 8, 2018. Before joining Perrigo, Mr.
He served as Senior Vice President of International and Rx Operations from 2012 until 2015. 58 Patrick Lockwood-Taylor Patrick Lockwood-Taylor was appointed President, Chief Executive Officer and Board Member of Perrigo Company plc, effective June 30, 2023.
Kessler served as the Chairman of the Board of Directors, President and Chief Executive Officer of Lorillard, Inc. from 2010 to 2015. 63 Grainne Quinn Dr. Quinn was named Executive Vice President in July 2016 and has served as Chief Medical Officer since November 2015.
Prior to this position, he spent more than 20 years with Procter & Gamble in various roles, including brand franchise and general management leadership positions. 55 Grainne Quinn Dr. Quinn was named Executive Vice President in July 2016 and has served as Chief Medical Officer since November 2015.
Removed
Prior to joining Perrigo, he served as Senior Vice President, Research, Development and Sciences and Chief Innovation Officer at Altria Group, Inc. from January 2009 to May 2018. 59 Thomas M. Farrington Mr. Farrington was named Executive Vice President and Chief Information Officer in November 2015.
Added
Schmelter spent 10 years at Kraft Foods in various leadership roles, including Vice President of Meals, after beginning her CPG career at General Mills. 55 Thomas M. Farrington Mr. Farrington was named Executive Vice President and Chief Information Officer in November 2015.
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He joined Perrigo from Bayer AG, where he was Regional President of Consumer Health North America, while also serving a dual role as President of Bayer U.S. Before Bayer, Mr. Lockwood-Taylor served as President and CEO of The Oneida Group Inc., a private company.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph below shows a comparison of our cumulative total return with the cumulative total returns for the S&P 500 Index, the S&P Pharmaceuticals Index, and the S&P Consumer Staples Index, which we added as a result of the Rx business divestiture.
Biggest changeAs of February 23, 2024, there were 4,117 record holders of our ordinary shares. The graph below shows a comparison of our cumulative total return with the cumulative total returns for the S&P 500 Index, and the S&P Consumer Staples Index. The graph assumes an investment of $100 at the beginning of the period and the reinvestment of any dividends.
We did not repurchase any shares during the year ended December 31, 2022 or December 31, 2021 . During the year ended December 31, 2020 , we repurchased 3.4 million ordinary shares at an average purchase price of $48.28 per share for a total of $164.2 million under the 2018 Authorization .
We did not repurchase any shares during the year ended December 31, 2023 or December 31, 2022 . During the year ended December 31, 2020 , we repurchased 3.4 million ordinary shares at an average purchase price of $48.28 per share for a total of $164.2 million under the 2018 Authorization .
As of December 31, 2022 the approximate value of shares available for purchase under the 2018 Authorization was $835.8 million .
As of December 31, 2023, the approximate value of shares available for purchase under the 2018 Authorization was $835.8 million .
The graph assumes an investment of $100 at the beginning of the period and the reinvestment of any dividends. Information in the graph is presented for the years ended December 31, 2017 through December 31, 2022. * $100 invested on December 31, 2017 - in stock or index - including reinvestment of dividends. Indexes calculated on month-end basis.
Information in the graph is presented for the years ended December 31, 2018 through December 31, 2023. * $100 invested on December 31, 2018 - in stock or index - including reinvestment of dividends. Indexes calculated on month-end basis.
Removed
Our common equity was also traded on the Tel Aviv Stock Exchange (“TASE”) under the same symbol between March 16, 2005 and February 23, 2022, which we voluntarily delisted from trading as a result of the Rx business divestiture. As of February 24, 2023, there were 4,154 record holders of our ordinary shares.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeNote 2 and Note 20 . 38 Perrigo Company plc - Item 7 Executive Overview Recent Highlights Market Factors Economic Uncertainty While many consumer self-care market factors from the COVID-19 pandemic are trending towards a "new normal" , current macroeconomic conditions remain very dynamic, including impacts from rising inflation and interest rates, volatile changes in foreign currency exchange rates, political unrest, and legislative and regulatory changes.
Biggest changeBusiness . For results by segment and geographic locations see below Segment Results and Item 8. Note 2 and Note 20 . Recent Highlights Market Factors and Trends Economic Uncertainty Current macroeconomic conditions remain very dynamic, including impacts from rising inflation and interest rates, volatile changes in foreign currency exchange rates, political unrest, COVID-19 and legislative and regulatory changes.
This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes found in Item 8 of this report. See also " Cautionary Note Regarding Forward-Looking Statements ." This discussion and analysis compares 2022 results to 2021. For discussion and analysis that compares 2021 results to 2020, see Item 7.
