EX-99.1 2 exhibit991fy23-q4earningsr.htm EX-99.1 Document

Exhibit 99.1    


Prestige Consumer Healthcare Inc. Reports Record Fiscal Year 2023

◦Revenue of $285.9 Million in Q4 and $1,127.7 Million in Fiscal 2023
◦Organic Revenue Grew 8.0% in Q4 and 3.5% in Fiscal 2023
◦Achieved Leverage Ratio of 3.3x at Year End; Revising Long-term Leverage Target to Less than 3.0x
◦Initial Full-Year Fiscal 2024 Revenue and EPS Expectation of $1,135 to $1,140 Million and $4.27 to $4.32, respectively

TARRYTOWN, N.Y.--(GLOBE NEWSWIRE)-May 4, 2023-- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its fourth quarter and fiscal year ended March 31, 2023.

“We are pleased to exceed our fourth quarter and full-year fiscal 2023 guidance, which included organic growth above our long-term outlook and continued leverage reduction approaching 3.0x at year-end. Our consistent business performance for the full year is a result of our proven business strategy and the benefits of a diverse portfolio of brands in a dynamic consumer and retail environment. These attributes give us confidence in our business outlook for fiscal 2024 and our ability to drive shareholder value,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.


Fourth Fiscal Quarter Ended March 31, 2023

Reported revenues in the fourth quarter of fiscal 2023 of $285.9 million increased 7.1% from $266.9 million in the fourth quarter of fiscal 2022. Revenues increased 8.0% excluding the impact of foreign currency. The strong revenue performance for the quarter was broad based across North America and International OTC segments versus the prior year comparable period.

Reported net loss for the fourth quarter of fiscal 2023 was $240.6 million versus the prior year comparable quarter’s net income of $52.1 million. Diluted loss per share of $4.83 for the fourth quarter of fiscal 2023 compared to $1.02 diluted earnings per share in the prior year comparable period. Non-GAAP adjusted net income for the fourth quarter of fiscal 2023 was $53.7 million and compared to the prior year period’s adjusted net income of $46.3 million. Non-GAAP adjusted earnings per share of $1.07 per share for the fourth quarter of fiscal 2023 compared to $0.91 per share in the prior year comparable period.

Adjustments to net income in the fourth quarter of fiscal 2023 include non-cash tradename impairments associated primarily with the Company’s DenTek, Summer’s Eve, and TheraTears brand names, goodwill impairments and associated tax adjustments. These impairments were due mostly to the impact of higher discount rate assumptions. The brands continue to generate value and remain important components of the Company’s brand portfolio and are well positioned for long-term growth. The adjustment to net income in both fourth quarter fiscal 2022 and fiscal 2023 reflects a tax rate adjustment to account for discrete items.

Fiscal Year Ended March 31, 2023

Reported revenues for the fiscal year 2023 totaled $1,127.7 million, an increase of 3.8%, compared to revenues of $1,086.8 million for the fiscal year 2022. Revenues increased 3.5% excluding the impact of


foreign currency and a $12.6 million contribution from the acquisition of Akorn in Q1 fiscal 2023. Revenue growth for the fiscal year was driven by strong International OTC segment performance and improved demand for certain brands, categories and channels that had been impacted by the COVID-19 virus in the prior fiscal year.

Reported net loss for fiscal 2023 of $82.3 million and adjusted net income of $212.0 million compared to the prior year’s net income and adjusted net income of $205.4 million and $206.3 million, respectively. Fiscal 2023 diluted loss per share and adjusted diluted earnings per share of $1.65 and $4.21, respectively, compared to diluted earnings per share and adjusted earnings per share of $4.04 and $4.06 in the prior year, respectively.

Adjustments to net income in fiscal 2023 included non-cash tradename impairments associated primarily with the Company’s DenTek, Summer’s Eve, and TheraTears brand names, goodwill impairments and associated tax adjustments as well as a normalized tax rate adjustment to account for discrete items. Adjustments to net income in fiscal 2022 included integration, transition, purchase accounting, legal and various other costs associated with the Akorn acquisition as well as a loss on extinguishment of debt and the related income tax effects of the adjustments and a normalized tax rate adjustment to account for discrete items.

