Investors Comforted as Perrigo Sticks to Forecast

As the pharma company's investors remain in "show me mode" with a new CEO at the helm, its maintained guidance may have offset revised earning results.

Author:: Sarah Pringle
Publish date:: May 17, 2016 12:24 PM EDT

As Perrigo (PRGO) - Get Report investors wait to see how the newly reshuffled C-suite executes on strategy, the drugmaker's reaffirmed full-year guidance seems to be making up for updated quarterly results that show a worse than previously reported loss.

Shares of the Dublin-headquartered company added about 1.7% to $90.27 late morning, regaining pre-market losses of as much as about 3%.

Within an announcement updating previously reported first quarter results, Perrigo disclosed late Monday that its GAAP net loss was $355 million, or $2.34 per diluted share over the period ended April 2. The company on May 11 had initially reported a GAAP net loss of $133 million, or diluted loss per share of 93 cents.

The updated results also cited a $24.6 million income tax benefit, as opposed to a previously reported $226.1 million benefit.

Likely to the the relief of investors, Perrigo once again reaffirmed its full-year guidance--a measurement TheStreet previously reported was of concern going into the quarter. The company expects its 2014 calendar year to see adjusted diluted EPS of $8.20 to $8.60 per share.

Reaching or exceeding these expectations will be important for Perrigo, according to company followers.

"Let's see if they can hit those numbers ... Every management team in pharma right now is in 'show me mode.' Investors want to see results," said BTIG analyst Tim Chiang on Tuesday. "There's so many different things that are weighing on the stock."

For instance, in connection with its €3.8 billion ($4.1 billion) acquisition of Belgian health-products provider Omega Pharma completed in March, Perrigo adjusted its associated impairment charge for the quarter to $273 million, up from a previously reported $194 million. This was the second straight quarter in which Perrigo wrote down the value of assets it acquired in the deal, having posted a $185 million associated impairment charge in its fourth quarter of 2015.

"Perrigo on the one side certainly has some solid businesses, but a lot of people are focused on the Omega transaction," Chiang said, pointing to the consecutive quarterly impairment charges.

Perrigo's Joseph Papa in late April resigned from his post as CEO to join Valeant Pharmaceuticals (VRX) as chief executive. But Perrigo's newly appointed chief executive John Hendrickson last week seemed to set a positive tone in a call with investors after posting Q1 results, communicating plans for new product launches and a more transparent management team.

Hendrickson, before taking the role of CEO late April following the departure of Joseph Papa, had held numerous management and operation leadership positions at Perrigo since 1989.

The maker of private-label over-the-counter products' last year held off a $34 billion hostile takeover bid by generics giant Mylan NV (MYL) - Get Report , after fewer than 50% of Perrigo shares were tendered to the offer.