Our discontinued operations consist of our prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel (collectively, the “RX business”).

On March 1, 2021, we announced a definitive agreement to sell our RX business to Altaris Capital Partners, LLC (“Altaris”). On July 6, 2021, we completed the sale of the RX business for aggregate consideration of $1.55 billion. The consideration includes a $53.3 million reimbursement related to an Abbreviated New Drug Application (“ANDA") for a generic topical lotion which Altaris delivered in cash to Perrigo pursuant to the terms of the Agreement during the three months ended April 2, 2022. The sale resulted in a pre-tax gain, net of professional

fees, of $47.5 million recorded in Other (income) expense, net on the Statement of Operations for discontinued operations. The gain included a $159.3 million increase from the write-off of foreign currency translation adjustment from Accumulated other comprehensive income. The transaction gain was subject to final settlements under the Agreement, which were finalized in the first quarter of 2022 with no change to the gain reported for the year ended December 31, 2021.

As of March 1, 2021, we determined that the RX business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results have been reflected in our consolidated financial statements as a discontinued operation and its assets and liabilities have been classified as held for sale. We ceased recording depreciation and amortization on the RX business assets from March 1, 2021. We have not allocated any general corporate overhead to the discontinued operation.

Under the terms of the agreement, we will provide transition services for up to 24 months after the close of the transaction, and we entered into a reciprocal supply agreement pursuant to which Perrigo will supply certain products to the RX business and the RX business will supply certain products to Perrigo. The supply agreements have a term of four years, extendable up to seven years by the party who is the purchaser of the products under such agreement. We also extended distribution rights to the RX business for certain OTC products owned and manufactured by Perrigo that may be fulfilled through pharmacy channels, in return for a share of the net profits.

We recognized $3.4 million of income related to the transition services agreement ("TSA") in Administration expense and collected $3.4 million during the three months ended April 2, 2022. We recognized $32.8 million of product sales and royalty income in Net sales related to the supply and distribution agreements with the RX business and collected $30.7 million during the three months ended April 2, 2022. We purchased $8.7 million of inventories related to the supply arrangement with the RX business and paid $14.3 million during the three months ended April 2, 2022.

Additionally, under the TSA, we net settle any receipts received or payments made on behalf of the RX business’ customers or vendors. As of April 2, 2022, we recorded a receivable in the amount of $14.8 million in Prepaid expenses and other current assets for the reimbursement due to Perrigo.

In the transaction, Perrigo retained certain pre-closing liabilities arising out of antitrust (refer to Note 1 5 - Contingencies under the header "Price-Fixing Lawsuits") and opioid matters and the Company’s Albuterol recall, subject to, in each case, Altaris' obligation to indemnify the Company for fifty percent of these liabilities up to an aggregate cap on Altaris' obligation of $50.0 million. We did not incur changes in liabilities or request payments from Altaris related to the indemnity of these liabilities during the three months ended April 2, 2022.

For the three months ended April 2, 2022, we incurred $1.1 million of net loss from discontinued operations, which primarily related to legal fees for retained liabilities and related tax benefit. Prior year income from discontinued operations, net of tax was as follows (in millions):


	Three months ended
		April 3, 2021
Net sales		$	200.1
Cost of sales		138.3
Gross profit		61.8

Operating expenses
Distribution		3.3
Research and development		13.4
Selling		7.4
Administration		18.2


Other operating expense (income)		(0.9)
Total operating expenses		41.4

Operating income		20.4


Interest expense, net		0.6
Other (income) expense, net		(1.5)

Income from discontinued operations before tax		21.3


Income tax benefit		(14.0)
Income from discontinued operations, net of tax		$	35.3

During the three months ended April 3, 2021, we incurred $9.3 million of separation costs related to the sale of the RX business, which are recorded in administration expenses.


	Three months ended
		April 3, 2021
Cash flows from discontinued operations operating activities:
Depreciation and amortization		$	15.3







Cash flows from discontinued operations investing activities:
Asset acquisitions		$	(69.7)
Additions to property, plant and equipment		(3.2)

Asset acquisitions related to discontinued operations consisted of two ANDAs purchased under a contractual arrangement. On December 31, 2020, we purchased an ANDA for a generic topical gel for $16.4 million, which was subsequently paid during the three months ended April 3, 2021 and on March 8, 2021, we purchased an ANDA for a generic topical lotion for $53.3 million. These ANDAs were acquired by Altaris as part of the RX business sale.