Free Cash Flow and Balance Sheet

The Company's net cash provided by operating activities for fourth quarter fiscal 2023 was $59.0 million, compared to $63.1 million during the prior year comparable period. Non-GAAP free cash flow in the fourth quarter of fiscal 2023 was $56.4 million compared to $60.0 million in the prior year comparable period. The Company's net cash provided by operating activities for fiscal 2023 was $229.7 million, compared to $259.9 million during the prior year. Non-GAAP free cash flow in fiscal 2023 was $221.9 million compared to $253.7 million in the prior year,
with the change in free cash flow largely due to an increase in working capital as the Company focused on increasing inventory to support service levels.

The Company's net debt position as of March 31, 2023 was approximately $1.3 billion, resulting in a covenant-defined leverage ratio of 3.3x.

Share Repurchase Program Authorization

On May 2, 2023 the Company’s Board of Directors authorized the repurchase of up to $25.0 million of the Company’s issued and outstanding common stock. Under the authorization, the Company may purchase common stock through May 2024 utilizing open market transactions, transactions structured through investment banking institutions, in privately-negotiated transactions, by direct purchases of common stock or a combination of the foregoing in compliance with the applicable rules and regulations of the Securities and Exchange Commission.

The timing of the purchases and the amount of stock repurchased is subject to the Company's discretion and will depend on market and business conditions, applicable legal and credit requirements and other corporate considerations including the Company’s historical strategy of pursuing accretive acquisitions and deleveraging.






Segment Review

North American OTC Healthcare: Segment revenues of $242.3 million for the fourth quarter fiscal 2023 compared to the prior year comparable quarter's segment revenues of $232.9 million. The revenue performance for the quarter was driven by strong performance across most of our key brands and categories compared to the prior year comparable period.

For the fiscal year 2023, reported revenues for the North American OTC segment were $973.8 million compared to $967.9 million in the prior year comparable period. The change was driven by increased demand for certain brands, categories and channels that had previously been impacted by the COVID-19 virus, most notably Cough & Cold products and an approximate $12.4 million contribution from the acquisition of Akorn in the first quarter fiscal 2023, partially offset by lower Women’s Health category sales.

International OTC Healthcare: Fiscal fourth quarter 2023 revenues of $43.6 million increased 28.0% from $34.0 million reported in the prior year comparable period. The revenue increase versus the prior year fourth quarter was driven by increased consumer demand across the segment’s key brands, partially offset by a $1.3 million currency headwind.

For fiscal year 2023, reported revenues for the International OTC Healthcare segment were $154.0 million, an increase of 29.5% over the prior year’s revenues of $118.9 million. The increase compared to the prior year was driven by large increases in the segment’s Australia business led by the Hydralyte brand, partially offset by a foreign currency headwind of $6.7 million. Segment revenues increased 37.1% on a constant currency basis.

Commentary Initial Outlook for Fiscal 2024

Ron Lombardi, Chief Executive Officer, stated, “We are pleased to generate record sales and earnings in fiscal 2023 that built off our very strong fiscal 2022 performance. Robust growth in multiple categories such as Cough & Cold and Gastrointestinal, as well as our International segment, helped offset a continued limiting supply chain. This continued growth speaks to the benefits of our diversified portfolio, our long-term brand-building efforts, and continued emphasis on customer service levels. In addition to investing in these areas we also reduced our leverage, achieving 3.3x year-end leverage thanks to our strong cash flow profile.”

“We anticipate our consistent financial profile and proven business attributes to drive results in the upcoming year. In fiscal 2024, we expect top-line organic growth of 1% to 2%. This builds off impressive organic growth over the last three years and incorporates the planned strategic exit of private label revenues that represent about one percentage point in annualized sales. We anticipate earnings growth largely following sales growth, but approximately mid-single-digits after excluding the impact of higher interest rates versus prior year thanks to the benefits of our business model and its strong financial profile and resulting cash flows.”

“Our history of strong performance continues to enable leverage reduction and additional financial flexibility. As a result, we now expect to operate with a targeted leverage of below 3x over time which allows further optionality for disciplined capital deployment. We would expect to be below this target by year-end fiscal 2024 with cash flow directed primarily to debt reduction.”



