PERRIGO Co plcPRGO
PERRIGO Co plc Fair Value Disclosure
FAIR VALUE MEASUREMENTS
Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable.
•Level 1: Quoted prices for identical instruments in active markets.
•Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
•Level 3: Valuations derived from techniques in which one or more significant inputs are not observable.
The table below summarizes the valuation of our financial instruments carried at fair value by the applicable pricing categories (in millions):
| Year Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||
| Measured at fair value on a recurring basis: | ||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | — | 2.4 | — | — | 5.5 | — | ||||||||||||||||||||||||||||||||
| Cross-currency swaps | — | — | — | — | 14.2 | — | ||||||||||||||||||||||||||||||||
| Interest rate swap agreements | — | 1.1 | — | — | 9.3 | — | ||||||||||||||||||||||||||||||||
| Total assets | $ | — | $ | 3.5 | $ | — | $ | — | $ | 29.0 | $ | — | ||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | — | $ | 14.5 | $ | — | $ | — | $ | 5.6 | $ | — | ||||||||||||||||||||||||||
| Cross-currency swaps | — | 265.6 | — | — | 46.8 | — | ||||||||||||||||||||||||||||||||
| Interest rate swap agreements | — | 32.8 | — | — | 22.6 | — | ||||||||||||||||||||||||||||||||
| Total liabilities | $ | — | $ | 312.9 | $ | — | $ | — | $ | 75.0 | $ | — | ||||||||||||||||||||||||||
| Measured at fair value on a non-recurring basis: | ||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
Goodwill(1) | $ | — | $ | — | $ | 2,050.1 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||
Contingent consideration(2) | — | — | — | — | — | 34.5 | ||||||||||||||||||||||||||||||||
Definite-lived intangible assets | — | — | 5.5 | — | — | 8.2 | ||||||||||||||||||||||||||||||||
Equity method investments | — | — | 3.5 | — | — | — | ||||||||||||||||||||||||||||||||
| Total assets | $ | — | $ | — | $ | 2,059.1 | $ | — | $ | — | $ | 42.7 | ||||||||||||||||||||||||||
(1) During the three months ended December 31, 2025, we assessed the fair value of our CSCA and CSCI goodwill to be $1,168.8 million and $881.3 million, respectively.
(2) During the year ended December 31, 2024, contingent consideration was recognized as a result of the divestiture of the Rare Diseases Business (refer to Note 3).
There were no transfers within Level 3 fair value measurements during the years ended December 31, 2025 or December 31, 2024 (refer to Note 7 for information on our investment securities and Note 12 for a discussion of derivatives).
Foreign Currency Forward Contracts
We value the foreign currency forward contracts based on notional amounts, contractual rates, and observable market inputs, such as currency exchange rates and credit risk.
Cross-currency Swaps
We value the cross-currency swaps using a method which discounts the expected cash flows resulting from the derivative. We estimate the cash flows using the contractual term of the derivative, including the period to maturity, and we use observable market-based inputs, including interest rate curves, and foreign exchange rate.
Interest Rate Swap Agreements
We value the interest rate swaps using a method which discounts the expected cash flows resulting from the derivative. We estimate the cash flows using the contractual term of the derivative, including the period to maturity and we use observable market-based inputs, including interest rate curves, and swap pricing.
Non-recurring Fair Value Measurements
The non-recurring fair values represent only those assets whose carrying values were adjusted to fair value during the reporting period.
CSCA and CSCI Reporting Units
During the year ended December 31, 2025, we prepared a goodwill impairment test utilizing a combination of discounted cash flow techniques and comparable company market approach for each reporting unit. Our cash flow projections included revenue growth rates and projected margins based on the reporting unit’s growth plans (Level 3 inputs). In our discounted cash flow analysis, we used a long-term growth rate of 2.5% for CSCA and 2.5% for CSCI. We used a discount rate of 11.5% for CSCA and 11.0% for CSCI in the analysis, which correlates with the required investment return and risk that we believe market participants would apply to the projected growth rate. In our comparable company market approach, we considered observable and unobservable market information (Level 2 and 3 inputs, respectively) which resulted in selected current and forward multiples averaging 7.0x of comparable adjusted earnings for CSCA. For CSCI, the current and forward multiples averaged 8.1x of comparable adjusted earnings.
Kazmira LLC
During the three months ended December 31, 2025, we identified potential indicators of impairment of our equity method investment in Kazmira LLC within our CSCA segment. We utilized an income approach, specifically a liquidation value method, to estimate the fair value based on the realizable value of Kazmira’s tangible assets. We concluded the fair value of our investment in Kazmira LLC was $3.5 million and recorded an impairment charge of $33.6 million (refer to Note 7).
Prevacid® Branded Product
During the years ended December 31, 2025 and 2024, we measured the impairment of our Prevacid® branded product, a definite-lived intangible asset. We utilized a discounted cash flow technique to estimate the fair value of the asset. Significant valuation inputs and assumptions relate to our projected future contribution margin, which include our estimated market share at planned investment levels and the expected selling price. We concluded the fair value was $5.5 million and $8.2 million as of December 31, 2025 and 2024, respectively.
Rare Diseases Business
On July 10, 2024, we completed the sale of our Rare Diseases Business to ESTEVE. The measurement of consideration received included a non-recurring valuation of the contingent earn-out milestone payments at $34.5 million utilizing a Monte Carlo simulation. The approach determined the expected value of achieving the milestone payments based on adjusted revenue projections for the Rare Diseases Business and the cash flows were discounted (refer to Note 3).
Fixed Rate Long-term Debt
Our fixed rate long-term debt consisted of the following (in millions):
| Year Ended | |||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Level 1 | Level 2 | Level 1 | Level 2 | ||||||||||||||||||||
| Public Bonds | |||||||||||||||||||||||
| Carrying value (excluding discount) | $ | 2,270.5 | $ | — | $ | 2,221.8 | $ | — | |||||||||||||||
| Fair value | $ | 2,149.8 | $ | — | $ | 2,083.9 | $ | — | |||||||||||||||
The fair values of our public bonds for all periods were based on quoted market prices.
The carrying amounts of our other financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, short-term debt, revolving credit agreements and variable rate long-term debt, approximate their fair value.About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.