EX-99.1 2 exhibit991fy23-q3earningsr.htm EX-99.1
Exhibit 99.1
Prestige Consumer Healthcare Inc. Reports Third Quarter Results
◦Revenue of $275.5 Million in Q3 fiscal 2023 increased 0.4% versus Prior Year and 1.8% excluding Currency
◦Diluted EPS of $1.04 for Q3 fiscal 2023 increased 5.1% versus Prior Year
◦Reduced leverage ratio to 3.5x in Q3, enabled by strong profitability and cash flow
TARRYTOWN, N.Y.--(GLOBE NEWSWIRE)-February 2, 2023-- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its third fiscal quarter ended December 31, 2022.
“In Q3 our business continued to generate solid revenue and earnings growth in a dynamic consumer and retail environment driven by our diversified portfolio of brands and proven business model. Our continued strong sales and profit growth drives our cash flow that continued to reduce our leverage ratio during the quarter and has us well positioned as we finish our fiscal year,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.
Third Fiscal Quarter Ended December 31, 2022
Reported revenues in the third quarter of fiscal 2023 of $275.5 million increased 0.4% from $274.5 million in the third quarter of fiscal 2022. Revenues increased 1.8% excluding the impact of foreign currency. The revenue growth for the quarter was led by strong performance in our International OTC segment and strong Cough & Cold category sales versus the prior year comparable period.
Reported net income for the third quarter of fiscal 2023 totaled $52.0 million, compared to the prior year third quarter’s net income of $50.2 million. Diluted earnings per share of $1.04 for the third quarter of fiscal 2023 compared to diluted earnings per share of $0.99 in the prior year comparable period.
Nine Months Ended December 31, 2022
Reported revenues for the first nine months of fiscal 2023 totaled $841.9 million, an increase of 2.7%, compared to revenues of $819.9 million for the first nine months of fiscal 2022. Revenues increased 2.0% excluding the impact of foreign currency and a $12.6 million contribution from the acquisition of Akorn in Q1 fiscal 2023. The revenue growth for the first nine months was driven by strong International OTC segment performance and improved demand for certain brands, categories and channels that had been impacted by the COVID-19 virus in the first nine months of the prior fiscal year.
Reported net income for the first nine months of fiscal 2023 totaled $158.2 million versus the prior year comparable period net income and adjusted net income of $153.3 million and $160.0 million, respectively. Diluted earnings per share were $3.14 for the first nine months of fiscal 2023 compared to diluted earnings per share and adjusted earnings per share of $3.02 and $3.15 in the prior year comparable period, respectively.
Adjustments to net income in the first nine months of fiscal 2022 included integration, transition, purchase accounting, legal and various other costs associated with the Akorn acquisition, as well as a loss on extinguishment of debt and the related income tax effects of the adjustments.
Free Cash Flow and Balance Sheet

