- Price
- $49.20
- Fair value
- $70.00
- Discount
- 29.7%
- Uncertainty
- Medium
- LSEG rating
- 2.00
- Moat
- Narrow
- Next earnings
- 2026-11-05
- Next earnings is estimate
- No
- Company name
- Prestige Consumer Healthcare
- Sector
- Consumer health products
- About
- Prestige Consumer Healthcare sells over-the-counter health and personal care products in North America, Australia and other markets. Its brands include Clear Eyes eye drops, Dramamine, Fleet, Monistat, Summer's Eve, DenTek, Debrox, TheraTears, Hydralyte and, since June 2026, Breathe Right nasal strips. It sells mainly to large retailers, drugstores and online sellers, and it earns money from the sale of these branded products. Most production is done by outside manufacturers, but it also has its own plants, including Pillar5, a sterile eye care plant in Canada that it bought in December 2025. Revenue was $1,088.7 million in the year to March 31, 2026. The company spends on advertising to keep its brands at the top of small product categories.
- Thesis
- The market fears that Prestige has lost part of its eye care business and that its new debt leaves little room for error. Its suppliers could not make enough Clear Eyes, so revenue fell 4.3% in the year to March 2026. Prestige then bought Breathe Right for $1.045 billion with a new term loan, so net debt rose to about $2 billion at June 30, 2026. Investors doubt that Pillar5, the eye care plant it bought, can raise output soon enough. For the gap to close, three things must be true. Eye care shipments must improve, as the company projects for fiscal 2027, and organic revenue must grow 1% to 3%. Breathe Right and LaCorium must add about $190 million of revenue this year and lift the gross margin to just above 57%. Adjusted free cash flow must reach $270 million or more, and the company must use it to reduce debt. The fiscal Q2 report on November 5, 2026, is the next test, and the full-year report in May 2027 shows whether the plan worked. If supply and debt reduction stay on plan, the gap can close over the next four to six quarters.
- Risks
- Clear Eyes supply depends on a small number of sterile plants, including Pillar5. If output does not rise as planned, eye care sales can fall again, and competitors can take shelf space.
Net debt rose to about $2 billion after the Breathe Right purchase, and most of the new term loan has a floating rate. A fall in cash flow or higher rates would slow debt reduction.
Prestige must combine two new businesses at the same time as it fixes eye care supply. Breathe Right must grow under new owners for the price to make sense.
Store brands sell similar products at lower prices. If consumers spend less, they can switch to cheaper store brands.
- Balance sheet
- Cash: $89M
Debt: $2.0B
Net debt: $2.0B
Interest cover: 3.8×
Undrawn credit line: $194M, to June 2031
Debt due within 12 months: $14M
Last debt due: 2034
Prestige funds itself with senior unsecured notes, a term loan and an asset-based revolving credit line. At June 30, 2026, it had $89.1 million of cash and $2,045 million of debt: $600 million of 3.750% notes due April 2031, $400 million of 5.125% notes due January 2028 and a new $1,045 million term loan due in 2033 at SOFR plus 2.00%. The term loan pays 0.25% of its principal each quarter, which is most of the debt due within 12 months. After June 30, 2026, Prestige borrowed $95 million more on the term loan for LaCorium. It also issued $400 million of 6.250% notes due July 2034 and used the money to repay the notes due 2028. The company said that net debt was about $2 billion at June 30, 2026, and that it will use free cash flow to reduce debt for the rest of fiscal 2027. The Breathe Right purchase brings about $150 million of expected tax benefits. Interest cover is operating income divided by net interest expense for the quarter to June 30, 2026. The revolving credit line of $225 million had no borrowings and $193.5 million of capacity.
As of 2026-06-30.
- Checkpoints
- Nov 5, 2026: Fiscal Q2 2027 results: eye care supply and debt. Pending. Watch: Positive organic revenue growth with better eye care shipments and lower net debt pass; a new fall in eye care sales or a cut to the outlook fails.
Feb 2027 (estimate): Fiscal Q3 2027 results: Breathe Right and cash flow. Pending. Watch: Results on track for adjusted free cash flow of $270 million or more and the adjusted EPS outlook pass; a lower outlook fails.
May 2027 (estimate): Fiscal 2027 results and fiscal 2028 outlook. Pending. Watch: Organic growth of 1% to 3% for the year, eye care back to growth and net debt well below $2 billion pass; another year of eye care decline fails.
- Recent events
- 2026-10-14: Prestige said that it will report its fiscal 2027 second quarter results before the market opens on November 5, 2026.
2026-08-14: Jeffrey Zerillo, Senior Vice President of Operations, retired from the company.
2026-08-06: Prestige reported fiscal Q1 2027 results. Revenue rose 6.5% to $265.7 million, and organic revenue grew 3.2%. GAAP EPS fell to $0.61 from $0.95 because of acquisition costs, and adjusted EPS rose to $0.98 from $0.95. Adjusted free cash flow was a record $83.7 million. Prestige raised its fiscal 2027 outlook to revenue of $1,290 million to $1,315 million and adjusted EPS of $4.55 to $4.65, with the acquisitions.
2026-07-15: Prestige issued $400 million of 6.250% senior notes due 2034. It used the money to repay its 5.125% notes due 2028, so it has no large debt due before 2031.
2026-07-01: Prestige completed the purchase of LaCorium Health, an Australian skin care company, with $95 million of new term loans. LaCorium has about $40 million of annual revenue.
2026-06-12: Prestige completed the purchase of Breathe Right and other brands from Foundation Consumer Brands for $1.045 billion in cash, funded with a new seven-year term loan. The brands have about $200 million of annual revenue.
2026-05-13: Prestige reported results for the year to March 31, 2026. Revenue fell 4.3% to $1,088.7 million because it could not supply enough Clear Eyes. Q4 revenue fell 5.0%. Diluted EPS was $3.91, and adjusted diluted EPS was $4.38. Free cash flow was $246.4 million.