PERRIGO Co plc - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________

FORM 10-Q

_______________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-36353

_______________________________________________

Perrigo Company plc

(Exact name of registrant as specified in its charter)

_______________________________________________


Ireland						Not Applicable
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

The Sharp Building, Hogan Place, Dublin 2, Ireland D02 TY74

+353 1 7094000

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, €0.001 par value	PRGO	New York Stock Exchange
3.900% Notes due 2024	PRGO24	New York Stock Exchange
4.375% Notes due 2026	PRGO26	New York Stock Exchange
4.650% Notes due 2030	PRGO30	New York Stock Exchange
5.300% Notes due 2043	PRGO43	New York Stock Exchange
4.900% Notes due 2044	PRGO44	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 3, 2023, there were 135,506,489 ordinary shares outstanding.

PERRIGO COMPANY PLC

FORM 10-Q

INDEX


		PAGE NUMBER
Cautionary Note Regarding Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations		4

Condensed Consolidated Statements of Comprehensive Income		5

Condensed Consolidated Balance Sheets		6

Condensed Consolidated Statements of Shareholders' Equity		7

Condensed Consolidated Statements of Cash Flows		9

Notes to the Condensed Consolidated Financial Statements

1	Summary of Significant Accounting Policies	10

2	Revenue Recognition	11

3	Acquisitions and Divestitures	12

4	Discontinued Operations	13

5	Inventories	14

6	Investments	14

7	Leases	15

8	Goodwill and Intangible Assets	16

9	Fair Value Measurements	17

10	Derivative Instruments and Hedging Activities	18

11	Indebtedness	23

12	Earnings per Share and Shareholders' Equity	24

13	Accumulated Other Comprehensive Income (Loss)	24

14	Restructuring Charges	25

15	Income Taxes	26

16	Contingencies	29

17	Segment Information	35



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36

Item 3. Quantitative and Qualitative Disclosures About Market Risk		51

Item 4. Controls and Procedures		51

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		52

Item 1A. Risk Factors		52



Item 5. Other Information		53

Item 6. Exhibits		54

Signatures		55

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our, or our industry’s actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this report, including certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are 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,” "forecast," “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: supply chain impacts on the Company’s business, including those caused or exacerbated by armed conflict, trade and other economic sanctions and/or disease; general economic, credit, and market conditions; the impact of the war in Ukraine and any escalation thereof, including the effects of economic and political sanctions imposed by the United States, United Kingdom, European Union, and other countries related thereto; the outbreak or escalation of conflict in other regions where we do business; future impairment charges, if we determine that the carrying amount of specific assets may not be recoverable from the expected future cash flows of such assets; 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; resolution of uncertain tax positions and any litigation relating thereto, ongoing or future government investigations and regulatory initiatives; uncertainty regarding the Company’s ability to obtain and maintain its regulatory approvals; potential costs and reputational impact of product recalls or sales halts; potential adverse changes to U.S. and foreign tax, healthcare and other government policy; the effect of the coronavirus (COVID-19) pandemic and its variants, or other epidemic or pandemic disease; the timing, amount and cost of any share repurchases (or the absence thereof) and/or any refinancing of outstanding debt at or prior to maturity; fluctuations in currency exchange rates and interest rates; the Company’s ability to achieve the benefits expected from the sale of its Rx business and the risk that potential costs or liabilities incurred or retained in connection with that transaction may exceed the Company’s estimates or adversely affect the Company’s business or operations; the Company’s ability to achieve the benefits expected from the acquisitions of Héra SAS ("HRA Pharma") and Nestlé’s Gateway infant formula plant along with the U.S. and Canadian rights to the GoodStart® infant formula brand and other related formula brands ("Gateway") and/or the risks that the Company’s synergy estimates are inaccurate or that the Company faces higher than anticipated integration or other costs in connection with the acquisitions; risks associated with the integration of HRA Pharma and Gateway, including the risk that growth rates are adversely affected by any delay in the integration of sales and distribution networks; the consummation and success of other announced and unannounced 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 strategic initiatives and investments, including the Company’s ability to achieve the expected benefits from its Supply Chain Reinvention Program. Adverse results with respect to pending litigation could have a material adverse impact on the Company's operating results, cash flows and liquidity, and could ultimately require the use of corporate assets to pay damages, reducing assets that would otherwise be available for other corporate purposes. These and other important factors, including those discussed in our Form 10-K for the year ended December 31, 2022, this report under “Risk Factors” and in any 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 forward-looking statements. The forward-looking statements in this report are made only as of the date hereof, and unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

This report contains trademarks, trade names and service marks that are the property of Perrigo Company plc, as well as, for informational purposes, trademarks, trade names, and service marks that are the property of other organizations. Solely for convenience, certain trademarks, trade names, and service marks referred to in this report appear without the ®, ™ and SM symbols, but those references are not intended to indicate that we or the applicable owner, as the case may be, will not assert, to the fullest extent under applicable law, our or their rights to such trademarks, trade names, and service marks.

Perrigo Company plc - Item 1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

PERRIGO COMPANY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Net sales	$	1,123.8	$	1,100.2	$	3,498.7	$	3,296.3
Cost of sales	712.6		737.3		2,245.6		2,223.5
Gross profit	411.2		362.9		1,253.1		1,072.8

Operating expenses
Distribution	27.8		30.6		85.0		84.5
Research and development	29.6		29.8		92.9		90.5
Selling	150.2		144.5		489.2		431.0
Administration	126.0		105.9		393.6		386.0

Restructuring	15.5		19.1		25.7		32.2
Other operating (income) expense, net	—		(0.1)		(0.8)		0.7
Total operating expenses	349.1		329.8		1,085.6		1,024.9

Operating income	62.1		33.1		167.5		47.9


Interest expense, net	43.5		41.0		131.1		115.1
Other (income) expense, net	(0.6)		(4.0)		(9.6)		48.7
(Gain) loss on extinguishment of debt	—		(0.4)		—		8.9
Income (loss) from continuing operations before income taxes	19.2		(3.5)		46.0		(124.8)
Income tax expense (benefit)	3.8		48.6		22.7		(6.6)
Income (loss) from continuing operations	15.4		(52.1)		23.3		(118.2)
Income (loss) from discontinued operations, net of tax	(1.2)		2.7		(3.7)		1.3
Net income (loss)	$	14.2	$	(49.4)	$	19.6	$	(116.9)

Earnings (loss) per share
Basic
Continuing operations	$	0.11	$	(0.39)	$	0.17	$	(0.88)
Discontinued operations	(0.01)		0.02		(0.03)		0.01
Basic earnings (loss) per share	$	0.10	$	(0.37)	$	0.14	$	(0.87)
Diluted
Continuing operations	$	0.11	$	(0.39)	$	0.17	$	(0.88)
Discontinued operations	(0.01)		0.02		(0.03)		0.01
Diluted earnings (loss) per share	$	0.10	$	(0.37)	$	0.14	$	(0.87)

Weighted-average shares outstanding
Basic	135.5		134.6		135.2		134.4
Diluted	136.9		134.6		136.6		134.4

See accompanying Notes to the Condensed Consolidated Financial Statements.

Perrigo Company plc - Item 1

PERRIGO COMPANY PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Net income (loss)	$	14.2	$	(49.4)	$	19.6	$	(116.9)
Other comprehensive income (loss):
Foreign currency translation adjustments	(101.3)		(270.5)		(65.0)		(477.9)
Change in fair value of derivative financial instruments, net of tax	3.9		101.0		15.6		132.5

Change in post-retirement and pension liability, net of tax	(0.6)		(0.8)		(1.7)		(7.5)
Other comprehensive income (loss), net of tax	(98.0)		(170.3)		(51.1)		(352.9)
Comprehensive income (loss)	$	(83.8)	$	(219.7)	$	(31.5)	$	(469.8)

See accompanying Notes to the Condensed Consolidated Financial Statements.

Perrigo Company plc - Item 1

PERRIGO COMPANY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

(unaudited)


	September 30, 2023		December 31, 2022
Assets

Cash and cash equivalents	$	598.3	$	600.7

Accounts receivable, net of allowance for credit losses of $8.2 and $6.8, respectively	737.8		697.1
Inventories	1,149.5		1,150.3

Prepaid expenses and other current assets	279.7		271.8

Total current assets	2,765.3		2,719.9

Property, plant and equipment, net	902.9		926.3
Operating lease assets	199.9		217.1

Goodwill and indefinite-lived intangible assets	3,554.7		3,549.0
Definite-lived intangible assets, net	2,941.4		3,230.2
Deferred income taxes	6.8		7.1

Other non-current assets	387.3		367.7
Total non-current assets	7,993.0		8,297.4
Total assets	$	10,758.3	$	11,017.3
Liabilities and Shareholders’ Equity

Accounts payable	$	433.1	$	537.3
Payroll and related taxes	108.8		136.4
Accrued customer programs	156.3		139.1
Other accrued liabilities	262.3		250.2
Accrued income taxes	9.8		14.4

Current indebtedness	38.1		36.2

Total current liabilities	1,008.4		1,113.6

Long-term debt, less current portion	4,048.5		4,070.4
Deferred income taxes	349.4		368.2

Other non-current liabilities	613.9		623.0
Total non-current liabilities	5,011.8		5,061.6
Total liabilities	6,020.2		6,175.2
Contingencies - Refer to Note 16
Shareholders’ equity
Controlling interests:
Preferred shares, $0.0001 par value per share, 10 shares authorized	—		—
Ordinary shares, €0.001 par value per share, 10,000 shares authorized	6,864.2		6,936.7
Accumulated other comprehensive income	(78.1)		(27.0)
Retained earnings (accumulated deficit)	(2,048.0)		(2,067.6)


Total shareholders’ equity	4,738.1		4,842.1
Total liabilities and shareholders' equity	$	10,758.3	$	11,017.3

Supplemental Disclosures of Balance Sheet Information
Preferred shares, issued and outstanding	—		—
Ordinary shares, issued and outstanding	135.5		134.7

See accompanying Notes to the Condensed Consolidated Financial Statements.

Perrigo Company plc - Item 1

PERRIGO COMPANY PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions, except per share amounts)

(unaudited)


	Ordinary Shares Issued			Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Total
	Shares	Amount
Balance at December 31, 2021	133.8	$	7,043.2	$	35.5	$	(1,927.0)	$	5,151.7

Net loss	—	—		—		(2.4)		(2.4)
Other comprehensive loss	—	—		(20.5)		—		(20.5)

Restricted stock plan	1.2	—		—		—		—

Compensation for restricted stock	—	26.3		—		—		26.3
Cash dividends, $0.26 per share	—	(34.2)		—		—		(34.2)
Shares withheld for payment of employees' withholding tax liability	(0.4)	(16.4)		—		—		(16.4)

Balance at April 2, 2022	134.6	$	7,018.9	$	15.0	$	(1,929.4)	$	5,104.5



Net loss	—	—		—		(65.1)		(65.1)
Other comprehensive loss	—	—		(161.8)		—		(161.8)



Compensation for restricted stock	—	9.0		—		—		9.0
Cash dividends, $0.26 per share	—	(35.4)		—		—		(35.4)
Shares withheld for payment of employees' withholding tax liability	—	(1.4)		—		—		(1.4)

Balance at July 2, 2022	134.6	$	6,991.1	$	(146.8)	$	(1,994.5)	$	4,849.8


Net loss	—	—		—		(49.4)		(49.4)
Other comprehensive income	—	—		(170.3)		—		(170.3)



Compensation for restricted stock	—	9.3		—		—		9.3
Cash dividends, $0.26 per share	—	(35.5)		—		—		(35.5)
Shares withheld for payment of employees' withholding tax liability	—	(1.2)		—		—		(1.2)

Balance at October 1, 2022	134.6	$	6,963.7	$	(317.1)	$	(2,043.9)	$	4,602.7

Perrigo Company plc - Item 1


	Ordinary Shares Issued			Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Total
	Shares	Amount
Balance at December 31, 2022	134.7	$	6,936.7	$	(27.0)	$	(2,067.6)	$	4,842.1

Net loss	—	—		—		(3.0)		(3.0)
Other comprehensive income	—	—		20.7		—		20.7

Restricted stock plan	1.0	—		—		—		—

Compensation for restricted stock	—	24.9		—		—		24.9
Cash dividends, $0.27 per share	—	(36.2)		—		—		(36.2)
Shares withheld for payment of employees' withholding tax liability	(0.4)	(14.6)		—		—		(14.6)
Balance at April 1, 2023	135.3	$	6,910.8	$	(6.3)	$	(2,070.6)	$	4,833.9


Net income	—	—		—		8.4		8.4
Other comprehensive income	—	—		26.2		—		26.2

Restricted stock plan	0.1	—		—		—		—

Compensation for restricted stock	—	18.6		—		—		18.6
Cash dividends, $0.27 per share	—	(37.0)		—		—		(37.0)
Shares withheld for payment of employees' withholding tax liability	—	(1.5)		—		—		(1.5)

Balance at July 1, 2023	135.4	$	6,890.9	$	19.9	$	(2,062.2)	$	4,848.6


Net income	—	—		—		14.2		14.2
Other comprehensive loss	—	—		(98.0)		—		(98.0)

Restricted stock plan	0.2	—		—		—		—

Compensation for restricted stock	—	14.7		—		—		14.7
Cash dividends, $0.27 per share	—	(38.9)		—		—		(38.9)
Shares withheld for payment of employees' withholding tax liability	(0.1)	(2.5)		—		—		(2.5)

Balance at September 30, 2023	135.5	$	6,864.2	$	(78.1)	$	(2,048.0)	$	4,738.1

See accompanying Notes to the Condensed Consolidated Financial Statements.

Perrigo Company plc - Item 1

PERRIGO COMPANY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Nine Months Ended
	September 30, 2023		October 1, 2022
Cash Flows From (For) Operating Activities
Net income (loss)	$	19.6	$	(116.9)
Adjustments to derive cash flows:
Depreciation and amortization	273.6		241.5
Share-based compensation	58.2		46.7
Restructuring charges	25.7		32.2
Amortization of debt discount (premium)	1.8		(2.8)
Foreign currency remeasurement loss	—		39.4
Loss on sale of business	—		1.4

Deferred income taxes	12.3		(19.6)
Gain on sale of assets	(4.0)		(5.8)
Other non-cash adjustments, net	(2.7)		3.4
Subtotal	384.5		219.5
Increase (decrease) in cash due to:
Accounts receivable	(70.6)		(38.6)
Accounts payable	(92.9)		46.1
Payroll and related taxes	(52.7)		(40.5)
Accrued income taxes	(54.4)		(50.1)
Inventories	(5.5)		(78.8)
Accrued liabilities	13.2		19.0
Prepaid expenses and other current assets	35.9		6.7
Accrued customer programs	20.5		15.7
Other operating, net	18.8		22.4
Subtotal	(187.7)		(98.1)
Net cash from operating activities	196.8		121.4
Cash Flows From (For) Investing Activities
Additions to property, plant and equipment	(75.0)		(70.0)
Acquisitions of businesses, net of cash acquired	—		(1,901.4)
Settlement of acquisition-related foreign currency derivatives	—		(37.1)
Asset acquisitions	—		(10.3)
Net proceeds from sale of businesses	—		58.7
Proceeds from sale of assets	2.0		24.8
Proceeds from royalty rights	18.3		2.7

Net cash for investing activities	(54.7)		(1,932.6)
Cash Flows From (For) Financing Activities
Cash dividends	(112.1)		(107.0)
Payments on long-term debt	(24.0)		(964.8)
Issuances of long-term debt	—		1,587.3

Payments for debt issuance costs	—		(20.9)
Premiums on early debt retirement	—		(12.2)
Proceeds on seller-financed divestiture			4.3

Other financing, net	(6.5)		(22.6)
Net cash (for) from financing activities	(142.6)		464.1
Effect of exchange rate changes on cash and cash equivalents	(1.9)		(63.5)
Net decrease in cash and cash equivalents	(2.4)		(1,410.6)
Cash and cash equivalents of continuing operations, beginning of period	600.7		1,864.9
Cash and cash equivalents held for sale, beginning of period	—		14.4

Cash and cash equivalents of continuing operations, end of period	$	598.3	$	468.7

See accompanying Notes to the Condensed Consolidated Financial Statements.

Perrigo Company plc - Item 1

Note 1

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Information

Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries.

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. We are headquartered in Ireland and sell our products primarily in North America and Europe as well as in other markets around the world.

Basis of Presentation

Our unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, all adjustments considered necessary for a fair presentation of the unaudited Condensed Consolidated Financial Statements have been included and include our accounts and accounts of all majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. Some amounts in this report may not add due to rounding.

Segment Reporting

Our reporting and operating segments are as follows:

•Consumer Self-Care Americas ("CSCA") comprises our consumer self-care business in the U.S. and Canada. 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.

We previously had an Rx segment which was comprised of our generic prescription pharmaceuticals business in the U.S., and other pharmaceuticals and diagnostic business in Israel, which have been divested. Following the divestiture, there were no substantial assets or operations left in this segment. The Rx segment was reported as Discontinued Operations in 2021, and is presented as such for all periods in this report (refer to Note 4).

