2018 J.P. Morgan Healthcare Conference January 9, 2018

Transcription

1 2018 J.P. Morgan Healthcare Conference January 9, 2018

2 Forward Looking Statements Certain statements in this presentation are "forward-looking statements." These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or the negative of those terms or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control, including: the timing, amount and cost of any share repurchases; future impairment charges; the success of management transition; customer acceptance of new products; competition from other industry participants, some of whom have greater marketing resources or larger market shares in certain product categories than the Company does; pricing pressures from customers and consumers; potential thirdparty claims and litigation, including litigation relating to the Company's restatement of previously-filed financial information; potential impacts of ongoing or future government investigations and regulatory initiatives; resolution of uncertain tax positions; the impact of U.S. tax reform legislation and healthcare policy; general economic conditions; fluctuations in currency exchange rates and interest rates; the consummation of announced acquisitions or dispositions, and the Company's ability to realize the desired benefits thereof; and the Company's ability to execute and achieve the desired benefits of announced cost-reduction efforts and other initiatives. In addition, the Company may be unable to remediate one or more previously identified material weaknesses in its internal control over financial reporting. Furthermore, the Company may incur additional tax liabilities in respect of 2016 and prior years or be found to have breached certain provisions of Irish company law in connection with the Company s restatement of previously filed financial statements; which may result in additional expenses and penalties. These and other important factors, including those discussed under "Risk Factors" in the Company's Form 10-K for the year ended December 31, 2016, as well as the Company's subsequent filings with the United States Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forwardlooking statements. The forward-looking statements in this presentation are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Measures This presentation contains non-gaap measures. The reconciliation of those measures to the most comparable GAAP measures is included at the end of this presentation. A copy of this presentation, including the reconciliations, is available on the Company s website at 2

3 Uwe Röhrhoff Incoming President & Chief Executive Officer I am excited to begin my role as CEO and lead Perrigo s experienced management team, who have been instrumental in positioning the Company s consumer OTC and prescription pharmaceutical businesses. I have long admired Perrigo s operational excellence and its mission to deliver high-quality, affordable healthcare products that improve the lives of patients and families. Seasoned Global Leader With Impressive Performance Track Record Experienced public CEO: Customer-centric, strategic leader whose focus on operational excellence transformed Gerresheimer AG, a leading manufacturer of pharmaceutical packaging products Global leadership: Held key leadership roles in Europe and North America; led American subsidiary Proven track record: Drove growth while managing a complex global operating platform Experienced public board member: Audit Committee Chairman of Catalent, Inc. (NYSE: CTLT) and Deputy Chairman of Klöckner&Co SE (ETR:KCO); plans to step down from both boards ~225% Total shareholder return 1 as Gerresheimer AG CEO Instrumental in determining Gerresheimer AG s strategic focus, transforming and reshaping the corporate portfolio and delivering on operational projects 3 1 Total shareholder return calculated from Bloomberg from announcement of Röhrhoff s election as CEO on February 9, 2010 through announcement of his successors appointment on March 3, 2017

4 The Perrigo Advantage Leader in Quality Affordable Healthcare Improving Lives of Patients & Families Operational Excellence Unique Business Model Quality Affordable Healthcare Products Save consumers more than $7B annually 130-year legacy of doing the right thing Diversified store brand and branded consumer OTC healthcare, and Rx platforms 4

5 Strategic Initiatives Delivering Results Segment Performance: Improved CHC International profitability Continued execution in CHC Americas Strong execution on Rx pipeline Completed Divestiture of: Tysabri U.S. VMS business API Israel European sports nutrition brand Pet treats plant Improved Results Strategic Alternatives Processes for: API India South Africa Russia Argentina Partnership for Rx branded portfolio 5

6 Simplified Portfolio Enables Greater Focus on Core Growth Categories Global Store Brand OTC EU Branded OTC US Prescription Pharmaceuticals Cough, Cold & Allergy Lifestyle/ Smoking Cessation Analgesic Infant Nutrition Animal Health Personal Care/ Dermatherapeutic Dermatological Ophthalmic Extended Topical CHC Americas CHC International Prescription Pharmaceuticals ~50% ~30% ~20% 6 * Based on percentage of 2017 Q3 net sales

