PERRIGO Co plc

Previous wording

Perrigo provides access to trusted self-care products that can be procured without the need to visit a doctor for a prescription. Guided by our vision and purpose, our strategic goal is to create a sustainable and value accretive growth engine by 1) delivering consumer preferred brands and innovation, 2) driving category growth with our customers, 3) powering our business with our world-class quality and supply chain, including a focus on sustainability with meaningful goals to reduce greenhouse gas emissions, water, and waste, in addition to improving the recyclability of our packaging, and 4) evolving our global organization to a single operating model. Our unique competency is to deliver a blended-branded business model of branded, value and store brand product offerings that provide consumers access to self-care products across the value spectrum.

Current wording

Perrigo provides access to trusted self-care products that can be procured without the need to visit a doctor for a prescription. Guided by our vision and purpose, our strategic goal is to create sustainable and value accretive growth by 1) delivering consumer preferred brands and innovation, 2) driving category growth with our customers, 3) powering our business with our world-class quality and supply chain, including a focus on sustainability with meaningful goals to reduce greenhouse gas emissions, water, and waste, in addition to improving the recyclability of our packaging, and 4) evolving our global organization to a single operating model. Our unique competency is to deliver a blended-branded business model of branded, value and store brand product offerings that provide consumers access to self-care products across the value spectrum.

Previous wording

Perrigo's broad offerings are well diversified across several major product categories as well as across geographies, primarily in North America and Europe with no one product representing more than 3% of total revenue. In North America, Perrigo is the leading store brand private label provider of self-care products in many categories, including upper respiratory, nutrition and women's health, along with brands including Opill® and Merderma®. In Europe, our portfolio consists primarily of brands, including Compeed®, EllaOne®, Solpadeine®, and ACO®.

Current wording

Perrigo's broad offerings are well diversified across several major product categories as well as across geographies, primarily in North America and Europe with no one product representing more than 3% of total revenue. In North America, Perrigo is the leading store brand private label provider of self-care products in many categories, including upper respiratory, nutrition and women's health, along with brands including Opill® and Mederma®. In Europe, our portfolio consists primarily of brands, including Compeed®, EllaOne®, Solpadeine®, and ACO®.

Previous wording

Several initiatives are anticipated to advance our self-care strategy, including the implementation of our Supply Chain Reinvention Program and Project Energize, a global investment and efficiency program. In addition, we continue to invest in other initiatives, including innovation, information systems and tools, and our people to drive consistent and sustainable results.

Current wording

Several initiatives are advancing our self-care strategy, including the implementation of our Supply Chain Reinvention Program and Project Energize, a global investment and efficiency 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.

Previous wording

•On April 25, 2024, we announced a binding offer to sell our HRA Pharma Rare Diseases business ("Rare Disease") to Esteve Healthcare, S.L. ("ESTEVE") for total consideration of up to €275 million, consisting of an upfront cash payment of €190 million and up to €85 million in potential earnout payments based on the Rare Diseases business achieving certain sales milestones.

Current wording

•On April 25, 2024, we announced a binding offer to sell the HRA Pharma Rare Diseases business (the "Rare Diseases Business") to Esteve Healthcare, S.L. ("ESTEVE") for total consideration of up to €275 million, consisting of an upfront cash payment of €190 million and up to €85 million in potential earnout payments based on the Rare Diseases Business achieving certain sales milestones. The sale of the Rare Diseases Business was completed on July 10, 2024. See Item 1. Note 3 for more information.

Previous wording

•On May 7, 2024, we announced that Svend Andersen, Executive Vice President and President, CSCI, intends to retire from the Company in December of this year. Roberto Khoury, a strong leader with more than 20 years of experience cultivating successful branded consumer products and pan-European brands, will be appointed to lead the business.

Current wording

•Effective July 31, 2024, Svend Andersen will no longer serve as Executive Vice President and President, CSCI of the Company and all relevant subsidiaries and affiliates. Roberto Khoury, a strong leader with more than 20 years of experience cultivating successful branded consumer products and pan-European brands, has been appointed to lead the business effective August 1, 2024.

