ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis ("MD&A") is intended to provide readers with an understanding of our financial condition, results of operations, and cash flows by focusing on changes in certain key measures from year to year. This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes found in Item 8 of this report. See also "Cautionary Note Regarding Forward-Looking Statements."

EXECUTIVE OVERVIEW

Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries.

Our vision is to make lives better by bringing Quality, Affordable Self-Care Products that consumers trust everywhere they are sold. We are a leading provider of over-the-counter ("OTC") health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed. We are also a leading producer of generic prescription pharmaceutical topical products including creams, lotions, gels and nasal sprays.

This vision is designed to support our global reach as we shift our focus to our consumer branded and store brand portfolio and embrace the opportunities for growth we see ahead of us, while remaining loyal to our heritage. Our vision represents an evolution from healthcare to self-care, which takes advantage of a massive global trend and opens up a large number of adjacent growth opportunities. We define self-care as not just treating disease or helping individuals feel better after using a product, but also maintaining and enhancing their overall health and wellness. Consistent with our vision, in 2019 Perrigo’s management and board of directors launched a three-year strategy to transform the Company into a consumer self-care leader. Significant progress has been made on our transformation journey towards achieving the major components of management’s transformation strategy, which consists of: reconfiguring the portfolio, delivering on base plans, creating repeatable platforms for growth, driving organizational effectiveness and capabilities, funding growth sustainably, allocating capital, and delivering consistent and sustainable results in line with consumer-packaged goods peers.

Our fiscal year begins on January 1 and ends on December 31 of each year. We end our quarterly accounting periods on the Saturday closest to the end of the calendar quarter, with the fourth quarter ending on December 31 of each year.

Our Segments

Our reporting and operating segments are as follows:

•Consumer Self-Care Americas ("CSCA") comprises our consumer self-care business (OTC, infant formula, and oral self-care categories, our divested animal health category, and contract manufacturing) in the U.S., Mexico and Canada.

•Consumer Self-Care International ("CSCI") comprises our consumer self-care business primarily branded in Europe and Australia, our store brand business in the United Kingdom and parts of Europe and Asia, and our divested liquid licensed products business in the United Kingdom.

•Prescription Pharmaceuticals ("RX") comprises our prescription pharmaceuticals business in the U.S., which are predominantly generics, and our pharmaceuticals and diagnostic businesses in Israel.

Our segments reflect the way in which our management makes operating decisions, allocates resources and manages the growth and profitability of the Company.

For information on each segment, our business environment, and competitive landscape, refer to Item 1. Business. For results by segment and geographic locations see below "Segment Results" and Item 8. Note 2 and Note 20.

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Executive Overview

Strategy

Our objective is to grow our business by responsibly bringing our self-care vision to life. We aim to accomplish this by leveraging our global infrastructure to expand our product offerings, thereby providing new innovative products and product line extensions to existing consumers and servicing new consumers through entry into adjacent product categories, new geographies and new channels of distribution. Critical to this strategy is investing in and continually improving all aspects of our five strategic pillars which we call the Perrigo Advantage:

•High quality;

•Superior customer service;

•Leading innovation;

•Best cost; and

•Empowered people,

while remaining true to our three core values, Integrity - we do what is right; Respect - we demonstrate the value we hold for one another; and Responsibility - we hold ourselves accountable for our actions. While delivering on our strategy, we remain committed to our corporate responsibility and sustainability programs, which include environmental and social initiatives, as summarized in Item 1. Business - Corporate Social Responsibility.

We utilize shared services and Research and Development ("R&D") centers of excellence in order to help ensure consistency in our processes around the world, and to maintain focus on our five strategic pillars.

We continually reinvest in our R&D pipeline and work with partners as necessary to strive to be first-to-market with new products. Our organic growth has been driven by successful new product launches across all our segments and expansion in new channels like e-commerce. We expect to continue to grow inorganically through expansion into adjacent products, product categories, and channels, as well as potentially through entry into new geographic markets. We evaluate potential acquisition targets using an internally developed 12-point scale that is weighted towards accretive revenue growth which is highly correlated with increases in shareholder value.

Competitive Advantage

Our consumer-facing business model combines the unique competencies of a fast-moving consumer goods company and a pharmaceutical manufacturing company with the supply chain breadth necessary to support customers in the markets we serve. These durable business model competencies align with our five strategic pillars and provide us a competitive advantage in the marketplace. We fully integrate quality in our operational systems across all products. Our ability to manage our supply chain complexity across multiple dosage forms, formulations, and stock-keeping units, as well as acquisitions, integrations, and hundreds of global partners provides value to our customers. Product development capacity and life cycle management are at the core of our operational investments. Globally we have 21manufacturing plants that are all in good regulatory compliance standing and have systems and structures in place to guide our continued success. Our leadership team is fully engaged in aligning all our metrics and objectives around sustainable compliance with industry associations and regulatory agencies.

Among other things, we believe the following give us a competitive advantage and provide value to our customers:

•Leadership in first-to-market product development and product life cycle management;

•Turn-key regulatory and promotional capabilities;

•Management of supply chain complexity and utilizing economies of scale;

•Quality and cost effectiveness throughout the supply chain creating a sustainable, low-cost network;

•Deep understanding of consumer needs and customer strategies;

•Industry leading e-commerce support; and

•Expansive pan-European commercial infrastructure, brand-building capabilities, and a diverse product portfolio.

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Executive Overview

Recent Highlights

Year Ended December 31, 2020

•On March 1, 2021, we announced a definitive agreement to sell our generic RX Pharmaceuticals business to Altaris Capital Partners, LLC for total consideration of $1.55 billion, including $1.5 billion in cash. As part of the consideration, Altaris Capital Partners, LLC will also assume more than $50.0 million in potential R&D milestone payments and contingent purchase obligations with third-party Rx partners. The transaction is subject to antitrust and other customary closing conditions and is expected to close by the end of the third quarter of 2021. The sale of the generic RX Pharmaceuticals business is an important step in our transformation plan and will establish Perrigo as a pure-play consumer self-care company. The generic RX Pharmaceuticals business will be classified as discontinued operations starting in the first quarter of 2021.

•On March 1, 2021, CEO & President Murray S. Kessler signed a three-year contract extension until October 8, 2024 to complete the Company's self-care transformation. See Item 9B. Other Information for additional details.

•During the year ended December 31, 2020, we completed strategic acquisitions and a divestiture that advanced our self-care transformation. We acquired the oral care assets of High Ridge Brands ("Dr. Fresh"), three Eastern European OTC dermatological brands from Sanofi, entered a strategic investment in and long-term supply agreement with Kazmira LLC, and divested our U.K.- based Rosemont Pharmaceuticals business. For additional details on these and other asset acquisitions and the divestiture refer to the "Recent Trends and Developments" discussion in the CSCA and CSCI sections below.

•During the year ended December 31, 2020, we repurchased $164.2 million worth of shares at an average purchase price of $48.28 as part of our authorized share repurchase plan.

•Effective December 15, 2020, our board of directors appointed Orlando D. Ashford to serve as a director of the Company and a member of its Remuneration Committee.

•On October 27, 2020, we announced that we will be establishing a new North American Corporate Headquarters in Grand Rapids, Michigan. We signed an agreement to lease space located in Michigan State University's Grand Rapids Innovation Park and expect the building to be ready for occupancy in mid-2022. This new location will help us support cross-functional collaboration and position us to routinely interact with a statewide education and research network within the Grand Rapids Medical Mile. This expansion is consistent with our self-care transformation and will advance our self-care vision.

•Effective July 29, 2020, our board of directors appointed Katherine C. Doyle to serve as a director of the Company and a member of its Audit Committee.

•On June 19, 2020, we, through our subsidiary, issued $750.0 million in aggregate principal amount of 3.150% Senior Notes due 2030 (the "2020 Notes") and received net proceeds of $737.1 million after fees and market discount. On July 6, 2020, we used a portion of the proceeds to fund the redemption of $280.4 million of our 3.500% Senior Notes due March 15, 2021 and $309.6 million of our 3.500% Senior Notes due December 15, 2021.

Year Ended December 31, 2019

•On July 8, 2019, we completed the sale of our animal health business to PetIQ for cash consideration of $182.5 million, which resulted in a pre-tax gain of $71.7 million recorded in Other (income) expense, net on the Consolidated Statements of Operations.

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Executive Overview

•On July 1, 2019, we acquired 100% of the outstanding equity interest in Ranir Global Holdings, LLC ("Ranir"), a privately-held company. After post-closing adjustments, the total cash consideration paid was $747.7 million, net of $11.5 million cash acquired. Ranir is headquartered in Grand Rapids, Michigan, and is a leading global supplier of private label and branded oral self-care products. This transaction advanced our transformation to a consumer-focused, self-care company and enhanced our position as a global leader in consumer self-care solutions. Ranir operations are reported in our CSCA and CSCI segments (refer to Item 8. Note 3).

Impact of COVID-19 Pandemic

We have been impacted by the coronavirus (COVID-19) global pandemic and the responses by government entities to combat the virus. We currently continue to operate in all our jurisdictions and are complying with the rules and guidelines prescribed in each jurisdiction. We are closely monitoring the impact of COVID-19 on all aspects of our business in all our global locations. Our first priority has been, and will continue to be, the safety of our employees who continue to come to work and are dedicated to keeping our essential products flowing into the market. We have taken extra precautions at our facilities, to help ensure the health and safety of our employees, that are in line with guidance from global and local health authorities. Among other precautions implemented, we have generally restricted access to our production facilities worldwide to essential employees only and permitted a limited number of nonessential employees into other facilities with a strict approval process, implemented a multi-step pre-screening access process before an employee can enter a facility, communicated regularly with employees and provided education and implemented controls related to physical distancing and hygiene measures, implemented remote work arrangements where appropriate, restricted business travel, and prioritized production of essential products for several months following the initial outbreak. To date, these arrangements have not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting, and disclosure controls and procedures.