7 Durable & Unique Business Model Continuing to Deliver Solid Adjusted Margins (1) 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Consolidated Adjusted Margin 19.4% 19.4% 21.5% 21.3% Q Q Q Q CHC Americas adjusted operating margin consistently above 20% CHC International adjusted operating margin of mid-teen percentage RX adjusted operating margin sustaining 40% 25.0% 20.0% CHCA Adjusted Margin 23.2% 22.2% 21.0% 20.2% 20.0% 15.0% CHCI Adjusted Margin 16.4% 14.6% 13.8% 50.0% 40.0% Rx Adjusted Margin 46.5% 43.2% 41.0% 42.4% 15.0% 30.0% 10.0% 10.0% 8.7% 20.0% 5.0% 5.0% 10.0% 0.0% Q Q Q Q % Q Q Q Q % Q Q Q Q (1) See attached Appendix for reconciliation of Adjusted (Non-GAAP) to Reported (GAAP) amounts

8 CHC Americas Executing in a Dynamic Market U.S. Store Brand OTC Dollar Growth Major Impacts: SB Drivers: 2 nd NB Recalls & Returns National Brand Recall National Brand Return SB Launches: SB NRT Mini Lozenge 2016 SB Launches: SB Flonase SB Nasacort 2017 SB Launches: SB Nexium SB Nasonex SB Differin SB Mucinex 3.4% 3.0% 2.0% 1.1% 0.0% Source: IRI MULO 2017

9 CHC Americas 2018 Headwinds & Tailwinds Headwinds Tailwinds Competitive environment in certain OTC categories Slowing traditional retail environment Continued consumer acceptance of store brands Full year effect of successful 2017 new product launches Supply chain scale and efficiencies Potentially 2017/2018 cough, cold and flu season Executing strategic plan as store brand market leader 9

10 CHC International European Branded OTC COMPETITIVE ADVANTAGES EU Platform Reaching 200K+ Pharmacies Country Focused Structure Leading Local Brands Country leaders able to leverage unique branded OTC portfolio Cough, Cold, Allergy, Analgesics Other Anti- Parasites Lifestyle Extensive Branded OTC Portfolio (1) VMS Personal Care Marketing & Innovation Store Brand & Other OTC Brands 10 (1) Based on CHCI Segment for first 9 months 2017

11 CHC International Branded Growth Initiatives Strategy to Outperform Market Growth Expand Scale in OTC & Natural Health Grow OTC position through A&P and innovation investments Accelerate natural health assets through A&P and adjacency innovation Strengthen Lifestyle Positions Solidify leadership position in weight management under a single brand Grow smoking cessation assets through innovation and digital marketing Drive Regional Dermatology & VMS Drive regional brands in Dermatology and VMS through targeted A&P and new products Maintain Leadership in Niche Categories Focus on fundamentals and new product development to maintain leadership position in niche categories 11

12 CHC International 2018 Headwinds & Tailwinds Headwinds Tailwinds Investments to continue improving business capabilities Selective portfolio rationalization Continued execution on focused business strategy Continued execution of insourcing strategy and improvement of cost structure Continued new product innovation & capitalize on inorganic bolt-on opportunities Disciplined execution across the business drives sustainable performance results 12

13 Rx Pharmaceuticals A Truly Differentiated Business Extended Topicals Portfolio with Meaningful Opportunities Business Outlook Generic ProAir Working to deliver this first-to-market generic product in late 2018 Re-filed response to CRL with FDA Differentiated Business Focused on difficult to manufacture extended topicals Balanced, diversified portfolio Delivering solid adjusted operating margin Unique product selection process 3 Paragraph IV Litigations Testosterone Topical Solution 2% (Axiron ) Ivermectin Cream, 1% (Soolantra ) Ingenol Mebutate Gel 0.015% & 0.05% (Picato ) 20 ANDAs Pending FDA Approval ANDAs represent $3B in branded sales 6 confirmed first-to-file ANDAs Meaningful Pipeline Opportunities Potential market opportunities represent greater than $48B (1) 13 (1) QuintilesIMS - NSP database TTM June 2017 (Combination of branded & generic sales data)