Previous wording

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 are reducing portfolio complexity, investing in advanced planning capabilities, diversifying sourcing, and optimizing 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 aggregate 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 13 for further details on restructuring charges.

Current wording

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 are reducing portfolio complexity, investing in advanced planning capabilities, diversifying sourcing, and optimizing 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 taking into account depreciation expense on capital investments related to the program) if all facets of the Program are successfully implemented and executed. To obtain these potential benefits, we anticipate incurring aggregate 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 taking into account depreciation expense on capital investments related to the program), are anticipated by the end of fiscal year 2025, along with associated potential spend of between $300 million and $450 million. Year to date, Supply Chain Reinvention Program has achieved gross savings of $23 million. Refer to Item 1. Note 14 for further details on restructuring charges.

Previous wording

Project Energize was initiated in the first quarter of 2024, subject to local law and consultation requirements, and is expected to deliver an annualized pre-tax savings in the range of $140 million to $170 million by 2026. The Company expects to reinvest approximately $40 million to $60 million of these savings to drive its blended-branded business model. Restructuring and related charges associated with these actions are estimated to be in the range of $140 million to $160 million, including $20 million to $40 million in investments to enhance capabilities, and are expected to be substantially incurred by the end of 2026. Restructuring activities as part of Project Energize are expected to result in the net reduction of approximately 6% of total Perrigo roles. To date, Project Energize has achieved approximately $17 million in savings.

Current wording

Project Energize was initiated in the first quarter of 2024, subject to local law and consultation requirements, and is expected to deliver an annualized pre-tax savings in the range of $140 million to $170 million by 2026. The Company expects to reinvest approximately $40 million to $60 million of these savings to drive its blended-branded business model. Restructuring and related charges associated with these actions are estimated to be in the range of $140 million to $160 million, including $20 million to $40 million in investments to enhance capabilities, and are expected to be substantially incurred by the end of 2026. Restructuring activities as part of Project Energize are expected to result in the net reduction of approximately 6% of total Perrigo roles. Year to date, Project Energize has achieved gross savings of approximately $53 million.

Previous wording

Current macroeconomic conditions remain very dynamic, including impacts from rising inflation and interest rates, volatile changes in foreign currency exchange rates, political unrest and legislative and regulatory changes. Any causes of market size contraction could reduce our sales or erode our operating margin and consequently reduce our net earnings and cash flows.

Current wording

Current macroeconomic conditions remain very dynamic, including impacts from rising inflation and interest rates, volatile changes in foreign currency exchange rates, political unrest and uncertainty magnified by the 2024 U.S. presidential election 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.

Previous wording

As the war in Ukraine continues, supply chain disruptions in specific categories such as oil, agricultural and paper based commodities continue to lead to inflationary pressures in those respective areas. 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 has normalized. However, future supply chain disruptions and inflationary pressures from the continuation of the war in Ukraine and the more recent events from the war in Israel are uncertain.

Current wording

As the war in Ukraine continues, supply chain disruptions in specific categories such as oil, agricultural and paper based commodities continue to lead to inflationary pressures in those areas. 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 the impacts of inflation, and the global freight constraints in availability of freight containers and truck drivers has normalized. However, future supply chain disruptions and inflationary pressures from the continuation of the conflicts between Russia and Ukraine, Israel and Hamas and in the Red Sea are uncertain.

Previous wording

As part of its efforts to prevent supply interruptions and risk of Cronobacter spp. illnesses associated with powdered infant formula, in March 2023, the FDA released an “Immediate National Strategy to Increase the Resiliency of the U.S. 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. In response to those changes, we made considerable investments in all our infant formula manufacturing sites, including enhanced cleaning and sanitation protocols, enhancements to our environmental monitoring programs and additional quality personnel. These changes resulted in higher costs and lower manufacturing output and production yields across our infant formula network.

