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INCOME TAXES
 6 Months Ended
Jun. 27, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The effective tax rates were as follows:
Three Months EndedSix Months Ended
June 27, 2026June 28, 2025June 27, 2026June 28, 2025
16.0 %115.7 %0.6 %103.6 %

The effective tax rate on pre-tax income for the three months ended June 27, 2026, decreased when compared to the effective tax rate on pre-tax income for the three months ended June 28, 2025, primarily due to increases in our
reserves for uncertain tax positions in 2025 and changes in jurisdictional mix of earnings, offset by impacts related to the Dermacosmetics Business divestiture in 2026.

The effective tax rate on pre-tax loss for the six months ended June 27, 2026, decreased when compared to the effective tax rate on pre-tax income for the six months ended June 28, 2025, primarily due to a reduction in our reserves for uncertain tax positions in 2026, the impact of goodwill impairments in 2026, offset by impacts related to the Dermacosmetics Business divestiture in 2026 and increases in our reserves for uncertain tax positions in 2025.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes significant changes to federal tax law and permanently extends or modifies various provisions from the 2017 Tax Cuts and Jobs Act, including, but not limited to, deductions for federal bonus depreciation, domestic research and development expenditures, and certain changes, some taxpayer-favorable and others not, for determining the limitation on business interest expense. We evaluated the OBBBA provisions enacted and determined they resulted in a tax benefit of $21.7 million for 2025, primarily due to the increased realizability of deferred tax assets associated with interest expense carryforwards following the restoration of depreciation and amortization in the Section 163(j) business interest expense limitation calculation. The remaining provisions of the OBBBA have multiple effective dates, with certain provisions effective in 2025 and others implemented over subsequent years. We are not anticipating the remaining provisions of the OBBBA to have a material effect on our consolidated financial statements.

The Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, has recommended changes to numerous long-standing tax principles. In particular, the OECD's Pillar Two initiative introduces a global per-country minimum tax of 15%. Pillar Two legislation has been enacted or substantively enacted in many of the jurisdictions in which we operate. We are in compliance with the OECD’s Pillar Two framework. After a comprehensive assessment, we have determined that there is no material impact on our financial results as a result of the implementation of the Pillar Two framework to date.

We believe that our existing global tax strategies will adequately address any necessary adjustments to comply with Pillar Two without significantly affecting our effective tax rate or overall financial position. We will continue to monitor regulatory developments to ensure ongoing compliance, but we do not anticipate any adverse effects on our operations or profitability due to the implementation of the Pillar Two framework.

Internal Revenue Service Audits of Perrigo Company, a U.S. Subsidiary

Perrigo Company, our U.S. subsidiary (“Perrigo U.S.”), is engaged in a series of tax disputes in the U.S. relating primarily to transfer pricing adjustments including income in connection with the purchase, distribution, and sale of store-brand OTC pharmaceutical products in the United States, including the heartburn medication omeprazole. On August 27, 2014, we received a statutory notice of deficiency from the Internal Revenue Service (“IRS”) relating to our fiscal tax years ended June 27, 2009, and June 26, 2010 (the “2009 tax year” and “2010 tax year”, respectively). On April 20, 2017, we received a statutory notice of deficiency from the IRS for the years ended June 25, 2011 and June 30, 2012 (the “2011 tax year” and “2012 tax year”, respectively). Specifically, both statutory notices proposed adjustments related to the offshore reporting of profits on sales of omeprazole in the United States resulting from the assignment of an omeprazole distribution contract to an Israeli affiliate. In addition to the transfer pricing adjustments, which applied to all four tax years, the statutory notice of deficiency for the 2011 and 2012 tax years included adjustments requiring the capitalization and amortization of certain legal expenses that were deducted when paid or incurred in defending against certain patent infringement lawsuits related to Abbreviated New Drug Applications (“ANDAs”) filed with a Paragraph IV Certification.