“This fiscal 2024 outlook and our strong operating fundamentals give us confidence in our ability to fuel a disciplined capital allocation that allows us to focus on long-term top- and bottom-line growth prospects. We look forward to executing our proven business strategy and leveraging our diverse portfolio of brands, retailers, and suppliers to create shareholder value,” Mr. Lombardi concluded.
Fiscal 2024 Outlook
Revenue
$1,135 to $1,140 million
Organic Revenue Growth
1% to 2%
Diluted E.P.S.
$4.27to $4.32
Free Cash Flow
$240 million or more


Fiscal Year End 2023 Conference Call, Accompanying Slide Presentation and Replay

The Company will host a conference call to review its fourth quarter and full-year fiscal 2023 results today, May 4, 2023 at 8:30 a.m. ET. The Company provides a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at www.prestigeconsumerhealthcare.com. To participate in the conference call via phone, participants may register for the call here to receive dial-in details and a unique pin. While not required, it is recommended to join 10 minutes prior to the event start. The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.

A conference call replay will be available for approximately one week following completion of the live call and can be accessed on the Company’s Investor Relations page.

Non-GAAP and Other Financial Information
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.

Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "guidance," "outlook," “look forward,” "projection," “plan,” “positioned,” "may," "will," "would," "expect," "anticipate," "believe,” "consistent," “confidence,” or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the Company's future operating results including revenues, organic growth, diluted earnings per share, and free cash flow, the Company’s use of cash flow to reduce debt and to delever, the impact of the planned strategic exit of private label revenues, the Company’s ability to grow. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those expected as a result of a variety of factors, including the impact of business and economic conditions, including as a result of COVID-19 and geopolitical instability, consumer trends, the impact of the Company’s advertising and marketing and new product development initiatives, customer inventory


management initiatives, fluctuating foreign exchange rates, competitive pressures, and the ability of the Company’s manufacturing operations and third party manufacturers and logistics providers and suppliers to meet demand for its products and to avoid inflationary cost increases and disruption as a result of labor shortages. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2022 and other periodic reports filed with the Securities and Exchange Commission.

About Prestige Consumer Healthcare Inc.
Prestige Consumer Healthcare is a leading consumer healthcare products company with sales throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s diverse portfolio of brands include Monistat® and Summer’s Eve® women's health products, BC® and Goody's® pain relievers, Clear Eyes® and TheraTears® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories, Chloraseptic® and Luden's® sore throat treatments and drops, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, Boudreaux’s Butt Paste® diaper rash ointments, Nix® lice treatment, Debrox® earwax remover, Gaviscon® antacid in Canada, and Hydralyte® rehydration products and the Fess® line of nasal and sinus care products in Australia. Visit the Company's website at www.prestigeconsumerhealthcare.com.





































Prestige Consumer Healthcare Inc.
Consolidated Statement of (Loss) Income and Comprehensive (Loss) Income
(Unaudited)

 Three Months Ended March 31,Year
 Ended March 31,
(In thousands, except per share data)2023 20222023 2022
Total Revenues285,869  266,936 1,127,725  1,086,812 
Cost of Sales      
Cost of sales excluding depreciation130,252 116,281 494,883 458,942 
Cost of sales depreciation1,853 1,793 7,548 7,224 
Cost of sales132,105 118,074 502,431 466,166 
Gross profit153,764  148,862 625,294  620,646 
Operating Expenses      
Advertising and marketing30,868 36,935 145,061 157,343 
General and administrative27,666 26,753 107,354 107,459 
Depreciation and amortization6,010 6,692 25,077 24,868 
Goodwill and tradename impairment370,217 1,057 370,217 1,057 
Total operating expenses434,761  71,437 647,709  290,727 
Operating (loss) income (280,997) 77,425 (22,415) 329,919 
Other expense (income)      
Interest expense, net18,976 15,973 69,164 64,287 
Loss on extinguishment of debt— — — 2,122 
Other expense (income), net(451)487 2,336 1,052 
Total other expense, net18,525  16,460 71,500  67,461 
(Loss) income before income taxes(299,522)60,965 (93,915)262,458 
(Benefit) provision for income taxes(58,970)8,879 (11,609)57,077 
Net (loss) income$(240,552) $52,086 $(82,306) $205,381 
(Loss) earnings per share:      
Basic$(4.83)$1.03 $(1.65)$4.09 
Diluted$(4.83)$1.02 $(1.65)$4.04 
Weighted average shares outstanding:      
Basic49,797 50,363 49,889 50,259 
Diluted49,797 50,972 49,889 50,842 
Comprehensive (loss) income, net of tax:
Currency translation adjustments(2,409)3,741 (12,076)(1,296)
Unrealized gain on interest rate swaps— 188 — 1,819 
Unrecognized net gain on pension plans334 246 334 246 
   Net loss on termination of pension plan — — (790)— 
Total other comprehensive (loss) income(2,075)4,175 (12,532)769 
Comprehensive (loss) income$(242,627)$56,261 $(94,838)$206,150 









