Exchange: NYSE | Sector: Healthcare | Industry: Medical Distribution
Q2 2025
Published: Nov 7, 2024
Earnings Highlights
Revenue of $283.55M down 1% year-over-year
EPS of $1.09 increased by 1.9% from previous year
Gross margin of 55.5%
Net income of 54.38M
"Ron Lombardi: "Thanks to our diverse portfolio, we offset most of this decline in other business areas, led by strong and broad-based growth in our International segment and its Hydralyte brand."" - Ron Lombardi
Prestige Consumer Healthcare Inc reported Q2 2025 results showcasing resilience amid supply chain constraints and inflationary pressures, with revenues of $284 million reflecting a 0.97% decline YoY, largely attributed to Clear Eyes supply chain issues. Despite the minor decline in sales, the company's diversified portfolio enabled offsetting growth in the International segment, particularly through Hydralyte. Key financial metrics demonstrate stable earnings, with earnings per share (EPS) slightly increasing to $1.09, a 1.85% growth from the previous year. The company continues to progress debt reduction strategies, reducing total debt by $40 million this quarter, resulting in a leverage decline to 2.7x. Management remains optimistic about future performance supported by strategic brand initiatives and capital allocation.
Key Performance Indicators
Revenue
283.55M
QoQ: 6.14% | YoY:-0.97%
Gross Profit
157.38M
55.50% margin
QoQ: 12.16% | YoY:-1.65%
Operating Income
84.34M
QoQ: 17.06% | YoY:-4.43%
Net Income
54.38M
QoQ: 10.82% | YoY:1.53%
EPS
1.10
QoQ: 12.24% | YoY:1.85%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $283.5 million (Q2 2025), down from $286.3 million (Q2 2024).
**Net Income:** $54.4 million, a 1.53% increase YoY.
**EPS:** $1.09, up from $1.07 YoY.
**Gross Profit Margin:** 55.5%, slightly down from the previous year’s margin, reflecting supply chain costs.
**Debt to Equity Ratio:** 0.613, indicating manageable leveraged position.
**Comparison:**
Financial Highlights
Financial Overview:
- Revenue: $283.5 million (Q2 2025), down from $286.3 million (Q2 2024).
- Net Income: $54.4 million, a 1.53% increase YoY.
- EPS: $1.09, up from $1.07 YoY.
- Gross Profit Margin: 55.5%, slightly down from the previous year’s margin, reflecting supply chain costs.
- Debt to Equity Ratio: 0.613, indicating manageable leveraged position. Comparison:
- Revenue growth targeted at approximately 1% for fiscal 2025, compared to industry peers showing growth rates between 2% to 3%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
283.55M
-0.97%
6.14%
Gross Profit
157.38M
-1.65%
12.16%
Operating Income
84.34M
-4.43%
17.06%
Net Income
54.38M
1.53%
10.82%
EPS
1.10
1.85%
12.24%
Key Financial Ratios
currentRatio
3.56
grossProfitMargin
55.5%
operatingProfitMargin
29.7%
netProfitMargin
19.2%
returnOnAssets
1.64%
returnOnEquity
3.14%
debtEquityRatio
0.61
operatingCashFlowPerShare
$1.41
freeCashFlowPerShare
$1.37
priceToBookRatio
2.07
priceEarningsRatio
16.46
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Commentary:
- Ron Lombardi (CEO): "Our Q2 results exceeded the expectations we communicated back in August and improved on Q1. Sales of $284 million declined slightly due to Clear Eyes supply chain limitations and Q1 timing."
- Chris Sacco (CFO): "We generated $121.4 million in free cash flow, up double digits versus the prior year. We continue to maintain industry-leading free cash flow and are maintaining our outlook for the full year of $240 million or more."
These insights highlight challenges while emphasizing the company’s proactive measures to mitigate impacts and enhance shareholder value.
Ron Lombardi: "Thanks to our diverse portfolio, we offset most of this decline in other business areas, led by strong and broad-based growth in our International segment and its Hydralyte brand."
— Ron Lombardi
Chris Sacco: "We still anticipate a gross margin of approximately 56%. We still expect an increase from the prior year to be driven by pricing actions and cost savings that more than offset inflationary cost headwinds."
— Chris Sacco
Forward Guidance
Management expects a robust performance in the second half of the fiscal year with projected revenues of $1.125 billion to $1.14 billion, aligning with previous growth trajectories. They anticipate improvements in sales from Clear Eyes due to strategic investments in supply chain diversification. EPS guidance remains unchanged, targeting $4.40 to $4.46 for fiscal 2025, bolstered by continued efforts in debt repayment and operational efficiencies. Key investment themes to monitor include improvements in international sales and the performance of newly introduced brands.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PBH Focus
55.50%
29.70%
3.14%
16.46%
EVO
8.64%
-57.40%
-9.39%
-4.23%
SUPN
77.10%
10.80%
2.08%
18.32%
COLL
62.50%
32.70%
9.05%
13.49%
DCPH
99.50%
-1.38%
-12.00%
-6.16%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investors should consider Prestige Consumer Healthcare as a stable player in the healthcare sector with promising recovery potential, particularly as supply chain issues resolve. The company’s strong cash flow position provides flexibility for share repurchases and M&A opportunities, enhancing shareholder value. With balanced risks and growth potential, especially in international markets, the stock remains a strong candidate for those seeking exposure in the healthcare distribution sector. Monitoring the performance of Clear Eyes and Hydralyte will be crucial in assessing the mid- and long-term growth trajectory.
Key Investment Factors
Growth Potential
The healthcare market is projected for steady growth, particularly in the OTC segment where Prestige's diverse product lines can capture trends toward health and wellness. Additionally, growth in the international sector, especially with Hydralyte, reinforces a path to organic growth.
Profitability Risk
Ongoing supply chain constraints related to Clear Eyes remain a key risk factor, potentially impacting revenue continuity. The competitive landscape in e-commerce and international hydration markets adds pressure on pricing strategies and market share.
Financial Position
Prestige maintains a robust balance sheet with satisfactory liquidity (current ratio at 3.56) and a sustainable debt-to-equity ratio (0.613), providing strategic scope for investment and expansion.
SWOT Analysis
Strengths
Strong brand portfolio and diversified product lines in the OTC healthcare sector.
Solid performance in international markets, particularly Hydralyte.
Stable cash flow generation enabling strategic capital allocation.
Weaknesses
Dependence on third-party suppliers for major product lines, particularly Clear Eyes.
Challenges in maintaining consistent sales growth amidst competitive pressures.
Opportunities
Expanding e-commerce presence as consumer preferences shift toward online shopping.
Growth opportunities in the international market, particularly in hydration categories.
Threats
Increased competition in both domestic and international healthcare markets.
Continued economic inflationary impacts affecting cost structures.
Regulatory changes in the healthcare sector that could affect product compliance and costs.