Current wording

As part of its efforts to prevent supply interruptions and risk of Cronobacter spp. illnesses associated with powdered infant formula, in March 2023, the FDA released an “Immediate National Strategy to Increase the Resiliency of the U.S. 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. In response to those changes, we made considerable investments in all our infant formula manufacturing sites, including enhanced cleaning and sanitation protocols, enhancements to our environmental monitoring programs, enhanced quality oversight and increasing the number of quality and operations personnel. These changes resulted in higher costs and lower manufacturing output and production yields across our infant formula network.

Previous wording

The Company also bolstered its internal resources and brought in additional outside expertise to help revise, enhance and strengthen comprehensive standards and processes across our infant formula network, including in some instances, pausing production for comprehensive cleaning and infrastructure improvements. Currently, any planned large-scale manufacturing plant resets have been completed, and we are progressing the next phase of our quality enhancements.

Current wording

The Company also bolstered its internal resources and brought in additional outside expertise to help revise, enhance and strengthen comprehensive standards and processes across our infant formula network, including in some instances, pausing production for comprehensive cleaning and infrastructure improvements. Any planned large-scale manufacturing plant resets have now been completed, and the Company is implementing the next phase of our quality enhancements, including further protocol, process and procedural improvements at the site level, and additional investments to upgrade infrastructure. We do not expect these continuing improvements to result in extended shutdowns beyond typical planned maintenance activities.

Previous wording

We have incurred and expect to incur certain extraordinary non-recurring costs associated with the evolving U.S. infant formula regulatory landscape, including consulting and legal fees relating to the Company’s responses to the FDA and the development and institution of new protocols across our infant formula manufacturing sites, as well as other costs relating to the extended cleaning and sanitization and the pausing and restarting of production. Cash costs in 2024 to achieve this remediation plan are estimated at $35 to $45 million. We also expect higher ongoing operating costs at our infant formula manufacturing sites moving forward as we continue to implement our enhanced program with additional internal capabilities. Due to these costs and the unabsorbed overhead and depressed sales volumes resulting from these actions, infant formula results in 2024 are expected to be below 2023 levels.

Current wording

We have incurred and expect to incur certain extraordinary non-recurring costs associated with the evolving U.S. infant formula regulatory landscape, including consulting and legal fees relating to the Company’s responses to the FDA and the development and institution of new protocols across our infant formula manufacturing sites, as well as other costs relating to the extended cleaning and sanitization and the pausing and restarting of production. Cash costs in 2024 to achieve this remediation plan are estimated at $15 to $20 million, of which approximately $10.5 million were incurred during the first two quarters. We also expect higher ongoing operating costs at our infant formula manufacturing sites moving forward as we continue to implement our enhanced program with additional internal capabilities. Due to these costs and the unabsorbed overhead and depressed sales volumes resulting from these actions, infant formula results in 2024 are expected to be below 2023 levels.

Previous wording

We continue to closely monitor the ongoing Israel/Hamas conflict and the social, political and economic environment in Israel and in the surrounding region to evaluate the impacts on our operations and supply chain. Israel is a global technology research and development center that plays a critical role to the global API market, as a number of key suppliers are located within Israel. The Company sources some raw materials and finished goods from suppliers in Israel for certain self-care products, including Omeprazole. Despite this situation, to date, Perrigo has confirmed that our suppliers in the region have active operations and continue to manufacture materials for us, and we have not received any reports of restrictions on imports or exports in Israel. However, there is potential for some disruption as it relates to in-country logistics, including freight. As a precaution, Perrigo has engaged alternate suppliers to help minimize a potential supply disruption. If the conflict spreads or materially escalates, or if the conflict leads to further volatility and uncertainty in financial markets or economic conditions, the impact on our business and results of operations could be material.

