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Prestige Consumer (PBH) Adds TheraTears to Its Eye Care Portfolio

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Prestige Consumer Healthcare Inc. (PBH - Free Report) has successfully concluded the acquisition of TheraTears and four other over-the-counter consumer brands across the VMS and Cough & Cold categories from Akorn Operating Company LLC. The deal worth $230 million, in cash, was initially announced on May 27 and has met all the terms of the asset purchase agreement. This move is likely to be accretive to Prestige Consumer’s eye care portfolio.

The asset agreement is expected to generate tax benefits of roughly $30 million and an annual EBITDA of approximately $20 million. Also, the transaction will contribute roughly $60 million to revenues, 10 cents to earnings per share and $13 million to operating cash flow, on an annual basis.

Notably, the TheraTears eye care brand accounts for nearly 80% of Akorn’s portfolio revenues. The brand also boasts a long record of market share gains and revenue growth in the dry eye category. As a result, the addition of TheraTears is likely to enhance Prestige Consumer’s eye care category, which already includes notable products from the iconic Clear Eyes brand.  

What Else Should You Know?

Prestige Consumer has been gaining from solid market share brand positions, efficient marketing efforts, diverse brands and strong e-commerce initiatives. The company’s fourth-quarter fiscal 2021 results reflect gains from its e-commerce investments. Courtesy of its constant investments, the company has a greater share in the e-commerce channel compared with brick and mortar. As a result, e-commerce sales doubled and constituted nearly 11% of the company’s revenues in fiscal 2021.

Encouragingly, management expects these factors to act as key growth drivers for fiscal 2022 and beyond. Moreover, it envisions a relatively stable performance compared with fiscal 2021. Also, fiscal 2022 organic growth is projected to be 1.5-2%, in sync with the company’s long-term expectations for its leading brand portfolio, barring some categories that are hurt by the pandemic. Further, strong cash flow along with stringent cost management is likely to result in low-double-digit growth in earnings. Notably, fiscal 2021 adjusted earnings per share are projected to be $3.58 or more along with revenues of nearly $957-$962 million.

Shares of this Zacks Rank #3 (Hold) company have gained 23% in the past three months against the industry’s decline of 0.2%.

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