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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to _____

Commission File Number: 001-32433
PRESTIGE CONSUMER HEALTHCARE INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware |  | 20-1297589
(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

660 White Plains Road
Tarrytown, New York 10591
(Address of Principal Executive Offices) (Zip Code)
(914) 524-6800

(Registrant's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common stock, par value $0.01 per share | PBH | New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☒ |  |  | Accelerated Filer | ☐
Non-Accelerated Filer | ☐ |  |  | Smaller Reporting Company | ☐
|  |  |  | Emerging Growth Company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of July 30, 2021, there were 50,059,989 shares of common stock outstanding.

Prestige Consumer Healthcare Inc.
Form 10-Q
Index

PART I. | FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended June 30, 2021 and 2020 (unaudited) | 2
| Condensed Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021 (unaudited) | 3
| Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended June 30, 2021 and 2020 (unaudited) | 4
| Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2021 and 2020 (unaudited) | 5
| Notes to Condensed Consolidated Financial Statements (unaudited) | 6
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31
Item 4. | Controls and Procedures | 31
PART II. | OTHER INFORMATION |
Item 1A. | Risk Factors | 32
Item 2. | Issuer Purchases of Equity Securities | 32
Item 5. | Other Information | 32
Item 6. | Exhibits | 34
| Signatures | 35

Trademarks and Trade Names
Trademarks and trade names used in this Quarterly Report on Form 10-Q are the property of Prestige Consumer Healthcare Inc. or its subsidiaries, as the case may be. We have italicized our trademarks or trade names when they appear in this Quarterly Report on Form 10-Q.
-1-

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)

|  |  | Three Months Ended June 30,
(In thousands, except per share data) |  |  |  |  | 2021 |  | 2020
Revenues |  |  |  |  |  |  |
Net sales |  |  |  |  | $ | 269,172 |  |  | $ | 229,384 |
Other revenues |  |  |  |  | 9 |  |  | 10 |
Total revenues |  |  |  |  | 269,181 |  |  | 229,394 |
Cost of Sales |  |  |  |  |  |  |
Cost of sales excluding depreciation |  |  |  |  | 108,335 |  |  | 94,124 |
Cost of sales depreciation |  |  |  |  | 1,834 |  |  | 1,402 |
Cost of sales |  |  |  |  | 110,169 |  |  | 95,526 |
Gross profit |  |  |  |  | 159,012 |  |  | 133,868 |
Operating Expenses |  |  |  |  |  |  |
Advertising and marketing |  |  |  |  | 39,439 |  |  | 27,750 |
General and administrative |  |  |  |  | 22,471 |  |  | 19,934 |
Depreciation and amortization |  |  |  |  | 5,760 |  |  | 6,065 |
Total operating expenses |  |  |  |  | 67,670 |  |  | 53,749 |
Operating income |  |  |  |  | 91,342 |  |  | 80,119 |
Other (income) expense |  |  |  |  |  |  |
Interest expense, net |  |  |  |  | 15,077 |  |  | 21,941 |
Other (income) expense, net |  |  |  |  | (105) |  |  | 10 |
Total other expense, net |  |  |  |  | 14,972 |  |  | 21,951 |
Income before income taxes |  |  |  |  | 76,370 |  |  | 58,168 |
Provision for income taxes |  |  |  |  | 18,615 |  |  | 14,462 |
Net income |  |  |  |  | $ | 57,755 |  |  | $ | 43,706 |
Earnings per share: |  |  |  |  |  |  |
Basic |  |  |  |  | $ | 1.15 |  |  | $ | 0.87 |
Diluted |  |  |  |  | $ | 1.14 |  |  | $ | 0.86 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic |  |  |  |  | 50,139 |  |  | 50,264 |
Diluted |  |  |  |  | 50,671 |  |  | 50,808 |
Comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Currency translation adjustments |  |  |  |  | (1,492) |  |  | 10,590 |
Unrealized gain on interest rate swaps |  |  |  |  | 520 |  |  | 309 |
Total other comprehensive (loss) income |  |  |  |  | (972) |  |  | 10,899 |
Comprehensive income |  |  |  |  | $ | 56,783 |  |  | $ | 54,605 |

See accompanying notes.
-2-

Prestige Consumer Healthcare Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands) | June 30, 2021 |  | March 31, 2021
Assets |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 163,624 |  |  | $ | 32,302 |
Accounts receivable, net of allowance of $14,659 and $16,457, respectively | 130,346 |  |  | 114,671 |
Inventories | 105,546 |  |  | 114,959 |
Prepaid expenses and other current assets | 9,008 |  |  | 7,903 |
Total current assets | 408,524 |  |  | 269,835 |
Property, plant and equipment, net | 69,825 |  |  | 70,059 |
Operating lease right-of-use assets | 22,345 |  |  | 23,722 |
Finance lease right-of-use assets, net | 8,344 |  |  | 8,986 |
Goodwill | 577,840 |  |  | 578,079 |
Intangible assets, net | 2,469,714 |  |  | 2,475,729 |
Other long-term assets | 2,522 |  |  | 2,863 |
Total Assets | $ | 3,559,114 |  |  | $ | 3,429,273 |
Liabilities and Stockholders' Equity |  |  |
Current liabilities |  |  |
Accounts payable | $ | 30,963 |  |  | $ | 45,978 |
Accrued interest payable | 17,067 |  |  | 6,312 |
Operating lease liabilities, current portion | 5,974 |  |  | 5,858 |
Finance lease liabilities, current portion | 2,607 |  |  | 2,588 |
Other accrued liabilities | 68,435 |  |  | 61,402 |
Total current liabilities | 125,046 |  |  | 122,138 |
Long-term debt, net | 1,545,352 |  |  | 1,479,653 |
Deferred income tax liabilities | 439,428 |  |  | 434,050 |
Long-term operating lease liabilities, net of current portion | 18,329 |  |  | 19,706 |
Long-term finance lease liabilities, net of current portion | 6,157 |  |  | 6,816 |
Other long-term liabilities | 8,555 |  |  | 8,612 |
Total Liabilities | 2,142,867 |  |  | 2,070,975 |
Commitments and Contingencies — Note 16 |  |  |
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 - 54,211 shares at June 30, 2021 and 53,999 shares at March 31, 2021 | 542 |  |  | 540 |
Additional paid-in capital | 503,588 |  |  | 499,508 |
Treasury stock, at cost - 4,151 shares at June 30, 2021 and 4,088 shares at March 31, 2021 | (133,648) |  |  | (130,732) |
Accumulated other comprehensive loss, net of tax | (20,773) |  |  | (19,801) |
Retained earnings | 1,066,538 |  |  | 1,008,783 |
Total Stockholders' Equity | 1,416,247 |  |  | 1,358,298 |
Total Liabilities and Stockholders' Equity | $ | 3,559,114 |  |  | $ | 3,429,273 |

See accompanying notes.
-3-

Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)

| Three Months Ended June 30, 2021
| Common Stock |  | Additional Paid-in Capital |  | Treasury Stock |  | Accumulated Other Comprehensive Loss |  |  |  | Retained Earnings |  | Totals
(In thousands) | Shares |  | Par Value |  |  | Shares |  | Amount |  |  |  |
Balances at March 31, 2021 | 53,999 |  |  | $ | 540 |  |  | $ | 499,508 |  |  | 4,088 |  |  | $ | (130,732) |  |  | $ | (19,801) |  |  |  |  | $ | 1,008,783 |  |  | $ | 1,358,298 |
Stock-based compensation | — |  |  | — |  |  | 1,878 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 1,878 |
Exercise of stock options | 68 |  |  | — |  |  | 2,204 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 2,204 |
Issuance of shares related to restricted stock | 144 |  |  | 2 |  |  | (2) |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |
Treasury share repurchases | — |  |  | — |  |  | — |  |  | 63 |  |  | (2,916) |  |  | — |  |  |  |  | — |  |  | (2,916) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 57,755 |  |  | 57,755 |
Comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (972) |  |  |  |  | — |  |  | (972) |
Balances at June 30, 2021 | 54,211 |  |  | $ | 542 |  |  | $ | 503,588 |  |  | 4,151 |  |  | $ | (133,648) |  |  | $ | (20,773) |  |  |  |  | $ | 1,066,538 |  |  | $ | 1,416,247 |

| Three Months Ended June 30, 2020
| Common Stock |  | Additional Paid-in Capital |  | Treasury Stock |  | Accumulated Other Comprehensive Income (Loss) |  |  |  | Retained Earnings |  | Totals
(In thousands) | Shares |  | Par Value |  |  | Shares |  | Amount |  |  |  |
Balances at March 31, 2020 | 53,805 |  |  | $ | 538 |  |  | $ | 488,116 |  |  | 3,719 |  |  | $ | (117,623) |  |  | $ | (44,161) |  |  |  |  | $ | 844,101 |  |  | $ | 1,170,971 |
Stock-based compensation | — |  |  | — |  |  | 1,464 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 1,464 |
Exercise of stock options | 60 |  |  | — |  |  | 1,216 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 1,216 |
Issuance of shares related to restricted stock | 74 |  |  | 1 |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |
Treasury share repurchases | — |  |  | — |  |  | — |  |  | 31 |  |  | (1,242) |  |  | — |  |  |  |  | — |  |  | (1,242) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 43,706 |  |  | 43,706 |
Comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,899 |  |  |  |  | — |  |  | 10,899 |
Balances at June 30, 2020 | 53,939 |  |  | $ | 539 |  |  | $ | 490,795 |  |  | 3,750 |  |  | $ | (118,865) |  |  | $ | (33,262) |  |  |  |  | $ | 887,807 |  |  | $ | 1,227,014 |

