Prestige Consumer Healthcare (NYSE:PBH) reported first-quarter fiscal 2027 revenue growth of 6.5%, supported by broad-based category strength, the initial contribution from its Breathe Right acquisition and retailer order timing. The company raised its reported full-year outlook to incorporate Breathe Right and LaCorium Health while maintaining its prior outlook for organic revenue growth.
First-quarter revenue rose to $265.7 million from $249.5 million a year earlier. Organic revenue, excluding foreign exchange effects and the Breathe Right acquisition, increased 3.2%. Adjusted diluted earnings per share increased to $0.98 from $0.95, while adjusted EBITDA rose 5.5%.
Portfolio Strength Offsets Clear Eyes Supply Constraints
North America organic revenue increased 4.2%, led by gastrointestinal brands Fleet and Dramamine and dermatological growth driven by Compound W. The company also cited solid growth for TheraTears and Debrox, which helped offset weaker Clear Eyes sales amid continued supply constraints.
Lombardi said Prestige is investing in its Pillar5 sterile ophthalmic manufacturing facility to improve supply consistency and expand long-term capacity for Clear Eyes. The company expects output variability to continue during the first half of fiscal 2027, including the second quarter, before greater stability supports sequential improvement in eye-care shipments during the second half.
Clear Eyes represents less than 3% of sales today, according to Senior Vice President, General Counsel and Corporate Secretary Bill P’Pool. Lombardi described the effort to restore the brand as a multiyear process involving consistent supply, rebuilding safety stocks, restoring the full SKU offering and eventually increasing advertising and marketing support.
International organic revenue declined 2.1% in the quarter, reflecting the timing of distributor orders despite positive consumption trends. Prestige continues to expect the segment to return to its long-term organic growth target of at least 5% for the full year.
Chief Financial Officer and Chief Operating Officer Chris Sacco said e-commerce consumption continued to grow at a double-digit rate. However, some e-commerce order timing benefited the first quarter at the expense of the second quarter. Retailer order timing contributed roughly two percentage points of first-quarter growth, Sacco said.
Acquisitions Add Scale and Lift Outlook
Prestige completed the acquisition of the Breathe Right portfolio on June 12 and acquired Australia-based LaCorium Health on July 1. The Breathe Right portfolio contributed $5.9 million of first-quarter revenue.
Breathe Right is expected to generate approximately $200 million in annual revenue, with the flagship nasal strip brand accounting for most of that total. The company said the portfolio has been largely integrated into its operations, systems and warehouse network less than 60 days after the transaction closed.
Lombardi said Prestige sees growth opportunities for Breathe Right through social-media marketing, innovation and international expansion. Recent product introductions include Breathe Right Menthol and Breathe Right Sport, a sweat-resistant strip intended to improve airflow during exercise.
LaCorium is expected to contribute about $40 million in annualized revenue, primarily in Australia. Its Dermal Therapy brand holds positions in therapeutic skincare categories including eczema and cold sore treatments. Prestige said LaCorium employees have joined its Care Pharma office outside Sydney, while broader integration will continue over the rest of the fiscal year.
Management expects additional LaCorium synergies over the next one to two years through sales-force integration, marketing opportunities, distributor optimization and supply-chain efficiencies.
The acquisitions are expected to contribute approximately $190 million in fiscal 2027 revenue. Sacco said Breathe Right remains expected to provide about $0.25 of annualized earnings-per-share accretion in a normal environment, although the initial stub period and timing factors could reduce that contribution by a few cents in the near term.
Margins, Cash Flow and Debt Plans
Adjusted gross margin was approximately 55% in the first quarter, flat sequentially but down 120 basis points from the prior year due mainly to higher transportation costs and sales mix. Prestige now expects adjusted gross margin of slightly more than 57% in both the second quarter and full fiscal year, with the increase in outlook attributed entirely to the acquired businesses.
Advertising and marketing spending totaled $34.7 million, or 13% of sales, in the first quarter, reflecting the timing of marketing programs. The company expects advertising and marketing expense to be approximately 14.5% of sales for the full year and second quarter. Adjusted general and administrative expenses are expected to be about 10% of sales for the year, aided by acquisition-related scale.
Adjusted free cash flow reached a quarterly record of $83.7 million, driven largely by working-capital timing. Prestige raised its full-year adjusted free-cash-flow expectation to at least $270 million.
At June 30, net debt was approximately $2 billion. The company funded the Breathe Right acquisition through a new seven-year Term Loan B and cash on hand, with those resources also funding the LaCorium transaction. Prestige also issued $400 million of new unsecured notes to replace notes that were approaching maturity. Its earliest debt maturity is now 2031, and management said it intends to begin paying down prepayable debt during the remainder of fiscal 2027.
Fiscal 2027 Guidance Raised for Acquisitions
Prestige raised its fiscal 2027 revenue outlook to a range of $1.290 billion to $1.315 billion. The company maintained its expectation for organic revenue growth of 1% to 3%, saying the higher reported revenue outlook is entirely due to Breathe Right and LaCorium.
- Second-quarter revenue is projected at $328 million to $331 million, including both acquisitions.
- Second-quarter adjusted diluted EPS is expected to be approximately $1.06 to $1.08.
- Full-year adjusted diluted EPS is forecast at $4.55 to $4.65.
- Year-end leverage is expected to be just below 4 times.
Management expects a modest organic revenue decline in the second quarter because of order timing that benefited the first quarter, while still projecting organic revenue growth for the first half of the fiscal year.
Lombardi said consumer consumption trends remain stable in Prestige’s categories, though shoppers are increasingly focused on value. He cited continued growth in e-commerce and mass retail channels, where consumers can more readily compare prices.
About Prestige Consumer Healthcare (NYSE:PBH)
Prestige Consumer Healthcare, Inc is a leading manufacturer and marketer of branded over-the-counter (OTC) healthcare products. The company focuses on developing, acquiring and commercializing a diverse portfolio of non-prescription remedies designed to address common consumer health needs, including pain relief, cold and cough, digestive health, eye care, skin care and women’s health.
Key brands in Prestige’s portfolio include Clear Eyes (eye health), Carmex (lip care), Chloraseptic (sore throat relief), Dramamine (motion sickness), Rolaids (antacid), Monistat (women’s health), BC Powder (pain relief), Little Remedies (pediatric cold and gas relief) and TheraTears (dry eye therapy).