Prestige Consumer Healthcare Inc.
Consolidated Balance Sheet
(Unaudited)

(In thousands)March 31,
20232022
Assets
Current assets 
Cash and cash equivalents$58,489 $27,185 
Accounts receivable, net of allowance of $20,205 and $19,720, respectively167,016 139,330 
Inventories162,121 120,342 
Prepaid expenses and other current assets4,117 6,410 
Total current assets391,743  293,267 
Property, plant and equipment, net70,412 71,300 
Operating lease right-of-use assets14,923 20,372 
Finance lease right-of-use assets, net4,200 6,858 
Goodwill527,553 578,976 
Intangible assets, net2,341,893 2,696,635 
Other long-term assets3,005 3,273 
Total Assets$3,353,729  $3,670,681 
Liabilities and Stockholders' Equity   
Current liabilities   
Accounts payable$62,743 $55,760 
Accrued interest payable15,688 4,437 
Operating lease liabilities, current portion6,926 6,360 
Finance lease liabilities, current portion2,834 2,752 
Other accrued liabilities72,524 74,113 
Total current liabilities160,715  143,422 
Long-term debt, net1,345,788 1,476,658 
Deferred income tax liabilities380,434  444,917 
Long-term operating lease liabilities, net of current portion9,876 16,088 
Long-term finance lease liabilities, net of current portion1,667 4,501 
Other long-term liabilities8,165 7,484 
Total Liabilities1,906,645  2,093,070 
Stockholders' Equity   
Preferred stock - $0.01 par value   
Authorized - 5,000 shares   
Issued and outstanding - None—  — 
Common stock - $0.01 par value   
Authorized - 250,000 shares   
     Issued – 54,857 shares at March 31, 2023 and 54,430 shares at March 31, 2022548 544 
Additional paid-in capital535,356 515,583 
Treasury stock, at cost – 5,165 shares at March 31, 2022 and 4,151 at March 31, 2022(189,114)(133,648)
Accumulated other comprehensive loss, net of tax(31,564)(19,032)
Retained earnings1,131,858 1,214,164 
Total Stockholders' Equity1,447,084  1,577,611 
Total Liabilities and Stockholders' Equity$3,353,729  $3,670,681 










Prestige Consumer Healthcare Inc.
Consolidated Statement of Cash Flows
(Unaudited)
 Year Ended March 31,
(In thousands)2023 2022
Operating Activities 
Net (loss) income$(82,306)$205,381 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization32,625 32,092 
Loss on sale or disposal of property and equipment273 271 
Deferred income taxes(60,765)9,979 
Amortization of debt origination costs4,364 4,230 
Stock-based compensation costs12,405 9,039 
Loss on extinguishment of debt— 2,122 
Non-cash operating lease cost6,311 6,706 
Impairment loss370,217 1,057 
Other 447 (9)
Changes in operating assets and liabilities, net of effects from acquisition:
Accounts receivable(24,927)(24,654)
Inventories(42,225)663 
Prepaid expenses and other current assets2,259 1,448 
Accounts payable7,258 9,154 
Accrued liabilities10,742 9,616 
Operating lease liabilities(6,687)(6,448)
Other(275)(725)
Net cash provided by operating activities229,716 259,922 
Investing Activities   
Purchases of property, plant and equipment(7,784)(9,642)
Acquisitions— (247,046)
Other(3,800)177 
Net cash used in investing activities(11,584) (256,511)
Financing Activities   
Term Loan repayments(135,000)(600,000)
Proceeds from refinancing of Term Loan— 597,000 
Borrowings under revolving credit agreement20,000 85,000 
Repayments under revolving credit agreement(20,000)(85,000)
Payment of debt costs— (6,111)
Payments of finance leases(2,752)(2,582)
Proceeds from exercise of stock options7,372 7,040 
Fair value of shares surrendered as payment of tax withholding(5,466)(2,916)
Repurchase of common stock(50,000)— 
Net cash used in financing activities(185,846) (7,569)
Effects of exchange rate changes on cash and cash equivalents(982)(959)
Increase (decrease) in cash and cash equivalents31,304  (5,117)
Cash and cash equivalents - beginning of year27,185 32,302 
Cash and cash equivalents - end of year$58,489  $27,185 
Interest paid$54,243 $61,364 
Income taxes paid$40,739 $46,568 