Our segments reflect the way in which our chief operating decision maker, who is our CEO, makes operating decisions, allocates resources and manages the growth and profitability of the Company. Financial information related to our business segments and geographic locations can be found in Note 2 and Note 17.

Foreign Currency Translation and Transactions

We translate our non-U.S. dollar-denominated operations’ assets and liabilities into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in the cumulative translation account, a component of Accumulated other comprehensive income (loss) ("AOCI"). Gains or losses from foreign currency transactions are included in Other (income) expense, net.

Perrigo Company plc - Item 1

Note 1

Allowance for Credit Losses

Expected credit losses on trade receivables and contract assets are measured collectively by geographic location. Historical credit loss experience provides the primary basis for estimation of expected credit losses and is adjusted for current conditions and for reasonable and supportable forecasts. Receivables that do not share risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. The following table presents the allowance for credit losses activity (in millions):


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Balance at beginning of period	$	8.1	$	7.3	$	6.8	$	7.2
Provision for credit losses, net	0.6		0.7		1.9		2.9
Receivables written-off	(0.2)		(0.9)		(0.7)		(3.1)
Recoveries collected	—		—		0.4		—

Currency translation adjustment	(0.3)		(0.2)		(0.2)		(0.1)
Balance at end of period	$	8.2	$	6.9	$	8.2	$	6.9

NOTE 2 - REVENUE RECOGNITION

The following is a summary of our net sales by category(1) (in millions):


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
CSCA
Nutrition	$	130.7	$	124.4	$	435.4	$	376.7
Upper Respiratory	130.2		132.2		422.2		430.9
Digestive Health	117.1		119.6		368.0		363.3
Pain and Sleep-Aids	94.1		104.0		295.0		309.5
Healthy Lifestyle	79.4		73.8		220.1		208.7
Oral Care	76.5		83.6		237.8		230.6
Skin Care	47.6		48.9		150.7		138.4
Women's Health	10.2		12.4		34.6		32.6
Vitamins, Minerals, and Supplements ("VMS")	4.3		7.1		12.7		23.0
Other CSCA(2)	13.4		16.3		41.4		46.5
Total CSCA	$	703.5	$	722.3	$	2,217.9	$	2,160.2
CSCI
Skin Care	$	86.7	$	81.1	$	293.1	$	257.5
Upper Respiratory	78.2		69.2		227.9		194.5
Pain and Sleep-Aids	61.1		46.1		163.8		149.2
Healthy Lifestyle	52.4		47.6		179.4		165.6
VMS	46.1		46.4		135.4		138.2
Women's Health	28.5		28.7		89.5		65.7
Oral Care	24.8		21.7		75.5		71.2
Digestive Health	10.8		8.2		30.0		27.4
Other CSCI(3)	31.7		28.9		86.1		66.8
Total CSCI	420.3		377.9		1,280.7		1,136.1

Total net sales	$	1,123.8	$	1,100.2	$	3,498.7	$	3,296.3

(1) We updated our global reporting product categories as a result of our product portfolio reconfiguration. These product categories have been adjusted retroactively to reflect the changes and have no impact on historical financial position, results of operations, or cash flows.

(2) Consists primarily of product sales and royalty income related to supply and distribution agreements and other miscellaneous or otherwise uncategorized product lines and markets, none of which is greater than 10% of the segment net sales.

Perrigo Company plc - Item 1

Note 2

(3) Consists primarily of our rare diseases business and other miscellaneous or otherwise uncategorized product lines, none of which is greater

than 10% of the segment net sales.

While the majority of revenue is recognized at a point in time, certain of our product revenue is recognized over time. Customer contracts recognized over time exist predominately in contract manufacturing arrangements, which occur in both the CSCA and CSCI segments. Contract manufacturing revenue was $77.0 million and $267.3 million for the three and nine months ended September 30, 2023, respectively, and $102.2 million and $270.6 million for the three and nine months ended October 1, 2022, respectively.

We also recognize a portion of the store brand OTC product revenues in the CSCA segment on an over time basis; however, the timing difference between over time and point in time revenue recognition for store brand contracts is not significant due to the short time period between the customization of the product and shipment or delivery.

The following table provides information about contract assets from contracts with customers (in millions):


	Balance Sheet Location	September 30, 2023		December 31, 2022
Short-term contract assets	Prepaid expenses and other current assets	$	23.6	$	41.5

We generated net sales in the following geographic locations(1) (in millions):


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
U.S.	$	690.3	$	716.1	$	2,176.3	$	2,116.7
Europe(2)	399.8		365.1		1,232.6		1,098.8
All other countries(3)	33.7		19.0		89.8		80.8
Total net sales	$	1,123.8	$	1,100.2	$	3,498.7	$	3,296.3

(1) The net sales by geography are derived from the location of the entity that sells to a third party.

(2) Includes Ireland net sales of $11.9 million and $31.0 million for the three and nine months ended September 30, 2023, respectively, and $6.2 million and $20.1 million for the three and nine months ended October 1, 2022, respectively.

(3) Includes net sales generated primarily in Australia and Canada.

NOTE 3 - ACQUISITIONS AND DIVESTITURES

Acquisitions During the Year Ended December 31, 2022

Héra SAS ("HRA Pharma")

On April 29, 2022, we completed the previously announced acquisition of 100% of the outstanding equity interest in HRA Pharma for total consideration of €1.8 billion, or approximately $1.9 billion based on exchange rates at the time of closing. We funded the transaction with cash on hand and borrowings under our New Senior Secured Credit Facilities (as defined in Note 11). The acquisition of HRA Pharma was accounted for as a business combination and has been reported in our Condensed Consolidated Statements of Operations as of the acquisition date.

HRA Pharma is a self-care based company with consumer brands such as Compeed®, ellaOne® and Mederma®, as well as a trusted rare disease portfolio. The acquisition completed our transformation to a consumer self-care company. HRA Pharma’s operations are reported in both our CSCA and CSCI segments.

We recorded the preliminary purchase price allocation in the second quarter of 2022. During the first quarter of 2023, we recorded measurement period adjustments resulting in an increase to goodwill of $80.6 million, which consisted of a $104.3 million decrease in definite-lived intangibles, $27.2 million decrease in net Deferred income tax liabilities, a net increase of $2.0 million to other non-current liabilities, and a $1.5 million decrease in Prepaid expenses and other current assets. Current year earnings adjustments of $3.5 million to Cost of sales were recorded that would have been recognized during the year-ended December 31, 2022, if the measurement period adjustments to the provisional opening balance sheet were reflected as of the acquisition date. As of the first quarter of 2023 the opening balance sheet is final.

Perrigo Company plc - Item 1

Note 3

Nestlé’s Gateway Infant Formula Plant and GoodStart® infant formula brand Acquisition

On November 1, 2022, we purchased Nestlé’s Gateway infant formula plant in Eau Claire, Wisconsin, along with the U.S. and Canadian rights to the GoodStart® infant formula brand ("Gateway"), for $110.0 million in cash, subject to customary post-closing adjustments. The acquisition was accounted for as a business combination and operating results attributable to the products are included in our CSCA segment in the Nutrition product category. There were no measurement period adjustments to the provisional opening balance sheet as of the acquisition date. As of the third quarter of 2023 the opening balance sheet is final.

Pro Forma Impact of Business Combinations

The following table presents unaudited pro forma information as if the HRA Pharma and Gateway acquisitions had occurred on January 1, 2021 and had been combined with the results reported in our Condensed Consolidated Statements of Operations for all periods presented (in millions):


	Three Months Ended		Nine Months Ended
(Unaudited)	October 1, 2022		October 1, 2022
Net sales	$	1,156.1	$	3,572.0
Income (loss) from continuing operations	$	(28.0)	$	(33.9)

The unaudited pro forma information is presented for information purposes only and is not indicative of the results that would have been achieved if the acquisition had taken place at such time. The unaudited pro forma information presented above includes adjustments primarily for amortization charges for acquired intangible assets, depreciation of property, plant and equipment that have been revalued, certain acquisition-related charges, and related tax effects.

Divestitures During the Year Ended December 31, 2022

Latin American businesses

On March 9, 2022, we completed the sale of our Mexico and Brazil-based OTC businesses ("Latin American businesses"), both within our CSCA segment, to Advent International for total consideration of $23.9 million, consisting of $5.4 million in cash, installment receivables due 12 and 18 months from completion totaling $11.3 million based on the Mexican peso exchange rate at the time of sale, and contingent consideration of $7.2 million based on the Brazilian real exchange rate at the time of sale. The sale resulted in a pre-tax loss of $1.4 million, net of professional fees, recorded in Other operating expense, net on the Condensed Consolidated Statements of Operations.

ScarAway®

On March 24, 2022, we completed the sale of the ScarAway® brand asset, a U.S. OTC scar management brand, to Alliance Pharmaceuticals Ltd. for cash consideration of $20.7 million. The sale resulted in a pre-tax gain of $3.6 million recorded in our CSCA segment in Other operating expense, net on the Condensed Consolidated Statements of Operations.

NOTE 4 - DISCONTINUED OPERATIONS

Our discontinued operations consist of our generic prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel (collectively, the “Rx business”).

On July 6, 2021, we completed the sale of the Rx business to Altaris Capital Partners, LLC ("Altaris") for aggregate consideration of $1.55 billion. The consideration included a $53.3 million reimbursement related to an Abbreviated New Drug Application (“ANDA") for a generic topical lotion which Altaris delivered in cash to Perrigo pursuant to the terms of the definitive agreement during the first quarter of 2022.

Under the terms of a transition services agreement ("TSA"), we provided transition services which were substantially completed as of the end of the third quarter of 2022. We also entered into reciprocal supply agreements pursuant to which Perrigo will supply certain products to the Rx business and the Rx business will

Perrigo Company plc - Item 1

Note 4

supply certain products to Perrigo. The supply agreements have a term of four years, extendable up to seven years by the party who is the purchaser of the products under such agreement. We also extended distribution rights to the Rx business for certain OTC products owned and manufactured by Perrigo that may be fulfilled through pharmacy channels, in return for a share of the net profits.

In connection with the sale, Perrigo retained certain pre-closing liabilities arising out of antitrust (refer to Note 16 - Contingencies under the header "Price-Fixing Lawsuits") and opioid matters and the Company’s Albuterol recall, subject to, in each case, Altaris' obligation to indemnify the Company for fifty percent of these liabilities up to an aggregate cap on Altaris' obligation of $50.0 million. We have not requested payments from Altaris related to the indemnity of these liabilities during the three and nine months ended September 30, 2023.

Current and prior period reported net loss from discontinued operations primarily relates to legal fees, partially offset by an income tax benefit.

NOTE 5 - INVENTORIES

Major components of inventory were as follows (in millions):


	September 30, 2023		December 31, 2022
Finished goods	$	671.6	$	620.3
Work in process	241.1		262.2
Raw materials	236.8		267.8
Total inventories	$	1,149.5	$	1,150.3

NOTE 6 - INVESTMENTS

The following table summarizes the measurement category, balance sheet location, and balances of our equity securities (in millions):


Measurement Category	Balance Sheet Location	September 30, 2023		December 31, 2022
Fair value method	Prepaid expenses and other current assets	$	0.1	$	0.1
Fair value method(1)	Other non-current assets	$	1.6	$	1.7
Equity method	Other non-current assets	$	60.5	$	63.4

(1) Measured at fair value using the Net Asset Value practical expedient.

The following table summarizes the expense recognized in earnings of our equity securities (in millions):


		Three Months Ended				Nine Months Ended
Measurement Category	Income Statement Location	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Fair value method	Other operating (income) expense, net	$	—	$	0.1	$	0.1	$	0.4
Equity method	Other operating (income) expense, net	$	0.3	$	0.3	$	1.5	$	1.6

Perrigo Company plc - Item 1

Note 7

NOTE 7 - LEASES

The balance sheet locations of our lease assets and liabilities were as follows (in millions):


Assets	Balance Sheet Location	September 30, 2023		December 31, 2022
Operating	Operating lease assets	$	199.9	$	217.1
Finance	Other non-current assets	19.4		22.0
Total		$	219.3	$	239.1


Liabilities	Balance Sheet Location	September 30, 2023		December 31, 2022
Current
Operating	Other accrued liabilities	$	27.9	$	28.4
Finance	Current indebtedness	2.1		3.3
Non-Current
Operating	Other non-current liabilities	173.0		189.5
Finance	Long-term debt, less current portion	16.3		17.4
Total		$	219.3	$	238.6

The below tables show our lease assets and liabilities by reporting segment (in millions):


	Assets
	Operating				Financing
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
CSCA	$	93.9	$	100.5	$	13.2	$	13.8
CSCI	44.2		49.5		6.0		6.6


Unallocated	61.8		67.1		0.2		1.6
Total	$	199.9	$	217.1	$	19.4	$	22.0


	Liabilities
	Operating				Financing
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
CSCA	$	95.9	$	102.2	$	14.5	$	14.9
CSCI	46.9		51.7		3.7		4.1


Unallocated	58.1		64.0		0.2		1.7
Total	$	200.9	$	217.9	$	18.4	$	20.7

Lease expense was as follows (in millions):


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Operating leases(1)	$	11.8	$	11.1	$	34.4	$	31.7

Finance leases
Amortization	$	0.9	$	1.3	$	3.1	$	4.2
Interest	0.1		0.2		0.4		0.5
Total finance leases	$	1.0	$	1.5	$	3.5	$	4.7

(1) Includes short-term leases and variable lease costs, which are immaterial.

Perrigo Company plc - Item 1

Note 7

The annual future maturities of our leases as of September 30, 2023 are as follows (in millions):


	Operating Leases		Finance Leases		Total
2023	$	8.4	$	0.7	$	9.1
2024	31.2		2.5		33.7
2025	28.4		2.3		30.7
2026	22.6		2.2		24.8
2027	21.6		2.1		23.7
After 2027	117.3		11.6		128.9
Total lease payments	229.5		21.4		250.9
Less: Interest	28.6		3.0		31.6
Present value of lease liabilities	$	200.9	$	18.4	$	219.3

Our weighted average lease terms and discount rates are as follows:


	September 30, 2023		October 1, 2022
Weighted-average remaining lease term (in years)
Operating leases	10.65		11.35
Finance leases	9.41		9.45
Weighted-average discount rate
Operating leases	2.7	%	2.5	%
Finance leases	3.1	%	2.9	%

Our lease cash flow classifications are as follows (in millions):


	Nine Months Ended
	September 30, 2023		October 1, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	27.0	$	30.6
Operating cash flows for finance leases	$	0.4	$	0.5
Financing cash flows for finance leases	$	2.8	$	3.8

Leased assets obtained in exchange for new finance lease liabilities	$	0.5	$	—
Leased assets obtained in exchange for new operating lease liabilities	$	5.9	$	62.3

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill, by reportable segment, were as follows (in millions):


	December 31, 2022		Purchase accounting adjustments		Currency translation adjustments		September 30, 2023
CSCA(1)	$	2,044.4	$	35.2	$	(2.0)	$	2,077.6
CSCI(2)	1,446.0		45.4		(19.3)		1,472.1

Total goodwill	$	3,490.4	$	80.6	$	(21.3)	$	3,549.7

(1) We had accumulated goodwill impairments of $6.1 million as of September 30, 2023 and December 31, 2022.

(2) We had accumulated goodwill impairments of $878.4 million as of September 30, 2023 and December 31, 2022.

Perrigo Company plc - Item 1

Note 8

Intangible Assets

Intangible assets and related accumulated amortization consisted of the following (in millions):


	September 30, 2023				December 31, 2022
	Gross		Accumulated Amortization		Gross		Accumulated Amortization
Indefinite-lived intangibles:(1)
Trademarks, trade names, and brands	$	3.2	$	—	$	3.2	$	—
In-process research and development	1.8		—		55.4		—
Total indefinite-lived intangibles	$	5.0	$	—	$	58.6	$	—
Definite-lived intangibles:
Distribution and license agreements and supply agreements	$	94.6	$	60.8	$	94.9	$	58.1
Developed product technology, formulations, and product rights	522.6		230.1		484.8		211.8
Customer relationships and distribution networks	1,814.4		1,049.9		1,825.1		965.9
Trademarks, trade names, and brands	2,408.3		557.7		2,542.2		481.0
Non-compete agreements	2.0		2.0		2.0		2.0
Total definite-lived intangibles	$	4,841.9	$	1,900.5	$	4,949.0	$	1,718.8
Total intangible assets	$	4,846.9	$	1,900.5	$	5,007.6	$	1,718.8

(1) Certain intangible assets are denominated in currencies other than U.S. dollar; therefore, their gross and net carrying values are subject to foreign currency movements.

On July 13, 2023, we announced that we received final approval from the U.S. Food and Drug Administration for Opill®, a progestin-only daily oral contraceptive, for over-the-counter (OTC) use for all ages. As a result, the Opill® in-process research and development (“IPR&D”), acquired through the 2022 acquisition of HRA Pharma, has been reclassified from indefinite-lived to finite-lived intangible asset in the third quarter subsequent to a fair value analysis.