Current wording

We continue to closely monitor the ongoing Israel/Hamas conflict and the social, political and economic environment in Israel and in the surrounding region to evaluate the impacts on our operations and supply chain. Israel is a global technology research and development center that plays a critical role to the global API market, as a number of key suppliers are located within Israel. The Company sources some raw materials and finished goods from suppliers in Israel for certain self-care products, including Omeprazole. Despite this situation, to date, Perrigo has confirmed that our suppliers in the region have active operations and continue to manufacture materials for us, and we have not received any reports of restrictions on imports or exports in Israel. However, there is potential for some disruption as it relates to in-country logistics, including freight. As a precaution, Perrigo has engaged alternate suppliers to help minimize a potential supply disruption. If the conflict spreads or materially escalates, or if the conflict leads to further volatility and uncertainty in financial markets or economic conditions, the impact on our business and results of operations could be material. This includes the related events developing in the Red Sea and their potential to disrupt supply chains and lead to further inflationary pressures which we are also continuing to monitor closely.

Previous wording

Any currency translation effects described below represent estimates of the net differences between translation of foreign currency transactions into U.S. dollars for the three months ended March 30, 2024 at the average exchange rates for the reporting period and average exchange rates for the three months ended April 1, 2023.

Current wording

Any 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 six months ended June 29, 2024 at the average exchange rates for the reporting period and average exchange rates for the three and six months ended July 1, 2023.

Previous wording

•$56.1 million decrease in gross profit driven by lower manufacturing productivity within U.S. Nutrition driven by actions to augment and strengthen the infant formula network, lower volume, and higher cost of goods sold inflation primarily in CSCI, partially offset by strategic pricing actions, higher margin new products and savings achieved through our restructuring programs. Gross profit as a percentage of net sales decreased 190 basis points compared to the prior year due to the same factors that drove gross profit partially offset by benefits from purposeful SKU prioritization actions in CSCA.

Current wording

•$33.3 million decrease in gross profit driven by lower manufacturing productivity within U.S. Nutrition driven by actions to augment and strengthen the infant formula network, and lower net sales volumes and unfavorable manufacturing absorption. These factors were partially offset by higher gross profit flow-through from strategic pricing actions and savings achieved through Supply Chain Reinvention and Project Energize activities. Gross profit as a percentage of net sales increased 120 basis points compared to the prior year due to benefits from purposeful SKU prioritization actions in addition to the same factors that drove gross profit.

Previous wording

•$81.4 million decrease, or 7.0%, due primarily to lower net sales in U.S. Nutrition driven by actions to augment and strengthen the infant formula network and purposeful SKU prioritization actions to enhance margins as part of the Company's Supply Chain Reinvention Program across most product categories. These factors were partially offset by strategic pricing actions and new products. The primary product category drivers are the previously discussed issues relating to infant formula in Nutrition, and lower sales in Upper Respiratory and Oral Care from lost distribution, partially offset by growth in Women's Health and Skincare; and

Current wording

•$189.8 million decrease, or 8.1%, due primarily to lower net sales in U.S. Nutrition driven by actions to augment and strengthen the infant formula network, lower net sales in Upper Respiratory and Pain & Sleep Aids categories and purposeful SKU prioritization actions to enhance margins as part of the Company's Supply Chain Reinvention Program across most product categories. These factors were partially offset by strategic pricing actions and new products.

Previous wording

•$10.3 million increase in operating expenses due primarily to higher restructuring expenses; which were partially offset by decreased selling expenses and savings from Project Energize.

Current wording

•$97.6 million increase in operating expense due primarily to increased expenses associated with Supply Chain Reinvention and Project Energize and impairment charges recognized as part of the assets held for sale of the Rare Diseases Business; which were partially offset by decreased selling expenses and savings from Project Energize.

Previous wording

(1) We updated our global reporting product categories as a result of legacy Rx sales being moved out of Other CSCA and into respective categories. 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.

Current wording

(1) We updated our global reporting product categories as a result of legacy sales being moved out of Other CSCA and into respective categories. 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.

Previous wording

•VMS and Other: Net sales of $5.6 million increased 5.7% due primarily to volume growth in the VMS category.

Current wording

•VMS and Other: Net sales of $5.4 million decreased 10.0% due primarily to volume decline in the Other category.