Both the outbreak of the disease and the actions to slow its spread have had an adverse impact on our operations by, among other things, increasing absenteeism, affecting the supply of raw materials and third party supplied finished goods, and preventing many of our employees from coming to work. We have responded to such impacts by, among other things, implementing protocols to protect the health of factory workers, adjusting production schedules, and seeking alternate suppliers where available, and so far, most of our facilities have continued to produce at high levels despite these challenges. However, a number of jurisdictions that relaxed such restrictions, or have experienced limited public adherence with suggested safety measures, have experienced new surges in COVID-19 cases. Many of these jurisdictions continue to contemplate or implement new or renewed restrictions. In addition, as conditions worldwide continue to evolve, there is uncertainty about the timing of widespread availability and acceptance of vaccines. As such, if the pandemic continues or intensifies, it is possible that these or other challenges may begin having a larger impact on our operations. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets which has adversely impacted, and may continue to adversely impact our stock price and our ability to access capital markets. The situation surrounding COVID-19 remains fluid, and we are actively managing our response and assessing potential impacts to our financial condition, supply chains and other operations, employees, results of operations, consumer demand for our products, and our ability to access capital. The magnitude of any such adverse impact cannot currently be determined due to a number of uncertainties surrounding COVID-19 (refer to Item 1A. Risk Factors - Operational Risks for related risks).

During the year ended December 31, 2020, all of our segments experienced product demand shifts that caused net sales to increase in certain product categories and decrease in other categories. We attribute these demand shifts to consumer and customer behavior surrounding the COVID-19 pandemic and the movement and social distancing restrictions put in place to combat spreading of the virus, such as travel bans, country lock-downs, and school closings as well as mask mandates. We also believe that the social distancing measures and mask mandates contributed to the decline in total cough and cold illnesses during the fourth quarter of 2020, which resulted in a decline of net sales for cough and cold products in our upper respiratory category. We currently expect this impact to continue in the first half of 2021.

Also, during the year ended December 31, 2020, we had incremental operating costs of approximately $18.0 million related to COVID-19, primarily due to the precautions implemented to keep our employees safe and properly rewarded during the pandemic as well as increased material costs. We expect that similar costs will continue into calendar year 2021. We also experienced a decrease in our effective tax rate due to additional interest and depreciation deductions provided for in the Coronavirus Aid, Relief and Economic Security Act (the “CARES

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Executive Overview

Act”) enacted on March 27, 2020 resulting in a reduction of income tax expense by approximately $36.6 million during the year ended December 31, 2020. Given our financial strength, we expect to continue to maintain sufficient liquidity as we manage through the pandemic.

Moving forward, whether the consumer and customer behavior surrounding COVID-19 that we have experienced in our segments will continue or change and if the incremental operating costs will continue or change is uncertain and will likely depend on the duration and severity of the COVID-19 pandemic, including if new strains of the virus become more prevalent, contagious or harmful, and each individual country's response to the pandemic. These factors may continue to increase or decrease consumer and/or customer demand for certain products within all our business segments. In addition, these dynamics may continue or change now that COVID-19 vaccines have been authorized for emergency use around the world with vaccination programs commencing at various rates. The impact of these vaccination efforts on the evolution of the pandemic globally remains uncertain at this time.

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Consolidated

RESULTS OF OPERATIONS

CONSOLIDATED

Consolidated Financial Results

Year Ended

Operating income % 2.3 % 4.2 % 5.0 %

*Total net sales by geography is derived from the location of the entity that sells to a third party.

Year Ended December 31, 2020 vs. December 31, 2019

Net sales increased $225.9 million, or 5%, due to:

•$303.1 million, or 6%, net increase due primarily to an increase in the CSCA segment of $252.1 million and CSCI segment of $47.4 million.

◦CSCA growth of $252.1 million included $168.2 million from the acquisitions of Ranir and Dr. Fresh for sales in periods of 2020 with no comparable sales in 2019, and net sales growth of $83.9 million driven primarily by certain OTC product categories. OTC growth was due primarily to favorable consumer conversion to products in our digestive health category, the increase of consumer COVID-19 related demand experienced in the first half of 2020 in the pain and sleep aids category, and the incremental impact of new product sales, all of which benefited from strong e-commerce performance. These were partially offset by a $38.6 million reduction in sales from the weak start to the cough cold season, and normal pricing pressure.

◦In our CSCI segment, net sales increased $47.4 million due primarily to Ranir, Dr. Fresh and Eastern European dermatology brands acquisitions contributing $45.3 million in sales for periods of 2020 with no comparable sales in 2019, net positive pricing, the incremental impact of new product sales, and an increase in demand for certain products in our pain and sleep-aids and VMS categories due to pandemic-related factors. These increases were partially offset by a decrease in sales of certain products in our skincare and personal hygiene and healthy lifestyle categories due to pandemic-related factors, a decrease in sales of $24.1 million from the weak start to the cough cold season, and discontinued products of $10.0 million.

◦A $3.6 million increase in the RX segment was due primarily to pre-recall Albuterol sales of $137.6 million and an increase of $27.3 million in other new product sales. These increases were largely offset by normal pricing pressure, $35.2 million of discontinued lower margin distribution

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Consolidated

products, $31.2 million for the establishment of the estimated Albuterol recall reserve, and lower prescription volumes from the COVID-19 pandemic related reductions in doctor visits.

•$77.2 million decrease due primarily to:

◦$84.0 million decrease due to our divested animal health business previously included in our CSCA segment, and our divested Rosemont pharmaceuticals business and Canoderm prescription product, both previously included in our CSCI segment; and

◦$2.4 million decrease primarily from unfavorable foreign currency translation in the Mexican Peso; partially offset by

◦$9.2 million increase due to the absence of the Ranitidine retail market withdrawal included in the prior year.

Operating income decreased $89.4 million, or 44%, due to:

•$41.9 million increase in gross profit due primarily to increased net sales as described above, which was partially offset by the net charge of $22.5 million from the Albuterol recall, infant nutrition operational inefficiencies, increased labor and overhead costs associated with the COVID-19 pandemic, and an increase in commodity costs for a certain OTC brand. Gross profit as a percentage of net sales decreased 80 basis points due primarily to the gross profit factors discussed above, unfavorable product mix mainly due to the oral self-care acquisitions, and normal pricing pressures, partially offset by the absence of the Ranitidine retail market withdrawal included in the prior year; more than offset by

•$131.3 million increase in operating expenses due primarily to:

◦$162.3 million increase in impairment charges due to the RX goodwill impairment charges of $346.8 million in the current year being partially offset by $184.5 million in impairment charges primarily for RX goodwill and certain definite-lived intangible assets in our RX and CSCI segments taken in the prior year; and

◦$5.1 million increase in selling and administration expenses due primarily to the inclusion of expenses from our acquisitions of Ranir and Dr. Fresh, an increase in insurance expense, an increase in employee incentive compensation expense, and incremental COVID-19 related operating costs, including employee bonuses and costs related to measures implemented to keep employees safe, partially offset by the absence of expenses from the divested animal health and Rosemont pharmaceutical businesses, the absence of acquisition and integration-related charges related to the acquisition of Ranir, and savings from our current Project Momentum cost savings initiative; partially offset by

◦$22.8 million decrease in restructuring expenses related primarily to the prior year reorganization of our sales force in France and reorganization of our executive management team;

◦$9.8 million decrease in R&D expense due primarily to the absence of pre-commercialization R&D costs for Albuterol in the prior year; and

◦The absence of a $7.1 million asset abandonment charge related to our waste water treatment plant in Vermont taken in the prior year.

Year Ended December 31, 2019 vs. December 31, 2018

Net sales increased $105.7 million, or 2%, due to:

•$279.4 million, or a 6%, net increase due to new product sales of $230.5 million, an increase of $151.4 million due to our acquisition of Ranir, and an overall increase in demand for existing products, partially offset by normal levels of competition-driven pricing pressure primarily in our RX segment and a $59.0 million decrease due to discontinued products; partially offset by

•$173.7 million decrease due to:

◦$86.4 million decrease due primarily to unfavorable Euro foreign currency translation;

◦$50.2 million decrease due to our divested animal health business;

◦$27.9 million decrease due to our exited infant foods business; and

Perrigo Company plc - Item 7

Consolidated

◦$9.2 million decrease due to the retail market withdrawal of Ranitidine products.

Operating income decreased $31.7 million, or 13%, due to:

•$58.2 milliondecrease in gross profit, or a 200 basis point decrease in gross profit as a percentage of net sales, due primarily to normal levels of competition-driven pricing pressure in our RX segment, the retail market withdrawal of Ranitidine products and unfavorable product mix; partially offset by

•$26.5 million decrease in operating expenses due primarily to:

◦$39.9 million decrease in impairment charges due primarily to the $221.9 million in impairment charges related to animal health goodwill and intangible assets and certain in-process research and development ("IPR&D") taken in 2018 being partially offset by $184.5 million in 2019 impairment charges related to RX goodwill and certain definite-lived intangible assets in our RX and CSCI segments; and

◦$31.1 million decrease in R&D expenses primarily related to the absence of a $50.0 million upfront license fee payment to enter into a license agreement with Merck Sharp & Dohme Corp in the prior year, partially offset by 2019 innovation investments and pre-commercialization R&D costs for Albuterol; partially offset by

◦$17.8 million increase due to the absence of an insurance recovery received in the prior year; and

◦$20.6 million increase in selling and administrative expenses due primarily to restored employee incentive compensation and increased acquisition and integration-related charges due to the Ranir acquisition; partially offset by favorable Euro foreign currency translation.

Recent Developments

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

We are 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 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 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 for the capitalization and amortization of certain expenses that were deducted when paid or incurred in defending against certain patent infringement lawsuits related to Abbreviated New Drug Applications (“ANDAs”).

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 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.

The previously scheduled trial date has been continued to May 25, 2021 for the refund case. The total amount of cumulative deferred charge that we are seeking to receive in this litigation is approximately $111.6 million, which reflects the impact of conceding that Perrigo Company, our U.S. subsidiary ("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, and the IRS will

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Consolidated

likely carry forward the adjustments set forth therein as long as the drug 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 January 13, 2021, the IRS issued a 30-day letter with respect to its audit of our fiscal tax years ended June 29, 2013, June 28, 2014, and June 27, 2015. The IRS letter proposed, among other modifications, transfer pricing adjustments regarding our profits from the distribution of omeprazole in such years in the aggregate amount of $141.6 million. We timely filed a protest to the 30-day letter noting that due to the pending litigation described above, IRS Appeals will not consider the merits of the omeprazole or ANDA matters. We believe that we should prevail on the merits on both 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 sustained, 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, an adverse ruling on the omeprazole issue could have a material impact on subsequent periods, with additional tax liability in the range of $24.0 million to $112.0 million, not including interest and any applicable penalties.