14 Prescription Pharmaceuticals (RX) 2018 Headwinds & Tailwinds Headwinds Tailwinds Industry pricing pressures Purchasing power of buying consortiums Full-year effect of successful 2017 new product launches Generic ProAir Continued investment in future pipeline Continue to execute unique product selection process and drive new product pipeline 14

15 Balance Sheet Strength Repaid $2.6 billion of debt in 2017 $776M * Total Cash as of 9/30/2017 Repurchased ~2.7 million shares in 2017 (1) $3.7B * Total Debt as of 9/30/2017 * Does not include ~$370M debt maturity repaid in December 2017 Approximately $550 million in total debt due through 2020 Well positioned to capitalize on bolt-on M&A opportunities 15 (1) As of 9/30/2017

16 Perrigo Value Proposition Focused Execution into 2018 Actions taken are enabling growth in challenging end markets: CHCA ~1% net sales growth (1) through 3Q17 on a constant currency basis, excluding divested businesses CHCI ~2% net sales growth (1) through 3Q17 on a constant currency basis, excluding divested businesses RX guidance expectation of ~2% net sales growth (1) for 2H 17 on a constant currency basis, excluding Entocort Diversified OTC and Rx platforms Growing pipeline of inorganic bolt-on opportunities Initial impact of U.S. tax reform expected to increase adjusted effective tax rate ~ basis points beginning in 2018 No material impact expected to operating cash flows FDA commissioner comments on the potential for new Rx-to-OTC switch categories 16 (1) See attached Appendix for reconciliation of Adjusted (Non-GAAP) to Reported (GAAP) amounts

17 17 Bradley Joseph Vice President Global Investor Relations and Corporate Communications (269)

18 Appendix Consolidated R&D Expense DSG&A Expense September 30, 2017 Restructuring, Impairment Charges, and Other Interest, Other, and Change in financial assets Tax Expense Diluted Earnings per Share Reported $ 1,231.3 $ $ 38.4 $ $ 8.7 $ $ 33.7 $ 84.2 $ 44.5 $ 0.31 As a % of reported net sales 40.4% 3.1% 23.4% 13.2% 2.7% 6.8% 3.6% Effective tax rate 65.5% Adjustments: Amortization expense related primarily to acquired intangible assets $ $ 55.3 $ (0.3) $ (34.5) $ $ 90.1 $ $ $ 90.1 $ 0.63 Change in financial assets (2.6) Impairment charges (7.8) Restructuring charges (3.8) results attributable to held-for-sale business* (16.5) (9.4) (2.4) (4.2) (2.8) 1.3 (4.1) (0.03) Gain/Loss on divestitures 1.9 (1.9) (0.01) Acquisition charges and contingent consideration adjustments 2.9 (2.9) (2.9) (0.02) Non-GAAP tax adjustments ** (57.3) Adjusted $ 1,214.8 $ $ 35.7 $ $ $ $ 34.3 $ 26.9 $ $ 1.39 As a % of adjusted net sales 44.8% 2.9% 20.6% 21.3% 2.8% 2.2% 16.2% Effective tax rate 12.0% Diluted weighted average shares outstanding Reported *Held-for-sale business includes the Israel API business. **The non-gaap tax adjustments include the following: (1) $(23.2) million of tax effects of pretax non-gaap adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax item; (2) a $36.2 million effect on non-gaap income taxes related to the interim tax accounting requirements within ASC 740, Taxes; (3) $10.0 million net impact related to valuation allowances on deferred tax assets commensurate with non-gaap pre-tax measures; (4) $(5.4) million of tax adjustments related to the divestiture of the Tysabri financial asset; (5) $12.8 million related to an IRS audit settlement; and (6) $26.9 million of tax related to the sale of our Israel API business. 18