We recorded amortization expense of $68.0 million and $202.7 million for the three and nine months ended September 30, 2023, respectively and $67.9 million and $178.8 million for the three and nine months ended October 1, 2022, respectively.

NOTE 9 - FAIR VALUE MEASUREMENTS

The table below summarizes the valuation of our financial instruments carried at fair value by the applicable pricing categories (in millions):


	September 30, 2023						December 31, 2022
Measured at fair value on a recurring basis:	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Investment securities	$	—	$	—	$	—	$	0.1	$	—	$	—
Foreign currency forward contracts	—		5.2		—		—		4.2		—


Interest rate swap agreements	—		—		—		—		3.0		—

Total assets	$	—	$	5.2	$	—	$	0.1	$	7.2	$	—
Liabilities:
Cross-currency swap	$	—	$	96.2	$	—	$	—	$	96.1	$	—
Foreign currency forward contracts	—		1.4		—		—		5.2		—

Total liabilities	$	—	$	97.6	$	—	$	—	$	101.3	$	—

There were no transfers within Level 3 fair value measurements during the three and nine months ended September 30, 2023 or the year ended December 31, 2022.

Perrigo Company plc - Item 1

Note 9

Non-recurring Fair Value Measurements

Non-recurring fair values represent only those assets whose carrying values were adjusted to fair value during the reporting period. During the three months ended September 30, 2023, an asset within CSCI was measured for impairment purposes and an impairment of $11.2 million was recorded (refer to Note 14).

Fixed Rate Long-term Debt

Our fixed rate long-term debt consisted of the following (in millions):


	September 30, 2023		December 31, 2022
Public Bonds	Level 1		Level 1

Carrying value (excluding discount)	$	2,544.4	$	2,544.4
Fair value	$	2,258.9	$	2,225.4

The fair values of our public bonds for all periods were based on quoted market prices. The fair values of our private placement notes for all periods were based on interest rates offered for borrowings of a similar nature and remaining maturities.

The carrying amounts of our other financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, short-term debt, revolving credit agreements, and variable rate long-term debt, approximate their fair value.

NOTE 10 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Foreign Currency Option Contracts

In September 2021, to economically hedge the foreign currency exposure associated with the planned payment of the euro-denominated purchase price for HRA Pharma, we entered into two non-designated currency option contracts with a total notional amount of $1.1 billion that were scheduled to mature in September 2022. In April 2022, due to market conditions, we unwound the two options and entered into two new undesignated options to economically hedge the purchase price for HRA Pharma for a total notional amount of $2.0 billion. All premiums associated with the HRA Pharma related currency options were settled in April 2022 for $37.1 million. Within Other (income) expense we recorded no loss and $16.2 million for the three and nine months ended October 1, 2022, respectively. There was no activity during the three and nine months ended September 30, 2023.

Interest Rate Swaps

In April 2022, to economically hedge the interest rate risk of the New Senior Secured Credit Facilities (as defined in Note 11), we entered into five variable-to-fixed interest rate swap agreements. Three of the interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the 2022 Term Loan B Facility (as defined in Note 11). The interest rate swaps cover an interest period ranging from June 1, 2022, through April 1, 2029, on notional balances that decline from $1.0 billion to $812.5 million over the term. The other two interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the 2022 Term Loan A Facility (as defined in Note 11). The interest rate swaps cover an interest period ranging from June 1, 2022, through April 1, 2027, on notional balances that decline from $487.5 million to $387.5 million over the term.

As a designated cash flow hedge, gains and losses will be deferred in AOCI and recognized within Interest expense, net when interest is paid on the New Senior Secured Credit Facilities.

Perrigo Company plc - Item 1

Note 10

Cross-currency Swaps

In April 2022, we entered into three fixed-for-fixed cross currency interest rate swaps designated as net investment hedge to hedge the EUR currency exposure of our investment in European operations. In October 2022, we replaced those swaps by entering into three fixed-for-fixed cross currency interest rate swaps at market rates and designated the instruments as net investment hedges on our investment in European operations. The following are the terms and notional amounts outstanding:

•$700 million notional amount outstanding from October 25, 2022 through December 15, 2024;

•$700 million notional amount outstanding from October 25, 2022 through March 15, 2026; and

•$100 million notional amount outstanding from October 25, 2022 through June 15, 2030.

Foreign Currency Forwards

Notional amounts of foreign currency forward contracts were as follows (in millions):


	September 30, 2023		December 31, 2022
British Pound (GBP)	$	83.6	$	224.9
European Euro (EUR)	77.4		61.7
Swedish Krona (SEK)	45.7		56.9
United States Dollar (USD)	35.7		51.7
Danish Krone (DKK)	26.3		51.7
Chinese Yuan (CNH)	22.7		34.4
Canadian Dollar (CAD)	20.0		24.9
Polish Zloty (PLZ)	5.9		25.2
Norwegian Krone (NOK)	5.1		12.4
Hungarian Forint (HUF)	3.7		10.6
Mexican Peso (MXN)	—		13.3





Other (1)	4.7		25.9
Total	$	330.8	$	593.6

(1) Number consists of various currencies notional amounts, none of which individually exceed $10 million in either period presented.

The maximum term of our forward currency exchange contracts is 60 months.

Perrigo Company plc - Item 1

Note 10

Effects of Derivatives on the Financial Statements

The below tables indicate the effects of all derivative instruments on the Condensed Consolidated Financial Statements. All amounts exclude income tax effects. The balance sheet location and gross fair value of our derivative instruments were as follows (in millions):



	Balance Sheet Location	September 30, 2023		December 31, 2022
Designated derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0.6	$	1.1
Interest rate swap agreements	Prepaid expenses and other current assets	—		3.0
Foreign currency forward contracts	Other non-current assets	0.4		0.7


Interest rate swap agreements	Other non-current assets	71.5		47.5
Total designated derivative assets		$	72.5	$	52.3
Non-designated derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	4.2	$	2.4


Total non-designated derivative assets		$	4.2	$	2.4
Designated derivative liabilities:
Foreign currency forward contracts	Other accrued liabilities	$	0.8	$	4.2
Cross-currency swap	Other accrued liabilities	96.2		96.1
Total designated derivative liabilities		$	97.0	$	100.3
Non-designated derivative liabilities:
Foreign currency forward contracts	Other accrued liabilities	$	0.6	$	1.0

The amounts of (income)/expense recognized in earnings related to our non-designated derivatives on the Consolidated Statements of Operations were as follows (in millions):


		Three Months Ended				Nine Months Ended
Non-Designated Derivatives	Income Statement Location	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Foreign currency forward contracts	Other (income) expense, net	$	(0.3)	$	(2.9)	$	(4.7)	$	(0.9)
	Interest expense, net	(1.6)		0.1		(2.2)		(0.2)
		$	(1.9)	$	(2.8)	$	(6.9)	$	(1.1)

Foreign currency options	Other (income) expense, net	$	—	$	—	$	—	$	16.2

Perrigo Company plc - Item 1

Note 10

The following tables summarize the effect of derivative instruments designated as hedging instruments in AOCI (in millions):


	Gain/(Loss)
			Reclassified from AOCI into Earnings			Related to Amounts Excluded from Effectiveness Testing
	Amount Recorded in OCI(1)		Classification	Amount(2)		Classification	Amount Recognized in Earnings on Derivatives
Three Months Ended September 30, 2023
Cash flow hedges

Interest rate swap agreements	$	17.7	Interest expense, net	$	6.4	Interest expense, net	$	—
Foreign currency forward contracts	$	(6.8)	Net sales	$	(0.2)	Net sales	$	0.2
			Cost of sales	$	0.2	Cost of sales	$	0.1
						Other (income) expense, net	$	—
	$	10.9		$	6.4		$	0.3
Net investment hedges
Cross-currency swap	$	40.1				Interest expense, net	$	6.4

Nine Months Ended September 30, 2023
Cash flow hedges

Interest rate swap agreements	$	20.9	Interest expense, net	$	16.2	Interest expense, net	$	—
Foreign currency forward contracts	(17.0)		Net sales	—		Net sales	0.4
			Cost of sales	0.4		Cost of sales	0.1
						Other (income) expense, net	(0.5)
	$	3.9		$	16.6		$	—
Net investment hedges
Cross-currency swap	$	(0.1)				Interest expense, net	$	19.2

Three Months Ended October 1, 2022
Cash flow hedges
Interest rate swap agreements	$	65.4	Interest expense, net	$	0.5	Interest expense, net	$	—
Foreign currency forward contracts	$	1.6	Net sales	0.4		Net sales	$	(0.2)
			Cost of sales	(1.7)		Cost of sales	$	(0.1)
						Other (income) expense, net	$	(1.0)
	$	67.0		$	(0.8)		$	(1.3)
Net investment hedges
Cross-currency swap	$	90.5				Interest expense, net	$	(6.7)

Nine Months Ended October 1, 2022
Cash flow hedges
Interest rate swap agreements	$	59.2	Interest expense, net	$	(1.4)	Interest expense, net	$	—
Foreign currency forward contracts	(3.3)		Net sales	0.9		Net sales	(0.3)
			Cost of sales	(2.9)		Cost of sales	(0.1)
						Other (income) expense, net	(1.7)
	$	55.9		$	(3.5)		$	(2.1)
Net investment hedges
Cross-currency swap	$	124.7				Interest expense, net	$	(10.9)

(1) Net gain of $1.2 million is expected to be reclassified out of AOCI into earnings during the next 12 months

(2) For additional details about the effect of the amounts reclassified from AOCI refer to Note 13.

Perrigo Company plc - Item 1

Note 10

The classification and amount of gain/(loss) recognized in earnings on fair value and hedging relationships were as follows (in millions):


	Net Sales		Cost of Sales		Interest Expense, net		Other (Income) Expense, net
Three Months Ended September 30, 2023
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded	$	1,123.8	$	712.6	$	43.5	$	(0.6)

Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings	$	(0.2)	$	0.2	$	—	$	—
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach	$	0.2	$	0.1	$	—	$	—
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	6.4	$	—

Nine Months Ended September 30, 2023
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded	$	3,498.7	$	2,245.6	$	131.1	$	(9.6)

Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	0.4	$	—	$	—
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach	$	0.4	$	0.1	$	—	$	(0.5)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	16.2	$	—

Three Months Ended October 1, 2022
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded	$	1,100.2	$	737.3	$	41.0	$	(4.0)

Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings	$	0.4	$	(1.7)	$	—	$	—
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach	$	(0.2)	$	(0.1)	$	—	$	(1.0)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	0.5	$	—

Nine Months Ended October 1, 2022
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded	$	3,296.3	$	2,223.5	$	115.1	$	48.7

Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings	$	0.9	$	(2.9)	$	—	$	—
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach	$	(0.3)	$	(0.1)	$	—	$	(1.7)
Treasury locks
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	(0.1)	$	—
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	(1.4)	$	—

Perrigo Company plc - Item 1

Note 11

NOTE 11 - INDEBTEDNESS

Total borrowings are summarized as follows (in millions):


			September 30, 2023		December 31, 2022
Term loans
	2022 Term loan A due April 20, 2027		478.1		493.8
	2022 Term loan B due April 20, 2029		1,086.3		1,094.5
	Total term loans		1,564.4		1,588.3
Notes and Bonds
	Coupon	Due
	3.900%	December 15, 2024	700.0		700.0
	4.375%	March 15, 2026	700.0		700.0
	4.650%	June 15, 2030(1)	750.0		750.0
	5.300%	November 15, 2043	90.5		90.5
	4.900%	December 15, 2044	303.9		303.9
	Total notes and bonds		2,544.4		2,544.4
Other financing			18.2		20.6
Unamortized discount, net			(13.9)		(15.9)
Deferred financing fees			(26.5)		(30.8)
Total borrowings outstanding			4,086.6		4,106.6
	Current indebtedness		(38.1)		(36.2)
Total long-term debt less current portion			$	4,048.5	$	4,070.4

(1) The coupon rate noted above increased from 4.400% to 4.650% on payments starting after June 15, 2023, following a credit rating downgrade by Moody's in the first quarter of 2023. Future interest rate adjustments are subject to a 2.0% total cap above the original 3.150% interest rate based on certain rating events as specified in the Note’s Supplemental Indenture No. 3, dated as of June 19, 2020, among Perrigo Finance Unlimited Company, Perrigo Company plc and Wells Fargo Bank, National Association, as trustee.

Credit Agreements

On April 20, 2022, we and our wholly owned subsidiary, Perrigo Investments, LLC, entered into new senior secured credit facilities consisting of (i) a $1.0 billion five-year revolving credit facility (the “2022 Revolver”), (ii) a $500 million five-year Term Loan A facility (the “2022 Term Loan A Facility”), and (iii) a $1.1 billion seven-year Term Loan B facility (the “2022 Term Loan B Facility” and, together with the 2022 Revolver and 2022 Term Loan A Facility, the “New Senior Secured Credit Facilities”), pursuant to a new Term Loan and Revolving Credit Agreement. The New Senior Secured Credit Facilities are guaranteed, along with any hedging or cash management obligations entered into with a lender, by us and certain of our direct and indirect wholly-owned subsidiaries organized in the United States, Ireland, Belgium and England and Wales (subject to certain exceptions) (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries and Perrigo Investments, LLC provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 5.300% Notes due 2043 issued by the Company, and the Guarantor Subsidiaries, Perrigo Investments, LLC and the Company provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 3.900% Notes due 2024, the 4.375% Notes due 2026, the 4.650% Notes due 2030 and the 4.900% Notes due 2044 issued by Perrigo Finance Unlimited Company, a wholly-owned subsidiary.

The Credit Agreement also contains customary representations and warranties and customary affirmative and negative covenants applicable to the Borrower and its restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of junior indebtedness and dividends and other distributions. The Credit Agreement contains financial covenants that require the Borrower and its restricted subsidiaries to (a) not exceed a maximum first lien secured net leverage ratio of 3.00 to 1.00 at the end of each fiscal quarter and (b) not fall below a minimum interest coverage ratio of 3.00 to 1.00 at the end of each fiscal quarter, provided that such covenants apply only to the 2022 Revolver and the 2022 Term Loan A Facility. If we consummate certain qualifying acquisitions during the term of the loan, the maximum first lien secured net leverage ratio covenant would increase to 3.25 to 1.00 for such quarter and the three following fiscal quarters

Perrigo Company plc - Item 1

Note 11

thereafter. The Credit Agreement also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations.

During the three and nine months ended September 30, 2023, principal repayments of $9.1 million and $24.0 million were made on the 2022 Term Loan A Facility and 2022 Term Loan B Facility, respectively.

There were no borrowings outstanding under the 2022 Revolver as of September 30, 2023 or December 31, 2022, respectively.

We are in compliance with all the covenants under our debt agreements as of September 30, 2023.

Other Financing

We have overdraft facilities available that we use to support our cash management operations. We report any balances outstanding under such facilities in the above table under "Other financing". There were no borrowings outstanding under the overdraft facilities as of September 30, 2023 or December 31, 2022.

We have financing leases that are reported in the above table under "Other financing" (refer to Note 7).

NOTE 12 - EARNINGS PER SHARE AND SHAREHOLDERS' EQUITY

Earnings per Share

A reconciliation of the numerators and denominators used in our basic and diluted earnings per share ("EPS") calculation is as follows (in millions):


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Numerator:
Income (loss) from continuing operations	$	15.4	$	(52.1)	$	23.3	$	(118.2)
Income (loss) from discontinued operations, net of tax	(1.2)		2.7		(3.7)		1.3
Net income (loss)	$	14.2	$	(49.4)	$	19.6	$	(116.9)
Denominator:
Weighted average shares outstanding for basic EPS	135.5		134.6		135.2		134.4
Dilutive effect of share-based awards	1.4		—		1.4		—
Weighted average shares outstanding for diluted EPS (1)	136.9		134.6		136.6		134.4

(1) In the period of a net loss from continuing operations, diluted shares equal basic shares.

Shareholders' Equity

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 (the "2018 Authorization"). We did not repurchase any shares during the three and nine months ended September 30, 2023 or October 1, 2022.

NOTE 13 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in our AOCI balances, net of tax were as follows (in millions):


	Fair Value of Derivative Financial Instruments, net of tax		Foreign Currency Translation Adjustments		Post-Employment Plan Adjustments, net of tax		Total AOCI
Balance at December 31, 2022	$	24.5	$	(58.6)	$	7.1	$	(27.0)
OCI before reclassifications	32.2		(65.0)		(1.7)		(34.5)
Amounts reclassified from AOCI	(16.6)		—		—		(16.6)
Other comprehensive income (loss)	$	15.6	$	(65.0)	$	(1.7)	$	(51.1)
Balance at September 30, 2023	$	40.1	$	(123.6)	$	5.4	$	(78.1)

Perrigo Company plc - Item 1

Note 13

For additional details about the effect of the amounts reclassified from AOCI refer to Note 10.