On May 7, 2020, we received a final NOPA from the IRS regarding the deductibility of interest related to the IRS audit of Perrigo Company for the years ended June 28, 2014 and June 27, 2015. On January 13, 2021, we received a Revenue Agent Report (“RAR”) for the tax years ended June 29, 2013, June 28, 2014 and June 27, 2015 which retains the adjustment from the NOPA disallowing interest expense deductions of $414.7 million on $7.5 billion in debts owed to Perrigo Company plc for tax years ended June 28, 2014 and June 27, 2015, together with the 30-day letter requiring us to file a written Protest and request for IRS Appeals consideration. The Protest was filed with the IRS on February 26, 2021. The RAR caps the interest rate on the debt for U.S. federal income tax purposes at 130.0% of the Applicable Federal Rate (a blended rate reduction of 4% per annum) on the stated grounds that the loans were not negotiated on an arm's-length basis. We strongly disagree with the IRS position and we will pursue all available administrative and judicial remedies necessary.

Internal Revenue Service Audit of Athena Neurosciences, Inc., a U.S. Subsidiary

On April 26, 2019, we received a revised NOPA from the IRS regarding transfer pricing positions related to the IRS audit of Athena for the years ended December 31, 2011, December 31, 2012 and December 31, 2013. The NOPA carries forward the IRS's theory from its 2017 draft NOPA that when Elan took over the future funding of Athena's in-process research and development after acquiring Athena in 1996, Elan should have paid a substantially higher royalty rate for the right to exploit Athena's intellectual property, rather than rates based on transfer pricing documentation prepared by Elan's external tax advisors. The NOPA proposes a payment of $843.0 million, which represents additional tax and a 40.0% penalty. This amount excludes consideration of offsetting tax attributes and any potential interest that may be imposed. We strongly disagree with the IRS position and will pursue all available administrative and judicial remedies, including those available under the U.S. - Ireland Income Tax Treaty to alleviate double taxation. Accordingly, on April 14, 2020, we filed a request for Competent Authority Assistance with the IRS. The request was accepted and is under review.

Irish Tax Appeals Commission Notice of Amended Assessment

On November 29, 2018, we received a Notice of Amended Assessment ("NoA") in the amount of €1,636.0 million, plus interest and any applicable penalties, from the Irish Office of the Revenue Commissioners (“Irish Revenue”) for the years ended December 31, 2012 and December 31, 2013. The NoA relates to the tax treatment of the 2013 sale of the Tysabri® intellectual property and other assets related to Tysabri® to Biogen Idec by Elan Pharma. We strongly disagree with this assessment and believe that the NoA is without merit and incorrect as a matter of law. We appealed the assessment to the Tax Appeals Commission ("TAC") in December 2018. The tax appeal was stayed by the Irish High Court in February 2019 pending the outcome of judicial review proceedings which were separately commenced by Elan Pharma in the Irish High Court. On November 4, 2020, the Irish High Court ruled that the NoA did not violate our constitutional rights and legitimate expectations as a taxpayer. The Irish High Court did not review the technical merits of the NoA under Irish tax law. The TAC will now consider whether the NoA is correct as a matter of Irish tax law. The tax appeal is scheduled to be heard in November 2021. Elan Pharma will continue to vigorously pursue its tax appeal before the TAC.

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Consolidated

Israeli Notice of Assessment

On December 29, 2020, we received a Stage A assessment from the Israeli Tax Authority for the tax years ended December 31, 2015 through December 31, 2017 in the amount of $63.8 million relating to attribution of intangible income to Israel, income qualifying for a lower preferential rate of tax, exemption from capital gains tax, and deduction of certain settlement payments. We have been granted an extension of time, until March 28, 2021 to file a protest to move the matter to Stage B of the assessment process. Our protest will demonstrate that we strongly disagree with the assessment and will pursue all available administrative and judicial remedies necessary.

Refer to Item 1A. Risk Factors - Tax Related Risks and Item 8. Note 15 for additional information on tax related matters.

Impairments

Throughout the years ended December 31, 2020, December 31, 2019, and December 31, 2018, we identified impairment indicators for various assets across our different segments, and therefore, we performed impairment testing. Below is a summary of the impairment charges recorded by segment (in millions):

During the year ended December 31, 2020, we recorded $346.8 million in goodwill impairment charges related to our RX U.S. reporting unit.

Year Ended

CSCA CSCI(1) RX(2) Total

Definite-lived intangible assets — 9.7 59.8 69.5

(1) Relates primarily to an intangible asset for certain pain relief products that we license from a third party.

(2) Relates primarily to our RX U.S. reporting unit goodwill, and definite-lived intangible assets for our generic clindamycin and benzoyl peroxide topical gel (generic equivalent to Benzaclin®), our Evamist® branded product, and a generic product.

Year Ended

CSCA(1) CSCI Total

Indefinite-lived intangible assets 27.7 — 27.7

Definite-lived intangible assets 48.9 0.7 49.6

Assets held-for-sale 0.6 1.1 1.7

(1) Relates primarily to animal health and certain IPR&D.

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CSCA

CONSUMER SELF-CARE AMERICAS

Recent Trends and Developments

•In March and April of 2020, we experienced a surge in demand for many of our OTC and infant nutrition products, which we attributed to consumer reaction to the outbreak of COVID-19. In May and June of 2020, the initial surge slowed, and we experienced a decrease in demand for some of these products, which we attributed primarily to the de-load of consumer pantry stocking that occurred during the initial March and April surge. During the fourth quarter of 2020, net sales of cough and cold products decreased as a result of the decline in total cough cold illnesses, which we believe is attributed to social distancing and mask mandates put in place to combat COVID-19. With social distancing and mask mandates continuing, we currently anticipate that we will continue to experience lower demand for cough and cold products into the first half of 2021. Alternatively, it is possible that we could experience additional surges in demand if further concentrated waves of COVID-19 occur.

•On January 11, 2021, we announced that we entered into a formal partnership with Michigan State University that will combine the university's clinical and research expertise with our product innovation, manufacturing scale and retail partnerships to form a new model for self-care innovation. We believe this partnership has the potential to yield customized transformative self-care solutions for consumers.

•On June 17, 2020, we announced our entrance into the cannabidiol ("CBD") market through a strategic investment in and long-term supply agreement with Kazmira LLC ("Kazmira"), a leading supplier of hemp-based, CBD products free of tetrahydrocannabinol ("zero-THC"). In addition to the supply agreement, we acquired an approximate 20% equity stake in Kazmira for $50.0 million with $15.0 million paid at close of the transaction and the balance due within 18 months. Our minority equity investment initiates the first phase of the partnership in which we will collaborate to scale-up Kazmira’s facilities and laboratories, in accordance with current Good Manufacturing Practices and to produce zero-THC CBD from industrial hemp that meets our standards for reliability and consistency. In the second phase of the partnership, we will work to launch zero-THC, hemp-based CBD products in a number of global markets, while leveraging our supply agreement with Kazmira, which is exclusive for the U.S. store brand market (refer to Item 8. Note 8 and Note 11).

•On April 1, 2020, we received approval from the FDA to sell OTC diclofenac sodium topical gel 1%, the store brand equivalent to Voltaren® gel. On September 8, 2020, we launched this product to our retail partners under store brand labels, which provides consumers with a high-quality, value alternative for the temporary relief of arthritis pain.

•On April 1, 2020, we acquired the oral care assets of High Ridge Brands ("Dr. Fresh") for total purchase consideration of $113.0 million, subject to customary post-closing adjustments, including a working capital settlement. After post-closing adjustments, as of December 31, 2020, total cash consideration paid was $106.2 million. This acquisition includes the children’s oral care value brand, Firefly®, in addition to the REACH® and Dr. Fresh® brands, and a licensing portfolio. The addition of these brands positions us as the number one fastest-growing value brand player in the children’s oral care category and the licensing portfolio will enable creative solutions for our customers (refer to Item 8. Note 3).

•On January 3, 2020, we acquired Steripod®, a leading toothbrush accessory brand and innovator in the toothbrush protector market, from Bonfit America Inc. Total consideration paid was $26.0 million. The transaction was accounted for as an asset acquisition, in which we capitalized $25.1 million as a brand-named intangible asset. The remainder of the purchase price was allocated to working capital. The acquisition, which includes a portfolio of antibacterial toothbrush protectors, kids’ toothbrush protectors and tongue cleaners, complements our current portfolio of oral self-care products, and leverages our manufacturing and marketing platform (refer to Item 8. Note 3).

Perrigo Company plc - Item 7

CSCA

Segment Financial Results

Year Ended December 31, 2020 vs. December 31, 2019

Year Ended

(in millions, except percentages) December 31,2020 December 31,2019

Operating income % 17.5 % 16.6 %

Net sales increased $205.3 million, or 8%, due primarily to:

•$252.1 million, or 10%, net increase due primarily to an increase of $178.2 million in our oral-self care category and from demand driven growth in certain of our OTC product categories. CSCA continued to benefit from robust e-commerce growth.

◦Net sales in our oral self-care category increased $168.2 million due to the acquisitions of Ranir and Dr. Fresh for sales in periods of 2020 with no comparable sales for 2019. In periods with comparable sales in 2019 and 2020, net sales grew $10.0 million driven by the incremental impact of new product sales and growth in the Plackers® brand. These increases were partially offset by declines in sales of travel sized products related to COVID-19 travel restrictions.

◦In OTC, the net sales increase of $75.5 million was due primarily to favorable consumer conversion to products in our digestive health category, the increase of consumer COVID-19 related demand experienced in the first half of 2020 in the pain and sleep aids category, and the incremental impact of new product sales led by Prevacid®, Diclofenac sodium topical gel 1%, and Esomeprazole Mini. These increases were partially offset by a decline of $38.6 million in sales of certain products in the upper respiratory and pain and sleep aids categories, primarily in the fourth quarter of 2020, resulting from the weak start to the cough cold season, and normal pricing pressure on certain products.