The Company's net cash provided by operating activities for third quarter fiscal 2023 was $54.9 million, compared to $66.3 million during the prior year comparable period. Non-GAAP free cash flow in the third quarter of fiscal 2023 was $53.1 million, a decrease compared to $64.1 million in the prior year comparable period. The Company's net cash provided by operating activities for the first nine months of fiscal 2023 was $170.7 million, compared to $196.8 million during the prior year comparable period. Non-GAAP free cash flow in the first nine months of fiscal 2023 was $165.5 million compared to $193.8 million in the prior year comparable period. The change in free cash flow for the nine months is largely due to an increase in working capital as the Company has focused on increasing inventory to improve service levels.
The Company's net debt position as of December 31, 2022 was approximately $1.4 billion, resulting in a covenant-defined leverage ratio of 3.5x.
Segment Review
North American OTC Healthcare: Segment revenues of $236.9 million for the third quarter fiscal 2023 compared to the prior year comparable quarter's segment revenues of $240.9 million. The revenue performance for the quarter was driven by strong performance across many of our key brands, particularly in the Cough & Cold and Gastrointestinal categories but was offset by lower Women’s Health and Eye & Ear Care category sales compared to the prior year comparable period.
For the first nine months of the current fiscal year, reported revenues for the North American OTC segment were $731.5 million compared to $735.0 million in the prior year comparable period. The change was driven by increased demand for certain brands, categories and channels that had previously been impacted by the COVID-19 virus, most notably Cough & Cold and motion sickness products and an approximate $12.4 million contribution from the acquisition of Akorn in the first quarter fiscal 2023, but more than offset by lower Women’s Health category sales.
International OTC Healthcare: Record segment fiscal third quarter 2023 revenues of $38.6 million increased 15.0% from $33.6 million reported in the prior year comparable period. The revenue increase versus the prior year third quarter was driven by increased consumer demand across the segment’s key brands, partially offset by a $2.8 million currency headwind.
For the first nine months of the current fiscal year, reported revenues for the International OTC Healthcare segment were $110.4 million, an increase of 30.0% over the prior year comparable period’s revenues of $84.9 million. The increase compared to the prior year was driven by large increases in the segment’s Australia business led by the Hydralyte brand, partially offset by a foreign currency headwind of $5.3 million.
Commentary and Updated Outlook for Fiscal 2023
Ron Lombardi, Chief Executive Officer, stated, “Our third quarter marked another period of successful execution against our long-term three-pillar strategy, with solid top-line revenue organic growth of approximately 2% and mid-single-digit earnings growth. The strong sales performance was driven by strength in our international segment and the Cough & Cold category and resulted in cash flow generation that enabled us to continue investing in our business while reducing our leverage to the lowest level in over 10 years. These investments included increasing our inventory levels during the quarter in order to improve service levels to our customers and positions us for continued growth in fiscal 2024.”

“With one quarter to go in fiscal year 2023 we anticipate sales between $1,120 and $1,122 equating to over 3% growth on top of our record fiscal 2022 results. Looking ahead, our proven business strategy, portfolio positioning, and improvements in our service levels have us well positioned for further revenue, earnings, and free cash flow growth in fiscal 2024,” Mr. Lombardi concluded.

| Updated Fiscal 2023 Outlook
Revenue | $1,120 to 1,122 million
Organic Revenue Growth | Approximately 3%
Diluted E.P.S. | Approximately $4.18
Free Cash Flow | Approximately $220 million

Fiscal Third Quarter 2023 Conference Call, Accompanying Slide Presentation and Replay
The Company will host a conference call to review its third quarter results today, February 2, 2023 at 8:30 a.m. ET. The Company provides a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at www.prestigeconsumerhealthcare.com. To participate in the conference call via phone, participants may register for the call here to receive dial-in details and a unique pin. While not required, it is recommended to join 10 minutes prior to the event start. The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.
A conference call replay will be available for approximately one week following completion of the live call and can be accessed on the Company’s Investor Relations page.
Non-GAAP and Other Financial Information
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.
Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "guidance," "outlook," “looking ahead,” "projection," “plan,” “positioned,” "may," "will," "would," "expect," "anticipate," "believe”, "consistent," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the Company's future operating results including revenues, organic growth, diluted earnings per share, and free cash flow, the impact of changes in the Company’s inventory on customer service levels, the Company’s ability to grow. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those expected as a result of a variety of factors, including the impact of business and economic conditions, including as a result of COVID-19 and geopolitical instability, consumer trends, the impact of the Company’s advertising and marketing and new product development initiatives, customer inventory management initiatives, fluctuating foreign exchange rates, competitive pressures, and the ability of the Company’s manufacturing operations and

third party manufacturers and logistics providers and suppliers to meet demand for its products and to avoid inflationary cost increases and disruption as a result of labor shortages. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2022 and other periodic reports filed with the Securities and Exchange Commission.
About Prestige Consumer Healthcare Inc.
Prestige Consumer Healthcare is a leading consumer healthcare products company with sales throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s diverse portfolio of brands include Monistat® and Summer’s Eve® women's health products, BC® and Goody's® pain relievers, Clear Eyes® and TheraTears® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories, Chloraseptic® and Luden's® sore throat treatments and drops, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, Boudreaux’s Butt Paste® diaper rash ointments, Nix® lice treatment, Debrox® earwax remover, Gaviscon® antacid in Canada, and Hydralyte® rehydration products and the Fess® line of nasal and sinus care products in Australia. Visit the Company's website at www.prestigeconsumerhealthcare.com.

Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)

|  | Three Months Ended December 31, |  | Nine Months Ended December 31,
(In thousands, except per share data) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total Revenues |  | $ | 275,524 |  |  | $ | 274,470 |  |  | $ | 841,856 |  |  | $ | 819,876 |
Cost of Sales |  |  |  |  |  |  |  |
Cost of sales excluding depreciation |  | 123,251 |  |  | 117,604 |  |  | 364,631 |  |  | 342,661 |
Cost of sales depreciation |  | 1,871 |  |  | 1,806 |  |  | 5,695 |  |  | 5,431 |
Cost of sales |  | 125,122 |  |  | 119,410 |  |  | 370,326 |  |  | 348,092 |
Gross profit |  | 150,402 |  |  | 155,060 |  |  | 471,530 |  |  | 471,784 |
Operating Expenses |  |  |  |  |  |  |  |
Advertising and marketing |  | 30,423 |  |  | 40,239 |  |  | 114,193 |  |  | 120,408 |
General and administrative |  | 26,536 |  |  | 25,983 |  |  | 79,688 |  |  | 80,706 |
Depreciation and amortization |  | 6,259 |  |  | 6,244 |  |  | 19,067 |  |  | 18,176 |
Total operating expenses |  | 63,218 |  |  | 72,466 |  |  | 212,948 |  |  | 219,290 |
Operating income |  | 87,184 |  |  | 82,594 |  |  | 258,582 |  |  | 252,494 |
Other expense |  |  |  |  |  |  |  |
Interest expense, net |  | 17,917 |  |  | 16,924 |  |  | 50,188 |  |  | 48,314 |
Loss on extinguishment of debt |  | — |  |  | — |  |  | — |  |  | 2,122 |
Other expense, net |  | 1,150 |  |  | 177 |  |  | 2,787 |  |  | 565 |
Total other expense, net |  | 19,067 |  |  | 17,101 |  |  | 52,975 |  |  | 51,001 |
Income before income taxes |  | 68,117 |  |  | 65,493 |  |  | 205,607 |  |  | 201,493 |
Provision for income taxes |  | 16,166 |  |  | 15,278 |  |  | 47,361 |  |  | 48,198 |
Net income |  | $ | 51,951 |  |  | $ | 50,215 |  |  | $ | 158,246 |  |  | $ | 153,295 |
Earnings per share: |  |  |  |  |  |  |  |
Basic |  | $ | 1.05 |  |  | $ | 1.00 |  |  | $ | 3.17 |  |  | $ | 3.05 |
Diluted |  | $ | 1.04 |  |  | $ | 0.99 |  |  | $ | 3.14 |  |  | $ | 3.02 |
Weighted average shares outstanding: |  |  |  |  |  |  |  |
Basic |  | 49,693 |  |  | 50,303 |  |  | 49,919 |  |  | 50,225 |
Diluted |  | 50,186 |  |  | 50,935 |  |  | 50,392 |  |  | 50,799 |
Comprehensive income, net of tax: |  |  |  |  |  |  |  |
Currency translation adjustments |  | 6,970 |  |  | 652 |  |  | (9,667) |  |  | (5,037) |
Unrealized gain on interest rate swaps |  | — |  |  | 561 |  | — |  |  | 1,631 |
Net loss on termination of pension plan |  | — |  |  | — |  |  | (790) |  |  | — |
Total other comprehensive income (loss) |  | 6,970 |  |  | 1,213 |  |  | (10,457) |  |  | (3,406) |
Comprehensive income |  | $ | 58,921 |  |  | $ | 51,428 |  |  | $ | 147,789 |  |  | $ | 149,889 |