This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes found in Item 8 of this report. See also " Cautionary Note Regarding Forward-Looking Statements ." This discussion and analysis compares 2023 results to 2022. For discussion and analysis that compares 2022 results to 2021, see Item 7.
War in Ukraine The invasion of Ukraine by Russia and resulting economic and political sanctions imposed by the United States, United Kingdom, European Union, and other countries on Russia, Belarus, and occupied regions in Ukraine have negatively impacted our results from operations in the region. We currently have 90 employees working in our Ukraine subsidiary.
War in Ukraine The invasion of Ukraine by Russia and resulting economic and political sanctions imposed by the United States, United Kingdom, European Union, and other countries on Russia, Belarus, and occupied regions in Ukraine have negatively impacted our results from operations in the region. We currently have 68 employees working in our Ukraine subsidiary.
CSCA previously included our Latin American businesses until they were disposed on March 9, 2022. • Consumer Self-Care International ("CSCI") comprises our consumer self-care business outside of the U.S. and Canada, primarily in Europe and Australia. For information on each segment, our business environment, and competitive landscape, refer to Item 1. Business .
CSCA previously included our Latin American businesses until they were disposed on March 9, 2022. • Consumer Self-Care International ("CSCI") comprises our consumer self-care business outside of the U.S. and Canada, primarily in Europe and Australia. 36 Perrigo Company plc - Item 7 Executive Overview For information on each segment, our business environment, and competitive landscape, refer to Item 1.
In addition, we continue to invest in other initiatives, including innovation, information systems and tools, and our people to drive consistent and sustainable results in line with consumer-packaged goods peers. Our fiscal year begins on January 1 and ends on December 31.
In addition, we continue to invest in other initiatives, including innovation, information systems and tools, and our people to drive consistent and sustainable results. Our fiscal year begins on January 1 and ends on December 31.
A significant portion of the annual run-rate potential savings of the Program, between $150 million to $200 million (not including related depreciation expense on capital investments), are anticipated by the end of fiscal year 2025, along with associated potential spend of between $300 million and $450 million.
A significant portion of the annual run-rate potential savings of the Program, between $150 million to $200 million (not including related depreciation expense on capital investments), are anticipated by the end of fiscal year 2025, along with associated potential spend of between $300 38 Perrigo Company plc - Item 7 Executive Overview million and $450 million.
ITEM 6. [RESERVED] 37 Perrigo Company plc - Item 7 Executive Overview ITEM 7.
ITEM 6. [RESERVED] 35 Perrigo Company plc - Item 7 Executive Overview ITEM 7.
Significant 39 Perrigo Company plc - Item 7 Executive Overview exchange rate fluctuations, especially in the Euro or the British Pound Sterling, have had, and could continue to have, a significant impact on our net sales, net earnings and cash flows, and have significantly impacted our historical net sales, costs and net earnings and could do so in the future.
Significant exchange rate fluctuations, especially in the Euro or the British Pound Sterling, have had, and could continue to have, a significant impact on our net sales, net earnings and cash flows, and have significantly impacted our historical net sales, costs and net earnings and could do so in the future.
Future impacts are difficult to predict due to the high level of uncertainty related to the war’s duration, evolution and resolution. If the conflict spreads or materially escalates, or economic conditions deteriorate, the impact on our business and results of operations could be material. Foreign Exchange We have both translation and transaction exposure to the fluctuation of exchange rates.
Future impacts are difficult to predict due to the high level of uncertainty related to the war’s duration, evolution and resolution. If the conflict spreads or materially escalates, or economic conditions deteriorate, the impact on our business and results of operations could be material.
Translation exposures relate to exchange rate impacts of measuring income statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency.
Foreign Exchange We have both translation and transaction exposure to the fluctuation of exchange rates. Translation exposures relate to exchange rate impacts of measuring income statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency.
Any causes of market size contraction could reduce our sales or erode our operating margin and consequently reduce our net earnings and cash flows.
Any causes of market size contraction could reduce our sales or erode our operating margin and consequently reduce our net earnings and cash flows. Our interest expense is impacted by the overall global economic and interest rate environment.
In 2022, we initiated a Supply Chain Reinvention Program to reduce structural costs, improve profitability and our service levels to our retail partners, and strengthen our resiliency by streamlining and simplifying our global supply chain. Through this initiative, we plan to reduce portfolio complexity, invest in advanced planning capabilities, diversify sourcing, and optimize our manufacturing assets and distribution models.