NOTE 14 - RESTRUCTURING CHARGES

We periodically take action to reduce redundant expenses and improve operating efficiencies. Restructuring activity includes severance, lease exit costs, asset impairments, and related consulting fees. The following reflects our restructuring activity (in millions):


	Three Months Ended
	September 30, 2023
	Supply Chain Reinvention		HRA Pharma Integration		Other Initiatives		Total
Beginning balance	$	—	$	9.6	$	3.8	$	13.4
Additional charges	13.5		0.5		1.5		15.5
Payments	(2.3)		(4.0)		(2.8)		(9.0)
Non-cash adjustments	(11.2)		(0.1)		(0.4)		(11.7)

Ending balance	$	—	$	6.0	$	2.2	$	8.2


	Three Months Ended
	October 1, 2022
	Supply Chain Reinvention		Other Initiatives		Total
Beginning balance	$	7.6	$	5.9	$	13.5
Additional charges	11.4		7.7		19.1
Payments	(10.0)		(2.9)		(12.9)
Non-cash adjustments	—		(0.4)		(0.4)

Ending balance	$	9.0	$	10.3	$	19.3


	Nine Months Ended
	September 30, 2023
	Supply Chain Reinvention		HRA Pharma Integration		Other Initiatives		Total
Beginning balance	$	2.2	$	13.3	$	4.3	$	19.8
Additional charges	17.4		2.7		5.6		25.7
Payments	(8.4)		(10.1)		(7.8)		(26.3)
Non-cash adjustments	(11.2)		0.1		0.1		(11.0)
Ending balance	$	—	$	6.0	$	2.2	$	8.2


	Nine Months Ended
	October 1, 2022
	Supply Chain Reinvention		Other Initiatives		Total
Beginning balance	$	—	$	6.9	$	6.9
Additional charges	22.3		9.9		32.2
Payments	(13.3)		(5.7)		(19.0)
Non-cash adjustments	—		(0.8)		(0.8)
Ending balance	$	9.0	$	10.3	$	19.3

The charges incurred during the three and nine months ended September 30, 2023 and October 1, 2022 were primarily associated with actions taken on our multi-year supply chain restructuring program initiative started in 2022, and HRA Pharma integration activities associated with employee separation, continuity and other benefit-related costs. Supply chain restructuring charges in the three months ended September 30, 2023 included an asset impairment of $11.2 million and other restructuring charges of $2.3 million. We have incurred $15.2 million of cumulative restructuring expense to date related to HRA Pharma integration. We expect that most of the HRA Pharma restructuring expenses will be incurred by the end of 2023.

Perrigo Company plc - Item 1

Note 14

Of the amount recorded during the three and nine months ended September 30, 2023, $12.5 million and $19.2 million, respectively, was related to our CSCI segment, due primarily to supply chain restructuring (including the $11.2 million asset impairment) and HRA Pharma integration initiatives, and $2.3 million and $4.6 million related to our CSCA segment, also due primarily to supply chain restructuring initiatives. Of the amount recorded during the three and nine months ended October 1, 2022, $6.4 million and $8.1 million, respectively, was related to our CSCI segment, $6.8 million and $6.9 million was related to our CSCA segment, and $5.8 million and $17.2 million was related to our Unallocated segment. For all segments, amounts were due primarily to supply chain restructuring.

There were no other material restructuring programs for the periods presented. All charges are recorded in Restructuring expense on the Condensed Consolidated Statements of Operations. The remaining $8.2 million liability for employee severance benefits and consulting fees is expected to be mostly paid within the next year.

NOTE 15 - INCOME TAXES

The effective tax rates were as follows:


Three Months Ended				Nine Months Ended
September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
19.7	%	(1,377.1)	%	49.5	%	5.3	%

The effective tax rate on the pre-tax income for the three months ended September 30, 2023 decreased compared to the effective tax rate on the pre-tax loss for the three months ended October 1, 2022, primarily due to changes in the jurisdictional mix of earnings, as well as the impact of benefits not realized on certain pre-tax losses in the three months ended October 1, 2022. The effective tax rate on the pre-tax income for the nine months ended September 30, 2023, increased compared to the effective tax rate on the pre-tax loss for the nine months ended October 1, 2022, primarily due to audit settlements occurring in the current period, as well as the tax benefit of the loss on sale of our Latin American businesses recognized in the prior year. The effective tax rate for these periods differs from the statutory income tax rate of 12.5% primarily due to non-deductible expenses as well as the impact of audit settlements in these periods.

The Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, has recommended changes to numerous longstanding tax principles. Changes include imposing a global minimum corporation tax of 15% and introducing new filing obligations. These changes are being adopted and implemented by many of the countries in which we do business. Specifically, in December 2022, the EU adopted a directive issued by the European Commission requiring EU members to implement the OECD's global minimum tax rules in part by January 1, 2024 and fully by January 1, 2025. Any such global minimum tax is expected to be a period cost, and thus we are continuing to evaluate the potential global impact on future periods.

Internal Revenue Service Audits of Perrigo Company, a U.S. Subsidiary

Perrigo Company, our U.S. subsidiary ("Perrigo U.S."), is engaged in a series of tax disputes in the U.S. relating primarily to transfer pricing adjustments including income in connection with the purchase, distribution, and sale of store-brand OTC pharmaceutical products in the United States, including the generic heartburn medication omeprazole. On August 27, 2014, we received a statutory notice of deficiency from the Internal Revenue Service ("IRS") relating to our fiscal tax years ended June 27, 2009, and June 26, 2010 (the “2009 tax year” and “2010 tax year”, respectively). On April 20, 2017, we received a statutory notice of deficiency from the IRS for the years ended June 25, 2011 and June 30, 2012 (the “2011 tax year” and “2012 tax year”, respectively). Specifically, both statutory notices proposed adjustments related to the offshore reporting of profits on sales of omeprazole in the United States resulting from the assignment of an omeprazole distribution contract to an Israeli affiliate. In addition to the transfer pricing adjustments, which applied to all four tax years, the statutory notice of deficiency for the 2011 and 2012 tax years included adjustments requiring the capitalization and amortization of certain legal expenses that were deducted when paid or incurred in defending against certain patent infringement lawsuits related to ANDAs filed with a Paragraph IV Certification.

We do not agree with the audit adjustments proposed by the IRS in either of the notices of deficiency. We paid the assessed amounts of tax, interest, and penalties set forth in the statutory notices and timely filed claims for refund

Perrigo Company plc - Item 1

Note 15

on June 11, 2015 for the 2009 and 2010 tax years, and on June 7, 2017, for the 2011 and 2012 tax years. On August 15, 2017, following disallowance of such refund claims, we timely filed a complaint in the United States District Court for the Western District of Michigan seeking refunds of tax, interest, and penalties of $27.5 million for the 2009 tax year, $41.8 million for the 2010 tax year, $40.1 million for the 2011 tax year, and $24.7 million for the 2012 tax year, for a total of $134.1 million, plus statutory overpayment interest thereon from the dates of payment. The amounts sought in the complaint for the 2009 and 2010 tax years were recorded as deferred charges in Other non-current assets on our balance sheet during the three months ended March 28, 2015, and the amounts sought in the complaint for the 2011 and 2012 tax years were recorded as deferred charges in Other non-current assets on our balance sheet during the three months ended July 1, 2017.

A bench trial was held during the period May 25, 2021 to June 7, 2021 for the refund case in the United States District Court for the Western District of Michigan. The total amount of cumulative deferred charge that we are seeking to receive in this litigation is approximately $111.6 million, which reflects the impact of conceding that Perrigo U.S. should have received a 5.24% royalty on all omeprazole sales. That concession was previously paid and is the subject of the above refund claims. The issues outlined in the statutory notices of deficiency described above are continuing in nature, and the IRS will likely carry forward the adjustments set forth therein as long as the OTC medication is sold, in the case of the omeprazole issue, and for all post-2012 Paragraph IV filings that trigger patent infringement suits, in the case of the ANDA issue. Post-trial briefings were completed on September 24, 2021 and the case is now fully submitted for the court’s decision. On April 30, 2021, we filed a Notice of New Authority in our refund case in the Western District of Michigan alerting the court to a United States Tax Court decision in Mylan v. Comm'r that ruled in favor of the taxpayer on nearly identical ANDA issues as we have before the court. On January 28, 2022, the IRS filed a Notice of Appeal with the United States Court of Appeals of the Third Circuit to appeal the United States Tax Court's decision in Mylan v. Comm'r. Briefing to the appellate court was completed during 2022, oral argument was held before the Third Circuit on January 12, 2023, and on July 27, 2023, the Third Circuit Court affirmed the decision of the Tax Court. On August 1, 2023, we filed a Notice of New Authority in our refund case in the Western District of Michigan alerting the court to the Third Circuit Court decision in Mylan v. Comm’r that ruled in favor of the taxpayer on nearly identical ANDA issues that we have before the court. On August 22, 2022, the parties filed a Notice of New Authority in the refund case alerting the court to a United States Court of Federal Claims decision in Actavis Laboratories v. United States that also ruled in favor of the taxpayer on the ANDA issues. The government appealed the Actavis Laboratories decision to the United States court of Appeals for the Federal Circuit in December of 2022 and briefing to the appellate court is ongoing.

On January 13, 2021, the IRS issued a 30-day letter and Revenue Agent's Report ("RAR") with respect to its audit of our fiscal tax years ended June 29, 2013, June 28, 2014, and June 27, 2015. The 30-day letter proposed, among other modifications, transfer pricing adjustments in connection with the distribution of omeprazole in the aggregate amount of $141.6 million and ANDA-related adjustments in the aggregate amount of $21.9 million. The 30-day letter also set forth adjustments described in the next two paragraphs. We timely filed a protest to the 30-day letter for those additional adjustments but noting that due to the pending refund litigation described above, IRS Appeals would not consider the merits of the omeprazole or ANDA matters. We believe that we should prevail on the merits on both carryforward issues and have reserved for taxes and interest payable on the 5.24% deemed royalty on omeprazole through the tax year ended December 31, 2018. Beginning with the tax year ended December 31, 2019, we began reporting income commensurate with the 5.24% deemed royalty. We have not reserved for the ANDA-related issue described above. While we believe we should prevail on the merits of this case, the outcome remains uncertain. If our litigation position on the omeprazole issue is not sustained, the outcome for the 2009–2012 tax years could range from a reduction in the refund amount to denial of any refund. In addition, we expect that the outcome of the refund litigation could effectively bind future tax years. In that event, an adverse ruling on the omeprazole issue could have a material impact on subsequent periods, with additional tax liability in the range of $24.0 million to $112.0 million, not including interest and any applicable penalties.

The 30-day letter for the 2013-2015 tax years also proposed to reduce Perrigo U.S.'s deductible interest expense for the 2014 tax year and the 2015 tax year on $7.5 billion in certain intercompany debts owed by it to Perrigo Company plc. The debts were incurred in connection with the 2013 Elan merger transaction. On May 7, 2020, the IRS issued a Notice of Proposed Adjustment ("NOPA") capping the interest rate on the debts for U.S. federal tax purposes at 130.0% of the Applicable Federal Rate ("AFR") (a blended rate reduction of 4.0% per annum) on the stated ground that the loans were not negotiated on an arms-length basis. The May 7, 2020 NOPA proposed a reduction in gross interest expense of approximately $414.7 million for tax years 2014 and 2015. On January 13, 2021, we received a RAR, together with the 30-day letter, requiring our filing of a written protest to request IRS Appeals consideration. The protest was timely filed with the IRS on February 26, 2021. On January 20, 2022, the IRS responded to our protest with its rebuttal in which it revised its position on this interest rate issue by reasserting that implicit parental support considerations are necessary to determine the arm's length interest rates and

Perrigo Company plc - Item 1

Note 15

proposed revised interest rates that are higher than the interest rates proposed under its 130.0% of AFR assertion. The blended interest rate proposed by the IRS rebuttal was 4.36%, an increase from the blended interest rate in the RAR of 2.57% but lower than the stated blended interest rate of the loans of 6.8%. An IRS Appeals conference for the interest rate issue was held during March 7, 2023 through March 9, 2023. On May 5, 2023, we finalized an agreement with IRS Appeals resulting in settlement of the May 7, 2020 NOPA of $153.4 million of gross interest expense reduction for the 2013-2015 tax years. This implies a blended interest rate of 5.44%. In addition, based on the above agreement with IRS Appeals, we will apply similar adjustments for all remaining tax years through 2018. Tax payments relating to the settlement have been suspended until the pending disputes relating to omeprazole income recognition and deductibility of certain ANDA legal costs are fully resolved. In the second quarter of fiscal year 2023 we adjusted our previously established reserves related to this matter to account for the agreed reduction of the interest rates.

On December 2, 2021, the IRS commenced an audit of our federal income tax returns for the tax years ended December 31, 2015, through December 31, 2019.

Internal Revenue Service Audit of Athena Neurosciences, Inc., a U.S. Subsidiary

On April 26, 2019, we received a revised NOPA from the IRS regarding transfer pricing positions related to the IRS audit of Athena Neurosciences, LLC ("Athena") for the years ended December 31, 2011, December 31, 2012, and December 31, 2013. The April 26, 2019 NOPA carried forward the IRS's theory from its 2017 draft NOPA that when Elan took over the future funding of Athena's in-process research and development after acquiring Athena in 1996, Elan should have paid a substantially higher royalty rate for the right to exploit Athena’s intellectual property in various developmental products, including the Multiple Sclerosis drug Tysabri, rather than rates based on transfer pricing documentation prepared by Elan's external tax advisors. The April 26, 2019 NOPA proposed a payment of $843.0 million, which represented additional tax based on imputing royalty income to Athena using a 24.7% royalty rate derived by the IRS and a 40.0% accuracy-related penalty. This amount excluded consideration of offsetting tax attributes and any potential interest that may be imposed. We strongly disagreed with the IRS position. On December 22, 2016, we also received a NOPA for these years denying the deductibility of settlement costs incurred in 2011 by Athena's parent company Elan Pharmaceuticals, Inc. ("EPI") related to illegal marketing of Zonegran by EPI's employees in the United States raised in a Qui Tam action under the U.S. False Claims Act. We strongly disagreed with the IRS' position on this issue as well. Because we believed that any concession on these issues in Appeals would be contrary to our evaluation of the issues and to avoid double taxation of the same income in the United States and Ireland, we pursued our remedies under the Mutual Agreement Procedure ("MAP") of the U.S.-Ireland Income Tax Treaty to alleviate double taxation. On April 21 and 23, 2020, we filed requests for Competent Authority assistance with the IRS and Irish Revenue on the Tysabri royalty issue, and those MAP applications were accepted. On October 20, 2020, we amended our requests for Competent Authority assistance to include the Zonegran issue and these supplemental requests were also accepted.

On April 24, 2023, we received a letter from the IRS informing us that the U.S. Competent Authority had agreed to fully withdraw the income and penalty adjustments related to the Tysabri royalty issue and considered that case to be closed. The April 24, 2023 letter concluded the competent authority process for the Tysabri royalty issue without the need for negotiations between the Competent Authorities and constitutes a full and final resolution of all adjustments proposed by the IRS in the April 26, 2019 NOPA. In the second quarter of fiscal year 2023 we adjusted previously established reserves related to this and other matters in the same audit period. The Zonegran deduction issue remains pending in the MAP case and is being considered by the U.S. and Irish Competent Authorities.

Summary

Although we believe that our tax estimates are reasonable and that we prepare our tax filings in accordance with all applicable tax laws, 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. The results of an audit or litigation could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments.

Based on the final resolution of tax examinations, judicial or administrative proceedings, changes in facts or law, expirations of statute of limitations in specific jurisdictions or other resolutions of, or changes in, tax positions - one or more of which may occur within the next twelve months - it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those recorded as of

Perrigo Company plc - Item 1

Note 15

September 30, 2023. However, we are not able to estimate a reasonably possible range of how these events may impact our unrecognized tax benefits in the next twelve months.

NOTE 16 - CONTINGENCIES

In view of the inherent difficulties of predicting the outcome of various types of legal proceedings, we cannot determine the ultimate resolution of the matters described below. We establish reserves for litigation and regulatory matters when losses associated with the claims become probable and the amounts can be reasonably estimated. The actual costs of resolving legal matters may be substantially higher or lower than the amounts reserved for those matters. For matters where the likelihood or extent of a loss is not probable or cannot be reasonably estimated as of September 30, 2023, we have not recorded a loss reserve. If certain of these matters are determined against us, there could be a material adverse effect on our financial condition, results of operations, or cash flows. We currently believe we have valid defenses to the claims in these lawsuits and intend to defend these lawsuits vigorously regardless of whether or not we have a loss reserve. Other than what is disclosed below, we do not expect the outcome of the litigation matters to which we are currently subject to, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows.

Price-Fixing Lawsuits Related to the Company's Former Rx Business

Beginning in 2016, the Company, along with other manufacturers, was named as a defendant in lawsuits in the United States and Canada generally alleging anticompetitive conduct with respect to the sale of generic drugs by the Company’s former Rx business. The complaints – which have been filed by putative classes of direct purchasers, end payors, and indirect resellers, as well as individual direct and indirect purchasers and certain cities and counties – allege a conspiracy to fix, maintain, stabilize, and/or raise prices, rig bids, and allocate markets or customers for various generic drugs in violation of federal and state antitrust and consumer protection laws. While most of the complaints involve alleged single-drug conspiracy, the three putative classes have each filed an over-arching conspiracy complaint alleging that Perrigo and other manufacturers (and some individuals) entered into an “overarching conspiracy” that involved allocating customers, rigging bids, and raising, maintaining, and fixing prices for various products. The vast majority of the lawsuits described in this paragraph have been consolidated in the generic pricing multidistrict litigation ("MDL") MDL No. 2724 (United States District Court for Eastern District of Pennsylvania).