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

(In thousands) | December 31, 2022 |  | March 31, 2022
Assets |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 86,358 |  |  | $ | 27,185 |
Accounts receivable, net of allowance of $21,370 and $19,720, respectively | 157,081 |  |  | 139,330 |
Inventories | 158,522 |  |  | 120,342 |
Prepaid expenses and other current assets | 6,886 |  |  | 6,410 |
Total current assets | 408,847 |  |  | 293,267 |
Property, plant and equipment, net | 69,569 |  |  | 71,300 |
Operating lease right-of-use assets | 16,410 |  |  | 20,372 |
Finance lease right-of-use assets, net | 4,864 |  |  | 6,858 |
Goodwill | 576,602 |  |  | 578,976 |
Intangible assets, net | 2,670,328 |  |  | 2,696,635 |
Other long-term assets | 3,154 |  |  | 3,273 |
Total Assets | $ | 3,749,774 |  |  | $ | 3,670,681 |
Liabilities and Stockholders' Equity |  |  |
Current liabilities |  |  |
Accounts payable | 64,254 |  |  | 55,760 |
Accrued interest payable | 15,267 |  |  | 4,437 |
Operating lease liabilities, current portion | 6,858 |  |  | 6,360 |
Finance lease liabilities, current portion | 2,814 |  |  | 2,752 |
Other accrued liabilities | 70,983 |  |  | 74,113 |
Total current liabilities | 160,176 |  |  | 143,422 |
Long-term debt, net | 1,424,095 |  |  | 1,476,658 |
Deferred income tax liabilities | 455,826 |  |  | 444,917 |
Long-term operating lease liabilities, net of current portion | 11,559 |  |  | 16,088 |
Long-term finance lease liabilities, net of current portion | 2,383 |  |  | 4,501 |
Other long-term liabilities | 8,872 |  |  | 7,484 |
Total Liabilities | 2,062,911 |  |  | 2,093,070 |
Total Stockholders' Equity | 1,686,863 |  |  | 1,577,611 |
Total Liabilities and Stockholders' Equity | $ | 3,749,774 |  |  | $ | 3,670,681 |

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

| Nine Months Ended December 31,
(In thousands) | 2022 |  | 2021
Operating Activities |  |  |
Net income | $ | 158,246 |  |  | $ | 153,295 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 24,762 |  |  | 23,607 |
Loss on disposal of property and equipment | 171 |  |  | 79 |
Deferred income taxes | 14,021 |  |  | 11,296 |
Amortization of debt origination costs | 2,613 |  |  | 2,811 |
Stock-based compensation costs | 9,756 |  |  | 7,331 |
Loss on extinguishment of debt | — |  |  | 2,122 |
Non-cash operating lease cost | 4,697 |  |  | 5,034 |
Other | 447 |  |  | — |
Changes in operating assets and liabilities, net of effects from acquisition: |  |  |
Accounts receivable | (17,078) |  |  | (21,848) |
Inventories | (38,587) |  |  | 14,650 |
Prepaid expenses and other current assets | (596) |  |  | (5,622) |
Accounts payable | 8,892 |  |  | (6,079) |
Accrued liabilities | 8,345 |  |  | 15,053 |
Operating lease liabilities | (4,941) |  |  | (4,807) |
Other | (19) |  |  | (126) |
Net cash provided by operating activities | 170,729 |  |  | 196,796 |
Investing Activities |  |  |
Purchases of property, plant and equipment | (5,226) |  |  | (6,481) |
Acquisition of Akorn | — |  |  | (246,914) |
Other | — |  |  | 177 |
Net cash used in investing activities | (5,226) |  |  | (253,218) |
Financing Activities |  |  |
Term loan repayments | (55,000) |  |  | (545,000) |
Proceeds from refinancing of Term Loan | — |  |  | 597,000 |
Borrowings under revolving credit agreement | 20,000 |  |  | 85,000 |
Repayments under revolving credit agreement | (20,000) |  |  | (85,000) |
Payments of debt costs | — |  |  | (6,111) |
Payments of finance leases | (2,058) |  |  | (2,145) |
Proceeds from exercise of stock options | 7,173 |  |  | 5,718 |
Fair value of shares surrendered as payment of tax withholding | (5,466) |  |  | (2,916) |
Repurchase of common stock | (50,000) |  |  | — |
Net cash (used in) provided by financing activities | (105,351) |  |  | 46,546 |
Effects of exchange rate changes on cash and cash equivalents | (979) |  |  | (1,408) |
Increase (decrease) in cash and cash equivalents | 59,173 |  |  | (11,284) |
Cash and cash equivalents - beginning of period | 27,185 |  |  | 32,302 |
Cash and cash equivalents - end of period | $ | 86,358 |  |  | $ | 21,018 |
Interest paid | $ | 36,716 |  |  | $ | 36,279 |
Income taxes paid | $ | 27,632 |  |  | $ | 42,977 |

Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income
Business Segments
(Unaudited)

| Three Months Ended December 31, 2022
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Total segment revenues* | $ | 236,884 |  |  | $ | 38,640 |  |  |  |  | $ | 275,524 |
Cost of sales | 110,554 |  |  | 14,568 |  |  |  |  | 125,122 |
Gross profit | 126,330 |  |  | 24,072 |  |  |  |  | 150,402 |
Advertising and marketing | 24,831 |  |  | 5,592 |  |  |  |  | 30,423 |
Contribution margin | $ | 101,499 |  |  | $ | 18,480 |  |  |  |  | $ | 119,979 |
Other operating expenses |  |  |  |  |  |  | 32,795 |
Operating income |  |  |  |  |  |  | $ | 87,184 |

*Intersegment revenues of $1.1 million were eliminated from the North American OTC Healthcare segment.

| Nine Months Ended December 31, 2022
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Total segment revenues* | $ | 731,456 |  |  | $ | 110,400 |  |  |  |  | $ | 841,856 |
Cost of sales | 327,008 |  |  | 43,318 |  |  |  |  | 370,326 |
Gross profit | 404,448 |  |  | 67,082 |  |  |  |  | 471,530 |
Advertising and marketing | 99,559 |  |  | 14,634 |  |  |  |  | 114,193 |
Contribution margin | $ | 304,889 |  |  | $ | 52,448 |  |  |  |  | $ | 357,337 |
Other operating expenses |  |  |  |  |  |  | 98,755 |
Operating income |  |  |  |  |  |  | $ | 258,582 |

*Intersegment revenues of $2.8 million were eliminated from the North American OTC Healthcare segment.

| Three Months Ended December 31, 2021
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Total segment revenues* | 240,857 |  |  | 33,613 |  |  |  |  | 274,470 |
Cost of sales | 106,790 |  |  | 12,620 |  |  |  |  | 119,410 |
Gross profit | 134,067 |  |  | 20,993 |  |  |  |  | 155,060 |
Advertising and marketing | 34,907 |  |  | 5,332 |  |  |  |  | 40,239 |
Contribution margin | $ | 99,160 |  |  | $ | 15,661 |  |  |  |  | $ | 114,821 |
Other operating expenses |  |  |  |  |  |  | 32,227 |
Operating income |  |  |  |  |  |  | 82,594 |

* Intersegment revenues of $0.6 million were eliminated from the North American OTC Healthcare segment.

| Nine Months Ended December 31, 2021
(In thousands) | North American OTC Healthcare |  | International OTC Healthcare |  |  |  | Consolidated
Total segment revenues* | $ | 734,978 |  |  | $ | 84,898 |  |  |  |  | $ | 819,876 |
Cost of sales | 314,817 |  |  | 33,275 |  |  |  |  | 348,092 |
Gross profit | 420,161 |  |  | 51,623 |  |  |  |  | 471,784 |
Advertising and marketing | 106,630 |  |  | 13,778 |  |  |  |  | 120,408 |
Contribution margin | $ | 313,531 |  |  | $ | 37,845 |  |  |  |  | $ | 351,376 |
Other operating expenses |  |  |  |  |  |  | 98,882 |
Operating income |  |  |  |  |  |  | $ | 252,494 |

* Intersegment revenues of $2.4 million were eliminated from the North American OTC Healthcare segment.