Restructuring Supply Chain Reinvention Program In 2022, we initiated a Supply Chain Reinvention Program to reduce structural costs, improve profitability and our service levels to our retail partners, and strengthen our resiliency by streamlining and simplifying our global supply chain.
Inflationary Costs and Supply Chain Supply chain disruptions, including constraints in availability of freight containers and truck drivers, record delays at global shipping ports, and volatility in both cost and availability of agricultural, oil and paper based commodities driven by the war in Ukraine has led to higher unfulfilled customer orders and higher input costs.
Inflationary Costs and Supply Chain Over the course of 2022 and 2023, supply chain disruptions, including volatility in both cost and availability of agricultural, oil and paper based commodities driven by the war in Ukraine, have led to higher input costs.
Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K for the year ended December 31, 2021.
Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the year ended December 31, 2022. EXECUTIVE OVERVIEW Perrigo is a leading pure-play self-care company with more than a century of innovation and experience serving the health and wellness needs of consumers.
Removed
EXECUTIVE OVERVIEW We are a leading provider of over-the-counter ("OTC") health and wellness solutions that are designed to enhance individual well-being and empower consumers to proactively prevent or treat conditions that can be self-managed. Our vision is to make lives better by bringing Quality, Affordable Self-Care Products that consumers trust everywhere they are sold .
Added
As one of the originators of the over-the-counter ("OTC") self-care market, Perrigo has a powerful legacy and vast scale in producing high-quality self-care products through a proven ability to proactively shape its portfolio to meet the evolving needs of consumers and customers.
Removed
We are headquartered in Ireland and sell our products primarily in North America and Europe as well as in other markets around the world. Our core competencies are geared to fully take advantage of the massive global trend towards self-care.
Added
Perrigo provides access to trusted self-care products that can be procured without needing to visit a doctor for a prescription.
Removed
We define self-care as not just treating disease or helping individuals feel better after taking a product, but also maintaining and enhancing their overall health and wellness.
Added
Guided by our vision and purpose, our strategic goal is to create a sustainable and value accretive growth engine by 1) delivering consumer preferred brands and innovation, 2) driving category growth with our customers, 3) powering our business with our world-class quality and supply chain, including a focus on sustainability with meaningful goals to reduce greenhouse gas emissions, water, and waste, in addition to improving the recyclability of our packaging, and 4) evolving our ways of working to one operating model.
Removed
Consistent with our vision, we recently completed our three-year strategy to transform the Company into a consumer self-care leader by reconfiguring our portfolio through the divestiture of our Rx business in 2021 and acquiring Héra SAS (“HRA Pharma”) in 2022. Additionally, we removed significant uncertainty in 2021 through final settlement of the Irish Revenue Notice of Amended Assessment.
Added
Our unique competency is to deliver a blended-branded business model of branded, value and store brand product offerings that provide consumers access to self-care products across the value spectrum.
Removed
Upon completion of our transformation, we have transitioned our strategy to ‘Optimizing’ its business and ‘Accelerating’ profitable growth. Several initiatives are anticipated to propel this strategy, including plans to achieve significant synergies from our acquisitions and implementation of our Supply Chain Reinvention Program.
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Perrigo's broad offerings are well diversified across several major product categories as well as across geographies, primarily in North America and Europe with no one product representing more than 3% of total revenue. In North America, Perrigo is the leading store brand private label provider of self-care products in many categories, including upper respiratory, nutrition and women's health.
Removed
For results by segment and geographic locations see below Segment Results and Item 8.
Added
In Europe, our portfolio consists primarily of brands, including Compeed ® , EllaOne ® , Solpadeine ® , and ACO ® . Several initiatives are anticipated to advance our self-care strategy, including the implementation of our Supply Chain Reinvention Program and Project Energize, a global investment and efficiency program.
Removed
Benefits from our actions are anticipated to substantially offset inflationary pressures, however, the duration and extent of inflation pressure, including impacts from the war in Ukraine, changes in labor market availability and wage rates, as well as the acceptance of any further pricing actions we may take in the markets we operate, is uncertain.
Added
We manage interest rate risk through our capital structure and the use of interest rate swaps to fix the interest rate on greater than 90% of our outstanding debt.
Removed
Impact of COVID-19 Pandemic The COVID-19 global pandemic, and actions to slow such outbreaks and the emergence of any new variants, have impacted, and continue to impact, our business and the global self-care markets in which we sell our products.