◦Nutrition net sales decreased $2.6 million due primarily to the decrease in infant formula product sales resulting from the prior year pre-build of contract pack inventory, operational challenges that led to a shortfall in achieving normal customer service levels, multi-year pricing contracts, and $5.7 million in discontinued products. These decreases were partially offset by new product sales from an infant formula launch at a major retailer in the prior year.

•$46.8 million decrease due primarily to:

◦$43.7 million decrease due to our divested animal health business; and

◦$10.5 million decrease from unfavorable Mexican peso foreign currency translation; partially offset by

◦$7.4 million increase due to the absence of the Ranitidine retail market withdrawal impact included in the prior year.

Perrigo Company plc - Item 7

CSCA

Operating income increased $58.0 million, or 14%, due primarily to:

•$59.6 million increase in gross profit due primarily to increased net sales as described above, partially offset by operating inefficiencies at one of our infant nutrition facilities as well as increased labor and overhead costs associated with the COVID-19 pandemic. Gross profit as a percentage of net sales decreased 20 basis points due primarily to the operating inefficiencies described above and pricing pressure on certain products, partially offset by the absence of the Ranitidine retail market withdrawal included in the prior year, and favorable product mix; further offset by

•$1.6 million increase in operating expenses due primarily to:

◦$15.3 million increase in selling and administration expenses due primarily to the inclusion of expenses from our acquisitions of Ranir and Dr. Fresh and an increase in promotional expenses on branded products in advance of their pending market launches, partially offset by the absence of expenses from the divested animal health business and savings from our current Project Momentum cost savings initiative; partially offset by

◦The absence of a $7.1 million asset abandonment charge related to our waste water treatment plant in Vermont taken in the prior year; and

◦$4.0 million legal settlement received in the current year.

Year Ended December 31, 2019 vs. December 31, 2018

Year Ended

(in millions, except percentages) December 31,2019 December 31,2018

Operating income % 16.6 % 7.2 %

Net sales increased $76.1 million, or 3%, due primarily to:

•$162.1 million, or 7%, net increase due primarily to an increase of $106.4 million due to our acquisition of Ranir, increased volume due to OTC category growth, market share gains from store brand competitors partly driven by $36.2 million of new product sales, growth in OTC e-commerce, and increased OTC store brand penetration versus national brand, partially offset by lower infant formula contract pack sales as several branded customers made the strategic decision to exit the category, lower net sales in the Mexico business, and competition-driven pricing pressure; partially offset by

•$85.5 million decrease due to:

◦$50.2 million decrease due to our divested animal health business;

◦$27.9 million decrease due to our exited foods business; and

◦$7.4 million decrease due to the retail market withdrawal of Ranitidine products.

Operating income increased $239.6 million, or 137%, due primarily to:

•$9.9 million increase in gross profit due primarily to increased net sales as described above, but a 60 basis point decrease in gross profit as a percentage of net sales, due primarily to pricing pressures, the retail market withdrawal of Ranitidine products, and unfavorable product mix; and

Perrigo Company plc - Item 7

CSCA

•$229.7 million decrease in operating expenses due primarily to:

◦$218.4 million decrease in impairment charges due primarily to the absence of $213.2 million in impairment charges related to animal health goodwill and intangible assets and a $5.0 million decrease in certain IPR&D impairments; and

◦$34.5 million decrease in R&D expense due primarily to the absence of a $50.0 million upfront license fee payment to enter into a license agreement with Merck; partially offset by current year innovation investments; partially offset by

◦$15.5 million increase in selling and administrative expenses due primarily to increased advertising and promotional spending to support product launches and e-commerce growth, an increase in employee-related expenses, and the acquisition of Ranir; and

◦$7.1 million increase due to an asset abandonment charge related to our waste water treatment plant in Vermont.

CONSUMER SELF-CARE INTERNATIONAL

Recent Trends and Developments

•Throughout the year, we experienced demand shifts for certain products, which we attributed to consumer dynamics related to the COVID-19 pandemic and the movement and social distancing restrictions put in place to combat spreading of the virus, such as travel bans and country lock-downs, as well as mask mandates. Demand for certain products in our pain and sleep-aids and vitamins, minerals and supplements ("VMS") categories increased, while demand for products in our upper respiratory, skincare and personal hygiene, and healthy lifestyle categories decreased. It is possible that demand in these categories may continue to decrease.

•On October 30, 2020, we acquired three Eastern European OTC dermatological brands, skincare brands Emolium®, Iwostin® and hair loss treatment brand Loxon® from Sanofi for €53.3 million ($62.3 million). The acquisition has been accounted for as a business combination. The addition of these brands complements our already robust skincare portfolio and adds scale to our Eastern European business. The addition of these market-leading OTC brands serves as another step for our growth plans and provides new opportunities for self-care revenue synergy in the European markets (refer to Item 8. Note 3).

•Consistent with our strategy to reconfigure our portfolio to focus on our consumer self-care businesses, on June 19, 2020, we completed the sale of our U.K.- based Rosemont Pharmaceuticals business, a generic prescription pharmaceuticals manufacturer focused on liquid medicines, to a U.K. headquartered private equity firm for cash consideration of £155.6 million (approximately $195.0 million), which resulted in a pre-tax loss of $21.1 million (refer to Item 8. Note 3).

•On February 13, 2020, we acquired Dexsil®,a silicon supplement brand, from RXW Group NV, for total cash consideration paid of approximately $8.0 million. The transaction was accounted for as an asset acquisition, in which we capitalized the consideration paid as a brand-named intangible asset. The acquisition provides additional opportunities for growth through new product launches and geographic expansion (refer to Item 8. Note 3).

Perrigo Company plc - Item 7

CSCI

Segment Financial Results

Year Ended December 31, 2020 vs. December 31, 2019

Year Ended

(in millions, except percentages) December 31,2020 December 31,2019

Operating income % 2.3 % 1.4 %

Net sales increased $13.0 million, or 1%, due primarily to:

•$47.4 million, or 3%, net increase due primarily to the increase of $45.3 million in sales from our acquisitions of Ranir, Dr. Fresh and Eastern European dermatology brands for periods of 2020 with no comparable sales in 2019, and the incremental impact of new product sales including line extensions in the ACO dermatology product line and the XLS Forte-Five weight management brand in the skincare and personal hygiene and healthy lifestyle categories, respectively. The segment also benefited from an increase in demand for products in our pain and sleep-aids and VMS categories due to pandemic-related consumer behavior in favor of immune support, and an increase in sales from our U.K. store brand business. These increases were partially offset by a decrease in sales of certain products in our skincare and personal hygiene and healthy lifestyle categories due to pandemic-related consumer behavior, school closings, social distancing measures and country lock-downs, a decline of $24.1 million for products in the upper respiratory category from the weak start to the cough cold season, experienced in the fourth quarter of 2020, and discontinued products of $10.0 million.

•$34.4 million decrease due primarily to:

◦$40.3 million decrease due to our divested Rosemont pharmaceuticals business and Canoderm prescription product previously included in the Nordic region; partially offset by

◦$4.1 million increase from favorable foreign currency translation primarily related to the Euro; and

◦$1.8 million increase due to the absence of the Ranitidine retail market withdrawal impact included in the prior year.

Operating income increased $12.7 million, or 65%, due to:

•$1.6 million increase in gross profit due primarily to increased net sales as described above, partially offset by higher commodity costs for a certain OTC brand. Gross profit as a percentage of net sales decreased 40 basis points due primarily to the addition of the oral self-care category and improved performance in the U.K. store brand business which both have a relatively lower gross margins than the overall portfolio, the impact from divested businesses, and an increase in commodity costs for a certain OTC brand, partially offset by the absence of the Ranitidine retail market withdrawal included in the prior year; and

•$11.1 million decrease in operating expenses due primarily to:

◦$9.7 million decrease in impairment changes due to an impairment taken in the prior year on a certain definite-lived intangible asset; and

◦$8.3 million decrease due primarily to the absence of restructuring expenses related to the reorganization of our sales force in France included in the prior year; partially offset by

◦$4.7 million increase in R&D expenses towards continued innovation efforts; and

◦$1.1 million increase in selling and administration expenses due primarily to unfavorable Euro foreign currency translation, and the inclusion of expenses from our acquisitions of Ranir and Dr. Fresh, partially offset by a reduction in selling, advertising and promotional expenses, the absence of expenses from the divestiture of our Rosemont pharmaceuticals business, and savings from our current Project Momentum cost savings initiative.

Perrigo Company plc - Item 7

CSCI

Year Ended December 31, 2019 vs. December 31, 2018

Year Ended

(in millions, except percentages) December 31,2019 December 31,2018

Operating income $ 19.6 $ 6.8

Operating income % 1.4 % 0.5 %

Net sales decreased $17.1 million, or 1%, due primarily to:

•$71.6 million, or 5%, net increase due to new product sales of $108.0 million driven by the launch of XLS-Medical Forte 5 and new products in the Phytosun® naturals portfolio, a $45.0 million increase due to our acquisition of Ranir, and volume increases in our UK store brand business, partially offset by lower net sales in France associated with restructuring the sales force and a $13.1 million decrease due to discontinued products; more than offset by

•$88.7 million decrease due to:

◦$86.9 million decrease due primarily to unfavorable Euro foreign currency translation; and

◦$1.8 million decrease due to the retail market withdrawal of Ranitidine products.

Operating income increased $12.8 million, or 188%, due to:

•$29.2 million decrease in gross profit due primarily to unfavorable Euro foreign currency translation, partially offset by the acquisition of Ranir and a 150 basis point decrease in gross profit as a percentage of net sales due primarily to improved performance in the UK store brand business and the acquisition of Ranir, both of which have relatively lower gross margins than the overall portfolio; more than offset by

•$42.0 million decrease in operating expenses due primarily to:

◦$42.4 million decrease in selling and administrative expenses due primarily to favorable Euro foreign currency translation, partially offset by an increase in employee-related expenses; and

◦$7.7 million decrease in restructuring expenses due primarily to the absence of cost reduction initiatives that were taken in the prior year; partially offset by

◦$7.9 million increase in impairment charges due primarily to a certain definite-lived intangible asset.