While the Court has ordered that the class actions alleging “single drug” conspiracies involving Clobetasol will proceed on a more expedited basis (as a bellwether) than the other cases in MDL No. 2724, the classes voluntarily dismissed their claims against Perrigo relating to "single drug" conspiracies involving Clobetasol in May 2023. The Court also ordered that the State Attorney General Complaint (described below) will proceed as a bellwether case. The bellwether cases completed discovery during October 2023 under the schedule set by the Court, and motions for summary judgment will be due on June 28, 2024. No trial dates have been set for any of the bellwether cases, or any of the other cases in the MDL.

State Attorney General Complaint

On June 10, 2020, the Connecticut Attorney General’s office filed a lawsuit on behalf of Connecticut and 50 other states and territories against Perrigo, 35 generic pharmaceutical manufacturers, and certain individuals (including two former Perrigo employees), alleging an overarching conspiracy to allocate customers and/or fix, raise, or stabilize prices of eighty products. This case is included among the “bellwether cases” designated to follow the expedited schedule described above. Like the other cases in the MDL, no trial date has been set for this case.

Canadian Class Action Complaint

In June 2020, an end payor filed a class action in Ontario, Canada against Perrigo and 29 manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise, or stabilize prices of dozens of products, most of which were neither made nor sold by Perrigo's former Rx business. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin. In December 2020, Plaintiffs amended their complaint to add additional claims based on the State Attorney General Complaint of June 2020.

Hospitals Complaint

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On June 30, 2023, a group of 150 hospitals filed a complaint against Perrigo and 35 manufacturers alleging a conspiracy to fix, raise, or stabilize prices of 228 products. Perrigo's former Rx business made and sold 30 of these products. Most of the product conspiracies allegedly involving Perrigo focus on products that are the same as the products involved in other MDL complaints naming Perrigo.

At this stage, we cannot reasonably estimate the outcome of the liability if any, associated with the claims listed above. We intend to defend each of these lawsuits vigorously.

Securities Litigation

In the United States (cases related to events in 2015-2017)

Beginning in May 2016, purported class action complaints were filed against the Company and our former CEO, Joseph Papa, in the U.S. District Court for the District of New Jersey (Roofers’ Pension Fund v. Papa, et al.) purporting to represent a class of shareholders for the period from April 21, 2015 through May 11, 2016, inclusive. The original complaint alleged violations of federal securities laws in connection with the actions taken by us and the former executive to defend against the unsolicited takeover bid by Mylan in the period from April 21, 2015 through November 13, 2015. The plaintiff also alleged that the defendants provided inadequate disclosure concerning alleged business developments during the alleged class period including integration problems related to the Omega acquisition.

The operative complaint is the first amended complaint filed on June 21, 2017, and named as defendants us and 11 current or former directors and officers of Perrigo (Mses. Judy Brown, Laurie Brlas, Jacqualyn Fouse, Ellen Hoffing, and Messrs. Joe Papa, Marc Coucke, Gary Cohen, Michael Jandernoa, Gerald Kunkle, Herman Morris, and Donal O’Connor). The amended complaint alleges violations of federal securities laws arising out of the actions taken by us and the former directors and executives to defend against the unsolicited takeover bid by Mylan in the period from April 21, 2015 through November 13, 2015 and the allegedly inadequate disclosure throughout the entire class period related to the business developments during that longer period (April 2015 to May 2017) including purported integration problems related to the Omega acquisition, alleges incorrect reporting of organic growth at the Company and at Omega, alleges price fixing activities with respect to six generic prescription pharmaceuticals, and alleges improper accounting for the Tysabri® royalty stream. During 2017, the defendants filed motions to dismiss, which the plaintiffs opposed. On July 27, 2018, the court issued an opinion and order granting the defendants’ motions to dismiss in part and denying the motions to dismiss in part. The court dismissed without prejudice defendants Laurie Brlas, Jacqualyn Fouse, Ellen Hoffing, Gary Cohen, Michael Jandernoa, Gerald Kunkle, Herman Morris, Donal O’Connor, and Marc Coucke. The court also dismissed without prejudice claims arising from the Tysabri® accounting issue described above and claims alleging incorrect disclosure of organic growth described above. The defendants who were not dismissed are the Company, Joe Papa, and Judy Brown. The claims (described above) that were not dismissed relate to the integration issue regarding the Omega acquisition, the defense against the Mylan tender offer, and the alleged price fixing activities with respect to six generic prescription pharmaceuticals. The defendants who remain in the case (us, Mr. Papa, and Ms. Brown) have filed answers denying liability.

On November 14, 2019, the court granted the lead plaintiffs’ motion and certified three classes for the case: (i) all those who purchased shares between April 21, 2015 through May 2, 2017 inclusive on a U.S. exchange and were damaged thereby; (ii) all those who purchased shares between April 21, 2015 through May 2, 2017 inclusive on the Tel Aviv exchange and were damaged thereby; and (iii) all those who owned shares as of November 12, 2015 and held such stock through at least 8:00 a.m. on November 13, 2015 (whether or not a person tendered shares in response to the Mylan tender offer) (the "tender offer class"). Plaintiffs' counsels have sent notices to the alleged classes.

The parties took discovery from 2018 through 2020. After discovery ended, defendants filed motions for summary judgement and to exclude plaintiffs' experts, which were fully briefed. The case was then re-assigned to a new federal judge, who heard oral argument on the motions in April 2022. In July 2023 the court reassigned the case to another federal judge. On August 17, 2023, the court granted summary judgment to Ms. Brown on all claims and dismissed her from the case; the court granted summary judgment in part to Mr. Papa terminating the claim against him that he made false statements with respect to alleged collusive pricing at the Generic Rx business. The court did not grant summary judgment on statements made about the integration of Omega during 2015. As to the Company, the court reserved ruling on claims related to the Generic Rx unit and ordered further briefing on that issue as to Perrigo and set an argument in mid-November 2023 on that issue. The court also indicated it would later

Perrigo Company plc - Item 1

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address aspects of defendants’ challenges to the plaintiffs’ experts. The case remains ongoing against Perrigo while the court considers the remaining issues. There can be no certainty that Perrigo will be successful in these further proceedings. We intend to defend the lawsuit vigorously.

In addition to the class action, the following opt-out cases have been filed against us, and in some cases, Mr. Papa and Ms. Brown. We intend to defend these lawsuits vigorously. These cases in the New Jersey federal court currently are stayed pending further developments in the Roofers' case (discussed above). The lawsuits, contain factual allegations and claims that are similar to some or all of the factual allegations and claims in the class actions:


Case			Date Filed
Carmignac Gestion, S.A. v. Perrigo Company plc, et al.			11/1/2017
First Manhattan Co. v. Perrigo Company plc, et al.			2/16/2018; amended 4/20/2018
Nationwide Mutual Funds, et al. v. Perrigo Company plc, et al.			10/29/2018
Schwab Capital Trust, et al. v. Perrigo Company plc, et al.			1/31/2019
Aberdeen Canada Funds -- Global Equity Fund, et al. v. Perrigo Company plc, et al.			2/22/2019
Principal Funds, Inc., et al. v. Perrigo Company plc, et al.			3/5/2020
Kuwait Investment Authority, et al. v. Perrigo Company plc, et al.			3/31/2020
Mason Capital L.P., et al. v. Perrigo Company plc, et al.			1/26/2018
Pentwater Equity Opportunities Master Fund Ltd., et al. v. Perrigo Company plc, et al.			1/26/2018
WCM Alternatives: Event-Drive Fund, et al. v. Perrigo Co., plc, et al.			11/15/2018
Hudson Bay Master Fund Ltd., et al. v. Perrigo Co., plc, et al.			11/15/2018
Discovery Global Citizens Master Fund, Ltd., et al. v. Perrigo Co. plc, et al.			12/18/2019
York Capital Management, L.P., et al. v. Perrigo Co. plc, et al.			12/20/2019
Burlington Loan Management DAC v. Perrigo Co. plc, et al.			2/12/2020
Universities Superannuation Scheme Limited v. Perrigo Co. plc, et al.			3/2/2020
Harel Insurance Company, Ltd., et al. v. Perrigo Company plc, et al.			2/13/2018
TIAA-CREF Investment Management, LLC., et al. v. Perrigo Company plc, et al.			4/20/2018
Sculptor Master Fund (f/k/a OZ Master Fund, Ltd.), et al. v. Perrigo Company plc, et al.			2/6/2019
BlackRock Global Allocation Fund, Inc., et al. v. Perrigo Co. plc, et al.			4/21/2020
Starboard Value and Opportunity C LP, et al. v. Perrigo Company plc, et al.			2/25/2021

In June 2020, three Highfields Capital entities filed a lawsuit in Massachusetts State Court with factual allegations that generally were similar to the factual allegations in the Amended Complaint in the Roofers' Pension Fund case described above, except that the Highfields plaintiffs did not include allegations about alleged collusive pricing of generic prescription drugs, and alleged Massachusetts state law claims under the Massachusetts Unfair Business Methods Law (chapter 93A) and Massachusetts common law claims of tortious interference with prospective economic advantage, common law fraud, negligent misrepresentation, and unjust enrichment. In December 2021, the Massachusetts State Court granted Defendants’ motion to dismiss in part and denied it in part. Defendants’ filed their answers in January 2022 denying liability. This is the only opt out case that has not been stayed during the summary judgment proceedings in the New Jersey federal court. The discovery phase in this case is underway (including discovery related to some factual allegations that were not part of the discovery in the actions in New Jersey federal court). The Court held a discovery conference and approved fact discovery deadlines into May 2023 and later deadlines to complete expert discovery. Subsequently, the Court held a further conference in March 2023 and revised the schedule with fact discovery ending in October 2023 and expert discovery in May 2024. Subsequently, on November 1, 2023, the Court issued a further revised scheduling order that ends fact discovery in March 2024, ends expert discovery in August 2024, and a post-discovery court conference in September 2024. We intend to defend the lawsuit vigorously.

In Israel (cases related to events in 2015-2017)

On June 28, 2017, a plaintiff filed a complaint in Tel Aviv District Court styled Israel Elec. Corp. Employees’ Educ. Fund v. Perrigo Company plc, et al. The lead plaintiff seeks to represent a class of shareholders who purchased

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Perrigo stock on the Tel Aviv exchange during the period from April 24, 2015 through May 3, 2017 and also a claim for those that owned shares on the final day of the Mylan tender offer (November 13, 2015). The complaint names as defendants the Company, Ernst & Young LLP (the Company’s auditor), and 11 current or former directors and officers of Perrigo (Mses. Judy Brown, Laurie Brlas, Jacqualyn Fouse, Ellen Hoffing, and Messrs. Joe Papa, Marc Coucke, Gary Cohen, Michael Jandernoa, Gerald Kunkle, Herman Morris, and Donal O’Connor). The complaint alleges violations under Israeli securities laws that are similar to U.S. Securities Exchange Act sections 10(b) (and Rule 10b‑5) and 14(e) against all defendants and 20(a) control person liability against the 11 individuals or, in the alternative, under other Israeli securities laws. In general, the allegations in Israel are similar to the factual allegations in the Roofers' Pension Fund case in the U.S. as described above. The plaintiff indicates an initial, preliminary class damages estimate of 2.7 billion NIS (approximately $760.0 million at 1 NIS = 0.28 cents). After the other two cases filed in Israel were voluntarily dismissed, the plaintiff in this case agreed to stay this case pending the outcome of the Roofers’ Pension Fund case in the U.S. (described above). The Israeli court approved the stay, and this case is now stayed. We intend to defend the lawsuit vigorously.

In Israel (case related to Irish Tax events)

On December 31, 2018, a shareholder filed an action against the Company, our former CEO Murray Kessler, and our former CFO Ronald Winowiecki in Tel Aviv District Court (Baton v. Perrigo Company plc, et. al.). The case is a securities class action brought in Israel making similar factual allegations for the same period as those asserted in a securities class action case (for those who purchased on a U.S. exchange) in New York federal court in which the settlement received final approval in February 2022. The Baron case alleges that persons who purchased securities through the Tel Aviv stock exchange and suffered damages can assert claims under Israeli securities law that will follow the liability principles of Sections 10(b) and 20(a) of the U.S. Securities Exchange Act. The plaintiff does not provide an estimate of class damages. Since 2019, the court granted several requests by Perrigo to stay the proceedings pending the resolution of proceedings in the New York federal court. During 2022, the case was reassigned to a newly-appointed judge. After the settlement of the U.S. case in New York federal court, Perrigo's counsel informed the Israeli Court of the final approval of the settlement of the U.S. case. The parties then sought further stays of the case while they attempted mediation, which the Court granted. In April 2023, the parties reported to the Court that the mediation had led to a preliminary agreement on settlement; the Court set a deadline for the parties to file settlement papers, which was later extended to November 16, 2023.

Other Matters

Talcum Powder

The Company has been named, together with other manufacturers, in product liability lawsuits in a variety of state courts alleging that the use of body powder products containing talcum powder causes mesothelioma and lung cancer due to the presence of asbestos. All but one of these cases involve legacy talcum powder products that have not been manufactured by the Company since 1999. One of the pending actions involves a current prescription product that contains talc as an excipient. As of October 13, 2023, the Company is currently named in 101 individual lawsuits seeking compensatory and punitive damages. The Company has several defenses and intends to aggressively defend these lawsuits. Trials for these lawsuits are currently scheduled throughout 2023, 2024 and 2025, with the earliest trial date commencing in November 2023.

Ranitidine

After regulatory bodies announced worldwide that ranitidine may potentially contain N-nitrosodimethylamine ("NDMA"), a known environmental contaminant, the Company promptly began testing its externally-sourced ranitidine API and ranitidine-based products. On October 8, 2019, the Company halted shipments of the product based upon preliminary results and on October 23, 2019, the Company made the decision to conduct a voluntary retail market withdrawal.

In February 2020, the resulting actions involving Zantac® and other ranitidine products were transferred for coordinated pretrial proceedings to a Multi-District Litigation (In re Zantac®/Ranitidine Products Liability Litigation MDL No. 2924) in the U.S. District Court for the Southern District of Florida. After the Company successfully moved to dismiss the first set of Master Complaints in the MDL, it now includes three: 1) an Amended Master Personal Injury Complaint; 2) a Consolidated Amended Consumer Economic Loss Class Action Complaint; and 3) a Consolidated Medical Monitoring Class Action Complaint. All three name the Company. Plaintiffs appealed one of

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the original Master Complaints, the Third-Party Payor Complaint, and two individual plaintiffs appealed their individual personal injury claims on limited grounds. The Company is not named in the appeals.

On June 30, 2021, the Court dismissed all claims against the retail and distributor defendants with prejudice, thereby reducing the Company’s potential for exposure and liability related to possible indemnification. On July 8, 2021, the Court dismissed all claims against the Company with prejudice. Appeals of these dismissal orders to the U.S. Court of Appeals for the 11th Circuit have been filed, as well as several state level claims related to the theories advanced in the MDL litigation. The Company will continue to vigorously defend each of these lawsuits. In December 2022 the Court granted in full brand defendants Daubert motions, finding no scientific causation, and in turn granted summary judgment dismissing the actions with prejudice. The Court later ruled that it was appropriate to apply the same standards to the retail and distributor defendants as well as the generic defendants, and the Court thereby ruled that its Daubert decision applied equally to these defendants as well. Appeals of these orders have been filed to the 11th Circuit.

Excepting the MDL due to the nature of the multiple dismissals as described above, as of October 13, 2023, the Company has been named in 202 personal injury lawsuits, primarily in the state courts of California and Pennsylvania. The Company is named in these lawsuits with manufacturers of the national brand Zantac® and other manufacturers of ranitidine products, as well as distributors, repackagers, and/or retailers. Plaintiffs seek compensatory and punitive damages, and in some instances seek applicable remedies under state consumer protection laws. The Company believes that it has strong defenses to such claims based on a significant body of scientific evidence, and pursuant to the doctrine of federal preemption. As noted above, the Company has won multiple motions to dismiss in the MDL, most recently in Illinois where the Circuit Court granted in full the Company's motions to dismiss based on federal preemption, as well as additional state court actions in California and Maryland. The Company has also been dismissed from additional state court actions in Ohio, New York and New Jersey.

The Company has also been named in a Complaint brought by the New Mexico Attorney General based on the following theories: violation of a New Mexico public nuisance statute, NMSA 30-8-1 to -14; common law nuisance; and negligence and gross negligence. The Company is named in this lawsuit with manufacturers of the national brand Zantac® and other manufacturers of ranitidine products and/or retailers. Brand name manufactures named in the lawsuit also face claims under the state’s Unfair Practices & False Advertising acts. The Company filed motions to dismiss the action. The New Mexico District Court denied the Company’s Motion to Dismiss and litigation continues. The Company will continue to vigorously defend this lawsuit.