Added
Benefits from our actions have begun to substantially offset inflationary pressures, and the global freight constraints in availability of freight containers and truck drivers have normalized. However, future supply chain disruptions and inflationary pressures from the continuation of the war in Ukraine and the more recent events from the war in Israel are uncertain.
Removed
This evolution may contribute to economic recessions or a slowdown of economic growth in certain countries or globally, which may impact demand for our products, some of which may be more than temporary.
Added
Infant Formula As part of its efforts to prevent supply interruptions and future Cronobacter spp. illnesses associated with powdered infant formula, in March 2023, the FDA released an “Immediate National Strategy to Increase the Resiliency of the U.S.
Removed
COVID-19 has and could lead to future volatility in consumer preferences and access to our products (due to government actions or key material, transportation and labor shortages impacting our ability to produce and ship products), or impact consumers’ movements and access to our products.
Added
Infant Formula Market” and issued a letter to the powdered infant formula industry to share information to assist the industry in improving the microbiologic safety of powdered infant formula.
Removed
For the year ended December 31, 2022, Ukraine operations accounted for approximately $9 million of net sales, $6 million of gross profit, and $2 million of operating income, and there were no sales in Russia. During 2021, these countries accounted for approximately $27 million of net sales, $15 million of gross profit, and $8 million of operating income combined.
Added
In response to those changes, we made considerable investments in all our infant formula manufacturing sites, including enhanced cleaning and sanitation protocols, enhancements to our environmental monitoring programs and added additional quality personnel. These changes resulted in lower manufacturing output and production yields across our infant formula network.
Removed
In 2022, significant exchange rate fluctuations, especially weakening of the Euro and the British Pound Sterling compared to the U.S. dollar had a significant foreign exchange impacts leading to lower net sales, net earnings and cash flows.
Added
As previously disclosed, the Company received a warning letter from the FDA on August 30, 2023 relating to the Perrigo Wisconsin infant formula facility, which was acquired from a third party in November 2022.
Removed
Acquisitions, Disposals and Restructuring In March 2022 we completed the sale of our Latin American businesses to Advent International. This transaction was part of Perrigo's margin improvement and Project Momentum cost savings initiatives.
Added
While the Company worked to resolve the issues raised in the August 30 letter, on November 29, 2023, the Company received notice from the FDA of additional inspection observations relating to Perrigo Wisconsin. Consistent with the Company’s commitment to quality, the Company temporarily paused all production at that facility and conducted an extended site-wide assessment and cleaning.
Removed
In April 2022 we completed the previously announced acquisition of HRA Pharma for €1.8 billion, or approximately $1.9 billion based on exchange rates at the time of closing. Upon completion of the acquisition, we updated our global reporting product categories. Refer to Item 8. Note 2 for further details.
Added
The Company also bolstered its internal resources and brought in additional outside expertise to help revise, enhance and strengthen comprehensive standards and processes across our infant formula network.
Removed
During the year ended December 31, 2022, we recorded total Supply Chain Reinvention Program restructuring and implementation charges of approximately $25 million, comprised primarily of consulting and severance expenses. We initiated the first phase of our Supply Chain Reinvention Program by announcing on November 1, 2022, a $170 million strategic investment to expand and strengthen our U.S. infant formula manufacturing.
Added
As part of this plan, each of our infant formula manufacturing facilities are undergoing a site-specific evaluation and a plant wide reset, which may entail a pausing of production for comprehensive cleaning, infrastructure improvements and further enhancements to quality protocols and manufacturing processes. Perrigo Wisconsin has recently completed its plant-wide reset, and is now back in production.
Removed
This strategic investment included the $110 million purchase of Nestlé’s Gateway infant formula plant in Eau Claire, Wisconsin, along with the U.S. and Canadian rights to the GoodStart ® infant formula brand and other related formula brands ("Gateway"), and an additional $60 million investment into the plant to expand its capacity. Refer to Item 8.
Added
Our other two infant formula facilities are under evaluation or set to begin a reset in the first quarter of 2024.
Removed
Note 3 for further details of these transactions. Indebtedness and Capital In April 2022, we entered into new senior secured credit facilities as further explained in Item 8. Note 12 . We used a portion of the proceeds to finance the acquisition of HRA Pharma and to repay our outstanding term loan facility.
Added
We have incurred and expect to incur certain extraordinary non-recurring costs associated with the evolving U.S. infant formula regulatory landscape, including consulting and legal fees relating to the Company’s responses to the FDA and the development and institution of new protocols across our infant formula manufacturing sites, as well as other costs relating to the extended cleaning and sanitization and the pausing and restarting of production.