19 Appendix July 1, 2017 Consolidated Reported $ 1,237.9 $ $ As a % of net sales 40.8% 12.0% Adjustments: Amortization expense related primarily to acquired intangible assets $ 55.6 $ 88.7 Impairment charges 27.4 Restructuring charges 12.1 Gain on divestitures (1.1) Unusual litigation (8.8) Acquisition charges and contingent consideration adjustments (0.6) Adjusted $ $ As a % of net sales 45.3% 21.5% 19

20 Appendix Consolidated April 1, 2017 Reported $ 1,194.0 $ $ As a % of net sales 38.9% 10.8% Adjustments: Amortization expense related primarily to acquired intangible assets $ 55.1 $ 86.6 Impairment charges 12.2 Gain on divestitures (21.8) Restructuring charges 38.7 results attributable to held-for-sale business* Acquisition and integration-related expense (income) (14.3) Adjusted $ $ As a % of net sales 43.6% 19.4% *Held-for-sale business includes the India API business. 20

21 Appendix Consolidated December 31, 2016 (Loss) Reported $ 1,331.2 $ $ (484.6) Adjustments: Amortization expense related primarily to acquired intangible assets $ 62.0 $ 94.9 Impairment charges Unusual litigation 18.4 Restructuring charges 13.1 results attributable to held-for-sale businesses* Acquisition and integration-related charges 3.0 Adjusted $ $ As a % of net sales 41.6% 19.4% *Held-for-sale businesses include the European sports brand and the India API business. 21

22 Appendix Consumer Healthcare Americas September 30, 2017 October 1, 2016 R&D Expense Reported $ $ $ 13.8 $ 70.4 $ $ $ $ 18.3 $ 74.6 $ 99.0 As a % of reported net sales 34.4% 2.3% 11.8% 20.8% 32.6% 3.0% 12.2% 16.2% Adjustments: Amortization expense primarily related to acquired intangible assets $ 12.1 $ (4.8) $ 16.9 $ $ 12.5 $ $ (5.0) $ 17.6 Impairment charges results attributable to held-for-sale business* (21.0) (3.4) (0.2) (3.1) (0.1) Restructuring charges (0.8) 3.9 Acquisition charges and contingent consideration adjustments (2.0) 0.8 (0.6) 1.1 Adjusted $ $ 65.6 $ $ $ $ 18.1 $ 65.9 $ As a % of reported net sales (2017) / As a % of adjusted net sales (2016) 36.4% 10.9% 23.2% 35.4% 3.1% 11.2% 21.2% *Held-for-sale business includes the U.S. VMS business, which was sold in Q Consumer Healthcare International DSG&A Expense R&D Expense September 30, 2017 October 1, 2016 R&D Expense Reported $ $ $ 10.5 $ $ 4.6 $ $ $ 10.7 $ $ (1,615.5) As a % of reported net sales 45.4% 2.9% 40.3% 1.2% 41.1% 2.8% 40.5% (428.1)% Adjustments: Amortization expense primarily related to acquired intangible assets $ 21.9 $ (0.3) $ (29.6) $ 51.8 $ $ 16.9 $ (0.3) $ (28.9) $ 46.3 Impairment charges 1,604.5 results attributable to held-for-sale business* (0.2) 0.2 (2.8) 3.0 Restructuring charges Acquisition charges and contingent consideration adjustments 0.2 (0.3) Adjusted $ $ 10.2 $ $ 60.0 $ $ $ 10.4 $ $ 40.5 As a % of reported net sales (2017) / As a % of adjusted net sales (2016) 51.4% 2.8% 32.2% 16.4% 45.7% 2.7% 32.2% 10.7% DSG&A Expense R&D Expense DSG&A Expense DSG&A Expense (Loss) 22 *Held-for-sale business includes the European sports brand, which was sold in Q

