February 18, 2016 / 11:37 AM / 4 years ago

Perrigo's adjusted profit misses for first time in five quarters

(Reuters) - Drugmaker Perrigo Co Plc’s (PRGO.N) adjusted profit missed market estimates for the first time in five quarters as sales in its branded consumer healthcare business disappointed.

Perrigo’s shares fell as much as 10 percent to $130.69, their biggest percentage drop since Nov. 13 when the company rejected Mylan NV’s (MYL.O) $26 billion hostile bid.

Perrigo’s portfolio of over-the-counter consumer products, including the branded business it beefed up through acquisitions last year, was the focus of Mylan’s seven-month pursuit.

The company’s branded consumer healthcare (BCH) unit, which includes over-the-counter drugs for cough, cold, allergies, personal and skin care and lifestyle products, brought in $325.7 million in the quarter ended Dec. 31, contributing 23 percent to total revenue.

JP Morgan had estimated BCH revenue to be $350 million, while RBC Capital Markets had expected $380 million.

Perrigo Chief Executive Joseph Papa said certain investments made in the branded healthcare unit failed to generate expected sales.

The company bought Belgium’s Omega Pharma NV for $3.1 billion last year to expand its over-the-counter products portfolio. It also bought OTC brands from GlaxoSmithKline Plc (GSK.L) last year.

“We did not get the benefits of a normal cough-cold-flu season in Europe,” Papa said.

A trader at a U.S. bulge bracket firm said a flu season miss was expected, but the weakness in the unit likely creates management credibility issues.

“This is the second straight quarter of disappointing performance despite the company acquiring several brands last year that should also be driving overall segment growth,” JP Morgan analyst Chris Schoff wrote in a note.

Perrigo reported a net loss of $107 million, or 74 cents per share, in the fourth quarter, compared with a profit of $70.2 million, or 51 cents per share, a year earlier.

The quarterly net loss includes an impairment charge of $185 million related to the Omega acquisition.

On an adjusted basis, the company earned $1.80 per share, below the analysts’ average estimate of $1.93, according to Thomson Reuters I/B/E/S.

Revenue rose 33 percent to $1.42 billion, just shy of the average estimate of $1.46 billion.

Perrigo said it expects adjusted earnings for 2016 to be between $9.50 and $9.80 per share. Analysts on average were expecting the company to earn $9.74 per share.

The company's shares were trading at $132.37 in late morning trading. The stock was the biggest percentage loser on the S&P 500 Index .SPX.

Reporting by Amrutha Penumudi, Rosmi Shaji and Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta and Don Sebastian

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