See accompanying notes.
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Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

| Three Months Ended June 30,
(In thousands) | 2021 |  | 2020
Operating Activities |  |  |
Net income | $ | 57,755 |  |  | $ | 43,706 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 7,594 |  |  | 7,467 |
Loss on disposal of property and equipment | 26 |  |  | 42 |
Deferred income taxes | 5,876 |  |  | 6,147 |
Amortization of debt origination costs | 759 |  |  | 1,400 |
Stock-based compensation costs | 1,878 |  |  | 1,464 |
Non-cash operating lease cost | 1,691 |  |  | 1,831 |
Other | — |  |  | 50 |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | (15,879) |  |  | 39,734 |
Inventories | 9,384 |  |  | 51 |
Prepaid expenses and other current assets | (1,049) |  |  | (4,019) |
Accounts payable | (15,551) |  |  | (32,386) |
Accrued liabilities | 18,439 |  |  | 11,588 |
Operating lease liabilities | (1,578) |  |  | (1,812) |
Other | (40) |  |  | (109) |
Net cash provided by operating activities | 69,305 |  |  | 75,154 |
Investing Activities |  |  |
Purchases of property, plant and equipment | (1,500) |  |  | (2,553) |
Other | 177 |  |  | — |
Net cash used in investing activities | (1,323) |  |  | (2,553) |
Financing Activities |  |  |
Term loan repayments | (20,000) |  |  | (56,000) |
Borrowings under revolving credit agreement | 85,000 |  |  | — |
Repayments under revolving credit agreement | — |  |  | (55,000) |
Payments of finance leases | (638) |  |  | (336) |
Proceeds from exercise of stock options | 2,204 |  |  | 1,216 |
Fair value of shares surrendered as payment of tax withholding | (2,916) |  |  | (1,242) |
Net cash provided by (used in) financing activities | 63,650 |  |  | (111,362) |
Effects of exchange rate changes on cash and cash equivalents | (310) |  |  | 1,942 |
Increase (decrease) in cash and cash equivalents | 131,322 |  |  | (36,819) |
Cash and cash equivalents - beginning of period | 32,302 |  |  | 94,760 |
Cash and cash equivalents - end of period | $ | 163,624 |  |  | $ | 57,941 |
Interest paid | $ | 3,389 |  |  | $ | 5,571 |
Income taxes paid | $ | 2,388 |  |  | $ | 2,182 |

See accompanying notes.
-5-

Prestige Consumer Healthcare Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
1. Business and Basis of Presentation
Nature of Business
Prestige Consumer Healthcare Inc. (referred to herein as the “Company” or “we,” which reference shall, unless the context requires otherwise, be deemed to refer to Prestige Consumer Healthcare Inc. and all of its direct and indirect 100% owned subsidiaries on a consolidated basis) is engaged in the development, manufacturing, marketing, sales and distribution of over-the-counter (“OTC”) healthcare products to mass merchandisers, drug, food, dollar, convenience and club stores and e-commerce channels in North America (the United States and Canada), and in Australia and certain other international markets. Prestige Consumer Healthcare Inc. is a holding company with no operations and is also the parent guarantor of the senior credit facility and the senior notes described in Note 7 to these Condensed Consolidated Financial Statements.
Coronavirus Outbreak
In January 2020, the World Health Organization ("WHO") announced a global health crisis due to a new strain of coronavirus ("COVID-19"). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. This pandemic has caused significant volatility in the United States and global economies. We expect economic conditions will continue to be highly volatile and uncertain and could affect demand for our products and put pressure on prices. We experienced a temporary but significant decline in consumer consumption of our brands in the first quarter of fiscal 2021, followed by more stable consumption and customer orders over the remainder of the year. Generally, throughout the pandemic some categories were positively impacted (for instance, Women’s Health, Oral Care and Dermatological) and some categories negatively impacted (for instance, Cough & Cold and Gastrointestinal). The positively impacted categories benefited from the consumer shift to over-the-counter healthcare products as consumers increased their focus on hygiene and self-care at home related to COVID-19. The declining categories were impacted by reduced incidence levels and usage rates due to shelter-at-home restrictions and limited travel-related activity. In the first quarter of fiscal 2022, we experienced solid consumer consumption and share gains across most of our brand portfolio. Our business also benefited from a significant increase in demand in certain travel-related categories and channels previously impacted by the COVID-19 virus.
We have continued to see changes in the purchasing patterns of our consumers, including the frequency of visits by consumers to retailers and a shift in many markets to purchasing our products online. Although we have not experienced a material disruption to our overall supply chain to date, the environment remains uncertain. To date, the pandemic has not had a material negative impact on our operations, overall demand for most of our products or resulting aggregate sales and earnings, and, as such, it has also not negatively impacted our liquidity position. We continue to generate operating cash flows to meet our short-term liquidity needs. These circumstances could change in this dynamic, unprecedented environment. If the outbreak continues to spread, it may materially affect our operations and those of third parties on which we rely, including causing disruptions in the supply and distribution of our products. We may need to limit operations and may experience material limitations in employee resources. The extent to which COVID-19 impacts our results and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, and the actions to contain COVID-19 or treat its impact, among others. We do not yet know the full extent of its impacts on our business or the global economy. However, these effects could have a material, adverse impact on our liquidity, capital resources, and results of operations and those of the third parties on which we rely.
Basis of Presentation
The unaudited Condensed Consolidated Financial Statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, these Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, that are considered necessary for a fair statement of our consolidated financial position, results of operations and cash flows for the interim periods presented. Our fiscal year ends on March 31 st of each year. References in these Condensed Consolidated Financial Statements or related notes to a year (e.g., 2022) mean our fiscal year ending or ended on March 31 st of that year. Operating results for the three months ended June 30, 2021 are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2022. These unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Although these estimates are
-6-

based on our knowledge of current events and actions that we may undertake in the future, actual results could differ from those estimates. Our most significant estimates include those made in connection with the valuation of intangible assets, stock-based compensation, fair value of debt, sales returns and allowances, trade promotional allowances, inventory obsolescence, and accounting for income taxes and related uncertain tax positions.
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update eliminate the need for an organization to analyze whether certain exceptions apply for tax purposes. It also simplifies GAAP for certain taxes. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We adopted this standard effective April 1, 2021, and the adoption of this standard did not have a material impact on our Consolidated Financial Statements.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in this update provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition to new reference rates. The amendments in this update are effective immediately for entities that elect to apply the optional guidance in Topic 848. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.
2. Inventories
Inventories consist of the following:

(In thousands) | June 30, 2021 |  | March 31, 2021
Components of Inventories |  |  |
Packaging and raw materials | $ | 9,480 |  |  | $ | 8,463 |
Work in process | 326 |  |  | 326 |
Finished goods | 95,740 |  |  | 106,170 |
Inventories | $ | 105,546 |  |  | $ | 114,959 |

Inventories are carried and depicted above at the lower of cost or net realizable value, which includes a reduction in inventory values of $6.0 million and $4.0 million at June 30, 2021 and March 31, 2021, respectively, related to obsolete and slow-moving inventory.
-7-

3. Goodwill
A reconciliation of the activity affecting goodwill by operating segment is as follows:

(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Balance - March 31, 2021 |  |  |  |  |  |  |
| Goodwill | $ | 710,354 |  |  | $ | 32,683 |  |  |  |  | $ | 743,037 |
| Accumulated impairment loss | (163,711) |  |  | (1,247) |  |  |  |  | (164,958) |
Balance - March 31, 2021 | 546,643 |  |  | 31,436 |  |  |  |  | 578,079 |
| Effects of foreign currency exchange rates | — |  |  | (239) |  |  |  |  | (239) |
Balance - June 30, 2021 |  |  |  |  |  |  |
| Goodwill | 710,354 |  |  | 32,444 |  |  |  |  | 742,798 |
| Accumulated impairment loss | (163,711) |  |  | (1,247) |  |  |  |  | (164,958) |
Balance - June 30, 2021 | $ | 546,643 |  |  | $ | 31,197 |  |  |  |  | $ | 577,840 |

On an annual basis during the fourth quarter of each fiscal year, or more frequently if conditions indicate that the carrying value of the asset may not be recoverable, management performs a review of the values assigned to goodwill and tests for impairment. We utilize the discounted cash flow method to estimate the fair value of our reporting units as part of the goodwill impairment test. We also considered our market capitalization at February 28, 2021, which was the date of our annual review, as compared to the aggregate fair values of our reporting units, to assess the reasonableness of our estimates pursuant to the discounted cash flow methodology. The estimates and assumptions made in assessing the fair value of our reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties related to future sales, gross margins, and advertising and marketing expenses, which can be impacted by increases in competition, changing consumer preferences, technical advances, or the potential impacts of COVID-19. The discount rate assumption may be influenced by such factors as changes in interest rates and rates of inflation, which can have an impact on the determination of fair value. If these assumptions are adversely affected, we may be required to record impairment charges in the future. We continuously monitor events that could trigger an interim impairment analysis, which included the impact of COVID-19 for the period ended June 30, 2021.
As of June 30, 2021, we determined no events have occurred that would indicate potential impairment of goodwill.
4. Intangible Assets, net
A reconciliation of the activity affecting intangible assets, net is as follows:

(In thousands) | Indefinite- Lived Trademarks |  | Finite-Lived Trademarks and Customer Relationships |  | Totals
Gross Carrying Amounts |  |  |  |  |
Balance — March 31, 2021 | $ | 2,281,988 |  |  | $ | 389,347 |  |  | $ | 2,671,335 |
Effects of foreign currency exchange rates | (1,143) |  |  | (24) |  |  | (1,167) |
Balance — June 30, 2021 | 2,280,845 |  |  | 389,323 |  |  | 2,670,168 |
Accumulated Amortization |  |  |  |  |
Balance — March 31, 2021 | — |  |  | 195,606 |  |  | 195,606 |
Additions | — |  |  | 4,867 |  |  | 4,867 |
Effects of foreign currency exchange rates | — |  |  | (19) |  |  | (19) |
Balance — June 30, 2021 | — |  |  | 200,454 |  |  | 200,454 |
Intangible assets, net - June 30, 2021 | $ | 2,280,845 |  |  | $ | 188,869 |  |  | $ | 2,469,714 |

Amortization expense was $4.9 million for the three months ended June 30, 2021, and June 30, 2020.
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Finite-lived intangible assets are expected to be amortized over their estimated useful life, which ranges from a period of 10 to 30 years, and the estimated amortization expense for each of the five succeeding years and the periods thereafter is as follows (in thousands):

(In thousands) |
Year Ending March 31, | Amount
2022 (remaining nine months ended March 31, 2022) | $ | 14,599 |
2023 | 19,465 |
2024 | 19,441 |
2025 | 17,398 |
2026 | 15,126 |
Thereafter | 102,840 |
| $ | 188,869 |