23 Appendix Prescription Pharmaceuticals September 30, 2017 October 1, 2016 R&D Expense DSG&A Expense Reported $ $ $ 12.2 $ 19.2 $ 82.1 $ $ $ 19.5 $ 27.1 $ 74.4 As a % of net sales 46.6% 4.9% 7.7% 32.8% 48.0% 7.7% 10.7% 29.5% R&D Expense DSG&A Expense Adjustments: Amortization expense primarily related to acquired intangible assets $ 20.9 $ (0.1) $ 21.0 $ 27.1 $ (0.1) $ 27.1 Restructuring charges 0.1 Impairment charges 4.0 Acquisition charges and contingent consideration adjustments (0.9) (5.0) 5.0 Adjusted $ $ 19.1 $ $ $ 22.0 $ As a % of net sales 54.9% 7.6% 42.4% 58.7% 8.7% 42.3% 23

24 Appendix Consumer Healthcare Americas July 1, 2017 July 2, 2016 Reported $ $ $ $ $ $ As a % of net sales 33.7% 17.2% 34.9% 18.5% Adjustments: Amortization expense related primarily to acquired intangible assets $ 12.1 $ 17.0 $ $ 12.5 $ 17.6 Impairment charges results attributable to held-for-sale business* (42.1) (7.2) (3.1) Restructuring charges Acquisition charges and contingent consideration adjustments (2.6) Adjusted $ $ $ $ $ As a % of reported net sales (2017) / As a % of adjusted net sales (2016) 35.7% 21.0% 38.5% 23.6% *Held-for-sale business includes the U.S. VMS business, which was sold in Q

25 Appendix Consumer Healthcare Americas April 1, 2017 April 2, 2016 Reported $ $ $ 75.0 $ $ $ As a % of reported net sales 32.3% 12.9% 30.7% 15.7% Adjustments: Amortization expense related primarily to acquired intangible assets $ 12.4 $ 17.1 $ $ 12.8 $ 18.1 Impairment charges results attributable to held-for-sale business* (47.1) (7.0) (2.5) Restructuring charges Acquisition and integration-related charges Adjusted $ $ $ $ $ As a % of reported net sales (2017) / As a % of adjusted net sales (2016) 34.5% 20.2% 34.6% 20.4% *Held-for-sale business includes the U.S. VMS business, which was sold in Q

26 Appendix Consumer Healthcare Americas December 31, 2016 December 31, 2015 Reported $ $ $ 83.3 $ $ $ 92.8 As a % of net sales 33.5% 13.3% 32.1% 14.4% Adjustments: Amortization expense related primarily to acquired intangible assets $ 12.6 $ 17.7 $ 12.2 $ 17.9 Unusual litigation Impairment charges Restructuring charges (0.1) 12.8 Acquisition and integration-related charges 1.2 Adjusted $ $ $ $ As a % of net sales 35.5% 22.2% 34.0% 19.5% For Comparative Purposes* Reported $ results attributable to held-for-sale businesses* (44.3) Adjusted $ *Q net sales adjustment made for comparison purposes only and does not change any other prior year financial information or metrics since the U.S. VMS business was not held-for-sale in Q gross margin and operating margin use reported net sales as the denominator. 26

27 Appendix Consumer Healthcare International April 1, 2017 April 2, 2016 Consumer Healthcare International (Loss) Reported $ $ $ 0.2 $ $ $ (396.4) As a % of net sales 45.2% 0.1% 45.4% (90.2)% Adjustments: Amortization expense related primarily to acquired intangible assets $ 20.1 $ 46.9 $ 13.1 $ 42.9 Impairment charges Restructuring charges results attributable to held-for-sale business* Acquisition and integration-related charges 1.3 Adjusted $ $ 51.6 $ $ 54.8 As a % of net sales 50.7% 13.8% 48.3% 12.5% *Held-for-sale business includes the European sports brand, which was sold in Q July 1, 2017 July 2, 2016 Reported $ $ $ 3.9 $ $ $ 0.6 As a % of net sales 46.2% 1.0% 45.1% 0.1% Adjustments: Amortization expense related primarily to acquired intangible assets $ 20.8 $ 48.9 $ $ 17.1 $ 46.6 Impairment charges 3.7 Unusual litigation (8.8) results attributable to held-for-sale business* (0.1) Restructuring charges Acquisition charges and contingent consideration adjustments 0.6 (0.2) Adjusted $ $ 54.9 $ $ $ 56.6 As a % of net sales 51.7% 14.6% 49.4% 13.6% *Held-for-sale business includes the European sports brand, which was sold in Q