About Non-GAAP Financial Measures
In addition to financial results reported in accordance with GAAP, we disclose certain Non-GAAP financial measures ("NGFMs"), including, but not limited to, Non-GAAP Organic Revenues, Non-GAAP Organic Revenue Change Percentage, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense Percentage, Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted Diluted EPS, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow, and Net Debt.
We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions. We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below. In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.
These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies. These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below. Investors should not rely on any single financial measure when evaluating our business. We recommend investors review the GAAP financial measures included in this earnings release. When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.
NGFMs Defined
We define our NGFMs presented herein as follows:
•Non-GAAP Organic Revenues: GAAP Total Revenues excluding revenues associated with acquisitions where the acquired brands were not included in both periods presented and the impact of foreign currency exchange rates in the periods presented.
•Non-GAAP Organic Revenue Change Percentage: Calculated as the change in Non-GAAP Organic Revenues from prior year divided by prior year Non-GAAP Organic Revenues.
•Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus inventory step-up charges associated with acquisition.
•Non-GAAP Adjusted Gross Margin Percentage: Calculated as Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues.
•Non-GAAP Adjusted General and Administrative Expense: GAAP General and Administrative expenses minus costs associated with acquisition.
•Non-GAAP Adjusted General and Administrative Expense Percentage: Calculated as Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues.
•Non-GAAP EBITDA: GAAP Net Income before interest expense, net, provision for income taxes, and depreciation and amortization.
•Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues.
•Non-GAAP Adjusted EBITDA: Non-GAAP EBITDA less inventory step-up charges associated with acquisition, costs associated with acquisition in general and administrative expenses, and loss on extinguishment of debt.
•Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP adjusted EBITDA divided by GAAP Total Revenues.
•Non-GAAP Adjusted Net Income: GAAP Net Income (Loss) before inventory step-up charges associated with acquisition, costs associated with acquisition in general and administrative expenses, loss on extinguishment of debt, and applicable tax impact associated with these items.
•Non-GAAP Adjusted Diluted EPS: Calculated as Non-GAAP Adjusted Net Income, divided by the diluted weighted average number of shares outstanding during the period.
•Non-GAAP Free Cash Flow: Calculated as GAAP Net cash provided by operating activities less cash paid for capital expenditures.
•Non-GAAP Adjusted Free Cash Flow: Calculated as Non-GAAP free cash flow plus cash payments associated with acquisition.
•Net Debt: Calculated as total principal amount of debt outstanding ($1,440,000 at December 31, 2022) less cash and cash equivalents ($86,358 at December 31, 2022). Amounts in thousands.
The following tables set forth the reconciliations of each of our NGFMs (other than Net Debt, which is reconciled above) to their most directly comparable financial measures presented in accordance with GAAP.

Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and related Non-GAAP Organic Revenue Change percentage:

| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
(In thousands) |  |  |  |  |  |  |
GAAP Total Revenues | $ | 275,524 |  |  | $ | 274,470 |  |  | $ | 841,856 |  |  | $ | 819,876 |
Revenue Change | 0.4 | % |  |  |  | 2.7 | % |  |
Adjustments: |  |  |  |  |  |  |
Revenues associated with acquisition (1) | — |  |  | — |  |  | (12,624) |  |  | — |
Impact of foreign currency exchange rates | — |  |  | (3,770) |  |  | — |  |  | (7,252) |
Total adjustments | — |  |  | (3,770) |  |  | (12,624) |  |  | (7,252) |
Non-GAAP Organic Revenues | $ | 275,524 |  |  | $ | 270,700 |  |  | $ | 829,232 |  |  | $ | 812,624 |
Non-GAAP Organic Revenue Change | 1.8 | % |  |  |  | 2.0 | % |  |