Under accounting guidelines, indefinite-lived assets are not amortized, but must be tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below the carrying amount. On February 28, 2021, the date of our annual impairment review, there were no indicators of impairment as a result of the analysis and, accordingly, no additional impairment charge was taken on our March 31, 2021 financial statements. Additionally, at each reporting period, an evaluation must be made to determine whether events and circumstances continue to support an indefinite useful life. Intangible assets with finite lives are amortized over their respective estimated useful lives and are also tested for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable and exceeds its fair value.
We utilize the excess earnings method to estimate the fair value of our individual indefinite-lived intangible assets. The assumptions subject to significant uncertainties include the discount rate utilized in the analyses, as well as future sales, gross margins, and advertising and marketing expenses. The discount rate assumption may be influenced by such factors as changes in interest rates and rates of inflation, which can have an impact on the determination of fair value. Additionally, should the related fair values of intangible assets be adversely affected as a result of declining sales or margins caused by competition, changing consumer needs or preferences, technological advances, changes in advertising and marketing expenses, or the potential impacts of COVID-19, we may be required to record impairment charges in the future.
As of June 30, 2021, no events have occurred that would indicate potential impairment of intangible assets.
5. Leases
We lease real estate and equipment for use in our operations.
The components of lease expense for the three months ended June 30, 2021 and 2020 were as follows:

|  |  |  | Three Months Ended June 30,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  |  |  |  |  | $ | 642 |  |  | $ | 325 |
Interest on lease liabilities |  |  |  |  |  | 66 |  |  | 50 |
Operating lease cost |  |  |  |  |  | 1,687 |  |  | 1,697 |
Short term lease cost |  |  |  |  |  | 22 |  |  | 23 |
Variable lease cost |  |  |  |  |  | 11,651 |  |  | 11,707 |
Sublease income |  |  |  |  |  | — |  |  | (54) |
Total net lease cost |  |  |  |  |  | $ | 14,068 |  |  | $ | 13,748 |

-9-

As of June 30, 2021, the maturities of lease liabilities were as follows:

(In thousands) |  |  |  |  |  |
Year Ending March 31, |  | Operating Leases |  | Finance Lease |  | Total
2022 (Remaining nine months ending March 31, 2022) |  | $ | 5,453 |  |  | $ | 2,119 |  |  | $ | 7,572 |
2023 |  | 6,377 |  |  | 2,826 |  |  | 9,203 |
2024 |  | 6,335 |  |  | 2,826 |  |  | 9,161 |
2025 |  | 4,137 |  |  | 1,413 |  |  | 5,550 |
2026 |  | 1,815 |  |  | — |  |  | 1,815 |
Thereafter |  | 3,164 |  |  | — |  |  | 3,164 |
Total undiscounted lease payments |  | 27,281 |  |  | 9,184 |  |  | 36,465 |
Less amount of lease payments representing interest |  | (2,978) |  |  | (420) |  |  | (3,398) |
Total present value of lease payments |  | $ | 24,303 |  |  | $ | 8,764 |  |  | $ | 33,067 |

The weighted average remaining lease term and weighted average discount rate were as follows:

|  |  | June 30, 2021
Weighted average remaining lease term (years) |  |
| Operating leases |  | 4.45
| Finance leases |  | 3.25
Weighted average discount rate |  |
| Operating leases |  | 5.26 | %
| Finance leases |  | 2.98 | %

6. Other Accrued Liabilities
Other accrued liabilities consist of the following:

(In thousands) | June 30, 2021 |  | March 31, 2021
Accrued marketing costs | $ | 38,885 |  |  | $ | 29,955 |
Accrued compensation costs | 7,107 |  |  | 14,074 |
Accrued broker commissions | 749 |  |  | 1,023 |
Income taxes payable | 7,772 |  |  | 1,652 |
Accrued professional fees | 4,523 |  |  | 4,472 |
Accrued production costs | 3,415 |  |  | 2,882 |
Accrued sales tax | 1,692 |  |  | 2,368 |
Other accrued liabilities | 4,292 |  |  | 4,976 |
| $ | 68,435 |  |  | $ | 61,402 |

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7. Long-Term Debt
Long-term debt consists of the following, as of the dates indicated:

(In thousands, except percentages) |  | June 30, 2021 |  | March 31, 2021
2021 Senior Notes bearing interest at 3.750%, with interest payable on April 1 and October 1 of each year. The 2021 Senior Notes mature on April 1, 2031. |  | 600,000 |  |  | 600,000 |
2019 Senior Notes bearing interest at 5.125%, with interest payable on January 15 and July 15 of each year. The 2019 Senior Notes mature on January 15, 2028. |  | 400,000 |  |  | 400,000 |
2012 Term B-5 Loans bearing interest at the Borrower's option at either LIBOR plus a margin of 2.00%, with a LIBOR floor of 0.00%, or an alternate base rate plus a margin of 1.00%, with a base rate floor of 1.00%, due on January 26, 2024. |  | 475,000 |  |  | 495,000 |
2012 ABL Revolver bearing interest at the Borrower's option at either a base rate plus applicable margin or LIBOR plus applicable margin. Any unpaid balance is due on December 11, 2024. |  | 85,000 |  |  | — |
Long-term debt |  | 1,560,000 |  |  | 1,495,000 |
Less: unamortized debt costs |  | (14,648) |  |  | (15,347) |
Long-term debt, net |  | $ | 1,545,352 |  |  | $ | 1,479,653 |

At June 30, 2021, we had $85.0 million outstanding on the asset-based revolving credit facility entered into January 31, 2012, as amended (the "2012 ABL Revolver"), and a borrowing capacity of $57.1 million.
See Note 19 - Subsequent Events.
Interest Rate Swaps:
We currently have an interest rate swap to hedge a tota l of $200.0 million of our variable interest debt (see Note 9 for further details).
As of June 30, 2021, aggregate future principal payments required in accordance with the terms of the 2012 Term B-5 Loans, 2012 ABL Revolver and the indentures governing the senior unsecured notes due 2031 (the "2021 Senior Notes") and the senior unsecured notes due 2028 (the "2019 Senior Notes") are as follows:

(In thousands) |
Year Ending March 31, | Amount
2022 (remaining nine months ending March 31, 2022) | $ | — |
2023 |  | — |
2024 |  | 475,000 |
2025 |  | 85,000 |
2026 |  | — |
Thereafter | 1,000,000 |
| $ | 1,560,000 |

8. Fair Value Measurements
For certain of our financial instruments, including cash, accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their respective fair values due to the relatively short maturity of these amounts.
FASB Accounting Standards Codification ("ASC") 820, Fair Value Measurements, requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market assuming an orderly transaction between market participants. ASC 820 established market (observable inputs) as the preferred source of fair value, to be followed by our assumptions of fair value based on hypothetical transactions (unobservable inputs) in the absence of observable market inputs. Based upon the above, the following fair value hierarchy was created:
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Level 1 - Quoted market prices for identical instruments in active markets;
Level 2 - Quoted prices for similar instruments in active markets, as well as quoted prices for identical or similar instruments in markets that are not considered active; and
Level 3 - Unobservable inputs developed by us using estimates and assumptions reflective of those that would be utilized by a market participant.
The market values have been determined based on market values for similar instruments adjusted for certain factors. As such, the 2021 Senior Notes, the 2019 Senior Notes, the 2012 Term B-5 Loans, and the 2012 ABL Revolver and our interest rate swaps are measured in Level 2 of the above hierarchy. The summary below details the carrying amounts and estimated fair values of these instruments at June 30, 2021 and March 31, 2021.

|  | June 30, 2021 |  | March 31, 2021
(In thousands) |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
2021 Senior Notes |  | $ | 600,000 |  |  | $ | 579,000 |  |  | $ | 600,000 |  |  | $ | 570,000 |
2019 Senior Notes |  | 400,000 |  |  | 421,000 |  |  | 400,000 |  |  | 417,000 |
2012 Term B-5 Loans |  | 475,000 |  |  | 475,000 |  |  | 495,000 |  |  | 493,763 |
2012 ABL Revolver |  | 85,000 |  |  | 85,000 |  |  | — |  |  | — |
Interest rate swaps |  | 1,688 |  |  | 1,688 |  |  | 2,363 |  |  | 2,363 |

At June 30, 2021 and March 31, 2021, we did not have any assets or liabilities measured in Level 1 or 3.
9. Derivative Instruments
Changes in interest rates expose us to risks. To help us manage these risks, in January 2020 we entered into two interest rate swaps to hedge a total of $400.0 million of our variable interest debt. One swap settled on January 31, 2021 and, as of June 30, 2021, one interest rate swap to hedge $200.0 million remained outstanding. The fair value of this interest rate swap is reflected in our Consolidated Balance Sheets in other accrued liabilities. We do not use derivatives for trading purposes.
The following tables summarize the fair values of our derivative instrument as of the end of the periods shown:

|  | June 30, 2021
(In thousands) |  | Hedge Type |  | Final Settlement Date |  | Notional Amount |  | Other Accrued Liabilities |  | Other Long-Term Liabilities
Interest rate swap |  | Cash flow |  | 1/31/2022 |  | $ | 200,000 |  |  | (1,688) |  |  | — |
Total fair value |  |  |  |  |  |  |  | $ | (1,688) |  |  | $ | — |

|  | March 31, 2021
(In thousands) |  | Hedge Type |  | Final Settlement Date |  | Notional Amount |  | Other Accrued Liabilities |  | Other Long-Term Liabilities
Interest rate swap |  | Cash flow |  | 1/31/2022 |  | $ | 200,000 |  |  | (2,363) |  |  | — |
Total fair value |  |  |  |  |  |  |  | $ | (2,363) |  |  | $ | — |

The following table summarizes our interest rate swaps, net of tax, for the periods shown:

|  |  |  |  |  | Three Months Ended June 30,
(In thousands) |  | Location |  |  |  |  |  | 2021 |  | 2020
Gain Recognized in Other Comprehensive Loss (effective portion) |  | Other comprehensive income (loss) |  |  |  |  |  | $ | 520 |  |  | $ | 309 |
Loss Reclassified from Accumulated Other Comprehensive Loss into Income |  | Interest expense |  |  |  |  |  | $ | (718) |  |  | $ | (1,026) |

We expect pre-tax losses of $1.7 million associated with interest rate swaps, currently reported in accumulated other comprehensive loss, to be reclassified into income over the next twelve months. The amount ultimately realized, however, will differ as interest rates change and the underlying contracts settle.
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Counterparty Credit Risk:
Interest rate swaps expose us to counterparty credit risk for non-performance. We manage our exposure to counterparty credit risk by only dealing with counterparties who are substantial international financial institutions with significant experience using such derivative instruments.
10. Stockholders' Equity
We are authorized to issue 250.0 million shares of common stock, $0.01 par value per share, and 5.0 million shares of preferred stock, $0.01 par value per share. The Board of Directors may direct the issuance of the undesignated preferred stock in one or more series and determine preferences, privileges and restrictions thereof.
Each share of common stock has the right to one vote on all matters submitted to a vote of stockholders. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to prior rights of holders of all classes of outstanding stock having priority rights as to dividends. No dividends have been declared or paid on our common stock through June 30, 2021.
During the three months ended June 30, 2021 and 2020, we repurchased shares of our common stock pursuant to the provisions of the various employee restricted stock awards and recorded them as treasury stock. Our share repurchases consisted of the following:

|  |  | Three Months Ended June 30,
|  |  |  |  | 2021 |  | 2020
Number of shares |  |  |  |  | 63,314 |  |  | 31,117 |
Average price per share |  |  |  |  | $46.04 |  | $39.91
Total amount repurchased |  |  |  |  | $2.9 million |  | $1.2 million

11. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consisted of the following at June 30, 2021 and March 31, 2021:

(In thousands) | June 30, 2021 |  | March 31, 2021
Components of Accumulated Other Comprehensive Loss |  |  |
Cumulative translation adjustment | $ | (20,400) |  |  | $ | (18,908) |
Unrealized loss on interest rate swaps, net of tax of $388 and $543, respectively | (1,299) |  |  | (1,819) |
Unrecognized net gain (loss) on pension plans, net of tax of $(276) and $(276), respectively | 926 |  |  | 926 |
Accumulated other comprehensive loss, net of tax | $ | (20,773) |  |  | $ | (19,801) |

As of June 30, 2021 and March 31, 2021, no amounts were reclassified from accumulated other comprehensive loss into earnings.
12. Earnings Per Share
Basic earnings per share is computed based on income available to common stockholders and the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on income available to common stockholders and the weighted average number of shares of common stock outstanding plus the effect of potentially dilutive common shares outstanding during the period using the treasury stock method, which includes stock options and restricted stock units ("RSUs"). Potential common shares, composed of the incremental common shares issuable upon the exercise of outstanding stock options and unvested RSUs, are included in the diluted earnings per share calculation to the extent that they are dilutive. In loss periods, the assumed exercise of in-the-money stock options and RSUs has an anti-dilutive effect, and therefore these instruments are excluded from the computation of diluted earnings per share.
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The following table sets forth the computation of basic and diluted earnings per share:

|  |  |  | Three Months Ended June 30,
(In thousands, except per share data) |  |  |  |  |  | 2021 |  | 2020
Numerator |  |  |  |  |  |  |  |
Net income |  |  |  |  |  | $ | 57,755 |  |  | $ | 43,706 |
Denominator |  |  |  |  |  |  |  |
Denominator for basic earnings per share — weighted average shares outstanding |  |  |  |  |  | 50,139 |  |  | 50,264 |
Dilutive effect of unvested restricted stock units and options issued to employees and directors |  |  |  |  |  | 532 |  |  | 544 |
Denominator for diluted earnings per share |  |  |  |  |  | 50,671 |  |  | 50,808 |
Earnings per Common Share: |  |  |  |  |  |  |  |
Basic earnings per share |  |  |  |  |  | $ | 1.15 |  |  | $ | 0.87 |
Diluted earnings per share |  |  |  |  |  | $ | 1.14 |  |  | $ | 0.86 |

For the three months ended June 30, 2021 and 2020, there were 0.5 million and 0.6 million shares, respectively, attributable to outstanding stock-based awards that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
13. Share-Based Compensation
In connection with our initial public offering, the Board of Directors adopted the 2005 Long-Term Equity Incentive Plan (the “2005 Plan”), which provided for grants of up to a maximum of 5.0 million shares of restricted stock, stock options, RSUs and other equity-based awards. In June 2014, the Board of Directors approved, and in July 2014, our stockholders ratified, an increase of an additional 1.8 million shares of our common stock for issuance under the 2005 Plan, an increase of the maximum number of shares subject to stock options that could be awarded to any one participant under the 2005 Plan during any fiscal 12-month period from 1.0 million to 2.5 million shares, and an extension of the term of the 2005 Plan by ten years, to February 2025. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing services for the Company, were eligible for grants under the 2005 Plan.
On June 23, 2020, the Board of Directors adopted the Prestige Consumer Healthcare Inc. 2020 Long-Term Incentive Plan (the “2020 Plan”). The 2020 Plan became effective on August 4, 2020, upon the approval of the 2020 Plan by our stockholders. On June 23, 2020, a total of 2,827,210 shares were available for issuance under the 2020 Plan (comprised of 2,000,000 new shares plus 827,210 shares that were unissued under the 2005 Plan). All future equity awards will be made from the 2020 Plan, and the Company will not grant any additional awards under the 2005 Plan.
The following table provides information regarding our stock-based compensation:

|  |  |  | Three Months Ended June 30,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Pre-tax share-based compensation costs charged against income |  |  |  |  |  | $ | 1,878 |  |  | $ | 1,464 |
Income tax benefit recognized on compensation costs |  |  |  |  |  | $ | 143 |  |  | $ | 112 |
Total fair value of options and RSUs vested during the period |  |  |  |  |  | $ | 7,006 |  |  | $ | 5,781 |
Cash received from the exercise of stock options |  |  |  |  |  | $ | 2,204 |  |  | $ | 1,216 |
Tax benefits realized from tax deductions resulting from RSU issuances and stock option exercises |  |  |  |  |  | $ | 1,721 |  |  | $ | 944 |

At June 30, 2021, there were $13.1 million of unrecognized compensation costs related to unvested share-based compensation arrangements under the 2005 Plan and the 2020 Plan, based on management's estimate of the shares that will ultimately vest. We expect to recognize such costs over a weighted average period of 1.1 years. At June 30, 2021, there were 2.5 million shares available for issuance under the 2020 Plan.
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On May 3, 2021, the Compensation and Talent Management Committee (the "Committee") of our Board of Directors granted 77,345 performance stock units, 73,108 RSUs and stock options to acquire 222,660 shares of our common stock under the 2020 Plan to certain executive officers and employees. The stock options were granted at an exercise price of $44.33 per share, which was equal to the closing price for our common stock on the date of the grant.
A newly appointed independent member of the Board of Directors received a grant under the 2020 Plan of 1,636 RSUs on May 3, 2021.
Restricted Stock Units
The fair value of the RSUs is determined using the closing price of our common stock on the date of the grant. A summary of the RSUs granted under the 2005 Plan and the 2020 Plan is presented below:

RSUs |  | Shares (in thousands) |  | Weighted Average Grant-Date Fair Value
Three Months Ended June 30, 2020 |  |  |  |
Vested and unvested at March 31, 2020 |  | 512.1 |  |  | $ | 32.49 |
Granted |  | 153.6 |  |  | 39.98 |
Vested and issued |  | (74.0) |  |  | 44.38 |
Forfeited |  | (4.7) |  |  | 56.11 |
Vested and unvested at June 30, 2020 |  | 587.0 |  |  | 32.76 |
Vested at June 30, 2020 |  | 124.2 |  |  | 30.54 |
Three Months Ended June 30, 2021 |  |  |  |
Vested and unvested at March 31, 2021 |  | 607.4 |  |  | $ | 33.02 |
Granted |  | 152.1 |  |  | 44.33 |
Vested and issued |  | (144.5) |  |  | 30.57 |
Forfeited |  | (23.1) |  |  | 30.17 |
Vested and unvested at June 30, 2021 |  | 591.9 |  |  | 36.64 |
Vested at June 30, 2021 |  | 151.3 |  |  | 32.03 |

Options
The fair value of each award is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions presented below:

|  | Three Months Ended June 30,
|  | 2021 |  | 2020
Expected volatility |  | 31.2% - 31.9% |  | 32.1% - 32.2%
Expected dividends |  | $ | — |  |  | $ | — |
Expected term in years |  | 6.0 to 7.0 |  | 6.0 to 7.0
Risk-free rate |  | 1.3 | % |  | 0.5%
Weighted average grant date fair value of options granted |  | $ | 14.77 |  |  | $ | 12.91 |

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A summary of option activity under the 2005 Plan and the 2020 Plan is as follows:

Options |  | Shares (in thousands) |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value (in thousands)
Three Months Ended June 30, 2020 |  |  |  |  |  |  |  |
Outstanding at March 31, 2020 |  | 1,020.2 |  |  | $ | 35.90 |  |  |  |  |
Granted |  | 249.9 |  |  | 39.98 |  |  |  |  |
Exercised |  | (60.5) |  |  | 20.10 |  |  |  |  |
Forfeited or expired |  | — |  |  | — |  |  |  |  |
Outstanding at June 30, 2020 |  | 1,209.6 |  |  | 37.53 |  |  | 7.3 |  | $ | 5,770 |
Vested at June 30, 2020 |  | 701.5 |  |  | 39.36 |  |  | 5.9 |  | $ | 3,874 |
Three Months Ended June 30, 2021 |  |  |  |  |  |  |  |
Outstanding at March 31, 2021 |  | 1,114.9 |  |  | $ | 37.92 |  |  |  |  |
Granted |  | 222.7 |  |  | 44.33 |  |  |  |  |
Exercised |  | (67.9) |  |  | 32.49 |  |  |  |  |
Forfeited or expired |  | (17.6) |  |  | 46.09 |  |  |  |  |
Outstanding at June 30, 2021 |  | 1,252.1 |  |  | 39.24 |  |  | 6.9 |  | $ | 17,068 |
Vested at June 30, 2021 |  | 779.5 |  |  | 38.72 |  |  | 5.6 |  | $ | 11,399 |

The aggregate intrinsic value of options exercised during the three months ended June 30, 2021 was $1.1 million.
14. Income Taxes
Income taxes are recorded in our quarterly financial statements based on our estimated annual effective income tax rate, subject to adjustments for discrete events, should they occur. The effective tax rates used in the calculation of income taxes were 24.4% and 24.9% for the three months ended June 30, 2021 and 2020, respectively. The decrease in the effective tax rate for the three months ended June 30, 2021 versus the prior year period was based on our estimated annual effective income tax rate, which fluctuates based on the mix of earnings from our U.S. and foreign jurisdictions, and discrete items pertaining to share-based compensation.
15. Employee Retirement Plans
The primary components of Net Periodic Benefits consist of the following:

|  |  |  | Three Months Ended June 30,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Interest cost |  |  |  |  |  | $ | 278 |  |  | $ | 525 |
Expected return on assets |  |  |  |  |  | (290) |  |  | (647) |
Net periodic benefit income |  |  |  |  |  | $ | (12) |  |  | $ | (122) |