Removed
We also entered into several financing hedge activities to economically hedge the purchase price for HRA Pharma, fix the interest rate on a substantial portion of the 2022 financing agreements, and to reduce the Euro exposure of our net investment in European operations.
Added
We also expect higher ongoing operating costs at our infant formula manufacturing sites moving forward as we implement 37 Perrigo Company plc - Item 7 Executive Overview our enhanced program with additional internal capabilities. Cash costs in 2024 to achieve this remediation plan are estimated at $35 to $45 million.
Removed
Tax Updates On December 28, 2022, we reached an agreement with IRS Appeals providing for settlement of a Notice of Proposed Adjustment ("NOPA") issued on December 11, 2019.
Added
Due to these costs and the unabsorbed overhead and depressed sales volumes resulting from these actions, infant formula results in 2024 is now expected below 2023 levels.
Removed
The NOPA proposed to disallow reductions to gross sales income on the sale of prescription products to wholesalers for accrued wholesale customer pipeline chargebacks where the prescription products were not re-sold by such wholesalers to covered retailers by the end of the tax year.
Added
Israel-Hamas War We continue to closely monitor the ongoing Israel/Hamas conflict and the social, political and economic environment in Israel and in the surrounding region to evaluate the impacts on our operations and supply chain.
Removed
The settlement agreement resolved this issue for all tax years through 2021, the last tax year with chargebacks due to the sale of the Rx business in July 2021. The required settlement payment of $8.3 million was fully covered by reserves for this issue. Refer to Item 8. Note 18 for additional information and Item 1A.
Added
Israel is a global technology research and development center that plays a critical role to the global API market, as a number of key suppliers are located within Israel. The Company sources some raw materials and finished goods from suppliers in Israel for certain self-care products, including Omeprazole.
Removed
Risk Factors - Tax Related Risks for risks associated with tax disputes.
Added
Despite this situation, to date, Perrigo has confirmed that our suppliers in the region have active operations and continue to manufacture materials for us, and we have not received any reports of restrictions on imports or exports in Israel. However, there is potential for some disruption as it relates to in-country logistics, including freight.
Removed
RESULTS OF OPERATIONS Currency Translation Currency translation effects described below represent estimates of the net differences between translation of foreign currency transactions into U.S. dollars for the year ended December 31, 2022 at the average exchange rates for the reporting period and average exchange rates for the year ended December 31, 2021. 40 Perrigo Company plc - Item 7 Consolidated CONSOLIDATED Consolidated Financial Results Year Ended (in millions, except percentages) December 31, 2022 December 31, 2021 Net sales $ 4,451.6 $ 4,138.7 Gross profit $ 1,455.4 $ 1,416.2 Gross profit % 32.7 % 34.2 % Operating income $ 78.9 $ 410.4 Operating income % 1.8 % 9.9 % Net sales increased $312.9 million, or 7.6%, due to: • $354.8 million increase, or 8.8%, due primarily to $155.9 million in strategic pricing actions and $140.5 million stemming from global category growth and U.S. store brand market share gains resulting in higher net sales across several Perrigo global product categories.
Added
As a precaution, Perrigo has engaged alternate suppliers to help minimize a potential supply disruption. If the conflict spreads or materially escalates, or if the conflict leads to further volatility and uncertainty in financial markets or economic conditions, the impact on our business and results of operations could be material.
Removed
These include increases in Upper Respiratory due to a strong global cough, cold and flu season and the U.S. launch of Nasonex ® 24HR, Nutrition due primarily to benefits from the recall of a national brand infant formula manufacturer and Skin Care due primarily to new products and anti-parasite offerings.
Added
Through this initiative, we plan to reduce portfolio complexity, invest in advanced planning capabilities, diversify sourcing, and optimize our manufacturing assets and distribution models.
Removed
An incremental six months of contract manufacturing sales to the divested Rx business, which closed on July 6, 2021, also contributed $62.0 million of net sales; and • $236.3 million increase from our acquisitions of HRA Pharma and Gateway, inclusive of a $23.9 million unfavorable effect of currency translation; partially offset by • $193.2 million decrease from unfavorable foreign currency translation excluding acquisitions; and • $85.6 million decrease from the divestitures of the Latin American businesses and ScarAway ® brand asset.
Added
During 2023, we achieved approximately $40 million of net savings, partially offset by approximately $28 million of restructuring expense. Refer to Item 8. N ote 17. Project Energize Perrigo has successfully transformed into a pure-play consumer self-care company and is now embarking on the next stage of its self-care journey - evolving to One Perrigo.