(1) Revenues of our Akorn acquisition for the three months ended June 30, 2022 are excluded for purposes of calculating Non-GAAP organic revenues.
Reconciliation of GAAP Gross Profit and related GAAP Gross Profit percentage to Non-GAAP Adjusted Gross Margin and related Non-GAAP Adjusted Gross Margin percentage:

| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
(In thousands) |  |  |  |  |  |  |
GAAP Total Revenues | $ | 275,524 |  |  | $ | 274,470 |  |  | $ | 841,856 |  |  | $ | 819,876 |
GAAP Gross Profit | $ | 150,402 |  |  | $ | 155,060 |  |  | $ | 471,530 |  |  | $ | 471,784 |
GAAP Gross Profit as a Percentage of GAAP Total Revenue | 54.6 | % |  | 56.5 | % |  | 56.0 | % |  | 57.5 | %
Adjustments: |  |  |  |  |  |  |
Inventory step-up charges associated with acquisition (1) | — |  |  | — |  |  | — |  |  | 1,567 |
Total adjustments | — |  |  | — |  |  | — |  |  | 1,567 |
Non-GAAP Adjusted Gross Margin | $ | 150,402 |  |  | $ | 155,060 |  |  | $ | 471,530 |  |  | $ | 473,351 |
Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues | 54.6 | % |  | 56.5 | % |  | 56.0 | % |  | 57.7 | %

(1) Inventory step-up charges relate to our North American OTC Healthcare segment.

Reconciliation of GAAP General and Administrative Expense and related GAAP General and Administrative Expense
percentage to Non-GAAP Adjusted General and Administrative Expense and related Non-GAAP Adjusted General and
Administrative Expense percentage:

| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
(In thousands) |  |  |  |  |  |  |
GAAP General and Administrative Expense | $ | 26,536 |  |  | $ | 25,983 |  |  | $ | 79,688 |  |  | $ | 80,706 |
GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue | 9.6 | % |  | 9.5 | % |  | 9.5 | % |  | 9.8 | %
Adjustments: |  |  |  |  |  |  |
Costs associated with acquisition (1) | — |  |  | — |  |  | — |  |  | 5,127 |
Total adjustments | — |  |  | — |  |  | — |  |  | 5,127 |
Non-GAAP Adjusted General and Administrative Expense | $ | 26,536 |  |  | $ | 25,983 |  |  | $ | 79,688 |  |  | $ | 75,579 |
Non-GAAP Adjusted General and Administrative Expense Percentage as a Percentage of GAAP Total Revenues | 9.6 | % |  | 9.5 | % |  | 9.5 | % |  | 9.2 | %

(1) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA and related Non-GAAP Adjusted EBITDA Margin:

| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
(In thousands) |  |  |  |  |  |  |
GAAP Net Income | $ | 51,951 |  |  | $ | 50,215 |  |  | $ | 158,246 |  |  | $ | 153,295 |
Interest expense, net | 17,917 |  |  | 16,924 |  |  | 50,188 |  |  | 48,314 |
Provision for income taxes | 16,166 |  |  | 15,278 |  |  | 47,361 |  |  | 48,198 |
Depreciation and amortization | 8,130 |  |  | 8,050 |  |  | 24,762 |  |  | 23,607 |
Non-GAAP EBITDA | $ | 94,164 |  |  | $ | 90,467 |  |  | $ | 280,557 |  |  | $ | 273,414 |
Non-GAAP EBITDA Margin | 34.2 | % |  | 33.0 | % |  | 33.3 | % |  | 33.3 | %
Adjustments: |  |  |  |  |  |  |
Inventory step-up charges associated with acquisition in Cost of Sales (1) | — |  |  | — |  |  | — |  |  | 1,567 |
Costs associated with acquisition in General and Administrative Expense (2) | — |  |  | — |  |  | — |  |  | 5,127 |
Loss on extinguishment of debt | — |  |  | — |  |  | — |  |  | 2,122 |
Total adjustments | — |  |  | — |  |  | — |  |  | 8,816 |
Non-GAAP Adjusted EBITDA | $ | 94,164 |  |  | $ | 90,467 |  |  | $ | 280,557 |  |  | $ | 282,230 |
Non-GAAP Adjusted EBITDA Margin | 34.2 | % |  | 33.0 | % |  | 33.3 | % |  | 34.4 | %

