Perrigo settles insurance dispute for $98 million

Perrigo Company plc (NYSE:PRGO), a global provider of over-the-counter health and wellness solutions with annual revenues of $4.4 billion, has reached a settlement in its long-standing insurance coverage litigation, according to a recent filing with the U.S. Securities and Exchange Commission (SEC).

According to InvestingPro analysis, the company appears undervalued at its current market price of $25.73. The settlement, dated December 18, 2024, will see the company's insurers pay out $98 million in full resolution of claims related to securities litigation from the period of 2015 to 2017.

The agreement concludes a dispute with directors and officers (D&O) insurers over coverage obligations stemming from securities actions that arose during a turbulent period for the company. Perrigo will receive the settlement amount before the end of the current fiscal year, which will help offset legal expenses and settlement costs incurred from related securities actions, including a class action in the U.S. District Court for the District of New Jersey.

Under the terms of the settlement, Perrigo will relinquish its rights under the D&O insurance policies for 2015 and 2016 and withdraw any related claims under the policies for 2017 and 2018. This move effectively closes the chapter on the securities litigation that has shadowed the company since the mid-2010s.

The SEC filing also contained a cautionary note, reminding readers that forward-looking statements are subject to risks and uncertainties and that actual results could differ materially. The company's financial condition and the potential impact of the settlement are discussed in detail in Perrigo's SEC filings, including the Form 10-K for the year ended December 31, 2023, and subsequent filings.

Notably, InvestingPro reports that four analysts have recently revised their earnings estimates upward, with the company expected to return to profitability this year. For deeper insights into Perrigo's financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The settlement is a significant financial development for Perrigo, aiming to resolve uncertainties that have lingered over its financial reporting and management practices. Investors and interested parties are directed to the company's SEC filings for further information on the company's business and the terms of the settlement. This news is based on a press release statement issued by Perrigo.

In other recent news, Perrigo Company plc has announced its third-quarter financial results, which showed a mix of challenges and strategic growth initiatives. Despite a 3.2% year-over-year decrease in net sales, Perrigo reported a 21.3% growth in operating income and a 27% increase in earnings per share (EPS) to $0.81.

The company also reaffirmed its adjusted EPS guidance for 2024, signaling its confidence in strategic initiatives such as Project Energize and supply chain improvements.

The company's infant formula segment demonstrated signs of recovery, with a 3% increase in net sales year-over-year. Perrigo is focusing on stabilizing this area and capitalizing on growth opportunities in over-the-counter medications. Moreover, the company aims to enhance free cash flow and continue deleveraging its balance sheet.

Despite these positive developments, Perrigo experienced a 7.5% decrease in year-to-date net sales, impacted by challenges in the infant formula segment and seasonal demand for certain products.

However, the company's Supply Chain Reinvention is expected to save $100 million to $120 million annually by 2025. These are among the recent developments in the company's ongoing efforts to improve its financial performance and market position.

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