Strategic Execution and Performance Attribution

• Management attributes the 8.3% CORE net sales decline primarily to a 'very challenging' market environment, specifically softer cough and cold incidence and retailer inventory destocking.

• The 'Three-S' plan (stabilize, streamline, strengthen) is credited with driving a 100 basis point volume share improvement in U.S. store brand OTC, with six of seven categories gaining share.

• Operational performance was weighed down by a $0.26 EPS headwind from prior-year manufacturing volume variances, which management views as a transitory legacy issue.

• The new category-led operating model is intended to leverage Perrigo's scale across 250+ molecules by focusing investments on fewer, larger brands in high-growth categories.

• Management highlights '360-degree innovation' in nicotine replacement therapy as a scalable model, expanding the addressable market to include vapers and dual users.

• The divestiture of the Dermacosmetics business in April is framed as a key milestone in simplifying the portfolio and enabling immediate debt reduction.

2026 Outlook and Strategic Assumptions

• Management reaffirmed full-year 2026 guidance, with earnings heavily weighted toward the second half (65% to 70% of CORE adjusted EPS) as manufacturing headwinds lap.

• The second-half recovery assumes a return to 'average' seasonal illness levels, noting that the recent cough and cold season was abnormally weak.

• Innovation is expected to be the single largest sales growth contributor in 2026, with 60% of the benefit projected for the second half, including new Infant Formula offerings.

• Management expects retailer inventory levels to positively adjust over time as consumption stabilizes, viewing the Q1 destocking as a pragmatic, temporary response by retailers.

• The company is evaluating pricing actions across both international and store brand portfolios to mitigate approximately $10 million in incremental costs from Middle East geopolitical pressures.

Structural Changes and Risk Factors

• A non-cash goodwill impairment charge of $331 million was recorded in Q1 following the reallocation of goodwill to new reporting units; management notes this has no impact on cash flows.

• Strategic reviews for the Infant Formula and Oral Care businesses remain ongoing, with a recent capacity rationalization in one formula facility aimed at streamlining costs.

• The company amended its $1 billion revolving credit facility to extend maturity to 2031, using it to repay a $421 million term loan to clear the maturity profile until 2029.

• Management flagged macroeconomic pressures in Europe as a headwind that led to lower-than-expected consumption levels in the Self Care segment.