We do not agree with the audit adjustments proposed by the IRS in either of the notices of deficiency. We paid the assessed amounts of tax, interest, and penalties set forth in the statutory notices and timely filed claims for refund on June 11, 2015 for the 2009 and 2010 tax years, and on June 7, 2017, for the 2011 and 2012 tax years. On August 15, 2017, following disallowance of such refund claims, we timely filed a complaint in the United States District Court for the Western District of Michigan seeking refunds of tax, interest, and penalties of $27.5 million for the 2009 tax year, $41.8 million for the 2010 tax year, $40.1 million for the 2011 tax year, and $24.7 million for the 2012 tax year, for a total of $134.1 million, plus statutory overpayment interest thereon from the dates of payment. The amounts sought in the complaint for the 2009 and 2010 tax years were recorded as deferred charges in Other non-current assets on our balance sheet during the three months ended March 28, 2015, and the amounts sought in the complaint for the 2011 and 2012 tax years were recorded as deferred charges in Other non-current assets on our balance sheet during the three months ended July 1, 2017.
A bench trial was held during the period May 25, 2021 to June 7, 2021 for the refund case in the United States District Court for the Western District of Michigan. The total amount of cumulative deferred charge that we are seeking to receive in this litigation is approximately $113.3 million, which reflects the impact of conceding that Perrigo U.S. should have received a 5.24% royalty on all omeprazole sales. That concession was previously paid and is the subject of the above refund claims. The issues outlined in the statutory notices of deficiency described above are continuing in nature, and the IRS will likely carry forward the adjustments set forth therein as long as the OTC medication is sold, in the case of the omeprazole issue, and for all post-2012 Paragraph IV filings that trigger patent infringement suits, in the case of the ANDA issue. On September 25, 2025, the court issued an opinion in the case that predominantly sided with Perrigo U.S. on both the omeprazole and the ANDA issues. The court ordered the parties to submit computations implementing the opinion and to submit a proposed final judgment by January 23, 2026, as extended. The court, thereafter, issued a final, appealable judgment on January 27, 2026. On March 26, 2026, the opinion of the District Court was appealed by the Department of Justice. Perrigo followed by filing a cross appeal on April 6, 2026.

On January 13, 2021, the IRS issued a 30-day letter and Revenue Agent's Report (“RAR”) with respect to its audit of our fiscal tax years ended June 29, 2013, June 28, 2014, and June 27, 2015. The 30-day letter proposed, among other modifications, transfer pricing adjustments in connection with the distribution of omeprazole consistent with the IRS position in the prior years in the aggregate amount of $141.6 million and ANDA-related adjustments in the aggregate amount of $21.9 million. We timely filed a protest to the 30-day letter for those additional adjustments but noted that, due to the pending refund litigation described above, IRS Appeals would not consider the merits of the omeprazole or ANDA matters. We believe that we should prevail on the merits on both carryforward issues and have reserved for taxes and interest payable on the 5.24% deemed royalty on omeprazole through the tax year ended December 31, 2018. Beginning with the tax year ended December 31, 2019, we began reporting income commensurate with the 5.24% deemed royalty. We have not reserved for the ANDA-related issue described above. While we believe we should prevail on the merits of this case, the outcome remains uncertain. If our litigation position on the omeprazole issue is not ultimately sustained as part of any appeal, the outcome for the 2009–2012 tax years could range from a reduction in the refund amount to denial of any refund. In addition, we expect that the outcome of the refund litigation could effectively bind future tax years. In that event, a final adverse ruling on the omeprazole issue could have a material impact on subsequent periods (i.e., 2013 to date), with additional tax liability in the range of $25.0 million to $128.0 million, not including interest and any applicable penalties.

On December 2, 2021, the IRS commenced an audit of our federal income tax returns for the tax years ended December 31, 2015, through December 31, 2019, which remains ongoing. On March 12, 2025, the IRS issued a NOPA to reduce Perrigo U.S.’s deductible interest expense for the 2015 through 2018 tax years by $348.2 million, using the same interest rates that we agreed with IRS Appeals for the 2014 and 2015 tax years, and a Closing Agreement has been since executed that resolves this issue with finality. We previously adjusted our reserves using such interest rates and, as a result, we are fully reserved for the adjustment specified in the NOPA.

On February 27, 2026, the IRS issued a NOPA proposing to reallocate income via transfer pricing adjustments arising from the activities of Perrigo Ireland for the 2016 through 2019 tax years. Although we strongly disagree with the IRS’s position and intend to pursue administrative and/or judicial remedies, the ultimate resolution is uncertain.