PRESCRIPTION PHARMACEUTICALS

Recent Trends and Developments

•We continued to experience pricing erosion, which moderated compared to the prior year. The key drivers behind the pricing reductions were competitive regulatory approvals for products in our portfolio resulting in increased competition. We expect pricing erosion to continue to impact the segment.

Perrigo Company plc- Item 7

•Starting in the second quarter of 2020, with a partial rebound in the third quarter, we experienced a reduction in demand for certain of our existing base products due to lower prescription volumes driven by the COVID-19 pandemic impact on doctor visits. The decrease in demand for existing base products was market-wide.

•On December 31, 2020, we purchased an Abbreviated New Drug Application ("ANDA") for a generic topical gel for $16.4 million payable in January 2021, which we capitalized as a developed product technology intangible asset. We launched the product in January 2021 and began amortizing it over a 20-year useful life (refer to Item 8. Note 3).

•On September 17, 2020, we initiated a voluntary nationwide recall to the retail level of Albuterol and market withdrawal as a result of complaints from patients that some units may not dispense due to clogging. While corrective action plans are underway, we do not expect to reintroduce the product in calendar year 2021. As a result of the recall, we recorded a net charge of $22.5 million in our Consolidated Statements of Operations during the third quarter. We, along with our manufacturing partner Catalent Pharma Solutions, launched Albuterol in the first quarter of 2020 after receiving approval from the FDA of our ANDA on February 24, 2020.

•During the three months ended September 26, 2020, our RX U.S. reporting unit had an indication of potential impairment primarily from the stoppage of production and distribution of Albuterol and voluntary nationwide recall at the retail level, combined with a decline in market multiples. We prepared an impairment test as of September 26, 2020 and determined the carrying value of the RX U.S. reporting unit exceeded its estimated fair value. We recorded a goodwill impairment of $202.4 million (refer to Item 8. Note 4 and Note 7).

•During the three months ended December 31, 2020, we identified indicators of impairment in our RX U.S. reporting unit and performed a quantitative impairment test. As a result, we determined the reporting unit’s carrying value exceeded estimated fair value. We recognized a further goodwill impairment of $144.4 million (refer to Item 8. Note 4 and Note 7).

•As described in Item 1. Business - Materials Sourcing, we rely on third parties to source many of our raw materials and to manufacture certain dosage forms that we distribute, and certain of these supplier relationships are single-source. Starting in the second quarter of 2021, we anticipate a potential supply disruption of a generic prescription product manufactured by a third party, which disruption could adversely affect our ability to sell and ship the product to customers in a timely manner. While we have identified one or more potential alternative suppliers of the product, delays in qualifying such alternative supplier may result in a supply disruption for the duration of 2021 and re-establishment of reliable supply may not be achieved until 2022 and cannot be assured. If a supply disruption occurs, depending on the duration of the disruption, the adverse impact on our revenue in the RX segment in 2021 could be material. Refer to Item 1A. Risk Factors - Operational Risks.

Segment Financial Results

Year Ended December 31, 2020 vs. December 31, 2019

Year Ended

(in millions, except percentages) December 31,2020 December 31,2019

Operating income (loss) $ (177.7) $ 2.6

Operating income (loss) % (18.2) % 0.3 %

Net sales increased $7.6 million, or 1%, due to:

•$3.6 million net sales increase was due primarily to $137.6 million from Albuterol sales prior to the recall and an increase of $27.3 million in other new product sales. These increases were largely offset by normal pricing pressure, $35.2 million of discontinued lower margin distribution products, $31.2 million for the establishment of the estimated Albuterol recall reserve, and lower prescription volumes caused by reductions in doctor visits from the COVID-19 pandemic.

Perrigo Company plc- Item 7

•$4.0 million increase due to favorable foreign currency translation.

Operating income decreased $180.3 million, or 6,935%, due to:

•$19.6 million decrease in gross profit due primarily to the net charge of $22.5 million from the Albuterol recall, partially offset by the increase in net sales as described above. Gross profit as a percentage of net sales decreased 230 basis points due primarily to the gross profit factors discussed above and unfavorable product mix; and

•$160.7 million increase in operating expenses due primarily to:

◦$176.1 million increase in impairment charges due primarily to $346.8 million of goodwill impairments in the current year period being partially offset by $170.7 million in impairment charges related to goodwill, certain definite-lived intangible assets and IPR&D in the prior year; partially offset by

◦$11.9 million decrease in R&D expenses due primarily to Albuterol pre-commercialization R&D costs expensed in the prior year; and

◦$4.0 million decrease in selling and administration expenses due primarily to our current Project Momentum cost savings initiative.

Year Ended December 31, 2019 vs. December 31, 2018

Year Ended

(in millions, except percentages) December 31,2019 December 31,2018

Operating income % 0.3 % 23.3 %

Net sales increased $46.7 million, or 5%, due primarily to:

•$87.5 million increase due to new product sales of $86.3 million driven mainly by Acyclovir cream (generic equivalent to Zovirax® cream), Testosterone Gel 1.62% (generic equivalent to Androgel®), and the Scopolamine Patch relaunch and higher volumes of existing product sales to meet the increased demand of our existing customers, partially offset by competition-driven pricing pressure; further partially offset by

•$41.8 million of discontinued products.

Operating income decreased $212.0 million, or 99%, due to:

•$39.0 million decrease in gross profit, or a 600 basis point decrease in gross profit as a percentage of net sales, due primarily to competition-driven pricing pressure, and unfavorable product mix; and

•$173.0 million increase in operating expense due primarily to $170.7 million increase in impairment charges related to goodwill, certain definite-lived intangible assets and IPR&D, and a $4.8 million increase in R&D expense due primarily to pre-commercialization R&D costs for Albuterol.

Unallocated Expenses

Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded above Operating income on the Consolidated Statements of Operations. Unallocated expenses were as follows (in millions):

Year Ended

Perrigo Company plc- Item 7

The $19.9 million decrease for the year ended December 31, 2020 compared to the prior year was due primarily to the absence of $15.6 million in acquisition and integration-related charges related to the acquisition of Ranir, a $15.3 million decrease in legal and consulting fees in part due to our current Project Momentum cost savings initiative, and a $12.6 million decrease in Restructuring expense related primarily to the reorganization of our executive management team. These decreases are partially offset by an increase of $17.0 million in employee incentive compensation expenses, which included COVID-19 bonuses for production employees, and an increase of $14.8 million in insurance related expenses.

The $72.2 million increase for the year ended December 31, 2019 compared to the year ended December 31, 2018 was due primarily to a $31.0 million increase in legal and consulting fees partially due to the absence of a $17.8 million insurance recovery received in the prior year, a $15.6 million increase in acquisition and integration-related charges related to the Ranir acquisition, a $13.8 million increase in employee compensation expenses, and a $10.7 million increase due primarily to our strategic transformation initiative and the reorganization of our executive management team.

Change in Financial Assets, Interest expense, net, Other (income) expense, net and Loss on extinguishment of debt (Consolidated)

Year Ended

Change in financial assets $ 96.4 $ (22.1) $ (188.7)

Other (income) expense, net $ 17.2 $ (66.0) $ 6.1

Loss on extinguishment of debt $ 20.0 $ 0.2 $ 0.5

Change in Financial Assets

The proceeds from our 2017 sale of the Tysabri® financial asset consisted of $2.2 billion in upfront cash and up to $250.0 million and $400.0 million in contingent milestone payments related to 2018 and 2020, respectively. During the year ended December 31, 2019 we received the $250.0 million contingent milestone payment.

During the year ended December 31, 2020, Royalty Pharma payments from Biogen for Tysabri® sales, as defined in the agreement between the parties, did not exceed the 2020 global net sales threshold of $351.0 million. Therefore, we are not entitled to receive the remaining contingent milestone payment of $400.0 million and, accordingly, wrote off the entire fair value of the remaining milestone payment related to 2020 of $95.3 million in Change in financial assets on the Consolidated Statements of Operations (refer to Item 8. Note 7).

During the year ended December 31, 2019 the fair value of the Royalty Pharma contingent milestone payment related to 2020 increased by $22.1 million to $95.3 million. These adjustments were driven by higher projected global net sales of Tysabri® and the estimated probability of achieving the earn-out. There was no contingent milestone based on 2019 sales of Tysabri®. The Royalty Pharma payments from Biogen for Tysabri® were $337.5 million in 2018, which triggered the $250.0 million milestone payment received during the year ended December 31, 2019.

During the year ended December 31, 2018, royalties on global net sales of Tysabri® received by Royalty Pharma met the 2018 threshold resulting in an increase to the asset and a gain of $170.1 million recognized in Change in financial assets on the Consolidated Statement of Operations. Also during that period, the fair value of the Royalty Pharma contingent milestone payment related to 2020 increased $18.6 million due to higher projected global net sales of Tysabri® and the estimated probability of achieving the contingent milestone payment related to 2020.

Perrigo Company plc - Item 7

Unallocated, Interest, Other, and Taxes

Interest Expense, Net

The $9.5 million increase during the year ended December 31, 2020 compared to the prior year was due primarily to the addition of interest expense on our 2020 Notes and two promissory notes related to our equity method investment in Kazmira and a reduction of interest income.

The $6.3 million decrease during the year ended December 31, 2019 compared to the year ended December 31, 2018 was due primarily to changes in our underlying hedge exposure and interest income (refer to Item 8. Note 9).

Other (Income) Expense, Net

The $83.2 million change from income to expense during the year ended December 31, 2020 compared to the prior year was due primarily to the absence of the pre-tax gain of $71.7 million on the sale of our animal health business and the $21.1 million pre-tax loss on the divestiture of our Rosemont Pharmaceuticals business, partially offset by a decrease of $4.7 million in unfavorable changes from the revaluation of monetary assets and liabilities held in foreign currencies (refer to Item 8. Note 3).