During the three months ended June 30, 2021, we contributed $0.1 million to our non-qualified defined benefit plan and no contributions to the qualified defined benefit plan. During the remainder of fiscal 2022, we expect to contribute an additional $0.3 million to our non-qualified plan and make no contributions to the qualified plan.
During the fourth quarter of 2021, we adopted a plan termination date of April 30, 2021 for our U.S. qualified defined benefit pension plan (the "Plan") and began the Plan termination process. Pension obligations related to the Plan of $52.1 million are expected to be distributed through a combination of lump sum payments to eligible Plan participants who elect such payments and through the purchase of annuity contracts to the remaining participants. The benefit obligation for the Plan as of March 31, 2021 was therefore determined on a plan termination basis for which it is assumed that a portion of eligible active and deferred vested participants will elect lump sum payments. The Plan likely has sufficient assets to satisfy all transaction obligations. No distributions have been made as of June 30, 2021 related to the termination. The transaction is expected to close in the first quarter of fiscal 2023.
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16. Commitments and Contingencies
We are involved from time to time in legal matters and other claims incidental to our business. We review outstanding claims and proceedings internally and with external counsel as necessary to assess the probability and amount of a potential loss. These assessments are re-evaluated at each reporting period and as new information becomes available to determine whether a reserve should be established or if any existing reserve should be adjusted. The actual cost of resolving a claim or proceeding ultimately may be substantially different than the amount of the recorded reserve. In addition, because it is not permissible under GAAP to establish a litigation reserve until the loss is both probable and estimable, in some cases there may be insufficient time to establish a reserve prior to the actual incurrence of the loss (upon verdict and judgment at trial, for example, or in the case of a quickly negotiated settlement). We believe the reasonably possible losses from resolution of routine legal matters and other claims incidental to our business, taking our reserves into account, will not have a material adverse effect on our business, financial condition, or results of operations.
17. Concentrations of Risk
Our revenues are concentrated in the area of OTC Healthcare. We sell our products to mass merchandisers, drug, food, dollar, convenience and club stores and e-commerce channels. During the three months ended June 30, 2021 and 2020, approximately 45.5% and 48.0%, respectively of our gross revenues were derived from our five top selling brands. One customer, Walmart, accounted for more than 10% of our gross revenues for each of the periods presented. Walmart accounted for approximately 20.5% and 22.0%, respectively, of our gross revenues for the three months ended June 30, 2021 and 2020. Another customer, Walgreens, accounted for 10.6% of our gross revenues for the first quarter of fiscal 2022. An additional customer, Amazon, accounted for 13.3% of our gross revenues for the first quarter of the prior fiscal year.
Our product distribution in the United States is managed by a third party through one primary distribution center in Clayton, Indiana. In addition, we operate one manufacturing facility for certain of our products located in Lynchburg, Virginia. A natural disaster, such as tornado, earthquake, flood, or fire, could damage our inventory and/or materially impair our ability to distribute our products to customers in a timely manner or at a reasonable cost. In addition, a serious disruption caused by performance or contractual issues with our third-party distribution manager or COVID-19 or other public health emergencies could also materially impact our product distribution. Any disruption as a result of third-party performance at our distribution center could result in increased costs, expense and/or shipping times, and could cause us to incur customer fees and penalties. In addition, any serious disruption to our Lynchburg manufacturing facility could materially impair our ability to manufacture many of the products associated with our acquisition of C.B. Fleet Company, Inc. ("Fleet"), which would also limit our ability to provide those products to customers in a timely manner or at a reasonable cost. We could also incur significantly higher costs and experience longer lead times if we need to replace our distribution center, the third-party distribution manager or the manufacturing facility. As a result, any serious disruption could have a material adverse effect on our business, financial condition and results of operations.
At June 30, 2021, we had relationships with 118 third-party manufacturers. Of those, we had long-term contracts with 18 manufacturers that produced items that accounted for approximately 69.8% of gross sales for the three months ended June 30, 2021. At June 30, 2020, we had relationships with 113 third-party manufacturers. Of those, we had long-term contracts with 19 manufacturers that produced items that accounted for approximately 60.6% of gross sales for the three months ended June 30, 2020. The fact that we do not have long-term contracts with certain manufacturers means that they could cease manufacturing our products at any time and for any reason or initiate arbitrary and costly price increases, which could have a material adverse effect on our business and results of operations. Although we are continually in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement, which could have a material adverse effect on our business and results of operations.
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18. Business Segments
Segment information has been prepared in accordance with the Segment Reporting topic of the FASB ASC 280. Our current reportable segments consist of (i) North American OTC Healthcare and (ii) International OTC Healthcare. We evaluate the performance of our operating segments and allocate resources to these segments based primarily on contribution margin, which we define as gross profit less advertising and marketing expenses.
The tables below summarize information about our reportable segments.

| Three Months Ended June 30, 2021
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Total segment revenues* | $ | 242,393 |  |  | $ | 26,788 |  |  |  |  | $ | 269,181 |
Cost of sales | 99,404 |  |  | 10,765 |  |  |  |  | 110,169 |
Gross profit | 142,989 |  |  | 16,023 |  |  |  |  | 159,012 |
Advertising and marketing | 35,230 |  |  | 4,209 |  |  |  |  | 39,439 |
Contribution margin | $ | 107,759 |  |  | $ | 11,814 |  |  |  |  | 119,573 |
Other operating expenses |  |  |  |  |  |  | 28,231 |
Operating income |  |  |  |  |  |  | $ | 91,342 |
* Intersegment revenues of $1.0 million were eliminated from the North American OTC Healthcare segment.

| Three Months Ended June 30, 2020
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Total segment revenues* | $ | 210,658 |  |  | $ | 18,736 |  |  |  |  | $ | 229,394 |
Cost of sales | 87,827 |  |  | 7,699 |  |  |  |  | 95,526 |
Gross profit | 122,831 |  |  | 11,037 |  |  |  |  | 133,868 |
Advertising and marketing | 24,680 |  |  | 3,070 |  |  |  |  | 27,750 |
Contribution margin | $ | 98,151 |  |  | $ | 7,967 |  |  |  |  | 106,118 |
Other operating expenses |  |  |  |  |  |  | 25,999 |
Operating income |  |  |  |  |  |  | $ | 80,119 |
* Intersegment revenues of $1.0 million were eliminated from the North American OTC Healthcare segment.

-18-

The tables below summarize information about our segment revenues from similar product groups.

| Three Months Ended June 30, 2021
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Analgesics | $ | 32,821 |  |  | $ | 406 |  |  |  |  | $ | 33,227 |
Cough & Cold | 14,045 |  |  | 4,847 |  |  |  |  | 18,892 |
Women's Health | 63,248 |  |  | 3,944 |  |  |  |  | 67,192 |
Gastrointestinal | 42,366 |  |  | 10,204 |  |  |  |  | 52,570 |
Eye & Ear Care | 35,987 |  |  | 3,458 |  |  |  |  | 39,445 |
Dermatologicals | 31,150 |  |  | 939 |  |  |  |  | 32,089 |
Oral Care | 20,967 |  |  | 2,989 |  |  |  |  | 23,956 |
Other OTC | 1,809 |  |  | 1 |  |  |  |  | 1,810 |
Total segment revenues | $ | 242,393 |  |  | $ | 26,788 |  |  |  |  | $ | 269,181 |

| Three Months Ended June 30, 2020
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Analgesics | $ | 27,867 |  |  | $ | 274 |  |  |  |  | $ | 28,141 |
Cough & Cold | 13,438 |  |  | 3,902 |  |  |  |  | 17,340 |
Women's Health | 65,410 |  |  | 2,431 |  |  |  |  | 67,841 |
Gastrointestinal | 30,050 |  |  | 5,705 |  |  |  |  | 35,755 |
Eye & Ear Care | 22,852 |  |  | 2,545 |  |  |  |  | 25,397 |
Dermatologicals | 27,620 |  |  | 699 |  |  |  |  | 28,319 |
Oral Care | 22,166 |  |  | 3,179 |  |  |  |  | 25,345 |
Other OTC | 1,255 |  |  | 1 |  |  |  |  | 1,256 |
Total segment revenues | $ | 210,658 |  |  | $ | 18,736 |  |  |  |  | $ | 229,394 |

Our total segment revenues by geographic area are as follows:

|  |  | Three Months Ended June 30,
|  |  |  |  | 2021 |  | 2020
United States |  |  |  |  | $ | 226,667 |  |  | $ | 199,346 |
Rest of world |  |  |  |  | 42,514 |  |  | 30,048 |
Total |  |  |  |  | $ | 269,181 |  |  | $ | 229,394 |

Our consolidated goodwill and intangible assets have been allocated to the reportable segments as follows:

June 30, 2021 | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
(In thousands) |  |  |  |  |  |  |
Goodwill | $ | 546,643 |  |  | $ | 31,197 |  |  |  |  | $ | 577,840 |
Intangible assets |  |  |  |  |  |  |
Indefinite-lived | 2,195,617 |  |  | 85,228 |  |  |  |  | 2,280,845 |
Finite-lived, net | 185,677 |  |  | 3,192 |  |  |  |  | 188,869 |
Intangible assets, net | 2,381,294 |  |  | 88,420 |  |  |  |  | 2,469,714 |
Total | $ | 2,927,937 |  |  | $ | 119,617 |  |  |  |  | $ | 3,047,554 |

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March 31, 2021 | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
(In thousands) |  |  |  |  |  |  |
Goodwill | $ | 546,643 |  |  | $ | 31,436 |  |  |  |  | $ | 578,079 |
Intangible assets |  |  |  |  |  |  |
Indefinite-lived | 2,195,617 |  |  | 86,371 |  |  |  |  | 2,281,988 |
Finite-lived, net | 190,462 |  |  | 3,279 |  |  |  |  | 193,741 |
Intangible assets, net | 2,386,079 |  |  | 89,650 |  |  |  |  | 2,475,729 |
Total | $ | 2,932,722 |  |  | $ | 121,086 |  |  |  |  | $ | 3,053,808 |

