Perrigo surprised its investors Thursday when it turned in much better than expected results for the second quarter, but it still reported a loss and continues to slim down and firm up as it works off debt. Part of that ongoing fiscal fitness program was its announced sale Thursday of its active pharmaceutical business for $110 million.
Perrigo announced it had sold the API business without providing any details, like a buyer, but later in the day, SK Capital said it had bought the business, which consists of a manufacturing plant in Israel and a portfolio of products.
The deal, which is slated to close in the fourth quarter of 2017, also includes a long-term supply agreement to produce for Perrigo APIs already on the market plus some still in the pipeline. The business will also get a new name once it changes hands.
SK pointed out it is not new to this kind of operation, already owning companies like Noramco and Tasmanian Alkaloids, the opiate supply and production business it acquired from Johnson & Johnson last year for a reported $800 million.
Perrigo’s API business previously included a plant in India, but the Ireland-domiciled company sold it to Strides Shasun in 2016 for about $14.8 million, a deal which also included a long-term supply agreement for the Indian company.
The sale of its API business in Israel is not the only operation Perrigo is lopping off its balance sheet soon. It also said it was selling its consumer health unit in Russia but didn’t say to whom or for how much.
That business is a piece of the OTC operations Perrigo picked up in its ill-fated buyout of Belgian OTC operator Omega Pharma in 2014 for $4.5 million. Sales across its international consumer health business were down 9% in the second quarter to $377 million.
Last year, CEO John Hendrickson had rejiggered the branded international consumer business into geographic areas and expressed an interest in selling off the resulting units in South Africa, Argentina and Russia.
But while sales in the international business remain soft, other units outperformed expectations. In what may be the last earnings report for Hendrickson, who is soon to retire, he got to announce that Perrigo’s branded generics unit offered up $240 million in second-quarter revenue, passing the Street’s $224 million expectations.
Even though the consumer health-oriented company reported a second-quarter loss of $70 million, or $0.49 a share, the results allowed the CEO to say Perrigo was upping new product guidance by $25 million and its generics revenue guidance by the same amount, pushing it to $950 million. That comes even as most of its peers were lowering outlooks because of depressed pricing in the U.S. generics market.