Previous wording

•$110.2 million decrease, or 14.6%, due primarily to lower net sales in U.S. Nutrition driven by actions to augment and strengthen the infant formula network, purposeful SKU prioritization actions to enhance margins as part of the Company's Supply Chain Reinvention program across most product categories, reduced inventories at retail customers resulting in lower net sales of store brand offerings and lower distribution in Oral Care. These factors were partially offset by growth in e-commerce and new products, including the launch of Opill® in the U.S.; and

Current wording

•$223.1 million decrease, or 14.9%, due primarily to lower net sales in U.S. Nutrition driven by actions to augment and strengthen the infant formula network, SKU prioritization actions to enhance margins and lower net sales in the Upper Respiratory and Pain & Sleep Aids categories due to lower seasonal demand. These factors were partially offset by growth in e-commerce and new products, including Opill®; and

Previous wording

•Digestive Health: Net sales of $122.2 million decreased 1.5% as higher volumes of laxative products, including Polyethylene Glycol, were more than offset by a 5.3 percentage points reduction from portfolio optimization actions;

Current wording

•Digestive Health: Net sales of $248.2 million decreased 0.8% as higher volumes of antacid and laxative products, including Polyethylene Glycol, were more than offset by a 3.1 percentage points reduction from exited product lines and portfolio optimization actions and lower volume of Omeprazole;

Previous wording

•Nutrition: Net sales of $90.6 million decreased 34.6% due primarily to lower shipments to customers as the company works through its infant formula plant remediation plans, in addition to a 1.8 percentage points decline from exited product lines in the category;

Current wording

•Nutrition: Net sales of $176.7 million decreased 42.4% due primarily to lower shipments to customers as the company works through its infant formula plant remediation plans in addition to a 1.0 percentage points decline from exited product lines in the category;

Previous wording

•Pain and Sleep-aids: Net sales of $82.6 million decreased 20.1% due primarily to purposeful SKU prioritization actions and exited product lines which had an aggregate negative impact of 13.0 percentage points. In addition, inventory reductions by U.S. retail customers resulted in lower net sales of pain and sleep-aid products. These impacts more than offset new products, including store brand Acetaminophen 250mg and Ibuprofen 125mg Tablets;

Current wording

•Pain and Sleep-aids: Net sales of $164.2 million decreased 17.9% due primarily to net lost distribution of lower margin products, purposeful SKU prioritization actions and exited product lines, which had an aggregate negative impact of 7.2 percentage points. In addition, inventory reductions by U.S. retail customers resulted in lower net sales of pain and sleep-aid products;

Previous wording

•Healthy Lifestyle: Net sales of $71.3 million decreased 2.9% due primarily to inventory de-stocking at U.S. retail customers, resulting in lower net sales of smoking cessation products, and lower category consumption compared to the prior year.;

Current wording

•Healthy Lifestyle: Net sales of $140.4 million increased 0.4% due primarily to higher net sales of nicotine lozenges, including the new product launch of the Nicotine Ice Mint Lozenge, partially offset by inventory de-stocking at U.S. retail customers and lower category consumption compared to the prior year period;

Previous wording

•Oral Care: Net sales of $64.7 million decreased 22.3% due primarily to lower distribution at specific retail customers and the comparison to strong sales in the prior year quarter as customers normalized inventories;

Current wording

•Oral Care: Net sales of $137.9 million decreased 13.2% due primarily to lower distribution at specific retail customers and the comparison to strong sales in the prior year as customers normalized inventories, partially offset by higher net sales of Reach® and Firefly® toothbrushes;

Previous wording

•Skin Care: Net sales of $49.6 million decreased 28.9% due primarily to portfolio optimization actions and exited product lines, which had an aggregate negative impact of 30.9 percentage points. These headwinds more than offset strong, double digit, growth of Mederma®;

Current wording

•Skin Care: Net sales of $106.7 million decreased 18.9% due primarily to portfolio optimization actions and exited product lines, which had an aggregate negative impact of 17.4 percentage points. These headwinds more than offset strong, double digit, growth of Mederma®;

Previous wording

•Women's Health: Net sales of $27.2 million increased 121.1% due primarily to the launch of Opill®, which was partially offset by an 11.7 percentage point reduction from exited product lines and portfolio optimization actions; and