Prestige Consumer Healthcare Inc.
Consolidated Statement of Income
Business Segments
(Unaudited)

 Three Months Ended March 31, 2023
(In thousands)North American OTC
Healthcare		International OTC
Healthcare		Consolidated
Total segment revenues*$242,318 $43,551 $285,869 
Cost of sales114,836 17,269 132,105 
Gross profit127,482 26,282 153,764 
Advertising and marketing24,367 6,501 30,868 
Contribution margin$103,115 $19,781 122,896 
Other operating expenses**403,893 
Operating loss$(280,997)
*Intersegment revenues of $1.5 million were eliminated from the North American OTC Healthcare segment.
**Other operating expenses for the three months ended March 31, 2023 includes a tradename impairment charge of $321.4 million and a goodwill impairment charge of $48.8 million.

 Year Ended March 31, 2023
(In thousands)North American OTC
Healthcare		International OTC
Healthcare		Consolidated
Total segment revenues*$973,774 $153,951 $1,127,725 
Cost of sales441,844 60,587 502,431 
Gross profit531,930 93,364 625,294 
Advertising and marketing123,926 21,135 145,061 
Contribution margin$408,004 $72,229 480,233 
Other operating expenses** 502,648 
Operating loss $(22,415)
*Intersegment revenues of $4.3 million were eliminated from the North American OTC Healthcare segment.
**Other operating expenses for the year ended March 31, 2023 includes a tradename impairment charge of $321.4 million and a goodwill impairment charge of $48.8 million.













 Three Months Ended March 31, 2022
(In thousands)North American OTC
Healthcare		International OTC
Healthcare		Consolidated
Total segment revenues*$232,903 $34,033 $266,936 
Cost of sales104,345 13,729 118,074 
Gross profit 128,558 20,304 148,862 
Advertising and marketing32,084 4,851 36,935 
Contribution margin$96,474 $15,453 111,927 
Other operating expenses34,502 
Operating income$77,425 
*Intersegment revenues of $0.6 million were eliminated from the North American OTC Healthcare segment.

 Year Ended March 31, 2022
(In thousands)North American OTC
Healthcare		International OTC
Healthcare		Consolidated
Total segment revenues*$967,881 $118,931 $1,086,812 
Cost of sales419,162 47,004 466,166 
Gross profit548,719 71,927 620,646 
Advertising and marketing138,714 18,629 157,343 
Contribution margin$410,005 $53,298 463,303 
Other operating expenses133,384 
Operating income$329,919 
* Intersegment revenues of $3.0 million were eliminated from the North American OTC Healthcare segment.






About Non-GAAP Financial Measures
In addition to financial results reported in accordance with GAAP, we disclose certain Non-GAAP financial measures ("NGFMs"), including, but not limited to, Non-GAAP Organic Revenues, Non-GAAP Organic Revenue Change Percentage, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense Percentage, Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income (Loss), Non-GAAP Adjusted Diluted EPS, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow and Net Debt. We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions. We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below. In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.
These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies. These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below. Investors should not rely on any single financial measure when evaluating our business. We recommend investors review the GAAP financial measures included in this earnings release. When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.

NGFMs Defined
We define our NGFMs presented herein as follows:
•Non-GAAP Organic Revenues: GAAP Total Revenues excluding revenues associated with acquisitions where the acquired brands were not included in both periods presented and the impact of foreign currency exchange rates in the periods presented.
•Non-GAAP Organic Revenue Change Percentage: Calculated as the change in Non-GAAP Organic Revenues from prior year divided by prior year Non-GAAP Organic Revenues.
•Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus inventory step-up charges associated with acquisition.
•Non-GAAP Adjusted Gross Margin Percentage: Calculated as Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues.
•Non-GAAP Adjusted General and Administrative Expense: GAAP General and Administrative expenses minus costs associated with acquisition.
•Non-GAAP Adjusted General and Administrative Expense Percentage: Calculated as Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues.
•Non-GAAP EBITDA: GAAP Net Income (Loss) before interest expense, net, (benefit) provision for income taxes, and depreciation and amortization.
•Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues.
•Non-GAAP Adjusted EBITDA: Non-GAAP EBITDA less inventory step-up charges associated with acquisition, costs associated with acquisition in general and administrative expenses, goodwill and tradename impairment, and loss on extinguishment of debt.
•Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues.
•Non-GAAP Adjusted Net Income (Loss): GAAP Net Income (Loss) before inventory step-up charges associated with acquisition, costs associated with acquisition in general and administrative expenses, goodwill and tradename impairment, loss on extinguishment of debt, applicable tax impact associated with these items, and normalized tax rate adjustment.
•Non-GAAP Adjusted Diluted EPS: Calculated as Non-GAAP Adjusted Net Income (Loss), divided by the diluted weighted average number of shares outstanding during the period.