Some of the Company’s retailer customers are seeking indemnity from the Company for a portion of their defense costs and liability relating to these cases.

Acetaminophen

In October 2022 the Judicial Panel on Multidistrict Litigation ("MDL") consolidated a number of pending actions filed in various federal courts alleging that prenatal exposure to acetaminophen is purportedly associated with the development of autism spectrum disorder (“ASD”) and attention-deficit/hyperactivity disorder (“ADHD”). The MDL is styled In re: Acetaminophen – ASD/ADHD Products Liability Litigation (MDL No. 3043) and is pending before the U.S. District Court for the Southern District of New York. Plaintiffs in the MDL have asserted claims against Johnson & Johnson Consumer, Inc. (“JJCI”) and various retailer chains alleging that plaintiff-mothers took acetaminophen products while pregnant and that plaintiff-children developed ASD and/or ADHD as a result of prenatal exposure to these acetaminophen products. At this time, the MDL proceedings are in the early stages. Currently, it is not possible to assess reliably the outcome of these cases or any potential future financial impact on the Company. As of October 13, 2023 the Company has not been named as a defendant in any Complaints filed in the MDL. Certain of the Company’s customers have made requests regarding indemnity from the Company for a portion of their defense costs and potential liability.

Phenylephrine

In September 2023, the FDA’s Advisory Committee on Nonprescription Drugs issued an advisory opinion calling into question the efficacy of orally administered phenylephrine (PE) containing products as a nasal decongestant. While the FDA itself has thus far taken no action in response to the Advisory Committee opinion, several putative class action lawsuits have been filed asserting various economic injury claims to consumers. The Judicial Panel on Multi-District Litigation (JPML) is determining whether to create an MDL class-action related to PE lawsuits. Currently, it is not possible to assess reliably the outcome of these cases or any potential future financial impact on the

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Company. Certain of the Company’s customers have made requests regarding indemnity from the Company for a portion of their defense costs and potential liability.

Contingencies Accruals

As a result of the matters discussed in this Note, the Company has established a loss accrual for litigation contingencies where we believe a loss to be probable and for which an amount of loss can be reasonably estimated. However, we cannot determine a reasonable estimate of the maximum possible loss or range of loss for these matters given that they are at various stages of the litigation process and each case is subject to inherent uncertainties of litigation. At September 30, 2023, the loss accrual for litigation contingencies reflected on the balance sheet in Other accrued liabilities was $67.6 million. The Company also recorded an insurance recovery receivable reflected on the balance sheet in Prepaid expenses and other current assets of $32.9 million related to these litigation contingencies because it believes such amount is recoverable based on communications with its insurers to date; however, the Company may erode this insurance receivable as it incurs defense costs associated with defending the matters. The Company’s management believes these accruals for contingencies are reasonable and sufficient based upon information currently available to management; however, there can be no assurance that final costs related to these contingencies will not exceed current estimates or that all of the final costs related to these contingencies will be covered by insurance. (See "Insurance Coverage Litigation," below.) In addition, we have other litigation matters pending for which we have not recorded any accruals because our potential liability for those matters is not probable or cannot be reasonably estimated based on currently available information. For those matters where we have not recorded an accrual but a loss is reasonably possible, we cannot determine a reasonable estimate of the maximum possible loss or range of loss for these matters given that they are at various stages of the litigation process and each case is subject to the inherent uncertainties of litigation.

Insurance Coverage Litigation

In May 2021, insurers on multiple policies of D&O insurance filed an action in the High Court in Dublin against the Company and multiple current and former directors and officers of the Company seeking declaratory judgments on certain coverage issues. Those coverage issues include claims that policies for periods beginning in December 2015 and December 2016, respectively, do not have to provide coverage for the securities actions described above pending in the District of New Jersey or in Massachusetts state court concerning the events of 2015-2017. The policy for the period beginning December 2014 is currently providing coverage for those matters, and the litigation would not affect that existing coverage. However, if the plaintiffs are successful, the total amount of insurance coverage available to defend such lawsuits and to satisfy any judgment or settlement costs thereunder would be limited to one policy period. The insurers’ lawsuit also challenges aspects of coverage for Krueger derivatively on behalf of nominal defendant Perrigo Company plc v. Alford et al., a prior derivative action filed in the District of New Jersey that was dismissed in August 2020, and for the counterclaims brought in the Omega arbitration proceedings. Perrigo responded on November 1, 2021; Perrigo’s response includes its position that the policies for the periods beginning December 2015 and December 2016 provide coverage for the underlying litigation matters and seeks a ruling to that effect. The discovery stage of the case occurred in 2022. The Court has set a schedule for submissions by the parties during 2023 and for a bench trial in mid-November 2023. We intend to defend the lawsuit vigorously.

Perrigo Company plc - Item 2

Note 17

NOTE 17 - SEGMENT INFORMATION

The tables below show select financial measures by reporting segment (in millions):


	Total Assets
	September 30, 2023		December 31, 2022
CSCA	$	5,094.6	$	5,134.1
CSCI	5,663.7		5,883.2



Total	$	10,758.3	$	11,017.3


	Three Months Ended
	September 30, 2023						October 1, 2022
	Net Sales		Operating Income (Loss)		Intangible Asset Amortization		Net Sales		Operating Income (Loss)		Intangible Asset Amortization
CSCA	$	703.5	$	91.1	$	14.5	$	722.3	$	75.2	$	14.6
CSCI	420.3		13.6		53.5		377.9		1.3		53.3


Unallocated	—		(42.6)		—		—		(43.4)		—
Continuing Operations Total	$	1,123.8	$	62.1	$	68.0	$	1,100.2	$	33.1	$	67.9


	Nine Months Ended
	September 30, 2023						October 1, 2022
	Net Sales		Operating Income (Loss)		Intangible Asset Amortization		Net Sales		Operating Income (Loss)		Intangible Asset Amortization
CSCA	$	2,217.9	$	272.0	$	43.1	$	2,160.2	$	240.0	$	40.6
CSCI	1,280.7		43.6		159.6		1,136.1		19.0		138.2


Unallocated	—		(148.1)		—		—		(211.1)		—
Continuing Operations Total	$	3,498.7	$	167.5	$	202.7	$	3,296.3	$	47.9	$	178.8

Perrigo Company plc - Item 2

Executive Overview

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis ("MD&A") is intended to provide readers with an understanding of our financial condition, results of operations, and cash flows by focusing on changes in certain key measures from year to year. This MD&A is provided as a supplement to, and should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes found in Item I included in this Form 10-Q, and our Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). These historical financial statements may not be indicative of our future performance. This discussion contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks referred to under “Risk Factors” in Item 1A of our 2022 Form 10-K and Part II. Item 1A of this Form 10-Q.

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. 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. 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. 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. Upon completion of our transformation, we have transitioned our strategy to ‘Optimizing’ 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. 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. We end our quarterly accounting periods on the Saturday closest to the end of the calendar quarter, with the fourth quarter ending on December 31 of each year.

Our Segments

Our reporting and operating segments reflect the way our chief operating decision maker, who is our CEO, makes operating decisions, allocates resources and manages the growth and profitability of the Company. Our reporting and operating segments are:

•Consumer Self-Care International ("CSCI") comprises our consumer self-care business outside of the U.S. and Canada, primarily in Europe and Australia.

We previously had an Rx segment which was comprised of our generic prescription pharmaceuticals business in the U.S. and other pharmaceuticals and diagnostic businesses in Israel, which have been divested. The Rx segment was reported as Discontinued Operations in 2021, and is presented as such for all periods in this report.

Perrigo Company plc - Item 2

Executive Overview

Recent Highlights

•On September 11, 2023, we announced the appointment of Catherine "Triona" Schmelter as Executive Vice President and President, CSCA and Global Portfolio Optimization.

Tax Updates

On April 26, 2019, we received a revised Notice of Proposed Adjustment ("NOPA") from the IRS regarding transfer pricing positions related to the IRS audit of Athena Neurosciences, LLC ("Athena") for its 2013 to 2015 fiscal tax years. The April 26, 2019 NOPA carried forward the IRS's theory from its 2017 draft NOPA that when Elan took over the future funding of Athena's in-process research and development after acquiring Athena in 1996, Elan should have paid a substantially higher royalty rate for the right to exploit Athena’s intellectual property in various developmental products, including the Multiple Sclerosis drug Tysabri, rather than rates based on transfer pricing documentation prepared by Elan's external tax advisors. The April 26, 2019 NOPA proposed a payment of $843.0 million, which represented additional tax based on imputing royalty income to Athena using a 24.7% royalty rate derived by the IRS and a 40.0% accuracy-related penalty. On April 24, 2023, we received a letter from the IRS regarding the Competent Authority request filed by Athena concluding the competent authority process commenced by such submissions without the need for negotiations between the competent authorities and constitutes a full and final resolution of the April 26, 2019 NOPA. We believe that any prior uncertainty regarding the tax treatment of the Tysabri royalty is now resolved. In the second quarter of fiscal year 2023 we adjusted previously established reserves related to this and other matters in the same audit period. Refer to Item 1. Note 15 for additional information.

On January 13, 2021, the IRS issued a 30-day letter and Revenue Agent's Report with respect to its audit of our 2013 to 2015 fiscal tax years. The 30-day letter proposed, among other modifications, to reduce Perrigo U.S.'s deductible interest expense for certain intercompany debts owed in connection with the 2013 Elan merger transaction. On May 5, 2023, we finalized an agreement with IRS Appeals providing for settlement of the May 7, 2020 NOPA. In addition, based on the agreement with IRS Appeals, we will apply similar adjustments for all remaining tax years through 2018. In the second quarter of fiscal year 2023 we adjusted previously established reserves related to this and other matters in the same audit period. Refer to Item 1. Note 15 for additional information.

Supply Chain Reinvention Program

In 2022, we initiated our 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. We have identified a total annual run-rate potential savings opportunity by the end of fiscal year 2028 of between an estimated $200 million to $300 million per year (not including related depreciation expense on capital investments) if all facets of the Program are successfully implemented and executed. To obtain these potential benefits, we anticipate incurring costs of between $350 million to $570 million by the end of fiscal year 2028 to complete the program implementation, including capital investments, restructuring expenses, and implementation costs. A significant portion of the annual run-rate potential savings of the Program, between $150 million to $200 million per year (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. Refer to Item 1. Note 14 for further details on restructuring charges.

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. 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 1. Note 3 for further transaction details.

Market Factors and Trends

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

Perrigo Company plc - Item 2

Executive Overview

U.S. 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. As a result of the FDA communications, we are experiencing additional costs and lower production volumes associated with compliance with these new and evolving regulatory expectations. In addition, as did others in the industry, Perrigo received a warning letter from the FDA on August 30, 2023. Consistent with the Company’s commitment to quality, the Company is in the process of working with the FDA to resolve issues raised in the August 30 letter, which stemmed from a routine inspection of the Company's recently-acquired infant formula facility in Wisconsin.

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. 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. 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.

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. Additionally, we experienced employment vacancies and attrition as the labor market negatively impacted productivity and drove the need for wage rate increases and other retention benefits. We implemented a series of actions to substantially mitigate these and other inflationary cost pressures such as strategic pricing and our Supply Chain Reinvention Program. 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. 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.

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 others on Russia, Belarus, and occupied regions in Ukraine have negatively impacted our results from operations in the region. We currently have 81 employees working in our Ukraine subsidiary. We do not have a subsidiary or employees in Russia. We have no manufacturing facilities in either Russia or Ukraine and we previously sold products into Russia entirely through distributors. In March 2022, we halted all sales to distributors in Russia and sales in Ukraine were severely depressed. If the conflict spreads or materially escalates, or economic conditions deteriorate, the impact on our business and results of operations could be material.

Israel-Hamas War

In response to the attack by Hamas in Israel and the subsequent hostilities, the Company is continuing to monitor the social, political and economic environment in Israel and in the surrounding region to evaluate the impacts on our operations and supply chain. The Company has suppliers who operate in Israel and could experience disruption of their manufacturing facilities due to terrorist acts or military actions, which could lead to delays, increased costs or the need to seek alternative sourcing. 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.

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. Transaction exposures relate to 1) the impact from input costs that are denominated in a currency other than the local reporting currency and 2) the revaluation of transaction-related working capital balances denominated in currencies other than the functional currency. Significant exchange rate fluctuations, especially in the Euro or the British Pound Sterling, have had, and could continue to have, a significant

Perrigo Company plc - Item 2

Executive Overview

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.

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 three and nine months ended September 30, 2023 at the average exchange rates for the reporting period and average exchange rates for the three and nine months ended October 1, 2022.

CONSOLIDATED FINANCIAL RESULTS

Three Month Comparison


	Three Months Ended
(in millions, except percentages)	September 30, 2023			October 1, 2022
Net sales	$	1,123.8		$	1,100.2
Gross profit	$	411.2		$	362.9
Gross profit %	36.6		%	33.0		%


Operating income	$	62.1		$	33.1
Operating income %	5.5		%	3.0		%

Net sales increased $23.6 million, or 2.1%, due primarily to:

•$27.0 million increase from our acquisition of Gateway, and

•$22.4 million increase from favorable foreign currency translation; partially offset by

•$13.4 million decrease, or 1.2%, due to lower net sales in legacy U.S. Nutrition stemming from the FDA evolving regulatory expectations for infant formula manufacturing, lower net sales as a result of purposeful SKU prioritization actions to focus capacity on higher margin products, lower volumes driven by consumer consumption, primarily in U.S. OTC and an unfavorable impact from distributor transitions as part of the integration strategy to capture synergies from the acquisition of HRA Pharma. These factors were partially offset by strategic pricing actions of approximately $51 million and new product sales; and

•$12.4 million decrease from exited product lines.

Operating income increased $29.0 million, or 87.6%, due primarily to:

•$48.3 million increase in gross profit driven by strategic pricing actions, new products and the acquisition of Gateway; partially offset by higher cost of goods sold inflation primarily in CSCI, and lower manufacturing productivity within U.S. Nutrition. Gross profit as a percentage of net sales increased 360 basis points compared to the prior year due to the same factors that drove gross profit in addition to benefits from purposeful SKU prioritization actions in CSCA.

•$19.3 million increase in operating expenses due primarily to increased costs as a result of the acquisition of Gateway and higher cost due to inflation; which were partially offset by decreased acquisition and integration costs and a favorable effect of $7.2 million from foreign currency translation.

Perrigo Company plc - Item 2

Consolidated

Nine Month Comparison


	Nine Months Ended
(in millions, except percentages)		September 30, 2023			October 1, 2022
Net sales		$	3,498.7		$	3,296.3
Gross profit		$	1,253.1		$	1,072.8
Gross profit %		35.8		%	32.5		%


Operating income		$	167.5		$	47.9
Operating income %		4.8		%	1.5		%

Net sales increased $202.4 million, or 6.1%, due primarily to:

•$188.8 million increase from our acquisition of Gateway inclusive of an unfavorable impact of $9.2 million from a voluntary product recall, four additional months of HRA Pharma sales (HRA Pharma was acquired on April 29, 2022) inclusive of an unfavorable impact of $22.1 million due to distributor transitions as part of the integration strategy to capture synergies from the acquisition of HRA Pharma; and

•$76.7 million increase, or 2.4%, due primarily to approximately $164 million in strategic pricing actions and higher sales volume in the OTC and Oral Care product categories within CSCA and within the CSCI segment. The increase was partially offset by declines in legacy Nutrition in the CSCA segment due primarily to a national brand recall that benefited our sales in the prior year and lower net sales stemming from the FDA evolving regulatory expectations for infant formula manufacturing, and lower net sales due primarily to purposeful SKU prioritization actions to focus capacity on higher margin products and $5.4 million due to distributor transitions in addition to impacts noted above; partially offset by

•$31.4 million decrease from exited product lines and a $19.3 million decrease from the divestitures of the Latin American businesses and ScarAway® brand asset; and

•$12.7 million decrease from unfavorable foreign currency translation.

Operating income increased $119.6 million, or 249.7%, due primarily to:

•$180.3 million increase in gross profit driven by strategic pricing actions and $95.1 million from our acquisitions of the GoodStart® infant formula brand and HRA Pharma, including $22.1 million unfavorable impact of distributor transitions; partially offset by cost of goods sold inflation, and lower infant formula productivity within U.S. Nutrition stemming from the FDA evolving regulatory expectations for infant formula manufacturing. Gross profit as a percentage of net sales increased 330 basis points compared to the prior year due to the same factors that drove gross profit and benefits from the purposeful SKU prioritization actions to focus capacity on higher margin products in CSCA.

•$60.7 million increase in operating expense as a result of 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 and $2.2 million from foreign currency translation.