19. Subsequent Events
Director Equity Grants
Pursuant to the 2020 Plan, each of the independent members of the Board of Directors received a grant of 2,808 RSUs on August 3, 2021. The RSUs are fully vested upon receipt of the award and will be settled by delivery to each director of one share of our common stock for each vested RSU promptly following the earliest of (i) such director's death, (ii) such director's separation from service or (iii) a change in control of the Company.
Acquisition
On July 1, 2021, we completed the previously announced acquisition of the Consumer Health business assets from Akorn Operating Company LLC pursuant to an Asset Purchase Agreement, dated May 27, 2021 (the "Purchase Agreement"), for a purchase price of $230.0 million in cash, subject to certain closing adjustments specified in the Purchase Agreement. As a result of the purchase, we acquired TheraTears and certain other over-the-counter consumer brands. The purchase price was funded by a combination of available cash on hand, additional borrowings under the 2012 ABL Revolver and the net proceeds from the refinancing of our term loan entered into on January 31, 2012 (the "2012 Term Loan") (see below).
The acquisition will be accounted for as a business combination. We have begun the process to determine the purchase price allocation for the assets and liabilities including estimating the fair values of intangible and tangible assets. These estimates have not been completed due to the timing and complexity of obtaining information and calculating such amounts.
Term Loan Refinancing
On July 1, 2021, we entered into Amendment No. 6 ("Term Loan Amendment No. 6") to the 2012 Term Loan. Term Loan Amendment No. 6 provides for (i) the refinancing of our outstanding term loans and the creation of a new class of Term B-5 Loans under the credit agreement governing the 2012 Term Loan in an aggregate principal amount of $600.0 million, (ii) increased flexibility under the credit agreement and (iii) an interest rate on the Term B-5 Loans that is based, at the Borrower's option, on a LIBOR rate plus a margin of 2.00% per annum, with a LIBOR floor of 0.50%, or an alternative base rate plus a margin of 1.00% per annum. In addition, Term Loan Amendment No. 6 provides for an extension of the maturity date to July 1, 2028. Under the Term Loan Amendment No. 6, we are required to make quarterly payments each equal to 0.25% of the aggregate principal amount.
The net proceeds from the Term B-5 Loans were used to refinance our outstanding term loans and finance the acquisition of the Akorn Consumer Health business and to pay fees and expenses incurred in connection with these transactions.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read together with the Condensed Consolidated Financial Statements and the related notes included in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended March 31, 2021. This discussion and analysis may contain forward-looking statements that involve certain risks, assumptions and uncertainties. Future results could differ materially from the discussion that follows for many reasons, including the factors described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 and in future reports filed with the U.S. Securities and Exchange Commission ("SEC").

See also “Cautionary Statement Regarding Forward-Looking Statements” on page 29 of this Quarterly Report on Form 10-Q.

Unless otherwise indicated by the context, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” the “Company” or “Prestige” refer to Prestige Consumer Healthcare Inc. and our subsidiaries. Similarly, reference to a year (e.g., 2022) refers to our fiscal year ended March 31 of that year.
General
We are engaged in the development, manufacturing, marketing, sales and distribution of well-recognized, brand name, over-the-counter ("OTC") healthcare products to mass merchandisers, drug, food, dollar, convenience, and club stores and e-commerce channels in North America (the United States and Canada) and in Australia and certain other international markets. We use the strength of our brands, our established retail distribution network, a low-cost operating model and our experienced management team to our competitive advantage.
We have grown our brand portfolio both organically and through acquisitions. We develop our existing brands by investing in new product lines, brand extensions and strong advertising support. Acquisitions of OTC brands have also been an important part of our growth strategy. We have acquired strong and well-recognized brands from consumer products and pharmaceutical companies, as well as private equity firms. While many of these brands have long histories of brand development and investment, we believe that, at the time we acquired them, most were considered “non-core” by their previous owners. As a result, these acquired brands did not benefit from adequate management focus and marketing support during the period prior to their acquisition, which created opportunities for us to reinvigorate these brands and improve their performance post-acquisition. After adding a core brand to our portfolio, we seek to increase its sales, market share and distribution in both existing and new channels through our established retail distribution network. We pursue this growth through increased spending on advertising and marketing support, new sales and marketing strategies, improved packaging and formulations, and innovative development of brand extensions.
Coronavirus Outbreak
In January 2020, the World Health Organization ("WHO") announced a global health crisis due to a new strain of coronavirus ("COVID-19"). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. This pandemic has caused significant volatility in the United States and global economies. We expect economic conditions will continue to be highly volatile and uncertain and could affect demand for our products and put pressure on prices. We experienced a temporary but significant decline in consumer consumption of our brands in the first quarter of fiscal 2021, followed by more stable consumption and customer orders over the remainder of the year. Generally, throughout the pandemic some categories were positively impacted (for instance, Women’s Health, Oral Care and Dermatological) and some categories negatively impacted (for instance, Cough & Cold and Gastrointestinal). The positively impacted categories benefited from the consumer shift to over-the-counter healthcare products as consumers increased their focus on hygiene and self-care at home related to COVID-19. The declining categories were impacted by reduced incidence levels and usage rates due to shelter-at-home restrictions and limited travel-related activity. In the first quarter of fiscal 2022, we experienced solid consumer consumption and share gains across most of our brand portfolio. Our business also benefited from a significant increase in demand in certain travel-related categories and channels previously impacted by the COVID-19 virus.
We have continued to see changes in the purchasing patterns of our consumers, including the frequency of visits by consumers to retailers and a shift in many markets to purchasing our products online. Although we have not experienced a material disruption to our overall supply chain to date, the environment remains uncertain. To date, the pandemic has not had a material negative impact on our operations, overall demand for most of our products or resulting aggregate sales and earnings, and, as such, it has also not negatively impacted our liquidity position. We continue to generate operating cash flows to meet our short-term liquidity needs. These circumstances could change in this dynamic, unprecedented environment. If the outbreak continues to spread, it may materially affect our operations and those of third parties on which we rely, including causing disruptions in the supply and distribution of our products. We may need to limit operations and may experience material
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limitations in employee resources. The extent to which COVID-19 impacts our results and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, and the actions to contain COVID-19 or treat its impact, among others. We do not yet know the full extent of its impacts on our business or the global economy. However, these effects could have a material, adverse impact on our liquidity, capital resources, and results of operations and those of the third parties on which we rely.
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Results of Operations
Three Months Ended June 30, 2021 compared to the Three Months Ended June 30, 2020
Total Segment Revenues
The following table represents total revenue by segment, including product groups, for the three months ended June 30, 2021 and 2020.

| Three Months Ended June 30, |  |
|  |  |  |  |  |  |  |  | Increase (Decrease) |  |  |
(In thousands) | 2021 |  | % |  | 2020 |  | % |  | Amount |  | % |  |  |
North American OTC Healthcare |  |  |  |  |  |  |  |  |  |  |  |  |
Analgesics | $ | 32,821 |  |  | 12.2 |  |  | $ | 27,867 |  |  | 12.1 |  |  | $ | 4,954 |  |  | 17.8 |  |  |  |
Cough & Cold | 14,045 |  |  | 5.2 |  |  | 13,438 |  |  | 5.9 |  |  | 607 |  |  | 4.5 |  |  |  |
Women's Health | 63,248 |  |  | 23.4 |  |  | 65,410 |  |  | 28.5 |  |  | (2,162) |  |  | (3.3) |  |  |  |
Gastrointestinal | 42,366 |  |  | 15.7 |  |  | 30,050 |  |  | 13.1 |  |  | 12,316 |  |  | 41.0 |  |  |  |
Eye & Ear Care | 35,987 |  |  | 13.4 |  |  | 22,852 |  |  | 10.0 |  |  | 13,135 |  |  | 57.5 |  |  |  |
Dermatologicals | 31,150 |  |  | 11.6 |  |  | 27,620 |  |  | 12.0 |  |  | 3,530 |  |  | 12.8 |  |  |  |
Oral Care | 20,967 |  |  | 7.8 |  |  | 22,166 |  |  | 9.7 |  |  | (1,199) |  |  | (5.4) |  |  |  |
Other OTC | 1,809 |  |  | 0.7 |  |  | 1,255 |  |  | 0.5 |  |  | 554 |  |  | 44.1 |  |  |  |
Total North American OTC Healthcare | 242,393 |  |  | 90.0 |  |  | 210,658 |  |  | 91.8 |  |  | 31,735 |  |  | 15.1 |  |  |  |
International OTC Healthcare |  |  |  |  |  |  |  |  |  |  |  |  |
Analgesics | 406 |  |  | 0.2 |  |  | 274 |  |  | 0.1 |  |  | 132 |  |  | 48.2 |  |  |  |
Cough & Cold | 4,847 |  |  | 1.8 |  |  | 3,902 |  |  | 1.7 |  |  | 945 |  |  | 24.2 |  |  |  |
Women's Health | 3,944 |  |  | 1.5 |  |  | 2,431 |  |  | 1.1 |  |  | 1,513 |  |  | 62.2 |  |  |  |
Gastrointestinal | 10,204 |  |  | 3.8 |  |  | 5,705 |  |  | 2.5 |  |  | 4,499 |  |  | 78.9 |  |  |  |
Eye & Ear Care | 3,458 |  |  | 1.3 |  |  | 2,545 |  |  | 1.1 |  |  | 913 |  |  | 35.9 |  |  |  |
Dermatologicals | 939 |  |  | 0.3 |  |  | 699 |  |  | 0.3 |  |  | 240 |  |  | 34.3 |  |  |  |
Oral Care | 2,989 |  |  | 1.1 |  |  | 3,179 |  |  | 1.4 |  |  | (190) |  |  | (6.0) |  |  |  |
Other OTC | 1 |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  |  |
Total International OTC Healthcare | 26,788 |  |  | 10.0 |  |  | 18,736 |  |  | 8.2 |  |  | 8,052 |  |  | 43.0 |  |  |  |
Total Consolidated | $ | 269,181 |  |  | 100.0 |  |  | $ | 229,394 |  |  | 100.0 |  |  | $ | 39,787 |  |  | 17.3 |  |  |  |

Total segment revenues for the three months ended June 30, 2021 were $269.2 million, an increase of $39.8 million, or 17.3%, versus the three months ended June 30, 2020.
North American OTC Healthcare Segment
Revenues for the North American OTC Healthcare segment increased $31.7 million, or 15.1%, during the three months ended June 30, 2021 versus the three months ended June 30, 2020. The three months ended June 30, 2021 were primarily positively impacted by the Eye & Ear Care and Gastrointestinal categories and certain other categories. The positively impacted categories benefited from increased consumer travel as a result of easing COVID-19 restrictions.
International OTC Healthcare Segment
Revenues for the International OTC Healthcare segment increased $8.1 million, or 43.0%, during the three months ended June 30, 2021 versus the three months ended June 30, 2020. The $8.1 million increase was attributable to increased sales in our Australian subsidiary primarily related to an increase in sales of Hydralyte as a result of easing COVID-19 restrictions.
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Gross Profit
The following table presents our gross profit and gross profit as a percentage of total segment revenues, by segment for each of the periods presented.

