Prestige cuts outlook as Clear Eyes supply falters

By Sophie Lindqvist

$336.3 million in fiscal second-quarter revenue, up 22.7% from $274.1 million a year earlier, gave Prestige Consumer Healthcare a stronger reported top line but a weaker full-year outlook. Recent acquisitions drove the increase, while production volatility at Clear Eyes forced management to lower fiscal 2027 guidance.

What did the quarter show?

Organic revenue, which excludes the Breathe Right and LaCorium acquisitions and foreign-currency effects, declined 1.6%, reflecting the timing of orders that benefited the first quarter. Adjusted diluted earnings per share (EPS), management’s adjusted per-share profit measure, rose approximately 6% to $1.13, as higher profits were partly offset by acquisition-related interest expense.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) grew at a double-digit rate, 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 EPS increased to $2.11 from $2.02.

Management cited growth in Dramamine, TheraTears, Compound W and Hydralyte. Those gains offered support, but Clear Eyes remained the binding constraint.

What changed in fiscal 2027 guidance?

Prestige now expects fiscal 2027 revenue of $1.28 billion to $1.29 billion and adjusted diluted EPS of $4.48 to $4.55. The revenue range implies approximately 2% organic growth excluding Clear Eyes, Chairman, President and CEO Ron Lombardi said.

Clear Eyes sales will total less than $20 million for the full year, with limited improvement expected in the second half. Production volatility began in late September and continued into October; with no safety stock available, the disruption immediately affects sales.

The revised outlook gives Prestige more time to prepare production lines for more consistent output in fiscal 2028, Lombardi said. He said “no one thing” was impacting production, while the company took a broader look at the issues as they emerged.

Third-quarter revenue is expected to reach approximately $328 million, with adjusted diluted EPS of $1.05. Organic revenue should decline year over year, largely because Clear Eyes faces a strong prior-year quarter.

Sacco said production needed for the third-quarter forecast was already complete, while the fourth-quarter forecast assumes output at levels achieved before the October shutdown. The forecast depends on restored production, without a safety buffer.

What does Pillar5 change?

Prestige acquired manufacturer Pillar5 last year to gain greater control over its eye-care supply. Lombardi said the company changed site management, and multiple regulatory inspections of the facility 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. Control improved. Continuity did not.

How much did acquisitions contribute?

The second quarter was Prestige’s first full quarter of owning 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 for the full fiscal year.

Breathe Right, now Prestige’s largest brand, was largely integrated in August. Prestige sees opportunities to reach more consumers seeking better sleep and expand into adjacent uses, including the recently launched Breathe Right Sports product.

LaCorium’s Dermal Therapy brand accounts for more than 70% of that portfolio’s sales and sells mainly in Australia and New Zealand. Lombardi expected major integration work to complete in November, with further synergies, or combined cost and revenue benefits, anticipated over time.

Asked whether the acquisitions produced surprises, Lombardi said both were “off to a strong start” and Prestige remained confident in their long-term opportunities. The acquired growth is visible; so is the debt attached to LaCorium.

What happens to cash and debt?

Adjusted free cash flow, a measure of cash available after capital spending and management adjustments, totaled $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, meaning debt less cash, stood at approximately $2.1 billion as of September 30, reflecting the roughly $150 million LaCorium purchase. Prestige expects a year-end leverage ratio, or net debt relative to EBITDA, of approximately four times and plans to prioritize debt reduction for the rest of the fiscal year.

About $90 million remained under the share repurchase authorization, but management’s near-term focus was deleveraging, or reducing borrowed money. Repurchases remain authorized; the balance sheet has first claim.

Is consumer demand still improving?

E-commerce consumption continued to grow at a mid-teens rate. Lombardi said shoppers sought better value and moved toward channels including mass retailers and e-commerce, while Sacco noted that online order patterns remained variable despite consistent consumption growth.

Growth is not predictability. Supply remains the sharper constraint.

What does Prestige sell?

Prestige Consumer Healthcare (NYSE: PBH) develops, acquires, markets and distributes over-the-counter health and wellness products across digestive, eye, ear, oral, pain, cold, allergy, feminine and dermatological care. Its portfolio focuses on established brands designed to address everyday healthcare needs.

Named brands include Dramamine and Bonine for motion sickness; BC and Goody’s for pain relief; Clear Eyes and Murine for eye and ear care; Chloraseptic for sore throats; Compound W for wart removal. Other names include Fleet for gastrointestinal health, Summer’s Eve for feminine care, TheraTears, Hydralyte, Breathe Right and Dermal Therapy.