CONSUMER SELF-CARE AMERICAS FINANCIAL RESULTS

Three Month Comparison


	Three Months Ended
(in millions, except percentages)	September 30, 2023			October 1, 2022
Net sales	$	703.5		$	722.3
Gross profit	$	224.0		$	190.3
Gross profit %	31.8		%	26.3		%
Operating income	$	91.1		$	75.2
Operating income %	12.9		%	10.4		%

Perrigo Company plc - Item 2

CSCA

Net sales decreased $18.8 million, or 2.6%, due primarily to:

•$36.6 million decrease, or 5.1%, due primarily to lower net sales in legacy U.S. Nutrition driven by lower manufacturing productivity, purposeful SKU prioritization actions to focus capacity on higher margin products and lower net sales of branded OTC products; partially offset by approximately $26 million in strategic pricing actions; and

•$27.0 million increase from the addition of Gateway; partially offset by

•$9.0 million decrease from exited product lines.


Sales	Three Months Ended
(in millions, except percentages)	September 30, 2023		October 1, 2022		$ Change		% Change
Nutrition	$	130.7	$	124.4	$	6.3	5.1	%
Upper Respiratory	130.2		132.2		(2.0)		(1.5)	%
Digestive Health	117.1		119.6		(2.5)		(2.1)	%
Pain and Sleep-Aids	94.1		104.0		(9.9)		(9.5)	%
Healthy Lifestyle	79.4		73.8		5.6		7.6	%
Oral Care	76.5		83.6		(7.1)		(8.5)	%
Skin Care	47.6		48.9		(1.3)		(2.7)	%
Women's Health	10.2		12.4		(2.2)		(17.7)	%
Vitamins, Minerals, and Supplements ("VMS")	4.3		7.1		(2.8)		(39.4)	%
Other CSCA	13.4		16.3		(2.9)		(17.8)	%
Total CSCA	$	703.5	$	722.3	$	(18.8)	(2.6)%

Sales drivers in each category are provided below:

•Nutrition: Net sales of $130.7 million increased 5.1% due primarily to the Gateway acquisition. This benefit was partially offset by lower net sales in legacy infant formula due to lower manufacturing productivity and exited product lines;

•Upper Respiratory: Net sales of $130.2 million decreased 1.5% due primarily to the launch and channel fill of Nasonex® in the prior year quarter and exited product lines, 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;

•Digestive Health: Net sales of $117.1 million decreased 2.1% due primarily to lower net sales of store brand Proton Pump Inhibitors, partially offset by higher net sales of store brand laxatives, including Polyethylene Glycol 3350 Orange;

•Pain and Sleep-aids: Net sales of $94.1 million decreased 9.5% due primarily to purposeful SKU prioritization actions in adult analgesic offerings to focus capacity on higher margin products, partially offset by sales of new products, including store brand Dual Action Acetaminophen 250mg and Ibuprofen 125mg Tablets, and higher demand for children's analgesics products;

•Healthy Lifestyle: Net sales of $79.4 million increased 7.6% due primarily to higher sales volumes and market share gains in smoking cessation products;

•Oral Care: Net sales of $76.5 million decreased 8.5% due primarily to purposeful SKU prioritization actions and timing of promotions compared to the third quarter in the prior year, partially offset by higher net sales of store brand teeth whitening products and power toothbrush handles;

•Skin Care: Net sales of $47.6 million decreased 2.7% due primarily to exited product lines, partially offset by strong performance of Mederma®;

•Women's Health: Net sales of $10.2 million decreased 17.7% due primarily to purposeful SKU prioritization actions in feminine hygiene; and

•VMS and Other: Net sales of $17.7 million decreased 24.4% due primarily to purposeful SKU prioritization actions.

Perrigo Company plc - Item 2

CSCA

Operating income increased $15.9 million, or 21.1%, due primarily to:

•$33.7 million increase in gross profit due primarily to strategic pricing actions, the addition of Gateway, favorable input costs and a decrease of integration costs and lower amortization; partially offset by increased direct labor costs across the Company, and lower manufacturing productivity in U.S. Nutrition stemming from the FDA evolving regulatory expectations for infant formula manufacturing. Gross profit as a percentage of net sales increased 550 basis points compared to the prior year due to the same factors that drove gross profit in addition to benefits from purposeful SKU prioritization actions.

•$17.8 million increase in operating expenses due primarily to the addition of Gateway and Opill® pre-launch expenses, partially offset by reduced distribution costs compared to the prior year period.

Nine Month Comparison


	Nine Months Ended
(in millions, except percentages)	September 30, 2023			October 1, 2022
Net sales	$	2,217.9		$	2,160.2
Gross profit	$	659.3		$	555.0
Gross profit %	29.7		%	25.7		%
Operating income (loss)	$	272.0		$	240.0
Operating income %	12.3		%	11.1		%

Net sales increased $57.7 million, or 2.7%, due primarily to:

•$120.6 million increase from four additional months of HRA Pharma sales (HRA Pharma was acquired on April 29, 2022), and Gateway; partially offset by

•$20.4 million decrease, or 1.0%, due primarily to lower distribution driven by known capacity constraints that limited our net sales primarily in cough cold products during the first quarter and purposeful SKU prioritization actions of approximately $55 million to focus capacity on higher margin products that primarily impacted net sales in our CSCA Pain and Sleep product categories, partially offset by approximately $79 million of strategic pricing actions in addition to new products; and

•$19.3 million decrease from the divestitures of the Latin American businesses and ScarAway® brand asset and $21.9 million decrease from exited product lines.


Sales	Nine Months Ended
(in millions, except percentages)(1)	September 30, 2023		October 1, 2022		$ Change		% Change
Nutrition	$	435.4	$	376.7	$	58.7	15.6	%
Upper Respiratory	422.2		430.9		(8.7)		(2.0)	%
Digestive Health	368.0		363.3		4.7		1.3	%
Pain and Sleep-Aids	295.0		309.5		(14.5)		(4.7)	%
Oral Care	237.8		230.6		7.2		3.1	%
Healthy Lifestyle	220.1		208.7		11.4		5.5	%
Skin Care	150.7		138.4		12.3		8.9	%
Women's Health	34.6		32.6		2.0		6.1	%
VMS	12.7		23.0		(10.3)		(44.8)	%
Other CSCA	41.4		46.5		(5.1)		(11.0)	%
Total CSCA	$	2,217.9	$	2,160.2	$	57.7	2.7%

Sales drivers in each category are provided below:

•Nutrition: Net sales of $435.4 million increased 15.6% due primarily to the Gateway acquisition and strong growth in contract infant formula. This growth was partially offset by lower net sales in legacy infant formula

Perrigo Company plc - Item 2

CSCA

due to lower manufacturing productivity, an unfavorable impact due to a voluntary recall and exited product lines;

•Upper Respiratory: Net sales of $422.2 million decreased 2.0% 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, exited product lines and the absence of the launch and channel fill of Nasonex® from the prior year quarter. 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;

•Digestive Health: Net sales of $368.0 million increased 1.3% due to higher net sales of Omeprazole, increased manufacturing capacity and demand for Polyethylene Glycol 3350, and new products, including Omeprazole Mini Capsules and Polyethylene Glycol 3350 Orange. Growth in this category was partially offset by the divested Latin American businesses and lower net sales of store brand Proton Pump Inhibitors;

•Pain and Sleep-aids: Net sales of $295.0 million decreased 4.7% 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 resulting from a relatively stronger cough cold and flu season;

•Oral Care: Net sales of $237.8 million increased 3.1% due primarily to the normalization of supply chain disruptions that impacted net sales in the prior year period and higher net sales of Plackers® and store brand teeth whitening products, partially offset by purposeful SKU prioritization actions and lower sales of manual toothbrushes, including branded Firefly® and REACH®, and store brand offerings;

•Healthy Lifestyle: Net sales of $220.1 million increased 5.5% due primarily to higher sales volumes and market share gains in smoking cessation products, partially offset by lost distribution at a specific customer;

•Skin Care: Net sales of $150.7 million increased 8.9% due primarily to the addition of HRA Pharma brands, including Mederma® and Compeed®, partially offset by the unfavorable impact from the divested Latin American businesses and ScarAway® brand asset and exited product lines;

•Women's Health: Net sales of $34.6 million increased 6.1% due primarily to the addition of HRA Pharma brands, including ella®, partially offset by purposeful SKU prioritization actions in feminine hygiene; and

•VMS and Other: Net sales of $54.1 million decreased 22.2% due primarily to the unfavorable impact from the divested Latin American businesses and purposeful SKU prioritization actions.

Operating income increased $32.0 million, or 13.3%, due primarily to:

•$104.3 million increase in gross profit due primarily to strategic pricing actions, the addition of HRA Pharma and Gateway, and new products; partially offset by lower manufacturing productivity in U.S. Nutrition stemming from the FDA evolving regulatory expectations for infant formula manufacturing, the divestitures of the Latin American businesses and ScarAway® brand asset in the prior year period, discontinued product lines and higher employee costs in the current year period. Gross profit as a percentage of net sales increased 400 basis points compared to the prior year due to the same factors that drove gross profit in addition to purposeful SKU prioritization actions to focus capacity on higher margin products.

•$72.3 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, higher administration costs and the absence of a gain on the sale of ScarAway® asset brand from the prior year period, partially offset by reduced distribution costs compared to the prior year period and the absence of the divested Latin American businesses in the prior year.

Perrigo Company plc - Item 2

CSCI

CONSUMER SELF-CARE INTERNATIONAL FINANCIAL RESULTS

Three Month Comparison


	Three Months Ended
(in millions, except percentages)	September 30, 2023			October 1, 2022
Net sales	$	420.3		$	377.9
Gross profit	$	187.2		$	172.6
Gross profit %	44.5		%	45.7		%
Operating income	$	13.6		$	1.3
Operating income %	3.2		%	0.3		%

Net sales increased $42.4 million, or 11.2%, due primarily to:

•$23.1 million, or 6.2%, net increase due primarily to approximately $26 million of strategic pricing actions in addition to new products, partially offset by lower sales volumes in certain product categories; and

•$22.7 million increase from favorable foreign currency translation; partially offset by

•$3.4 million decrease from exited product lines.


Sales	Three Months Ended
(in millions, except percentages)(1)	September 30, 2023		October 1, 2022		$ Change		% Change
Skin Care	$	86.7	$	81.1	$	5.6	6.9	%
Upper Respiratory	78.2		69.2		9.0		13.0	%
Pain and Sleep-Aids	61.1		46.1		15.0		32.5	%
Healthy Lifestyle	52.4		47.6		4.8		10.1	%
VMS	46.1		46.4		(0.3)		(0.6)	%
Women's Health	28.5		28.7		(0.2)		(0.7)	%
Oral Care	24.8		21.7		3.1		14.3	%
Digestive Health	10.8		8.2		2.6		31.7	%
Other CSCI	31.7		28.9		2.8		9.7	%
Total CSCI	$	420.3	$	377.9	$	42.4	11.2	%

Sales in each category were driven primarily by:

•Skin Care: Net sales of $86.7 million increased 6.9%, inclusive of a 2.5% favorable effect of currency translation, driven primarily by the Sebamed and ACO brands, partially offset by lower net sales in wound care products, which were primarily impacted by distributor transitions;

•Upper Respiratory: Net sales of $78.2 million increased 13.0%, inclusive of a 7.9% favorable effect of currency translation, due primarily to higher demand for cough cold products, including Bronchostop and Coldrex. Net sales of U.K. store brand cough cold products were also higher compared to the prior year period;

•Pain & Sleep-Aids: Net sales of $61.1 million increased 32.5%, inclusive of a 9.5% favorable effect of currency translation, due primarily to quarterly phasing of Solpadeine, higher net sales in store brands and increased demand for Nytol;

•Healthy Lifestyle: Net sales of $52.4 million increased 10.1%, inclusive of a 5.7% favorable effect of currency translation, due primarily to higher net sales of anti-parasite offerings that continue to outpace strong category growth and higher demand for smoking cessation products. This growth was partially offset by lower category consumption in weight loss, impacting XLS Medical;

•VMS: Net sales of $46.1 million decreased 0.6%, inclusive of a 6.9% favorable effect of currency translation, due primarily to lower category consumption, impacting sales of Davitamon and Abtei;

Perrigo Company plc - Item 2

CSCI

•Women's Health: Net sales of $28.5 million decreased 0.7%, inclusive of a 6.3% favorable effect of currency translation, due primarily to lower net sales in contraceptive products, which were primarily impacted by distributor transitions;

•Oral Care: Net sales of $24.8 million increased 14.3%, inclusive of a 7.8% favorable effect of currency translation, due primarily to higher net sales of power oral care products, Plackers® and improved service levels compared to the prior year;

•Digestive Health and Other: Net sales of $42.5 million increased 14.6%, inclusive of a 3.8% favorable effect of currency translation, due primarily to higher net sales of store brand digestive health products and distribution brands.

Operating income increased $12.3 million, or 946.2%, due primarily to:

•$14.6 million increase in gross profit due primarily to strategic pricing actions and higher margin new products, partially offset by $16.0 million of cost of goods sold inflation. Gross profit as a percentage of net sales decreased 110 basis points due primarily to inflation and unfavorable brand volume/mix, partially offset by positive pricing benefits; and

•$2.4 million increase in operating expenses due primarily to higher restructuring expenses and higher administrative expenses, partially offset by lower advertising and promotion investments.

Nine Month Comparison


	Nine Months Ended
(in millions, except percentages)	September 30, 2023			October 1, 2022
Net sales	$	1,280.7		$	1,136.1
Gross profit	$	593.8		$	517.8
Gross profit %	46.4		%	45.6		%
Operating income	$	43.6		$	19.0
Operating income %	3.4		%	1.7		%

Net sales increased $144.6 million, or 12.7%, due primarily to:

•$91.7 million, or 8.1%, net increase due primarily to approximately $84 million of strategic pricing actions, and new products, partially offset by lower sales volumes in certain product categories and an unfavorable impact of $5.4 million from distributor transitions as part of the integration strategy to capture synergies after the twelve month anniversary of the HRA Pharma acquisition;

•$68.3 million increase from an additional four months of HRA Pharma sales prior to the twelve month anniversary of the HRA Pharma acquisition, which included an unfavorable impact of $22.1 million from distributor transitions; and

•$11.2 million decrease from unfavorable foreign currency translation; and

•$10.4 million decrease from exited product lines.

Perrigo Company plc - Item 2

CSCI


Sales	Nine Months Ended
(in millions, except percentages)(1)	September 30, 2023		October 1, 2022		$ Change		% Change
Skin Care	$	293.1	$	257.5	$	35.6	13.8	%
Upper Respiratory	227.9		194.5		33.4		17.2	%
Healthy Lifestyle	179.4		165.6		13.8		8.3	%
Pain and Sleep-Aids	163.8		149.2		14.6		9.8	%
VMS	135.4		138.2		(2.8)		(2.0)	%
Women's Health	89.5		65.7		23.8		36.2	%
Oral Care	75.5		71.2		4.3		6.0	%
Digestive Health	30.0		27.4		2.6		9.5	%
Other CSCI	86.1		66.8		19.3		28.9	%
Total CSCI	$	1,280.7	$	1,136.1	$	144.6	12.7	%

Sales in each category were driven primarily by:

•Skin Care: Net sales of $293.1 million increased 13.8%, inclusive of a 4.4% unfavorable effect of currency translation, driven primarily by the addition of HRA Pharma, Sebamed and ACO brands, partially offset by lower net sales in wound care products, which were primarily impacted by distributor transitions;

•Upper Respiratory: Net sales of $227.9 million increased 17.2%, inclusive of an 0.3% favorable effect of currency translation, due primarily to strong demand for cough cold products, including Bronchostop and Coldrex, stemming from a relatively stronger cough cold and flu season. Net sales of the U.K. allergy brand Beconase were also higher compared to the prior year period;

•Healthy Lifestyle: Net sales of $179.4 million increased 8.3%, inclusive of a 0.2% favorable effect of currency translation, due primarily to higher net sales of anti-parasite offerings that continue to outpace strong category growth, partially offset by lower category consumption in weight management impacting XLS Medical;

•Pain & Sleep-Aids: Net sales of $163.8 million increased 9.8%, inclusive of a 0.3% favorable effect of currency translation, primarily due to quarterly phasing of Solpadeine, higher net sales in store brands and increased demand for Nytol;

•VMS: Net sales of $135.4 million decreased 2.0%, inclusive of a 1.1% favorable effect of currency translation, primarily due to higher sales in the prior year due to pandemic related demand and lower category consumption, impacting sales of Davitamon and Abtei;

•Women's Health: Net sales of $89.5 million increased 36.2%, inclusive of a 0.6% favorable effect of currency translation, due primarily to the addition of HRA Pharma brands, including ellaOne® and NorLevo®, partially offset by lower net sales in contraceptive products, which were primarily impacted by distributor transitions;

•Oral Care: Net sales of $75.5 million increased 6.0%, due primarily to higher net sales of power oral care products, Plackers® and improved service levels compared to the prior year;

•Digestive Health and Other: Net sales of $116.1 million increased 23.2%, inclusive of a 3.6% 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.