•Non-GAAP Free Cash Flow: Calculated as GAAP Net cash provided by operating activities less cash paid for capital expenditures.
•Non-GAAP Adjusted Free Cash Flow: Calculated as Non-GAAP free cash flow plus cash payments associated with acquisition.
•Net Debt: Calculated as total principal amount of debt outstanding ($1,360,000 at March 31, 2023 and $1,495,000 at March 31, 2022) less cash and cash equivalents ($58,489 at March 31, 2023 and $27,185 at March 31, 2022). Amounts in thousands.

The following tables set forth the reconciliations of each of our NGFMs to their most directly comparable financial measures presented in accordance with GAAP.

Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and related Non-GAAP Organic Revenue Change percentage:
Three Months Ended March 31,Year Ended
March 31,
2023202220232022
(In thousands)
GAAP Total Revenues$285,869 $266,936 $1,127,725  $1,086,812 
Revenue Change7.1 %3.8 %
Adjustments:
Revenues associated with acquisition (1)
— — (12,624)— 
Impact of foreign currency exchange rates— (2,120)— (9,372)
Total adjustments— (2,120)(12,624)(9,372)
Non-GAAP Organic Revenues$285,869$264,816$1,115,101$1,077,440
Non-GAAP Organic Revenue Change8.0 %3.5 %
(1) Revenues of our Akorn acquisition for the three months ended June 30, 2022 are excluded for purposes of calculating Non-GAAP organic revenues.

Reconciliation of GAAP Gross Profit and related GAAP Gross Profit percentage to Non-GAAP Adjusted Gross Margin
and related Non-GAAP Adjusted Gross Margin percentage:
Three Months Ended March 31,Year Ended
March 31,
2023202220232022
(In thousands)
GAAP Total Revenues$285,869  $266,936 $1,127,725  $1,086,812 
GAAP Gross Profit$153,764  $148,862 $625,294  $620,646 
GAAP Gross Profit as a Percentage of GAAP Total Revenue53.8 %55.8 %55.4 %57.1 %
Adjustments:
Inventory step-up charges associated with acquisition (1)
— — — 1,567 
Total adjustments— — — 1,567 
Non-GAAP Adjusted Gross Margin$153,764 $148,862 $625,294 $622,213 
Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues53.8 %55.8 %55.4 %57.3 %
(1) Inventory step-up charges related to our North American OTC Healthcare segment.















Reconciliation of GAAP General and Administrative Expense and related GAAP General and Administrative Expense percentage to Non-GAAP Adjusted General and Administrative expense and related Non-GAAP Adjusted General and Administrative Expense percentage:

Three Months Ended March 31,Year Ended
March 31,
2023202220232022
(In thousands)
GAAP General and Administrative Expense (1)
$27,666 $27,810 $107,354 108,516 
GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue9.7 %10.4 %9.5 %10.0 %
Adjustments:
Costs associated with acquisition (2)
— — — 5,127 
Total adjustments— — — 5,127 
Non-GAAP Adjusted General and Administrative Expense$27,666 $27,810 $107,354 $103,389 
Non-GAAP Adjusted General and Administrative Expense as a Percentage of GAAP Total Revenues9.7 %10.4 %9.5 %9.5 %
(1) Includes tradename impairment of $1.1 million in both the three months and year ended March 31, 2022.
(2) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Reconciliation of GAAP Net (Loss) Income to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA and related Non-GAAP Adjusted EBITDA Margin:
Three Months Ended March 31,Year Ended
March 31,
2023202220232022
(In thousands)
GAAP Net (Loss) Income$(240,552) $52,086 $(82,306) $205,381 
Interest expense, net18,976 15,973 69,164 64,287 
(Benefit) provision for income taxes(58,970)8,879 (11,609)57,077 
Depreciation and amortization7,863 8,485 32,625 32,092 
Non-GAAP EBITDA(272,683)85,423 7,874 358,837 
Non-GAAP EBITDA Margin(95.4)%32.0 %0.7 %33.0 %
Adjustments:
Inventory step-up charges associated with acquisition in Cost of Sales (1)
— — — 1,567 
Costs associated with acquisition in General and Administrative Expense (2)
— — — 5,127 
Goodwill and tradename impairment370,217 — 370,217 — 
Loss on extinguishment of debt— — — 2,122 
Total adjustments370,217 — 370,217 8,816 
Non-GAAP Adjusted EBITDA$97,534 $85,423 $378,091 $367,653 
Non-GAAP Adjusted EBITDA Margin34.1 %32.0 %33.5 %33.8 %
(1) Inventory step-up charges related to our North American OTC Healthcare segment.
(2) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.