Current wording

•Women's Health: Net sales of $44.0 million increased 75.3% due primarily to the new product launch of Opill®, which was partially offset by an 8.2 percentage point reduction from exited product lines; and

Previous wording

•$57.3 million decrease in gross profit due primarily to lower manufacturing productivity in U.S. Nutrition driven by actions to augment and strengthen the infant formula network; partially offset by Supply Chain Reinvention savings. Gross profit as a percentage of net sales decreased 380 basis points compared to the prior year due to the same factors that impacted gross profit, partially offset by benefits from purposeful SKU prioritization actions and high margin new products, including Opill®.

Current wording

•$92.0 million decrease in gross profit due primarily to lower net sales and manufacturing productivity in U.S. Nutrition driven by actions to augment and strengthen the infant formula network and lower manufacturing volumes in OTC; partially offset by new products and savings achieved through Supply Chain Reinvention and Project Energize activities. Gross profit as a percentage of net sales decreased 180 basis points compared to the prior year due to the same factors that impacted gross profit, partially offset by favorable product mix, including higher margin new products.

Previous wording

•Women's Health: Net sales of $32.0 million increased 10.0%, inclusive of a 0.3% favorable effect of currency translation, due primarily to higher net sales of contraceptive products including EllaOne, driven by the absence of prior year distribution transitions sales returns;

Current wording

•Women's Health: Net sales of $36.9 million increased 15.7%, inclusive of a 1.3% unfavorable effect of currency translation, due primarily to higher net sales of contraceptive products including EllaOne, driven by market share gains and the absence of prior year distribution transitions;

Previous wording

•Skin Care: Net sales of $114.7 million increased 37.5%, inclusive of a 3.4% unfavorable effect of currency translation, due to strong growth in Compeed driven by the new product launch of Compeed Spots, and the absence of prior year distribution transitions sales returns. Category growth was also driven by performance of ACO® and Sebamed®, partially offset by a 2.2 percentage point reduction from exited product lines;

Current wording

•Skin Care: Net sales of $242.4 million increased 17.4%, inclusive of a 4.3% unfavorable effect of currency translation, due to strong growth in Compeed® driven by the new product launch of Compeed Spots, and the absence of prior year distribution transitions. Category growth was also driven by improved performance within the Sebamed®brand portfolio;

Previous wording

•Healthy Lifestyle: Net sales of $64.6 million decreased 2.7%, inclusive of a 7.4% unfavorable effect of currency translation, due primarily to the seasonal sell in of anti-parasite products including, Jungle Formula and Paranix, partially offset by lower category consumption in weight loss, impacting XLS Medical. The category was impacted by a 1.3 percentage points reduction from exited product lines;

Current wording

•Healthy Lifestyle: Net sales of $122.1 million decreased 3.8%, inclusive of a 6.3% unfavorable effect of currency translation, due primarily to higher consumption of anti-parasite products including, Jungle Formula and Paranix, partially offset by lower category consumption in weight loss, impacting XLS Medical;

Previous wording

•Upper Respiratory: Net sales of $69.1 million decreased 18.5%, inclusive of a 1.7% favorable effect of currency translation, due primarily to lower net sales of cough cold products stemming from lower incidence

Current wording

•Upper Respiratory: Net sales of $119.8 million decreased 20.0%, inclusive of an 0.8% favorable effect of currency translation, due primarily to lower net sales of cough cold products stemming from lower incidence of cough cold throughout the E.U. compared to the prior year and supply constraints on several products in the category;

Previous wording

•VMS: Net sales of $44.6 million decreased 6.7%, inclusive of a 1.0% favorable effect of currency translation, due primarily to timing of sales of Granufinkand Abte, in addition to promotional phasing of Davitamon;

Current wording

•VMS: Net sales of $84.5 million decreased 5.4%, inclusive of a 0.1% favorable effect of currency translation, due primarily to lower net sales of Granufinkand Arterin, stemming from lower consumption. These dynamics were partially offset by higher net sales of Abteiand promotional phasing of Davitamon;

Previous wording

•Digestive Health and Other: Net sales of $32.8 million increased 18.8%, inclusive of a 1.0% favorable effect of currency translation, due primarily to higher net sales of store brand digestive health products.

