Our discontinued operations consist of our generic prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel (collectively, the “RX business”).

On March 1, 2021, we announced a definitive agreement to sell our RX business to Altaris Capital Partners, LLC (“Altaris”). On July 6, 2021, we completed the sale of the RX business for aggregate consideration of $1.55 billion. The consideration included a $53.3 million reimbursement related to an Abbreviated New Drug Application (“ANDA") for a generic topical lotion which Altaris delivered in cash to Perrigo pursuant to the terms of the definitive agreement during the three months ended April 2, 2022. The sale resulted in a 2021 pre-tax gain, net

of professional fees, of $47.5 million recorded in Other (income) expense, net on the Statement of Operations for discontinued operations. The gain included a $159.3 million increase from the write-off of foreign currency translation adjustment from Accumulated other comprehensive income. The transaction gain was subject to final settlements under the Agreement, which were finalized in the first quarter of 2022 with no change to the gain reported for the year ended December 31, 2021.

As of March 1, 2021, we determined that the RX business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results have been reflected in our consolidated financial statements as a discontinued operation and its assets and liabilities have been classified as held for sale. We ceased recording depreciation and amortization on the RX business assets from March 1, 2021. We have not allocated any general corporate overhead to the discontinued operation.

Under the terms of a transition services agreement ("TSA"), we provided transition services for up to 24 months after the close of the transaction, which were substantially completed as of the end of the third quarter of 2022 . We also entered into reciprocal supply agreements pursuant to which Perrigo will supply certain products to the RX business and the RX business will supply certain products to Perrigo. The supply agreements have a term of four years, extendable up to seven years by the party who is the purchaser of the products under such agreement. Additionally, we extended distribution rights to the RX business for certain OTC products owned and manufactured by Perrigo that may be fulfilled through pharmacy channels, in return for a share of the net profits.


		Three Months Ended		Nine Months Ended
	Financial Statement Location	October 1, 2022		October 1, 2022
TSA income recognized	Administration expense	$	2.7	$	9.5
TSA income collected	Administration expense	$	2.1	$	7.8
Product & Royalty sales recognized	Net sales	$	25.0	$	95.8
Product & Royalty sales collected	Net sales	$	28.0	$	96.6
Purchases	Inventory	$	13.6	$	28.7
Inventory payments	Inventory	$	13.6	$	31.6

In the transaction, Perrigo retained certain pre-closing liabilities arising out of antitrust (refer to Note 15 - Contingencies under the header "Price-Fixing Lawsuits") and opioid matters and the Company’s Albuterol recall, subject to, in each case, Altaris' obligation to indemnify the Company for fifty percent of these liabilities up to an aggregate cap on Altaris' obligation of $50.0 million. We did not incur changes in liabilities or request payments from Altaris related to the indemnity of these liabilities during the three and nine months ended October 1, 2022.

For the three and nine months ended October 1, 2022, we reported $2.7 million and $1.3 million of net income, respectively, from discontinued operations, which primarily related to an income tax benefit, partially offset by legal fees for retained liabilities. Prior year income from discontinued operations, net of tax was as follows (in millions):


	Three Months Ended		Nine Months Ended
	October 2, 2021		October 2, 2021
Net sales	$	0.5	$	405.1
Cost of sales	0.1		258.4
Gross profit	0.4		146.7

Operating expenses
Distribution	—		6.1
Research and development	0.2		30.8
Selling	0.1		16.3
Administration	4.9		35.6


Other operating expense (income)	—		(0.4)
Total operating expenses	5.2		88.4

Operating income	(4.8)		58.3


Interest expense, net	—		0.8
Other (income) expense, net	(63.7)		(65.5)

Income from discontinued operations before tax	58.9		123.0


Income tax benefit	63.9		38.5
Income from discontinued operations, net of tax	$	(5.0)	$	84.5

During the three months and nine months ended October 2, 2021, we incurred $2.4 million and $11.7 million, respectively, of separation costs related to the sale of the RX business, which are recorded in administration expenses. We incurred no such costs in 2022.


	Nine Months Ended
	October 2, 2021
Cash flows from discontinued operations operating activities:
Depreciation and amortization	$	15.3







Cash flows from discontinued operations investing activities:
Asset acquisitions	$	(69.7)
Additions to property, plant and equipment	(6.1)

Asset acquisitions related to discontinued operations consisted of two ANDAs purchased under a contractual arrangement. On December 31, 2020, we purchased an ANDA for a generic topical gel for $16.4 million, which was subsequently paid during the three months ended April 3, 2021 and on March 8, 2021, we purchased an ANDA for a generic topical lotion for $53.3 million. These ANDAs were acquired by Altaris as part of the RX business sale.