Reconciliation of GAAP Net (Loss) Income and GAAP Diluted Earnings Per Share to Non-GAAP Adjusted Net Income (Loss) and related Non-GAAP Adjusted Earnings Per Share:
Three Months Ended March 31,Year Ended March 31,
20232023 Adjusted EPS20222022 Adjusted EPS20232023 Adjusted EPS20222022 Adjusted EPS
(In thousands, except per share data)
GAAP Net (Loss) Income and
Diluted EPS (1)
$(240,552)$(4.78)$52,086 $1.02 $(82,306)$(1.63)$205,381 $4.04 
Adjustments:
Inventory step-up charges and other costs associated with acquisition in Cost of Sales (2)
— — — — — — 1,567 0.03 
Costs associated with acquisition in General and Administrative Expense (3)
— — — — — — 5,127 0.10 
Goodwill and tradename impairment370,217 7.35 — — 370,217 7.35 — — 
Loss on extinguishment of debt— — — — — — 2,122 0.04 
Tax impact of adjustments (4)
(88,852)(1.76)— — (88,852)(1.76)(2,134)(0.04)
Normalized tax rate adjustment (5)
12,915 0.26 (5,753)(0.11)12,915 0.26 (5,753)(0.11)
Total adjustments294,280 5.85 (5,753)(0.11)294,280 5.85 929 0.02 
Non-GAAP Adjusted Net Income and Adjusted EPS$53,728 $1.07 $46,333 $0.91 $211,974 $4.21 $206,310 $4.06 
(1) Reported GAAP is calculated using diluted shares outstanding. Diluted shares outstanding are 50,358 for the three months ended March 31, 2023 and 50,384 for the year ended March 31, 2023.
(2) Inventory step-up charges related to our North American OTC Healthcare segment.
(3) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.
(4) The income tax adjustments are determined using applicable rates in the taxing jurisdictions in which the above adjustments relate and includes both current and deferred income tax expense (benefit) based on the specific nature of the specific Non-GAAP performance measure.
(5) Income tax adjustment to adjust for discrete income tax items.
Note: Amounts may not add due to rounding.

Reconciliation of GAAP Net (Loss) Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:
Three Months Ended March 31,Year Ended
March 31,
2023202220232022
(In thousands)
GAAP Net (Loss) Income$(240,552) $52,086 $(82,306) $205,381 
Adjustments:
Adjustments to reconcile net (loss) income to net cash provided by operating activities as shown in the Statement of Cash Flows309,410 13,207 365,877 65,487 
Changes in operating assets and liabilities as shown in the Statement of Cash Flows(9,871)(2,167)(53,855)(10,946)
Total adjustments299,539 11,040 312,022 54,541 
GAAP Net cash provided by operating activities58,987 63,126 229,716 259,922 
Purchases of property and equipment(2,558)(3,161)(7,784)(9,642)
Non-GAAP Free Cash Flow56,429 59,965 221,932 250,280 
Payments associated with acquisition (1)
— — — 3,465 
Non-GAAP Adjusted Free Cash Flow$56,429 $59,965 $221,932 $253,745 
(1) Payments related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.




Outlook for Fiscal Year 2024:

Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Free Cash Flow:
(In millions)
Projected FY'24 GAAP Net cash provided by operating activities$250 
Additions to property and equipment for cash(10)
Projected FY'24 Non-GAAP Free Cash Flow$240