Perrigo Co.'s (PRGO, Financial) stock rallied about 20% in Thursday trading after the company reported second-quarter EPS of $1.22 on revenue of $1.24 billion, beating profit estimates by 29 cents per share and revenue expectations by $60 million.
The company reported nets sales of $605 million from the CHC Americas segment, a 4% decline when compared to $630 million last year. For the quarter, the company reported a net loss of $70 million and diluted loss per share of 49 cents, while adjusted net income came in at $175 million with adjusted diluted EPS of $1.22.
Perrigo witnessed margin expansion during the quarter. In the CHC International segment, the operating margin was 1% and the adjusted operating margin reached 14.6%.The RX segment performed even better with an operating margin of 28.8% while the segment's extended topical strategy registered an adjusted operating margin of 46.5%, higher when compared to the previous year.
Looking at the cash flow statement, cash flow from operations was $285 million. Excluding a tax payment of $74 million and restructuring payments of $31 million, the figure was $390 million. This cash generation gave the company the opportunity to repurchase approximately 812,000 shares for $58 million during the quarter.
Further, the company reached an agreement to divest its Israel-based active pharmaceutical ingredient (API) business unit, Chemagis, for $110 million in cash. In 2005, Perrigo acquired Chemagis for $818 million. The buyer is SK Capital, a private U.S. investment firm that specializes in pharma and chemical companies.
Looking forward, Perrigo expects fiscal 2017 diluted EPS to be between 84 cents and $1.09.Given continued positive execution across all of its business segments, the company raised its adjusted diluted EPS guidance to be in the range of $4.45 to $4.70.
Disclosure: The author holds no position in any stocks mentioned.
