Floundering Perrigo’s CFO is hitting the road—along with hundreds of other employees, who didn’t have quite as much say in the matter.
The Dublin drugmaker announced in a financial filing on Monday that it had approved a plan to chop 750 jobs, or 14% of its nonproduction workforce; 243 staffers have already taken the early retirement route, the company said. It expects the cuts to cost between $70 million and $80 million.
Longtime CFO Judy Brown will also make her exit, the latest departure in a series for Perrigo. She’s headed to Amgen in late April, RBC Capital Markets analyst Randall Stanicky wrote in a note to clients. Ron Winowiecki will step in as acting CFO when she leaves.
After more than 15 years at the company, Brown will be following several of Perrigo’s former leaders out the door. Earlier this month, the struggling pharma sent four directors packing in response to activist pressure, tagging one more for eventual departure. And less than a year ago, CEO Joseph Papa left the helm for Valeant.
One thing’s for sure: They won’t be missing anything good when it comes to the company’s financial outlook. Full-year guidance rolled out on Monday disappointed analysts “even after sharp cuts to Street models just four weeks ago,” Jefferies’ David Steinberg wrote in his own research note.
Perrigo expects sales of between $5.0 billion and $5.2 billion, along with adjusted diluted earnings of between $6.30 and $6.65 per share. “We had expected Perrigo to bracket $6.75 against our $6.92” and Wall Street’s $7.10, Stanicky noted, with Steinberg adding that “for the first time we can recall both revenue and EPS will decline—not a good storyline for an OTC-focused company.”
And the way the analysts see it, Perrigo's fortunes could still get worse. Bowing again to the demands of activist Starboard Value, Perrigo agreed to sell off its royalty stream on Biogen multiple sclerosis med Tysabri to Royalty Pharma for up to $2.85 billion, a move that helps delever Perrigo “but at the same time shrinks the EPS base by ~$2.20,” Steinberg wrote.
And now, Perrigo is continuing to weigh whether to do the same with its pharma business, a prospect that doesn't thrill analysts.
“Has anything actually changed except reducing leverage and shrinking the earnings base? It’s early but we’d say not really,” Steinberg wrote, adding, “The reality is that the consumer business needs to improve—and there are few positive signs.”