The $72.1 million change from expense to income during the year ended December 31, 2019 compared to the year ended December 31, 2018 was due primarily to a $71.7 million pre-tax gain on the sale of our animal health business (refer to Item 8. Note 3).

Loss on Extinguishment of Debt

During the year ended December 31, 2020, we recorded a loss of $20.0 million as a result of the early redemption of the 3.500% Senior Notes due March 15, 2021 and 3.500% Senior Notes due December 15, 2021, consisting of the premium on debt repayments, the write-off of deferred financing fees, and the write-off of the remaining bond discounts (refer to Item 8. Note 11).

Income Taxes (Consolidated)

The effective tax rates were as follows:

Year Ended

The effective tax rate for the year ended December 31, 2020 as compared to December 31, 2019 decreased primarily due to the pre-tax profit mix between jurisdictions with varying tax rates offset by U.S. CARES Act and Proposed and Final Section 163(j) interest expense limitation effects.

The effective tax rate for the year ended December 31, 2019 as compared to December 31, 2018 decreased primarily due to a decrease in the U.S. valuation allowance offset by increased U.S. permanent adjustments largely due to disallowed interest expense.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

We finance our operations with internally generated funds, supplemented by credit arrangements with third parties and capital market financing. We routinely monitor current and expected operational requirements and financial market conditions to evaluate other available financing sources including term and revolving bank credit and securities offerings. In determining our future capital requirements we regularly consider, among other factors, known trends and uncertainties, such as the Notice of Assessment ("NoA") and the Notices of Proposed Adjustment ("NOPAs"), the current COVID-19 pandemic, and other contingencies. We note that no payment of the additional amounts assessed by Irish Revenue pursuant to the NoA or proposed by the IRS in the NOPAs is currently required, and no such payment is expected to be required, unless and until a final determination of the matter is reached that is adverse to us (refer to Item 8. Note 15 for additional information on the NoA and NOPAs). Based on the foregoing, management believes that our operations and borrowing resources are sufficient to provide for our short-term and long-term capital requirements, as described below. However, an adverse result with respect to our appeal of any material outstanding tax assessments or litigation, including securities or drug pricing matters and product liability

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

cases, damages resulting from third-party claims, and related interest and/or penalties, could ultimately require the use of corporate assets to pay such assessments and any such use of corporate assets would limit the assets available for other corporate purposes. As such, we continue to evaluate the impact of the above factors on liquidity and may determine that modifications to our capital structure are appropriate if market conditions deteriorate, favorable capital market opportunities become available, or any change in conditions relating to the NoA, the NOPAs, the COVID-19 pandemic or other contingencies have a material impact on our capital requirements.

Cash and Cash Equivalents

*Working capital represents current assets less current liabilities, excluding cash and cash equivalents, and excluding current indebtedness.

Cash, cash equivalents, cash flows from operations, and borrowings available under our credit facilities are expected to be sufficient to finance our liquidity and capital expenditures in both the short and long term. Although our lenders have made commitments to make funds available to us in a timely fashion under our revolving credit agreements and overdraft facilities, if economic conditions worsen, including due to the COVID-19 pandemic, or new information becomes publicly available impacting the institutions’ credit rating or capital ratios, these lenders may be unable or unwilling to lend money pursuant to our existing credit facilities. Should our outlook on liquidity requirements change substantially from current projections, we may seek additional sources of liquidity in the future.

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

Cash Generated by (Used in) Operating Activities

Year Ended December 31, 2020 vs. December 31, 2019

The $248.4 million increase in operating cash flow was due primarily to:

•$309.6 million increase in cash from the change in accounts receivable, due primarily to timing of sales and receipt of payments;

•$67.5 million increase in cash from the change in accrued income taxes, due primarily to the CARES Act and adoption of final and proposed 163(j) regulations, as well as the absence of tax liabilities on the Royalty Pharma contingent milestone payment received in the prior year and Israeli withholding tax paid in the prior year; and

•$14.5 million increase in cash from the change in accrued payroll and related taxes, due primarily to the CARES Act payroll tax payment deferrals; partially offset by

•$103.6 million decrease in cash from the change in inventory, due primarily to the build up of inventory levels to improve customer service levels in the CSCA and CSCI segments, as well as higher inventory levels due to a reduction in sales for certain products and an increase in inventory for new product launches in the CSCI segment, partially offset by the current year launch of new products in the RX segment;

•$29.4 million decrease in cash due primarily to the change in prepaid expenses, mainly from payments made for annual prepaid expenses, a payment made for a transitional service agreement, an increase in the cost of our directors and officers prepaid insurance, and the absence of a litigation related settlement received in the prior year, partially offset by payments received related to our cross currency swap; and

•$19.7 million decrease in cash from the change in accounts payable, due primarily to the timing of payments and mix of payment terms.

Year Ended December 31, 2019 vs. December 31, 2018

The $205.2 million decrease in operating cash flow was due primarily to:

•$161.7 million decrease in cash due to the change in accounts receivable due primarily to timing of sales and receipt of payments primarily in RX and CSCI, and our acquisition of Ranir;

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

•$142.6 million decrease in cash due to prior year tax payments made in 2019, 2019 estimated tax payments, and an Israeli withholding tax payment; and

•$74.1 million decrease in cash due to the change in accrued customer programs due primarily to pricing dynamics in our RX segment, as well as timing of rebate and chargeback payments; partially offset by

•$88.9 million increase in cash due to the change in net earnings after adjustments for items such as deferred income taxes, impairment charges, restructuring charges, changes in our financial assets, share-based compensation, amortization of debt premium, gain on sale of business, and depreciation and amortization;

•$36.0 million increase in cash due primarily to changes in operating leases and litigation related settlements;

•$31.6 million decrease in the use of cash primarily due to the continued build-up of inventory at a lower level than in the prior year to support customer demands and improved supply management in our CSCA and CSCI segments, and increased volumes in CSCI due to new product launches; and

•$30.8 million decrease in the use of cash due to the change in accrued payroll and related taxes due primarily to an increase in employee incentive compensation expense.

Cash Generated by (Used in) Investing Activities

Year Ended December 31, 2020 vs. December 31, 2019

The $408.3 million decrease in cash used in investing cash flow was due primarily to:

•$579.2 million decrease in cash used due to the absence of the cash paid for the acquisition of Ranir for $747.7 million, partially offset by the cash paid for the acquisitions of Dr. Fresh for $106.2 million and Eastern European dermatology brands for $62.3 million (refer to Item 8. Note 3);

•$113.9 million decrease in cash used due to the decrease in spending on asset acquisitions, primarily related to the purchase of the Steripod® brand for $25.1 million and theDexsil® brand for approximately $8.0 million, offset by spending on prior year acquisitions, including for the branded OTC rights to Prevacid®24HR for $61.7 million, two ANDAs for generic products for $15.7 million and $49.0 million, and Budesonide Nasal Spray and Triamcinolone Nasal Spray for $14.0 million (refer to Item 8. Note 3); and

•$5.3 million increase in cash due primarily to the net proceeds from the sale of our Rosemont pharmaceuticals business, partially offset by the proceeds from the sale of our animal health business (refer to Item 8. Note 3); further partially offset by

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

•$250.0 million decrease in cash due to the absence of the Royalty Pharma contingent milestone proceeds received in the prior year (refer to Item 8. Note 7);

•$32.7 million decrease in cash due to the change in capital spending, used primarily to increase tablet and infant formula capacity, plant efficiency projects, investments in our oral self-care business, and for software and technology initiatives; and

•$15.0 million decrease in cash for the purchase of our equity method investment in Kazmira (refer to Item 8. Note 8).

Capital expenditures for the next twelve months are anticipated to be between $180.0 million and $230.0 million, depending on the progression of project timelines, related to increased infant formula and tablet capacity, manufacturing productivity and efficiency upgrades, software and technology initiatives, and general plant maintenance. We expect to fund these estimated capital expenditures with funds from operating cash flows.

Year Ended December 31, 2019 vs. December 31, 2018

The $469.3 million decrease in investing cash flow was due primarily to:

•$747.7 million decrease in cash used for the acquisition of Ranir (refer to Item 8. Note 3);

•$113.5 million decrease in cash used for other acquisitions, primarily for the branded OTC rights to Prevacid®24HR for $61.7 million, an ANDA for a generic gel product for $49.0 million, an ANDA for a generic product used to relieve pain for $15.7 million, and Budesonide Nasal Spray and Triamcinolone Nasal Sprayfor $14.0 million, partially offset by the absence of $35.6 million of prior year acquisitions primarily related to an ANDA for a generic topical cream (refer to Item 8. Note 3); and

•$35.1 million decrease in cash used for capital spending, primarily to increase tablet and infant formula capacity and quality/regulation projects; partially offset by

•$250.0 million receipt of the Royalty Pharma contingent milestone proceeds(refer to Item 8. Note 7); and

•$177.3 million in proceeds received from divestitures, primarily from our animal health business (refer to Item 8. Note 3).

Cash used for capital expenditures totaled $137.7 million during the year ended December 31, 2019 compared to $102.6 million in the prior year. The increase in cash used for capital expenditures was due primarily to increase tablet and infant formula capacity and quality/regulation projects in 2019 compared to the prior year.

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

Cash Generated by (Used in) Financing Activities

Year Ended December 31, 2020 vs. December 31, 2019

The $182.9 million decrease in financing cash flow was due primarily to:

•$164.2 million decrease in cash due to share repurchases;

•$114.0 million decrease in cash due to the increase in payments on long-term debt;

•$19.0 million decrease in cash due to the payment of premiums on the early redemption of the 3.500% Senior Notes due March 15, 2021 and 3.500% Senior Notes due December 15, 2021;

•$11.5 million decrease in cash due to an increase in dividend payments;

•$5.7 million decrease in cash due to an increase in deferred financing fees related to the issuance of long-term debt; and

•$4.4 million decrease in cash due primarily to the payment made on the November 2020 portion of the Kazmira promissory notes; partially offset by

•$143.8 million increase in cash for the issuance of long-term debt (refer to Item 8. Note 11).