(1) Inventory step-up charges relate to our North American OTC Healthcare segment.
(2) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Adjusted Net Income and related Non-GAAP Adjusted Diluted Earnings Per Share:

| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2022 | 2022 Diluted EPS |  | 2021 | 2021 Diluted EPS |  | 2022 | 2022 Diluted EPS |  | 2021 | 2021 Diluted EPS
(In thousands, except per share data) |  |  |  |  |  |  |  |  |  |  |
GAAP Net Income and Diluted EPS | $ | 51,951 |  | $ | 1.04 |  |  | $ | 50,215 |  | $ | 0.99 |  |  | $ | 158,246 |  | $ | 3.14 |  |  | $ | 153,295 |  | $ | 3.02 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |
Inventory step-up charges and other costs associated with acquisition in Cost of Sales (1) | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 1,567 |  | 0.03 |
Costs associated with acquisition in General and Administrative Expense (2) | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 5,127 |  | 0.10 |
Loss on extinguishment of debt | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 2,122 |  | 0.04 |
Tax impact of adjustments (3) | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | (2,134) |  | (0.04) |
Total adjustments | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 6,682 |  | 0.13 |
Non-GAAP Adjusted Net Income and Adjusted Diluted EPS | $ | 51,951 |  | $ | 1.04 |  |  | $ | 50,215 |  | $ | 0.99 |  |  | $ | 158,246 |  | $ | 3.14 |  |  | $ | 159,977 |  | $ | 3.15 |

(1) Inventory step-up charges relate to our North American OTC Healthcare segment.
(2) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.
(3) The income tax adjustments are determined using applicable rates in the taxing jurisdictions in which the above adjustments relate and includes both
current and deferred income tax expense (benefit) based on the specific nature of the specific Non-GAAP performance measure.
Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:

| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
(In thousands) |  |  |  |  |  |  |
GAAP Net Income | $ | 51,951 |  |  | $ | 50,215 |  |  | $ | 158,246 |  |  | $ | 153,295 |
Adjustments: |  |  |  |  |  |  |
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 22,978 |  |  | 17,052 |  |  | 56,467 |  |  | 52,280 |
Changes in operating assets and liabilities as shown in the Statement of Cash Flows | (19,987) |  |  | (970) |  |  | (43,984) |  |  | (8,779) |
Total adjustments | 2,991 |  |  | 16,082 |  |  | 12,483 |  |  | 43,501 |
GAAP Net cash provided by operating activities | 54,942 |  |  | 66,297 |  |  | 170,729 |  |  | 196,796 |
Purchases of property and equipment | (1,803) |  |  | (2,229) |  |  | (5,226) |  |  | (6,481) |
Non-GAAP Free Cash Flow | $ | 53,139 |  |  | $ | 64,068 |  |  | $ | 165,503 |  |  | $ | 190,315 |
Payments associated with acquisition (1) | — |  |  | — |  |  | — |  |  | 3,465 |
Non-GAAP Adjusted Free Cash Flow | $ | 53,139 |  |  | $ | 64,068 |  |  | $ | 165,503 |  |  | $ | 193,780 |

(1) Payments related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Outlook for Fiscal Year 2023:

Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Free Cash Flow:

(In millions) |  |  |
Projected FY'23 GAAP Net cash provided by operating activities |  |  | $ | 230 |
Additions to property and equipment for cash |  |  | (10) |
Projected FY'23 Non-GAAP Free Cash Flow |  |  | $ | 220 |