Removed
Operating income decreased $331.5 million, or 80.8%, due to: • $39.2 million increase in gross profit driven by higher gross profit flow-through resulting from higher net sales, $104.2 million from the addition of HRA Pharma and Gateway, partially offset by $122.0 million of cost of goods sold inflation and freight, and lower productivity, and $94.0 million of unfavorable foreign currency translation excluding acquisitions, as well as divestitures of the Latin American businesses and ScarAway ® brand asset.
Added
This evolution will create sustainable, value accretive growth through a blended-branded business model that better positions the Company to win in self-care. As part of the Company's sustainable, value accretive growth strategy, the Company is launching Project Energize - a global investment and efficiency program to drive the next evolution of capabilities and organizational agility.
Removed
Gross profit as a percentage of net sales decreased 150 basis points compared to the prior year due to acquisition related inventory values stepped up to fair value, partially offset by the same factors that drove gross profit. • $370.7 million increase in operating expenses due primarily to: • The absence of the $417.6 million Omega arbitration award received in the prior year; • $151.9 million increase from the addition of HRA Pharma and Gateway; and • $56.0 million increase due primarily to increased distribution, higher employee expenses; and • $25.6 million of higher restructuring expenses in the current year; partially offset by • $63.0 million decrease from foreign currency translation excluding acquisitions; and • $173.1 million of prior year impairment charges primarily related to the divested Latin American businesses, and $14.2 million decrease from the divestitures of the Latin American businesses and ScarAway ® brand asset, and approximately $44.3 million of lower litigation expense.
Added
This three-year program is expected to produce significant benefits in the Company’s long-term business performance by enabling our One Perrigo growth strategy, increasing organizational agility and mitigating impacts from stabilizing and strengthening the infant formula business.
Removed
Impairments During the year ended December 31, 2022, we recorded a loss from disposal of a fixed asset of $4.6 million in our Unallocated segment.
Added
Project Energize will be initiated in the first quarter of 2024, subject to local law and consultation requirements, and is expected to deliver an annualized pre-tax savings in the range of $140 million to $170 million by 2026. The Company expects to reinvest approximately $40 million to $60 million of these savings to drive its blended-branded business model.
Removed
During the year ended December 31, 2021, we recorded an impairment associated with our CSCA Latin American divestiture announcement totaling $162.2 million, of which $6.1 million related to goodwill and the remainder related to assets held-for-sale.
Added
Restructuring and related charges associated with these actions are estimated to be in the range of $140 million to $160 million, including $20 million to $40 million in investments to enhance capabilities and are expected to be substantially incurred by the end of 2026.
Removed
Also during the year ended December 31, 2021, we recorded an impairment within our annual impairment testing on our CSCI Oral Care International reporting unit totaling $10.0 million of goodwill and $0.9 million of IPR&D. 41 Perrigo Company plc - Item 7 Consolidated CONSUMER SELF-CARE AMERICAS Segment Financial Results Year Ended (in millions, except percentages) December 31, 2022 December 31, 2021 Net sales $ 2,925.9 $ 2,693.1 Gross profit $ 787.2 $ 765.1 Gross profit % 26.9 % 28.4 % Operating income $ 366.1 $ 206.5 Operating income % 12.5 % 7.7 % Net sales increased $232.8 million, or 8.6% due to: • $247.4 million increase, or 9.5%, due primarily to strategic pricing actions, total category growth, and store brand market share gains versus national brands and store brand competitors.
Added
Restructuring activities as part of Project Energize are expected to result in the net reduction of approximately 6% of total Perrigo roles.
Removed
Growth was achieved across several product categories, including Upper Respiratory due to a strong cough, cold and flu season and the launch of Nasonex ® 24HR , and Nutrition due primarily to benefits from the recall of a national brand infant formula manufacturer.
Added
Impairments During the three months ended December 31, 2023, we identified impairment indicators within our Rare Diseases reporting unit within the CSCI Segment as a result of performance and market factors that led to increased discount rates and lower comparable company multiples. We determined the reporting unit was impaired and recorded an impairment charge totaling $90.0 million related to goodwill.
Removed
An incremental six months of contract manufacturing sales to the divested Rx business, which closed on July 6, 2021, also contributed $62.0 million of net sales.
Added
Refer to Item 8. Note 9 . Indebtedness and Capital In December 2023, we entered into Amendment No. 1, an Incremental Assumption Agreement to our Term Loan and Revolving Credit Agreement that provides for a fungible add on to the Term B Loans in an aggregate principal amount of $300 million.