Year Ended December 31, 2019 vs. December 31, 2018

The $573.7 million increase in financing cash flow was due primarily to:

•$400.0 million absence in share repurchases;

•$169.0 million increase due to the issuance of long-term debt in our $600.0 million refinance of the 2018 Term Loan in 2019, offset by the absence of our $431.0 million refinance of the 2014 Term Loan; and

•$4.9 million increase in the change in net borrowings (repayments) of revolving credit agreements and other financing; and

•$6.5 million decrease in payments on long-term debt; partially offset by

•$7.5 million increase in dividend payments.

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

Share Repurchases

In October 2015, the Board of Directors approved a three-year share repurchase plan of up to $2.0 billion. Following the expiration of our 2015 share repurchase plan authorization in October 2018, our Board of Directors authorized up to $1.0 billion of share repurchases with no expiration date, subject to the Board of Directors’ approval of the pricing parameters and amount that may be repurchased under each specific share repurchase program. Share repurchases were $164.2 million, $0.0 million, and $400.0 million for the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.

Dividends

In January 2003, the Board of Directors adopted a policy of paying quarterly dividends. We paid dividends as follows:

Year Ended

The declaration and payment of dividends, if any, is subject to the discretion of our Board of Directors and will depend on our earnings, financial condition, availability of distributable reserves, capital and surplus requirements, and other factors our Board of Directors may consider relevant.

Borrowings and Capital Resources

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

Term Loans, Notes and Bonds

Total Term Loans, Notes and Bonds outstanding are summarized as follows (in millions):

Year Ended

Term loan

Notes and bonds

Coupon Due

* Debt denominated in euros subject to fluctuations in the euro-to-U.S. dollar exchange rate.

On June 19, 2020, Perrigo Finance Unlimited Company, a public unlimited company incorporated under the laws of Ireland ("Perrigo Finance") and an indirect wholly-owned finance subsidiary of Perrigo whose primary purpose is to finance the business and operations of Perrigo and its affiliates, issued $750.0 million in aggregate principal amount of 3.150% Senior Notes due 2030 (the “2020 Notes") and received net proceeds of $737.1 million after fees and market discount. Interest on the 2020 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020. The 2020 Notes will mature on June 15, 2030. The 2020 Notes are governed by a base indenture and a third supplemental indenture (collectively, the "2020 Indenture"). The 2020 Notes are fully and unconditionally guaranteed on a senior unsecured basis by Perrigo and no other subsidiary of Perrigo guarantees the 2020 Notes. There are no restrictions under the 2020 Notes on Perrigo's ability to obtain funds from its subsidiaries. Perrigo Finance may redeem the 2020 Notes in whole or in part at any time for cash at the make-whole redemption prices described in the 2020 Indenture. On July 6, 2020, the proceeds of the 2020 Notes were used to fund the redemption of Perrigo Finance's $280.4 million of 3.500% Senior Notes due March 15, 2021 and $309.6 million of 3.500% Senior Notes due December 15, 2021. The balance will be used for general corporate purposes which may include the repayment or redemption of additional indebtedness. As a result of the early redemption of the $280.4 million of 3.500% Senior Notes and $309.6 million of 3.500% Senior Notes, during the year ended December 31, 2020, we recorded a loss of $20.0 million in Loss on extinguishment of debt on the Consolidated Statements of Operations, consisting of the premium on debt repayments, the write-off of deferred financing fees, and the write-off of the remaining bond discounts.

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

On March 8, 2018, we refinanced the €350.0 million outstanding under the previous term loan with the proceeds of a new €350.0 million ($431.0 million) term loan, maturing March 8, 2020 (the "2018 Term Loan"). As a result of the refinancing during the three months ended March 31, 2018, we recorded a loss of $0.5 million, consisting of the write-off of deferred financing fees in Loss on extinguishment of debt on the Consolidated Statements of Operations. During the year ended December 31, 2019, we made $24.7 million in scheduled principal payments. On August 15, 2019, we refinanced the €284.4 million ($317.1 million) outstanding under the 2018 Term Loan with the proceeds of a new $600.0 million term loan, maturing on August 15, 2022 (the "2019 Term Loan"). As a result of the refinancing, during the year ended December 31, 2019, we recorded a loss of $0.2 million, consisting of the write-off of deferred financing fees in Loss on extinguishment of debt on the Consolidated Statements of Operations.

In connection with the Omega acquisition, we assumed a 5.000% retail bond due in 2019 in the amount of €120.0 million ($130.7 million), which was repaid in full on May 23, 2019.

Overdraft Facilities

We have overdraft facilities available that we use to support our cash management operations. We report any balances outstanding in "Other Financing" in Item 8. Note 11. There were no borrowings outstanding under the facilities as of December 31, 2020 and December 31, 2019.

Leases

We had $221.3 million and $158.2 million of lease liabilities and $217.0 million and $157.5 million of lease assets as of December 31, 2020 and December 31, 2019, respectively.

Accounts Receivable Factoring

We have accounts receivable factoring arrangements with non-related third-party financial institutions (the “Factors”). Pursuant to the terms of the arrangements, we sell to the Factors certain of our accounts receivable balances on a non-recourse basis for credit approved accounts. An administrative fee per invoice is charged on the gross amount of accounts receivables assigned to the Factors, and interest is calculated at the applicable EUR LIBOR rate plus a spread. The total amount factored on a non-recourse basis and excluded from accounts receivable was $6.9 million and $10.0 million at December 31, 2020 and December 31, 2019, respectively.

Revolving Credit Agreement

On March 8, 2018, we entered into a $1.0 billion revolving credit agreement maturing on March 8, 2023 (the "2018 Revolver"). There were no borrowings outstanding under the 2018 Revolver as ofDecember 31, 2020 or December 31, 2019.

Other Financing

On June 17, 2020, we incurred debt of $34.3 million related to our equity method investment in Kazmira pursuant to two promissory notes, with $3.7 million, $5.8 million and $24.8 million to be settled in November 2020, May 2021 and November 2021, respectively. On December 8, 2020, we repaid the $3.7 million balance due on the November 2020 portion of the Promissory Notes (refer to Item 8. Note 8).

We are in compliance with all covenants under our debt agreements as of December 31, 2020 (refer to Item 8. Note 11 and Note 10 for more information on all of the above debt facilities and lease activity, respectively).

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

Credit Ratings

Our credit ratings on December 31, 2020 were Baa3 (stable) and BBB- (stable) by Moody's Investors Service and S&P Global Ratings, respectively.

In January 2021, Fitch Ratings Inc. assigned a BBB- long-term Issuer Default Rating ("IDR") to Perrigo’s IDR with a stable rating outlook.

Credit rating agencies review their ratings periodically and, therefore, the credit rating assigned to us by each agency may be subject to revision at any time. Accordingly, we are not able to predict whether current credit ratings will remain as disclosed above. Factors that can affect our credit ratings include changes in operating performance, the economic environment, our financial position, and changes in business strategy. If changes in our credit ratings were to occur, they could impact, among other things, future borrowing costs, access to capital markets, and vendor financing terms.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, capital expenditures, or capital resources. We acquire and collaborate on potential products still in development and enter into R&D arrangements with third parties that often require milestone payments to the third-party contingent upon the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required contingent upon the successful achievement of an important point in the development life cycle of the product. Because of the contingent nature of these payments, they are not included in our table of contractual obligations below.

Contractual Obligations

Our enforceable and legally binding obligations as of December 31, 2020 are set forth in the following table. Some of the amounts included in this table are based on management’s estimates and assumptions about these obligations, including the duration, the possibility of renewal, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the enforceable and legally binding obligations actually paid in future periods may vary from the amounts reflected in the table (in millions):

Payment Due

Other contractual liabilities reflected on the consolidated balance sheets:

Deferred compensation and benefits (4) — — — 118.7 118.7

(1)Short-term and long-term debt includes interest payments, which were calculated using the effective interest rate at December 31, 2020.

(2)Consists of commitments for both materials and services.

(3)Used in normal course of business, principally for warehouse facilities and computer equipment.

(4)Includes amounts associated with non-qualified plans related to deferred compensation, executive retention and post-employment benefits. Of this amount, we have funded $37.3 million, which is recorded in Other non-current assets on the balance sheet. These amounts are assumed payable after five years, although certain circumstances, such as termination, would require earlier payment.

(5)Primarily includes consulting fees, legal settlements, contingent consideration obligations, restructuring accruals, insurance obligations, and electrical and gas purchase contracts, which were accrued in Other current liabilities and Other non-current liabilities at December 31, 2020 for all years.

Perrigo Company plc - Item 7

Financial Condition, Liquidity and Capital Resources

We fund our U.S. qualified profit-sharing and investment plan in accordance with the Employee Retirement Income Security Act of 1974 regulations for the minimum annual required contribution and Internal Revenue Service regulations for the maximum annual allowable tax deduction. We are committed to making the required minimum contributions, which we expect to be approximately $27.7 million over the next 12 months. Future contributions are dependent upon various factors, including employees’ eligible compensation, plan participation and changes, if any, to current funding requirements. Therefore, no amounts were included in the Contractual Obligations table above. We generally expect to fund all future contributions with cash flows from operating activities.

As of December 31, 2020, we had approximately $504.9 million of liabilities for uncertain tax positions, including interest and penalties. These unrecognized tax benefits have been excluded from the Contractual Obligations table above due to uncertainty as to the amounts and timing of settlement with taxing authorities.

Net deferred income tax liabilities were $235.1 million as of December 31, 2020. This amount is not included in the Contractual Obligations table above because we believe this presentation would not be meaningful. Net deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their book basis, which will result in taxable amounts in future years when the book basis is settled. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, scheduling net deferred income tax liabilities as payments due by period could be misleading because this scheduling would not relate to liquidity needs.

Critical Accounting Estimates

The determination of certain amounts in our financial statements requires the use of estimates. These estimates are based upon our historical experiences combined with management’s understanding of current facts and circumstances. Although the estimates are considered reasonable based on the currently available information, actual results could differ from the estimates we have used. Management considers the below accounting estimates to require the most judgment and to be the most critical in the preparation of our financial statements. These estimates are reviewed by the Audit Committee.

