Prestige Consumer Healthcare (NYSE:PBH) reported fiscal second-quarter revenue growth of 22.7%, driven by its recent acquisitions, but lowered its full-year outlook as production disruptions continued to constrain its Clear Eyes brand.
The consumer healthcare company reported revenue of $336.3 million, up from $274.1 million a year earlier. Excluding foreign currency effects and the Breathe Right and LaCorium acquisitions, revenue declined 1.6%, which management attributed to the timing of orders that benefited the first quarter.
Adjusted diluted earnings per share rose approximately 6% to $1.13, as higher profits were partially offset by interest expense related to the acquisitions. Adjusted EBITDA grew by double digits, with a margin of approximately 33.6%, according to CFO and COO Christine Sacco.
For the first six months of fiscal 2027, organic revenue grew 0.7%, while adjusted diluted earnings per share increased to $2.11 from $2.02 a year earlier. Management cited growth in brands including Dramamine, TheraTears, Compound W and Hydralyte.
Clear Eyes supply problems weigh on outlook
Prestige now expects fiscal 2027 revenue of $1.28 billion to $1.29 billion and adjusted diluted earnings per share of $4.48 to $4.55. The revenue outlook implies approximately 2% organic growth excluding Clear Eyes, Chairman, President and CEO Ron Lombardi said.
Lombardi said production volatility began in late September and continued into October. With no safety stock available, the disruption has an immediate effect on sales. The revised outlook allows more time to prepare production lines for more consistent output in fiscal 2028, he said.
The company now forecasts less than $20 million in full-year Clear Eyes sales, with limited improvement expected in the second half. Sacco said the production needed for the third-quarter forecast had already been completed, while the fourth-quarter forecast assumes output at levels achieved before the October shutdown.
“There’s no one thing that’s impacting production,” Lombardi said during the question-and-answer session. He added that the company was taking a broader look at the issues as they emerged.
Prestige acquired manufacturer Pillar5 last year to gain greater control over its eye-care supply. Lombardi said the company had made site management changes and that multiple regulatory inspections of the facility had concluded favorably. He also described out-of-stocks across parts of the broader eye-care industry, while noting that dry-eye products generally had not experienced the same disruptions.
For the third quarter, Prestige expects revenue of approximately $328 million and adjusted diluted earnings per share of $1.05. Organic revenue is expected to decline year over year, largely because Clear Eyes is being compared with a strong quarter in the prior year.
Acquisitions support growth
The second quarter marked Prestige’s first full quarter of ownership of both Breathe Right and LaCorium. The acquisitions contributed $71 million in revenue during the first half, and management maintained its expectation for approximately $190 million in combined revenue from the businesses for the full fiscal year.
Lombardi said Breathe Right, now Prestige’s largest brand, was largely integrated in August. The company sees opportunities to reach more consumers seeking better sleep and to expand into adjacent uses, including with the recently launched Breathe Right Sports product.
LaCorium’s Dermal Therapy brand accounts for more than 70% of that portfolio’s sales and is sold mainly in Australia and New Zealand. Major integration work was expected to be completed in November, Lombardi said, with further synergies anticipated over time.
Asked whether the acquisitions had produced any surprises, Lombardi said both were off to a strong start and that the company remained confident in their long-term opportunities.
Cash flow and debt reduction
Adjusted free cash flow was $123 million in the first half, down from a year earlier because of working-capital timing. Prestige now expects at least $265 million for the full year, a slight reduction that Sacco attributed to the updated revenue forecast and higher expected interest expense.
Net debt stood at approximately $2.1 billion as of September 30, reflecting the roughly $150 million LaCorium purchase. Prestige expects a year-end leverage ratio of approximately four times and plans to prioritize debt reduction for the rest of the fiscal year.
Sacco said the company had about $90 million remaining under its share repurchase authorization, but that its near-term focus would be deleveraging.
Management also said e-commerce consumption continued to grow at a mid-teens rate. Lombardi said shoppers were seeking better value and moving toward channels including mass retailers and e-commerce, while Sacco noted that online order patterns remained variable despite consistent consumption growth.
About Prestige Consumer Healthcare (NYSE:PBH)
Prestige Consumer Healthcare Inc (NYSE: PBH) is a consumer healthcare company that develops, acquires, markets and distributes over-the-counter health and wellness products. Its portfolio is focused on established brands designed to address everyday healthcare needs, including digestive health, eye and ear care, oral care, pain relief, cold and allergy symptoms, feminine care and dermatological conditions.
The company’s brands include Dramamine and Bonine for motion-sickness relief; BC and Goody’s for pain relief; Clear Eyes and Murine for eye and ear care; Chloraseptic for sore-throat relief; Compound W for wart removal; Fleet for gastrointestinal health; and Summer’s Eve for feminine care.