Removed
These drivers also benefited from e-commerce growth and other new products; and • $71.5 million increase from the additions of HRA Pharma and Gateway; partially offset by • $85.5 million decrease from the divestitures of the Latin American businesses and the ScarAway ® brand asset; and • $0.7 million decrease from foreign currency translation excluding acquisitions.
Added
The funds were used to settle the cash tender offer by Perrigo Finance Unlimited Company ("Perrigo Finance") for $300.0 million in aggregate principal amount of 3.900% Senior Notes due 2024 ("2024 Notes").

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

8 edited+3 added−5 removed13 unchanged
Biggest changeWe are incorporated in Ireland; Irish law differs from the laws in effect in the United States and may afford less protection to, or otherwise adversely affect, our shareholders. As an Irish company, we are governed by the Irish Companies Act 2014 (the "Act").
Biggest changeSuch disapplication of these preemption rights can either be generally applicable or be in respect of a particular allotment of shares. 30 Perrigo Company plc - Item 1A Risk Factors We are incorporated in Ireland; Irish law differs from the laws in effect in the United States and may afford less protection to, or otherwise adversely affect, our shareholders.
Judgments of U.S. courts of liabilities predicated upon U.S. federal securities laws may not be enforced by Irish High Courts if deemed to be contrary to public policy in Ireland. • It could be more difficult for us to obtain shareholder approval for a merger or negotiated transaction than if we were a U.S. company because the shareholder approval requirements for certain types of transactions differ, and in some cases are greater, under Irish law. • Additionally, under the Irish Takeover Panel Act, 1997, Takeover Rules, 2022, the Board of Directors is not permitted to take any action that might frustrate an offer for our ordinary shares, including issuing additional ordinary shares or convertible equity, making material acquisitions or dispositions, or entering into contracts outside the ordinary course of business, once the Board of Directors has received an approach that may lead to an offer or has reason to believe that such an offer is or may be imminent, subject to certain exceptions.
Judgments of U.S. courts of liabilities predicated upon U.S. federal securities laws may not be enforced by Irish High Courts if deemed to be contrary to public policy in Ireland. • It could be more difficult for us to obtain shareholder approval for a merger or negotiated transaction than if we were a U.S. company because the shareholder approval requirements for certain types of transactions differ, and in some cases are greater, under Irish law. • Additionally, under the Irish Takeover Panel Act issued in 1997 and Takeover Rules issued in 2022, the Board of Directors is not permitted to take any action that might frustrate an offer for our ordinary shares, including issuing additional ordinary shares or convertible equity, making material acquisitions or dispositions, or entering into contracts outside the ordinary course of business, once the Board of Directors has received an approach that may lead to an offer or has reason to believe that such an offer is or may be imminent, subject to certain exceptions.
During the year ended December 31, 2022 and December 31, 2021, we did not repurchase any shares under such authorization, and there can be no assurances that we will do so in the future.
During the year ended December 31, 2023 and December 31, 2022, we did not repurchase any shares under such authorization, and there can be no assurances that we will do so in the future.
A number of factors may limit our ability to pay dividends, including, among other things: • Our ability to receive cash dividends and distributions from our subsidiaries; • Compliance with applicable laws and debt covenants; • Our financial condition, results of operations, capital requirements, general business conditions, and other factors that our Board of Directors may deem relevant; and • The availability of our distributable reserves, being profits of the company available for distribution to shareholders.
A number of factors may limit our ability to pay dividends, including, among other things: • Our ability to receive cash dividends and distributions from our subsidiaries; • Compliance with applicable laws and debt covenants; • Our financial condition, results of operations, capital requirements, general business conditions, and other factors that our Board of Directors may deem relevant; and • The availability of our distributable reserves.
Although our share repurchase plan is intended to enhance long-term shareholder value, there is no assurance that it will do so, and short-term share price fluctuations could reduce the plan’s effectiveness. 33 Perrigo Company plc - Item 1A Risk Factors Any additional shares we may issue could dilute your ownership in the Company.
Although our share repurchase plan is intended to enhance long-term shareholder value, there is no assurance that it will do so, and short-term share price fluctuations could reduce the plan’s effectiveness. Any additional shares we may issue could dilute your ownership in the Company.
These provisions may give the Board of Directors less ability to control negotiations with hostile offerors and protect the interests of holders of ordinary shares than would be the case for a corporation incorporated in a jurisdiction of the United States. 34 Perrigo Company plc - Item 1A Risk Factors We may be limited in our ability to pay dividends in the future.