Operating income increased $24.6 million, or 129.5%, due primarily to:

•$76.0 million increase in gross profit from positive sales pricing benefits and the addition of HRA Pharma, partially offset by $25.0 million of cost of goods sold inflation and $22.1 million impact from distributor transitions. Gross profit as a percentage of net sales increased 80 basis points due primarily to the same factors that drove gross profit; and

•$51.4 million increase in operating expenses due to higher selling and administrative expenses primarily driven by the addition of HRA Pharma, higher restructuring and increased amortization expenses, partially offset by a $4.6 million gain on an asset divestiture in the current year.

Perrigo Company plc - Item 2

Unallocated, Interest, Other, and Taxes

Unallocated Expenses

Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded in Operating income on the Consolidated Statements of Operations. Unallocated expenses were as follows (in millions):


Three Months Ended				Nine Months Ended
September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
$	42.5	$	43.4	$	148.1	$	211.1

The decrease of $63.0 million in unallocated expenses during the nine months ended September 30, 2023, compared to the prior year periods was due primarily to a decrease in acquisition and integration expenses associated with the HRA Pharma and Gateway acquisitions.

Interest expense, net, and Other (income) expense, net


	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Interest expense, net	$	43.5	$	41.0	$	131.1	$	115.1
Other (income) expense, net	$	(0.6)	$	(4.0)	$	(9.6)	$	48.7
(Gain) loss on extinguishment of debt	$	—	$	(0.4)	$	—	$	8.9

The $2.5 million increase in Interest Expense, net during the three months ended September 30, 2023 compared to the prior year period was due primarily to increasing interest rates on our variable rate debt.

The $16.0 million increase in Interest Expense, net during the nine months ended September 30, 2023 compared to the prior year period was due primarily to an increase in outstanding borrowings under our New Senior Secured Credit Facilities (as defined in Item 1. Note 11) in addition to increasing interest rates on our variable rate debt.

The $3.4 million decrease in income in Other (Income) Expense, net during the three months ended September 30, 2023 compared to the prior year period was due primarily to the unfavorable revaluation of foreign currency.

The $58.3 million decrease in expense in Other (Income) Expense, net during the nine months ended September 30, 2023 compared to the prior year period was due primarily to the absence of a prior year unfavorable change in revaluation of foreign currency expense associated with the acquisition of HRA Pharma, a prior year unfavorable termination expense of the forward currency options related to the acquisition of HRA Pharma and higher milestone income related to legacy royalty rights in the current year period, partially offset by the absence of a prior year favorable pension plan matter.

The (gain) loss on extinguishment of debt was due to the prior year write-off of certain deferred financing fees and make whole payments on debt redeemed prior to maturity.

Income Taxes (Consolidated)

The effective tax rates were as follows:


Three Months Ended				Nine Months Ended
September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
19.7	%	(1,377.1)	%	49.5	%	5.3	%

The effective tax rate on the pre-tax income for the three months ended September 30, 2023 decreased compared to the effective tax rate on the pre-tax loss for the three months ended October 1, 2022, primarily due to the jurisdictional mix of earnings, as well as the impact of benefits not realized on certain pre-tax losses in the three months ended October 1, 2022. The effective tax rate on the pre-tax income for the nine months ended September 30, 2023, increased compared to the effective tax rate on the pre-tax loss for the nine months ended October 1, 2022, primarily due to audit settlements occurring in the current period, as well as the tax benefit of the loss on sale of our Latin American business recognized in the prior year. The effective tax rate for these periods

Perrigo Company plc - Item 2

Unallocated, Interest, Other, and Taxes

differs from the statutory income tax rate of 12.5% primarily due to non-deductible expenses as well as the impact of audit settlements in these periods.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

We finance our operations with internally generated funds, supplemented by credit arrangements with third parties and capital markets 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. In determining our future capital requirements, we regularly consider, among other factors, known trends and uncertainties, such as the war 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. We may from time to time, subject to relevant restrictions under our debt agreements, 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) and subject to our cash requirements for other purposes and other factors management deems relevant.

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. 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. 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 markets opportunities become available, or any change in conditions relating to the war 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.

Cash and Cash Equivalents


(in millions)	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	598.3	$	600.7
Working capital(1)	$	1,196.7	$	1,041.8

(1) Working capital represents current assets less current liabilities, excluding cash and cash equivalents and excluding current indebtedness.

Cash, cash equivalents, 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. 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. Should our outlook on liquidity requirements change substantially from current projections, we may seek additional sources of liquidity in the future.

Cash Flows

The following table includes summarized cash flow activities:


	Nine Months Ended
(in millions)	September 30, 2023		October 1, 2022		$ Change
Net cash from operating activities	$	196.8	$	121.4	$	75.4
Net cash for investing activities	(54.7)		(1,932.6)		1,877.9
Net cash (for) from financing activities	(142.6)		464.1		(606.7)
Effect of exchange rate changes on cash and cash equivalents	(1.9)		(63.5)		61.6
Net increase (decrease) in cash and cash equivalents	$	(2.4)	$	(1,410.6)	$	1,408.2

Perrigo Company plc - Item 2

Financial Condition, Liquidity and Capital Resources

Net cash from (for) Operating Activities

The $75.4 million increase in operating cash flow was primarily driven by an increase in cash flow from the change in net earnings after adjustments for items including deferred income taxes and depreciation and amortization, partially offset by higher working capital, primarily related to timing of sales and payments received and made.

Net cash from (for) Investing Activities

The $1.9 billion increase in investing cash flow was due to the absence of a $1.9 billion cash paid for the acquisition of HRA Pharma in the prior year and a $15.6 million increase in proceeds from royalty rights primarily driven by higher milestone income related to legacy royalty rights in the current year, partially offset by $58.7 million of prior year proceeds from the sale of our Latin American businesses and from an ANDA for a generic topical lotion related to our RX business sale.

Net cash from (for) Financing Activities

The $606.7 million decrease in financing cash flow was due primarily to $589.3 million from the issuance of our New Senior Secured Credit Facilities in the prior year, net of term loan repayments and debt issuance costs, and $24.0 million of current year payments on our New Senior Secured Credit Facilities and $5.1 million increase in dividend payments compared to the prior year, partially offset by installment and working capital proceeds in the current year from the sale of our Latin American businesses.

Borrowings and Capital Resources

Credit Agreements

On April 20, 2022, we entered into two new term loans consisting of (i) a $500 million five-year term loan (the "2022 Term Loan A Facility"), and (ii) a $1.1 billion seven-year loan (the "2022 Term Loan B Facility" and, together with the 2022 Term Loan A Facility, the "2022 Term Loan Facilities"). Refer to Item I Note 11 for further information.

As of September 30, 2023 and December 31, 2022, we had $1,564.4 million and $1,588.3 million outstanding under the 2022 Term Loan Facilities, respectively. Our short term debt as of September 30, 2023 of $38.1 million is comprised of (i) principal payments of the 2022 Term Loan Facilities and (ii) leases.

The interest rate net of derivatives results in a fixed rate on a substantial portion of our long-term debt, the earliest of which matures in December 2024.

On April 20, 2022, we and our wholly owned subsidiary, Perrigo Investments, LLC, entered into a $1.0 billion five-year revolving credit facility (the "2022 Revolver") as part of its New Senior Secured Credit Facilities (as defined in Item 1. Note 11). There were no borrowings outstanding under the 2022 Revolver as of September 30, 2023 or December 31, 2022.

We are in compliance with all the covenants under our debt agreements as of September 30, 2023.

Other Financing

We have overdraft facilities available that we may use to support our cash management operations. There were no borrowings outstanding under the overdraft facilities as of September 30, 2023 or December 31, 2022.

Leases

We had $219.3 million and $238.6 million of lease liabilities and $219.3 million and $239.1 million of lease assets as of September 30, 2023 and December 31, 2022, respectively.

Perrigo Company plc - Item 2

Financial Condition, Liquidity and Capital Resources

Credit Ratings

Our credit ratings on September 30, 2023 were Ba2 (negative), BB (stable), and BB+ (negative), by Moody's Investor Services, S&P Global Ratings, and Fitch Ratings Inc., respectively. On March 15, 2023, Moody's downgraded our Corporate Family Rating to Ba2 from Ba1 and senior unsecured notes ratings to Ba3 from Ba2 and the rating outlooks remained negative. Due to the downgrade, the interest of the 3.150% Senior Notes due 2030 stepped up from 4.400% to 4.650% on payments made after June 15, 2023. Future interest rate adjustments are subject to a 2.0% total cap above the original 3.150% interest rate based on certain rating events as specified in the Note’s Supplemental Indenture No. 3, dated as of June 19, 2020, among Perrigo Finance Unlimited Company, Perrigo Company plc and Wells Fargo Bank, National Association, as trustee.

Guarantor Financial Information

As detailed in Item 1. Note 11, our Guarantor Subsidiaries and the Borrower under the New Senior Secured Credit Facilities provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 5.300% Notes due 2043 issued by the Company, and the Loan Parties provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 3.900% Notes due 2024, the 4.375% Notes due 2026, the 4.650% Notes due 2030 and the 4.900% Notes due 2044 issued by Perrigo Finance Unlimited Company.

The guarantees of the Guarantor Subsidiaries, the Company and the Borrower are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The guarantees of the Guarantor Subsidiaries, the Company and the Borrower rank senior in right of payment to any future subordinated indebtedness of the Company, equal in right of payment with all of the Company’s existing and future senior indebtedness and effectively subordinated to any of the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.

Basis of Presentation

The following tables include summarized financial information of the obligor groups of debt issued by Perrigo Finance Unlimited Company and Perrigo Company plc. The summarized financial information of each obligor group is presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with U.S. GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.

The summarized balance sheet information for the consolidated obligor group of debt issued by Perrigo Finance Unlimited Company and Perrigo Company plc is presented in the table below:


	September 30, 2023		December 31, 2022
Current Assets	$	1,979.9	$	1,975.7
Non-current Assets	$	4,652.8	$	4,819.1
Current liabilities	$	641.5	$	734.9
Non-current liabilities	$	11,079.7	$	11,036.2
Due to non-guarantors	$	6,402.5	$	6,346.4

Perrigo Company plc - Item 2

Financial Condition, Liquidity and Capital Resources

The summarized results of operations information for the consolidated obligor group of debt issued by Perrigo Finance Unlimited Company and Perrigo Company plc is presented in the table below:


	Nine Months Ended
	September 30, 2023
Total Revenues	$	2,461.7
Gross Profit	$	711.3
Operating Income (loss)	$	24.7
Net Income (loss)	$	23.4
Revenue from non-guarantors	$	51.8
Operating Expenses to non-guarantors	$	(1.5)
Other (income) expense to non-guarantors	$	(201.3)

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Contractual Obligations

There were no material changes in contractual obligations as of September 30, 2023 from those provided in our 2022 Form 10-K.

Significant Accounting Policies

There have been no material changes to the significant accounting policies as disclosed in our 2022 Form 10-K.

Critical Accounting Estimates

The determination of certain amounts in our financial statements requires the use of estimates. These estimates are based upon our historical experiences combined with management’s understanding of current facts and circumstances. Although the estimates are considered reasonable based on the currently available information, actual results could differ from the estimates we have used. There have been no material changes to the critical accounting estimates as disclosed in our 2022 Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our quantitative or qualitative disclosures found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of our 2022 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act) as of September 30, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in ensuring that all material information relating to us and our consolidated subsidiaries required to be included in our periodic SEC filings would be made known to them by others within those entities in a timely manner and that no changes are required at this time.

Evaluation of the Effectiveness of Internal Control over Financial Reporting

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2023. The framework used in carrying out our evaluation was the 2013 Internal Control - Integrated Framework

Perrigo Company plc - Item 4

Controls and Procedures

published by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission. In evaluating our information technology controls, we also used components of the framework contained in the Control Objectives for Information and related Technology, which was developed by the Information Systems Audit and Control Association’s IT Governance Institute, as a complement to the COSO internal control framework. Management has concluded that our internal control over financial reporting was effective as of September 30, 2023. The results of management’s assessment have been reviewed with our Audit Committee.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Item 1. Note 15 and Item 1. Note 16 of the Notes to the Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

Our Annual Report on Form 10-K for the year ended December 31, 2022 includes a detailed discussion of our risk factors. At the time of this filing, there have been no material changes to the risk factors that were included in the Form 10-K, other than the risk factor as described below.

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.

We operate in highly regulated industries in numerous countries and are subject to the regulations of a variety of U.S. and non-U.S. agencies related to the manufacturing, processing, formulation, packaging, labeling, testing, storing, distribution, import, export, advertising, and sale (including cost, pricing and reimbursement) of our products, as described in detail in Item 1. of our Annual Report on Form 10-K for the year ended December 31, 2022. 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 results, and financial condition or impose significant administrative burdens. Moreover, changes in the interpretation of existing regulations or practices by such regulators could result in changes in the legal requirements affecting us (including with retroactive effect). Divergence in regulatory approach from country to country, and between the EU and individual member states, adds cost and complexity to the compliance framework; and differences in requirements and/or implementation dates in different jurisdictions may provide competitive advantages to manufacturers that operate in other locations. If our products fail to meet regulatory requirements, our sales may be adversely affected, we may incur fines and penalties, and our exposure to liability relating to product-based claims may increase. Below are some examples of ways in which regulatory risk may impact us:

•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"). 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.

•We must obtain approval from the appropriate regulatory agencies in order to manufacture and sell our products in the regions in which we operate. Obtaining this approval can be time consuming and costly. When we submit an application for market authorization, there can be no assurance that the regulator will approve that application on a timely basis or at all.

•U.S. law encourages generic competition by providing eligibility for first generic marketing exclusivity if certain conditions are met. If we are granted generic exclusivity, the exclusivity may be shared with other companies; or we may forfeit 180-day exclusivity if we fail to obtain regulatory approval and begin marketing within the statutory requirements. 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.

Perrigo Company plc - Item 1A

Risk Factors

•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. 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.

•In 2020, regulatory agencies globally, including the FDA and the European Medicines Agency, issued guidance on assessing and controlling nitrosamine impurities in medicine products. We are continuing to undertake a review of our product portfolio in accordance with regulatory guidance to assess the risk of the presence of nitrosamine impurities. Any finding of nitrosamine impurities exceeding levels set by regulatory authorities may require us to adopt modified product sourcing and/or manufacturing processes or to initiate product withdrawal.

•Rx-to-OTC switches are part of our future growth. If regulatory agencies fail to approve Rx-to-OTC switches in new product categories or reassess the terms of existing OTC classifications, our growth prospects and product mix would be impaired. Further, regulatory agencies may reassess the terms of OTC classification if they perceive a shift in the previously assessed benefit/risk profile. Any such reassessment could lead to OTC products reverting to prescription. For example, as described in Item 1. of our Annual Report on Form 10-K for the year ended December 31, 2022, 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. A final opinion is expected in the first quarter of 2024. Sales of products containing codeine in Ireland were approximately $8 million in 2022. 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. If governments enhance regulations on the infant formula industry by, for example, 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.

•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 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 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. With this decision the European Parliament took into account that there is currently a shortage in the number of Notified Bodies authorized to carry out conformity assessments required under MDR.

•Increased scrutiny of product classifications by government agencies can result in investigations and prosecutions, which carry the risk of significant civil and criminal penalties, including but not limited to, debarment from government business and prohibition to continue the business.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2023, no director or executive officer adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement", as each term is defined in Item 408(a) of Regulation S-K.

Perrigo Company plc - Item 6

Exhibits

ITEM 6. EXHIBITS


Exhibit Number						Description

3.1						Certificate of Incorporation of Perrigo Company plc (formerly known as Perrigo Company Limited) (incorporated by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on December 19, 2013).

3.2						Memorandum and Articles of Association of Perrigo Company plc, as amended and restated (incorporated by reference from Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2017).

10.1						A mended and Restated Perrigo Company plc Annual Incentive Plan, Dated August 2 , 2023 (filed herewith).

10.2						A mend ment No. 2 to the Perrigo Company plc 2019 Long -Term Incentive Plan, dated August 2 , 2023 (filed herewith ).

10.3						A mendment No. 3 to the Perrigo Company plc 2019 Long -Term In centive Plan, dated November 1 , 2023 (filed her e with ).

10.4						A mendment No. 1 to Employment Agreement by and between the Company and Pat rick Lo ckwoo d-Taylor, effective as of September 28 , 2023 (filed herewith ).

22						List of Guarantor Subsidiaries (filed herewith).

31.1						Rule 13a-14(a) Certification by Patrick Lockwood-Taylor, Chief Executive Officer (filed herewith).

31.2						Rule 13a-14(a) Certification by E duardo Bezerra , Chief Financial Officer (filed herewith).

32						Certification Pursuant to 18 United States Code 1350 and Rule 13a-14(b) of the Securities Exchange Act of 1934 (furnished herewith).



101. INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema Document.

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Date File, formatted in Inline XBRL (contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PERRIGO COMPANY PLC
		(Registrant)

Date:	November 7, 2023	/s/ Patrick Lockwood-Taylor
		Patrick Lockwood-Taylor
		Chief Executive Officer and President
		(Principal Executive Officer)

Date:	November 7, 2023	/s/ Eduardo Bezerra
		Eduardo Bezerra
		Chief Financial Officer
		(Principal Accounting and Financial Officer)