| Three Months Ended June 30,
(In thousands) |  |  |  |  |  |  |  |  | Increase (Decrease)
Gross Profit | 2021 |  | % |  | 2020 |  | % |  | Amount |  | %
North American OTC Healthcare | $ | 142,989 |  |  | 59.0 |  |  | $ | 122,831 |  |  | 58.3 |  |  | $ | 20,158 |  |  | 16.4 |
International OTC Healthcare | 16,023 |  |  | 59.8 |  |  | 11,037 |  |  | 58.9 |  |  | 4,986 |  |  | 45.2 |
| $ | 159,012 |  |  | 59.1 |  |  | $ | 133,868 |  |  | 58.4 |  |  | $ | 25,144 |  |  | 18.8 |

Gross profit for the three months ended June 30, 2021 increased $25.1 million, or 18.8%, when compared with the three months ended June 30, 2020. As a percentage of total revenues, gross profit increased to 59.1% during the three months ended June 30, 2021, from 58.4% during the three months ended June 30, 2020. The increase in gross profit as a percentage of revenues was primarily a result of product mix.
North American OTC Healthcare Segment
Gross profit for the North American OTC Healthcare segment increased $20.2 million, or 16.4%, during the three months ended June 30, 2021, versus the three months ended June 30, 2020. As a percentage of North American OTC Healthcare revenues, gross profit increased to 59.0% during the three months ended June 30, 2021 from 58.3% during the three months ended June 30, 2020, primarily due to product mix.
International OTC Healthcare Segment
Gross profit for the International OTC Healthcare segment increased $5.0 million, or 45.2%, during the three months ended June 30, 2021, versus the three months ended June 30, 2020. As a percentage of International OTC Healthcare revenues, gross profit increased to 59.8% during the three months ended June 30, 2021 from 58.9% during the three months ended June 30, 2020, primarily due to product mix.
Contribution Margin
Contribution margin is our segment measure of profitability. It is defined as gross profit less advertising and marketing expenses.
The following table presents our contribution margin and contribution margin as a percentage of total segment revenues, by segment for each of the periods presented.

| Three Months Ended June 30,
(In thousands) |  |  |  |  |  |  |  |  | Increase (Decrease)
Contribution Margin | 2021 |  | % |  | 2020 |  | % |  | Amount |  | %
North American OTC Healthcare | $ | 107,759 |  |  | 44.5 |  |  | $ | 98,151 |  |  | 46.6 |  |  | $ | 9,608 |  |  | 9.8 |
International OTC Healthcare | 11,814 |  |  | 44.1 |  |  | 7,967 |  |  | 42.5 |  |  | 3,847 |  |  | 48.3 |
| $ | 119,573 |  |  | 44.4 |  |  | $ | 106,118 |  |  | 46.3 |  |  | $ | 13,455 |  |  | 12.7 |

North American OTC Healthcare Segment
Contribution margin for the North American OTC Healthcare segment increased $9.6 million, or 9.8%, during the three months ended June 30, 2021 versus the three months ended June 30, 2020. As a percentage of North American OTC Healthcare revenues, contribution margin decreased to 44.5% during the three months ended June 30, 2021 from 46.6% during the three months ended June 30, 2020. The contribution margin decrease as a percentage of revenues was primarily due to an increase in advertising and marketing expenses, partly offset by the increase in gross profit noted above.
International OTC Healthcare Segment
Contribution margin for the International OTC Healthcare segment increased $3.8 million, or 48.3%, during the three months ended June 30, 2021 versus the three months ended June 30, 2020. As a percentage of International OTC Healthcare revenues, contribution margin increased to 44.1% during the three months ended June 30, 2021 from 42.5% during the three months ended June 30, 2020. The contribution margin increase as a percentage of revenues was primarily due to the increase in gross profit noted above.
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General and Administrative
General and administrative expenses were $22.5 million for the three months ended June 30, 2021 and $19.9 million for the three months ended June 30, 2020. The increase in general and administrative expenses was primarily due to an increase in compensation costs.
Depreciation and Amortization
Depreciation and amortization expenses were $5.8 million for the three months ended June 30, 2021 and $6.1 million for the three months ended June 30, 2020. The decrease in depreciation and amortization expenses was primarily due to certain assets being fully depreciated subsequent to the first quarter of fiscal 2021.
Interest Expense, Net
Interest expense, net was $15.1 million during the three months ended June 30, 2021, versus $21.9 million during the three months ended June 30, 2020. The average indebtedness decreased to $1.5 billion during the three months ended June 30, 2021 from $1.7 billion during the three months ended June 30, 2020. The average cost of borrowing decreased to 4.0% for the three months ended June 30, 2021 from 5.1% for the three months ended June 30, 2020.
Income Taxes
The provision for income taxes during the three months ended June 30, 2021 was $18.6 million versus $14.5 million during the three months ended June 30, 2020. The effective tax rate during the three months ended June 30, 2021 was 24.4% versus 24.9% during the three months ended June 30, 2020. The decrease in the effective tax rate for the three months ended June 30, 2021 was based on our estimated annual effective income tax rate, which fluctuates based on the mix of earnings from our U.S. and foreign jurisdictions, and discrete items pertaining to share-based compensation.
Liquidity and Capital Resources
Liquidity
Our primary source of cash comes from our cash flow from operations. In the past, we have supplemented this source of cash with various debt facilities, primarily in connection with acquisitions. We have financed our operations, and expect to continue to finance our operations for the next twelve months and the foreseeable future, with a combination of funds generated from operations and borrowings. Our principal uses of cash are for operating expenses, debt service, share repurchases, capital expenditures, and acquisitions. Based on our current levels of operations and anticipated growth, excluding acquisitions, we believe that our cash generated from operations and our existing credit facilities will be adequate to finance our working capital and capital expenditures through the next twelve months. See "Coronavirus Outbreak" above.
As of June 30, 2021, we had cash and cash equivalents of $163.6 million, an increase of $131.3 million from March 31, 2021. The following table summarizes the change:

| Three Months Ended June 30,
(In thousands) | 2021 |  | 2020 |  | $ Change
Cash provided by (used in): |  |  |  |  |
Operating Activities | $ | 69,305 |  |  | $ | 75,154 |  |  | $ | (5,849) |
Investing Activities | (1,323) |  |  | (2,553) |  |  | 1,230 |
Financing Activities | 63,650 |  |  | (111,362) |  |  | 175,012 |
Effects of exchange rate changes on cash and cash equivalents | (310) |  |  | 1,942 |  |  | (2,252) |
Net change in cash and cash equivalents | $ | 131,322 |  |  | $ | (36,819) |  |  | $ | 168,141 |

Operating Activities
Net cash provided by operating activities was $69.3 million for the three months ended June 30, 2021, compared to $75.2 million for the three months ended June 30, 2020. The $5.8 million decrease was due to increased working capital, partly offset by an increase in net income after non-cash items.
Investing Activities
Net cash used in investing activities was $1.3 million for the three months ended June 30, 2021, compared to $2.6 million for the three months ended June 30, 2020. The decrease was due to a decrease in capital expenditures in the current period.
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Financing Activities
Net cash provided by financing activities was $63.7 million for the three months ended June 30, 2021, compared to net cash used of $111.4 million for the three months ended June 30, 2020. This change was primarily due to reduced repayments of debt of $91.0 million and increased borrowings of $85.0 million in the three months ended June 30, 2021. The Company borrowed $85.0 million under its revolving credit agreement in June 2021 in anticipation of the acquisition completed on July 1, 2021; see Capital Resources below.
Capital Resources
As of June 30, 2021, we had an aggregate of $1.6 billion of outstanding indebtedness, which consisted of the following:
•$400.0 million of 5.125% 2019 Senior Notes, which mature on January 15, 2028;
•$600.0 million of 3.750% 2021 Senior Notes, which mature on April 1, 2031;
•$475.0 million of borrowings under the 2012 Term B-5 Loans due January 26, 2024; and
•$85.0 million of borrowings under the 2012 ABL Revolver due December 11, 2024.
As of June 30, 2021, we had $85.0 million outstanding on 2012 ABL Revolver and a borrowing capacity of $57.1 million.
During the years ended March 31, 2021 and 2020, under the 2012 Term Loan, we made voluntary principal payments against outstanding indebtedness of $195.0 million and $48.0 million, respectively. During the three months ended June 30, 2021, we made voluntary principal payments against outstanding indebtedness of $20.0 million under the 2012 Term Loan. Under the 2012 Term Loan (as amended), we are required to make quarterly payments each equal to 0.25% of the aggregate principal amount, which, as of June 30, 2021, was $475.0 million. Since we have made optional payments this year and in prior years that exceed a significant portion of our required quarterly payments, we will not be required to make another payment on the 2012 Term Loan until maturity on January 26, 2024. See Term Loan Refinancing below.
Acquisition
On July 1, 2021, we completed the acquisition of the Consumer Health business assets from Akorn Operating Company LLC pursuant to an Asset Purchase Agreement (the "Purchase Agreement"), for a purchase price of $230.0 million in cash, subject to certain closing adjustments specified in the Purchase Agreement. As a result of the purchase, we acquired TheraTears and certain other over-the-counter consumer brands. The purchase price was funded by a combination of available cash on hand, additional borrowings under our 2012 ABL Revolver and the net proceeds from the refinancing of our term loan entered into on January 31, 2012 (the "2012 Term Loan") (see below).
The acquisition will be accounted for as a business combination. We have begun the process to determine the purchase price allocation for the assets and liabilities including estimating the fair values of intangible and tangible assets. These estimates have not been completed due to the timing and complexity of obtaining information and calculating such amounts.
Term Loan Refinancing
On July 1, 2021, we entered into Amendment No. 6 ("Term Loan Amendment No. 6") to the 2012 Term Loan. Term Loan Amendment No. 6 provides for (i) the refinancing of our outstanding term loans and the creation of a new class of Term B-5 Loans under the credit agreement governing the 2012 Term Loan in an aggregate principal amount of $600.0 million, (ii) increased flexibility under the credit agreement and (iii) an interest rate on the Term B-5 Loans that is based, at the Borrower's option, on a LIBOR rate plus a margin of 2.00% per annum, with a LIBOR floor of 0.50%, or an alternative base rate plus a margin of 1.00% per annum. In addition, Term Loan Amendment No. 6 provides for an extension of the maturity date to July 1, 2028. Under the Term Loan Amendment No. 6, we are required to make quarterly payments each equal to 0.25% of the aggregate principal amount.
The net proceeds from the Term B-5 Loans were used to refinance our outstanding term loans and finance the acquisition of the Akorn Consumer Health business and to pay fees and expenses incurred in connection with these transactions.
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Maturities:

(In thousands) |
Year Ending March 31, | Amount
2022 (remaining nine months ending March 31, 2022) | $ | — |
2023 |  | — |
2024 |  | 475,000 |
2025 |  | 85,000 |
2026 |  | — |
Thereafter | 1,000,000 |
| $ | 1,560,000 |