Current wording

•Digestive Health and Other: Net sales of $78.1 million increased 6.1%, inclusive of a 0.5% unfavorable effect of currency translation, due primarily to higher net sales of store brand digestive health products.

Previous wording

•$1.2 million increase in gross profit due primarily to strategic pricing actions, higher margin new products, and Supply Chain Reinvention savings, partially offset by lower volume/mix and higher cost of goods sold inflation. Gross profit as a percentage of net sales decreased 200 basis points compared to the prior year due to the same factors impacting gross profit being more than offset by higher cost of goods sold inflation and unfavorable product mix driven in part by supply constraints; and

Current wording

•$2.6 million increase in gross profit due primarily to higher gross profit flow-through from strategic pricing actions, new products, and Supply Chain Reinvention savings, partially offset by lower volume/mix and cost of goods sold inflation. Gross profit as a percentage of net sales decreased 20 basis points compared to the prior year due to the same factors impacting gross profit being more than offset by unfavorable product mix driven in part by supply constraints; more than offset by

Previous wording

•$47.6 million increase in operating expenses due primarily to increased expenses associated with an additional provision for securities litigation contingencies and increased restructuring expenses; which were partially offset by decreased selling expenses and savings from Project Energize.

Current wording

•$16.4 million increase in operating expenses due primarily to impairment charges recognized as part of the assets held for sale of the Rare Diseases Business and increased expenses associated with Project Energize and Supply Chain Reinvention activities; which were partially offset by decreased selling expenses and savings from Project Energize.

Previous wording

The increase of $41.4 million in unallocated expenses during the three months ended March 30, 2024, compared to the prior year period was due primarily to an increase in expenses associated with our securities litigation settlement and restructuring expenses associated primarily with Project Energize.

Current wording

The increase of $35.8 million in unallocated expenses during the three months ended June 29, 2024, and the increase of $77.2 million in unallocated expenses during the six months ended June 29, 2024, compared to the prior year periods was due primarily to an increase in expenses for litigation as well as restructuring associated primarily with Project Energize.

Previous wording

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

Current wording

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

Previous wording

Other (Income) Expense, net for the three months ended March 30, 2024 was comparable to the prior year period.

Current wording

Interest expense, net during the three and six months ended June 29, 2024 was comparable to the prior year periods.

Previous wording

The effective tax rate on the pre-tax loss for the three months ended March 30, 2024 was largely impacted by the year-to-date losses recognized in the various tax jurisdictions as well as the impacts of accounting for income taxes in interim reporting periods. As a result, a significant variation in the customary relationship between income tax expense and pre-tax book income may occur. Due to the net impact of planned inter-company intellectual property sales, estimated worldwide non-deductible expenses, as well as establishing a partial valuation allowance in the United States, we are projecting an income tax expense for the full year ended December 31, 2024, which results in an unusually high annual effective tax rate when applied to the forecasted pre-tax income for the year.

Current wording

The effective tax rate on the pre-tax loss for the three and six months ended June 29, 2024 was largely impacted by losses recognized in various tax jurisdictions, in both periods, as well as the impacts of accounting for income taxes in interim reporting periods. As a result, a significant variation in the customary relationship between income tax expense and pre-tax book income may occur. Due to the net impact of an inter-company intellectual property sale, estimated worldwide non-deductible expenses, as well as establishing a partial valuation allowance in the United States, we are projecting an income tax expense for the full year ended December 31, 2024, which results in an unusually high annual effective tax rate when applied to the forecasted pre-tax income for the year. Although a significant tax benefit has been recorded on the losses for the six months ended June 29, 2024, a tax expense has been recorded for the three months ended June 29, 2024, and as noted above, we are projecting an income tax expense for the full year ended December 31, 2024.