28 Appendix Consumer Healthcare International December 31, 2016 (Loss) Reported $ $ $ (76.1) As a % of net sales 36.1% (18.1)% Adjustments: Amortization expense related primarily to acquired intangible assets $ 20.8 $ 48.4 Impairment charges 34.1 Restructuring charges 10.5 Unusual litigation 8.2 results attributable to held-for-sale business* Acquisition and integration-related charges 1.0 Adjusted $ $ 36.4 As a % of net sales 41.9% 8.7% *Held-for-sale business includes the European sports brand, which was sold in Q

29 Appendix July 1, 2017 Prescription Pharmaceuticals Reported $ $ $ 69.3 As a % of net sales 49.6% 28.8% Adjustments: Amortization expense related primarily to acquired intangible assets $ 22.3 $ 22.4 Gain on divestitures (1.1) Restructuring charges 0.2 Impairment charges 19.6 Acquisition charges and contingent consideration adjustments 1.4 Adjusted $ $ As a % of net sales 58.8% 46.5% April 1, 2017 Prescription Pharmaceuticals Reported $ $ 96.3 $ 88.2 As a % of net sales 44.3% 40.5% Adjustments: Amortization expense related primarily to acquired intangible assets $ 22.0 $ 22.1 Gain on divestitures (21.8) Restructuring charges 5.6 Impairment charges 11.1 Acquisition and integration-related charges (16.1) Adjusted $ $ 89.1 As a % of net sales 54.4% 41.0% 29

30 Appendix December 31, 2016 Prescription Pharmaceuticals Reported $ $ $ (258.5) As a % of net sales 45.5% (97.3)% Adjustments: Amortization expense related primarily to acquired intangible assets $ 28.0 $ 28.1 Restructuring charges 2.1 Impairment charges Acquisition and integration-related charges 0.9 Adjusted $ $ As a % of net sales 56.1% 43.2% 30

31 Appendix Consumer-facing businesses Three months ended October 1, 2016 Consolidated reported net sales $ 1,231.3 CHCA reported net sales $ CHCI reported net sales Total consumer-facing businesses $ % CHCA adjusted net sales growth over the past nine months Three months ended sales Three months ended sales Total change April 1, April 2, 2016* (2)% July 1, July 2, 2016* % September 30, October 1, 2016* % $ 1,786.5 $ 1, % * sales are adjusted to exclude sales attributable to held-for-sale businesses. See Table II for non-gaap reconciliations. CHCI net sales less Belgium Distribution net sales October 1, 2016 December 31, 2016 CHCI reported net sales $ $ Less: Belgium Distribution net sales (42.4) (81.5) $ $

32 Appendix September 30, 2017 Nine Months Ended October 1, 2016 Total Change FX Change CHCA* $ 1,786.4 $ 1, % % 1% Constant Currency Change CHCI* $ 1,116.8 $ 1,232.4 (9)% 2% (7)% Less: Belgium distribution net sales (10.6) (118.4) $ 1,106.2 $ 1,114.0 (1)% 3% 2% *2016 net sales are adjusted to exclude sales attributable to held-for-sale businesses. See Tables I and II for non-gaap reconciliations. Nine Months Ended September 30, RX reported net sales guidance $ Less: Q actual sales (217.4) Less: Q actual sales (240.4) Less: Q2 and Q Entocort net sales (8.8) RX Q3 - Q4 net sales excluding Entocort net sales $ RX reported net sales YTD $ 1,042.8 Less: Q actual sales $ (248.2) Less: Q actual sales $ (276.9) Less: Q2 and Q Entocort net sales (25.7) RX Q3 - Q4 net sales excluding Entocort net sales $ RX net sales growth excluding Entocort 1.3% 32