Covenants:
Our debt facilities contain various financial covenants, including provisions that require us to maintain certain leverage, interest coverage and fixed charge ratios. The credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and 2019 Senior Notes contain provisions that accelerate our indebtedness on certain changes in control and restrict us from undertaking specified corporate actions, including asset dispositions, acquisitions, payments of dividends and other specified payments, repurchasing our equity securities in the public markets, incurrence of indebtedness, creation of liens, making loans and investments and transactions with affiliates. Specifically, we must:
•Have a leverage ratio of less than 6.50 to 1.0 for the quarter ended June 30, 2021 and thereafter (defined as, with certain adjustments, the ratio of our consolidated total net debt as of the last day of the fiscal quarter to our trailing twelve month consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (“EBITDA”));
•Have an interest coverage ratio of greater than 2.25 to 1.0 for the quarter ended June 30, 2021 and thereafter (defined as, with certain adjustments, the ratio of our consolidated EBITDA to our trailing twelve month consolidated cash interest expense); and
•Have a fixed charge ratio of greater than 1.0 to 1.0 for the quarter ended June 30, 2021 (defined as, with certain adjustments, the ratio of our consolidated EBITDA minus capital expenditures to our trailing twelve month consolidated interest paid, taxes paid and other specified payments). Our fixed charge requirement remains level throughout the term of the debt facilities.
At June 30, 2021, we were in compliance with the applicable financial and restrictive covenants under the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes. Additionally, management anticipates that in the normal course of operations, we will be in compliance with the financial and restrictive covenants during the next twelve months.
Interest Rate Swaps:
We have one interest rate swap to hedge a total of $200.0 million of our variable interest debt.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or financing activities with special-purpose entities.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on our knowledge of current events and actions that we may undertake in the future, actual results could differ from those estimates. A summary of our critical accounting policies is presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021. There were no material changes to our critical accounting policies during the three months ended June 30, 2021.
Recent Accounting Pronouncements
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A description of recently issued and recently adopted accounting pronouncements is included in the notes to the unaudited Condensed Consolidated Financial Statements in Part I, Item I, Note 1 of this Quarterly Report on Form 10-Q.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), including, without limitation, information within Management's Discussion and Analysis of Financial Condition and Results of Operations. The following cautionary statements are being made pursuant to the provisions of the PSLRA and with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA.
Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required under federal securities laws and the rules and regulations of the SEC, we do not intend to update any forward-looking statements to reflect events or circumstances arising after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements included in this Quarterly Report on Form 10-Q or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
These forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “anticipate,” “expect,” “estimate,” “project,” "intend," "strategy," "goal," "future," "seek," "may," "should," "would," "will," or other similar words and phrases. Forward-looking statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation:
•The impact of the COVID-19 pandemic or other disease outbreaks on global economic conditions, consumer demand, retailer product availability, and business operations including manufacturing, supply chain and distribution;
•The high level of competition in our industry and markets;
•Our inability to increase organic growth via new product introductions, line extensions, increased spending on advertising and marketing support, and other new sales and marketing strategies;
•Our dependence on a limited number of customers for a large portion of our sales;
•Our inability to successfully identify, negotiate, complete and integrate suitable acquisition candidates and to obtain necessary financing;
•Changes by retailers in inventory management practices, delivery requirements, and demands for marketing and promotional spending in order to retain or increase shelf space or online share;
•Our inability to grow our international sales;
•General economic conditions and incidence levels affecting sales of our products and their respective markets;
•Financial factors, such as increases in interest rates and currency exchange rate fluctuations;
•Changing consumer trends, additional store brand or branded competition, accelerating shifts to online shopping or pricing pressures;
•Our dependence on third-party manufacturers to produce many of the products we sell and our ability to transfer production to our own facilities or other third-party suppliers;
•Our dependence on a third-party logistics provider to distribute our products to customers;
•Price increases for raw materials, labor, energy and transportation costs, and for other input costs;
•Disruptions in our distribution center or manufacturing facility;
•Shortages of supply of sourced goods;
•Potential changes in export/import and trade laws, regulations and policies including any increased trade restrictions or tariffs;
•Acquisitions, dispositions or other strategic transactions diverting managerial resources, and creating additional liabilities;
•Actions of government agencies in connection with our products, advertising or regulatory matters governing our industry;
•Product liability claims, product recalls and related negative publicity;
•Our inability to protect our intellectual property rights;
•Our dependence on third parties for intellectual property relating to some of the products we sell;
•Our inability to protect our information technology systems from threats or disruptions;
•Our dependence on third-party information technology service providers and their ability to protect against security threats and disruptions;
•Our assets being comprised virtually entirely of goodwill and intangibles and possible changes in their value based on adverse operating results and/or changes in the discount rate used to value our brands;
•Our dependence on key personnel;
•The costs associated with any claims in litigation or arbitration and any adverse judgments rendered in such litigation or arbitration;
•Our level of indebtedness and possible inability to service our debt or to obtain additional financing;
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•The restrictions imposed by our financing agreements on our operations; and
•Changes in federal, state and other geographic tax laws.
For more information, see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We are exposed to changes in interest rates because our 2012 Term Loan and 2012 ABL Revolver are variable rate debt. To manage this risk, we use an interest rate swap to hedge a total o f $200.0 million of this variable rate debt. At June 30, 2021, approximately $360.0 million of our debt carries a variable rate of interest.
Holding other variables constant, including levels of indebtedness, a 1.0% increase in interest rates on our variable rate debt would have an adverse impact on pre-tax earnings and cash flows for the three months ended June 30, 2021 of approximately $0.7 million.
Foreign Currency Exchange Rate Risk
During the three months ended June 30, 2021 and 2020, approximately 12.4% and 10.0%, respectively, of our gross revenues were denominated in currencies other than the U.S. Dollar. As such, we are exposed to transactions that are sensitive to foreign currency exchange rates. These transactions are primarily with respect to the Canadian and Australian Dollars.
We performed a sensitivity analysis with respect to exchange rates for the three months ended June 30, 2021 and 2020. Holding all other variables constant, and assuming a hypothetical 10.0% adverse change in foreign currency exchange rates, this analysis resulted in a less than 5.0% impact on pre-tax income of approximately $1.6 million for the three months ended June 30, 2021 and approximately $1.0 million for the three months ended June 30, 2020.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a–15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of June 30, 2021. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
You should carefully consider the risk factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended March 31, 2021, which could materially affect our business, financial condition or results of operations. The risk factors described in our Annual Report on Form 10-K have not materially changed in the period covered by this Quarterly Report on Form 10-Q, but such risks are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations.
Our quarterly operating results and revenues may fluctuate as a result of any of these or other factors. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year, and revenues for any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors. In that event, the market price of our outstanding securities could be adversely impacted.
ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES

Period |  | Total Number of Shares Purchased (a) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 1 to April 30, 2021 |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
May 1 to May 31, 2021 |  | 63,314 |  |  | $ | 46.04 |  |  | — |  |  | $ | — |
June 1 to June 30, 2021 |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Total |  | 63,314 |  |  |  |  | — |  |  |

(a) These repurchases were made pursuant to our 2005 Long-Term Equity Incentive Plan, which allows for the indirect purchase of shares through a net-settlement feature upon the vesting of shares in order to satisfy minimum statutory tax-withholding requirements.
ITEM 5. OTHER INFORMATION
Submission of Matters to a Vote of Security Holders.
The 2021 Annual M eeting of Stockholders of the Company was held on August 3, 2021. The stockholders of the Company voted upon three proposals at the Annual Meeting, with the following results:
Item 1 – Election of seven directors nominated by the Board of Directors to serve until the 2022 Annual Meeting of Stockholders.

Director Nominee |  | For |  | Withheld |  | Broker Non-Votes
Ronald M. Lombardi |  | 45,636,393 |  | 1,647,650 |  | 523,795
John E. Byom |  | 45,785,876 |  | 1,497,978 |  | 523,984
Celeste A. Clark |  | 46,788,211 |  | 495,643 |  | 523,984
Christopher J. Coughlin |  | 46,409,825 |  | 874,029 |  | 523,984
Sheila A. Hopkins |  | 46,410,634 |  | 873,220 |  | 523,984
Natale S. Ricciardi |  | 46,409,937 |  | 873,917 |  | 523,984
Dawn M. Zier |  | 42,904,140 |  | 4,379,714 |  | 523,984

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Item 2 – Ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2022.

For | Against | Abstentions
46,618,697 | 1,180,446 | 8,695

Item 3 – Non-binding resolution to approve the compensation of the Company’s named executive officers as disclosed in the Company’s proxy statement.

For | Against | Abstentions | Broker Non-Votes
46,498,416 | 728,489 | 56,948 | 523,985

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ITEM 6. EXHIBITS

3.1 |  | Amended and Restated Certificate of Incorporation of Prestige Consumer Healthcare Inc. (filed as Exhibit 3.1 to the Company's Form S-1/A filed with the SEC on February 8, 2005).*
3.1.1 |  | Amendment to Amended and Restated Certificate of Incorporation of Prestige Consumer Healthcare Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 2, 2018).*
3.2 |  | Amended and Restated Bylaws of Prestige Consumer Healthcare Inc., as amended, effective October 29, 2018 (filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed with the SEC on February 7, 2019).*
2.1 |  | Asset Purchase Agreement, dated M ay 27, 2021, by and between Medtech Products Inc. and Akorn Operating Company. †
10.1 |  | Amendment No. 6 to the Term Loan Credit Agreement, dated as of July 1, 2021, among Prestige Consumer Healthcare Inc., Prestige Brands, Inc., the other guarantors from time to time party thereto, each lender from time to time party thereto and Barclays Bank PLC (as successor in interest to Citibank, N.A.), as administrative agent (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 1, 2021). *
31.1 |  | Certification of Principal Executive Officer of Prestige Consumer Healthcare Inc. pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
31.2 |  | Certification of Principal Financial Officer of Prestige Consumer Healthcare Inc. pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
32.1 |  | Certification of Principal Executive Officer of Prestige Consumer Healthcare Inc. pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2 |  | Certification of Principal Financial Officer of Prestige Consumer Healthcare Inc. pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
* |  | Incorporated herein by reference.
† |  | Certain portions of this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
101.INS |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | PRESTIGE CONSUMER HEALTHCARE INC. |
Date: | August 5, 2021 | By: | /s/ Christine Sacco |
|  |  | Christine Sacco |
|  |  | Chief Financial Officer |
|  |  | (Principal Financial Officer and Duly Authorized Officer) |

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