These provisions may give the Board of Directors less ability to control negotiations with hostile offerors and protect the interests of holders of ordinary shares than would be the case for a corporation incorporated in a jurisdiction of the United States. We may be limited in our ability to pay dividends in the future.
Under Irish law, distributable reserves are the accumulated realized profits so far as not previously utilized by distribution or capitalization, less accumulated realized losses so far as not previously written off in a reduction or a reorganization of capital duly made.
Under Irish law, distributable reserves are the accumulated realized profits so far as not previously utilized by distribution or capitalization, less accumulated realized losses so far as not previously written off in a reduction or a reorganization of capital duly made, subject to adjustments for any increases to, or reductions of, share premium.
Additionally, we are subject to financial covenants in our New Senior Secured Credit Facilities. Refer to Item 7. Management's Discussion and Analysis - Capital Resources for more information. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Our failure to comply with these covenants could trigger events, which could result in the acceleration of the related debt. Refer to Item 7. Management's Discussion and Analysis - Capital Resources for more information. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Removed
Such disapplication of these preemption rights can either be generally applicable or be in respect of a particular allotment of shares.
Added
As an Irish company, we are governed by the Irish Companies Act 2014 (the "Act").
Removed
At our annual general meeting of shareholders in May 2022, our shareholders authorized our Board of Directors to issue up to a maximum of 33% of our issued ordinary capital on that date for a period of 18 months from the passing of the resolution.
Added
On July 18, 2023, the Irish High Court approved the creation of $4,900 million of distributable reserves of the Company through the reduction of the Share Premium account.
Removed
At the annual general meeting, our shareholders also authorized our Board of Directors to issue ordinary shares on a nonpreemptive basis in the following circumstances: (i) an issuance of shares in connection with any rights issuance and (ii) an issuance of shares for cash, if the issuance is limited to up to 5% of the Company’s issued ordinary share capital (with the possibility of issuing an additional 5% of the Company’s issued ordinary share capital provided the Company uses it only in connection with an acquisition or a specified capital investment that is announced contemporaneously with the issuance, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issuance), bringing the total acceptable limit for nonpreemptive share issuances for cash to 10% of the Company’s issued ordinary share capital.
Added
The court order authorizing the creation of distributable reserves was filed with the Registrar of Companies in Ireland and became effective on July 20, 2023. 31 Perrigo Company plc - Item 1A Risk Factors Additionally, we are subject to financial covenants in our Senior Secured Credit Facilities.
Removed
We could seek to create additional distributable reserves through a reduction in our share premium, which would require 75% shareholder approval and the approval of the Irish High Court. The Irish High Court's approval is a matter for the discretion of the court, and there can be no assurances that such approval would be obtained.
Removed
In the event that additional distributable reserves are not created in this way, dividends, share repurchases or other distributions would generally not be permitted under Irish law until such time as we have created sufficient distributable reserves in our audited statutory financial statements as a result of our business activities.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed10 unchanged
Biggest changeA 1% increase in interest rates would result in approximately $3.9 million of additional annual interest expense in 2023. Inflation Risk Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results.
Biggest changeA 1% increase in interest rates would result in approximately $3.6 million of additional annual interest expense in 2024. Inflation Risk Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results.
We estimate the translation effect of a ten percent devaluation of the U.S. dollar relative to the other foreign currencies in which we transact business would not materially affect operating income of our non U.S. operating units for the year ended December 31, 2022. This sensitivity analysis has inherent limitations.
We estimate the translation effect of a ten percent devaluation of the U.S. dollar relative to the other foreign currencies in which we transact business would not materially affect operating income of our non U.S. operating units for the year ended December 31, 2023. This sensitivity analysis has inherent limitations.
Refer to Item 8. Note 1 and Note 11 for further information regarding our derivative instruments and hedging activities. 54 Perrigo Company plc - Item 8
Refer to Item 8. Note 1 and Note 11 for further information regarding our derivative instruments and hedging activities. 53 Perrigo Company plc - Item 8
In certain markets, we could recognize a significant gain or loss related to unrealized cumulative translation adjustments if we were to exit the market and liquidate our net investment. As of December 31, 2022, cumulative net currency translation adjustments increased shareholders’ equity by $58.6 million. We monitor and strive to manage risk related to foreign currency exchange rates.
In certain markets, we could recognize a significant gain or loss related to unrealized cumulative translation adjustments if we were to exit the market and liquidate our net investment. As of December 31, 2023, cumulative net currency translation adjustments increased shareholders’ equity by $4.0 million. We monitor and strive to manage risk related to foreign currency exchange rates.

Other PRGO 10-K year-over-year comparisons