Revenue Recognition

Net product sales include estimates of variable consideration for which accruals and allowances are established. Variable consideration for product sales consists primarily of chargebacks, rebates, other incentive programs, and related administrative fees recorded on the Consolidated Balance Sheets as Accrued customer programs, and sales returns and shelf stock allowances recorded on the Consolidated Balance Sheets as a reduction to Accounts receivable. Where appropriate, these estimates take into consideration a range of possible outcomes in which relevant factors, such as historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns, are either probability-weighted to derive an estimate of expected value or the estimate reflects the single most likely outcome. Overall, these reserves reflect the best estimates of the amount of consideration to which we are entitled based on the terms of the contract. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from the estimates, these estimates are adjusted, which would affect revenue and earnings in the period such variances become known.

The aggregate gross-to-net adjustments related to RX products can exceed 50% of the segment's gross sales. In contrast, the aggregate gross-to-net adjustments related to CSCA and CSCI typically do not exceed 10% of the segment's gross sales. The following table summarizes the activity in Accrued customer programs and allowance accounts on the Consolidated Balance Sheets (in millions):

Perrigo Company plc - Item 7

Critical Accounting Estimates

RX All Other Segments

Balances acquired in business acquisition — — — — 5.7 5.7

Balances disposed of in business divestiture — — — — (4.1) (4.1)

Foreign currency translation adjustments — — — — (1.7) (1.7)

Balances acquired in business acquisition — — — — 3.0 3.0

Balances disposed of in business divestiture — — — — (1.0) (1.0)

Foreign currency translation adjustments — — — — 5.5 5.5

Chargebacks

We market and sell U.S. Rx pharmaceutical products directly to wholesalers, distributors, warehousing pharmacy chains, and other direct purchasing groups. We also market products indirectly to independent pharmacies, non-warehousing chains, managed care organizations, and group purchasing organizations, (collectively referred to as "indirect customers"). In addition, we enter into agreements with some indirect customers to establish contract pricing for certain products. These indirect customers then independently select a wholesaler from which to purchase the products at these contracted prices. Alternatively, we may pre-authorize wholesalers to offer specified contract pricing to other indirect customers. Under either arrangement, we provide chargeback credit to the wholesaler for any difference between the contracted price with the indirect customer and the wholesaler's invoice price. The accrual for chargebacks includes an estimate for outstanding claims that occurred but for which the related claim has not yet been paid, and an estimate for future claims that will be made when the wholesaler inventory is sold to the indirect customer. This estimate is based on historical chargeback experience, which includes sell-through levels by wholesalers to retailers, and confirmed wholesaler inventory levels. We regularly assess current pricing dynamics and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated.

Medicaid Rebates

We participate in certain qualifying U.S. federal and state government programs whereby discounts and rebates are provided to participating government entities. Medicaid rebates are amounts owed based upon contractual agreements or legal requirements with public sector (Medicaid) benefit providers, after the final dispensing of the product by a pharmacy to a benefit plan participant. Medicaid reserves are based on expected payments, which are driven by patient usage, contract performance, and field inventory that will be subject to a Medicaid rebate. Medicaid rebates are typically billed up to 180 days after the product is shipped, but can be billed as many as 270 days after the quarter in which the product is dispensed to the Medicaid participant. As a result, our Medicaid rebate provision includes an estimate of outstanding claims for end-customer sales that occurred but for which the related claim has not been billed, and an estimate for future claims that will be made when inventory in the distribution channel is sold through to plan participants. Our calculation also requires other estimates, such as estimates of sales mix, to determine which sales are subject to rebates and the amount of such rebates. Our rebates are reviewed on a monthly basis against actual claims data to ensure the liability is fairly stated.

Perrigo Company plc - Item 7

Critical Accounting Estimates

Returns and Shelf Stock Allowances

We maintain a return policy that allows our customers to return product within a specified period prior to and subsequent to the expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration date. The majority of our product returns are the result of product dating, which falls within the range set by our policy, and are settled through the issuance of a credit to the customer. Our estimate of the provision for returns is based upon our historical experience with actual returns, which is applied to the level of sales for the period that corresponds to the period during which our customers may return product. The period is based on the shelf life of the products at the time of shipment. Additionally, when establishing our reserves, we consider factors such as levels of inventory in the distribution channel, product dating and expiration period, size and maturity of the market prior to a product launch, entrance into the market of additional competition, and changes in formulations.

Shelf stock allowances are credits issued to reflect changes in the selling price of a product and are based upon estimates of the amount of product remaining in a customer's inventory at the time of the anticipated price change. In many cases, the customer is contractually entitled to such a credit. The allowances for shelf stock adjustments are based on specified terms with certain customers, estimated launch dates of competing products, and estimated changes in market price.

RX Administrative Fees and Other Rebates

Rebates or administrative fees are offered to certain wholesale customers, group purchasing organizations, and end-user customers. Settlement of rebates and fees generally may occur from one to 15 months from the date of sale. We provide a provision for rebates at the time of sale based on contracted rates and historical redemption rates. Estimates used to establish the provision include level of wholesaler inventories, contract sales volumes, and average contract pricing.

CSCA and CSCI Rebates and Other Allowances

In the CSCA and CSCI segments, we offer certain customers a volume incentive rebate if specific levels of product purchases are made during a specified period. The accrual for rebates is based on contractual agreements and estimated levels of purchasing. In addition, we have a reserve for product returns, primarily related to damaged and unsaleable products. We also have agreements with certain customers to cover promotional activities related to our products such as coupon programs, new store allowances, and product displays. The accrual for these activities is based on customer agreements and is established at the time product revenue is recognized.

Allowances for customer-related programs are generally recorded at the time of sale based on the estimates and methodologies described above. We continually monitor product sales provisions and re-evaluate these estimates as additional information becomes available, which includes, among other things, an assessment of current market conditions, trade inventory levels, and customer product mix. We make adjustments to these provisions at the end of each reporting period to reflect any such updates to the relevant facts and circumstances.

Income Taxes

Our tax rate is subject to adjustment over the balance of the year due to, among other things, income tax rate changes by governments; the jurisdictions in which our profits are determined to be earned and taxed; changes in the valuation of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax returns; adjustments to our interpretation of transfer pricing standards; changes in available tax credits, grants and other incentives; changes in stock-based compensation expense; changes in tax laws or the interpretation of such tax laws; changes in U.S. generally accepted accounting principles; expiration of or the inability to renew tax rulings or tax holiday incentives; and the repatriation of earnings with respect to which we have not previously provided taxes. For the year ended December 31, 2020, we recorded a net decrease in valuation allowances of $86.5 million, comprised primarily of a release of the U.S. valuation allowance against certain deferred tax assets and a decrease in U.S. valuation allowance due to the CARES Act.

Although we believe our tax estimates are reasonable and we prepare our tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audit, and any related litigation, could be materially

Perrigo Company plc - Item 7

Critical Accounting Estimates

different from our estimates or from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments (refer to Item 8. Note 15).

Legal Contingencies

We are involved in product liability, patent, commercial, regulatory and other legal proceedings that arise in the normal course of business. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range and no amount within that range is a better estimate, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. We have established reserves for certain of our legal matters (refer to Item 8. Note 17). We do not incorporate insurance recoveries into our reserves for legal contingencies. We separately record receivables for amounts due under insurance policies when we consider the realization of recoveries for claims to be probable, which may be different than the timing in which we establish the loss reserves.

Acquisition Accounting

We account for acquired businesses using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the specifically identified assets is recorded as goodwill. If the acquired net assets do not constitute a business, or substantially all of the fair value is in a single asset or group of similar assets, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, acquired IPR&D with no alternative future use is charged to expense at the acquisition date.

Significant judgment is required in estimating the fair value of intangible assets and in assigning their respective useful lives. The acquired intangible assets can include customer relationships, trademarks, trade names, brands, developed product technology and IPR&D assets. For acquisitions accounted for as business combinations, IPR&D is considered to be an indefinite-lived intangible asset until the research is completed, at which point it then becomes a definite-lived intangible asset, or is determined to have no future use and is then impaired. There are several methods that can be used to determine the fair value of our intangible assets. We typically use an income approach to value the specifically identifiable intangible assets which is based on forecasts of the expected future cash flows. We have historically used a relief from royalty or multi-period excess earnings methodology. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management but are inherently uncertain. We typically consult with an independent advisor to assist in the valuation of these intangible assets. Significant estimates and assumptions inherent in the valuations include discount rates, revenue growth assumptions and expected profit margins. We consider marketplace participant assumptions in determining the amount and timing of future cash flows along with the length of our customer relationships, the attrition, product or technology life cycles, barriers to entry and the risk associated with the cash flows in concluding upon our discount rate. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, we may record adjustments to the purchase accounting. In addition, unanticipated market or macroeconomic events and circumstances may occur that could affect the accuracy or validity of the estimates and assumptions.

Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives. With the exception of certain trademarks, trade names, and brands and IPR&D, the majority of our acquired intangible assets are expected to have determinable useful lives. Our assessment as to the useful lives of these intangible assets is based on a number of factors including competitive environment, market share, trademark, brand history, underlying product life cycles, operating plans and the macroeconomic environment of the countries in which the trademarked or branded products are sold. Definite-lived intangible assets are amortized to expense over their estimated useful life.

Change in Financial Assets

Perrigo Company plc - Item 7

Critical Accounting Estimates

wrote off the entire fair value of the remaining milestone payment related to 2020 of $95.3 million in Change in financial assets on the Consolidated Statements of Operations (refer to Item 8. Note 7). As of December 31, 2020, there are no contingent milestone payments outstanding; therefore, this accounting estimate will no longer be applicable in future periods.

We valued our contingent milestone payments from Royalty Pharma using a modified Black-Scholes Option Pricing Model ("BSOPM"). Key inputs in the BSOPM are the estimated volatility and rate of return of royalties on global net sales of Tysabri® that are received by Royalty Pharma until the contingent milestones are resolved. As of December 31, 2019, volatility and the estimated fair value of the milestones had a positive relationship such that higher volatility translated to a higher estimated fair value of the contingent milestone payments. Rate of return and the estimated fair value of the milestones had an inverse relationship, such that a lower rate of return correlates with a higher estimated fair value of the contingent milestone payments. We assess volatility and rate of return inputs quarterly by analyzing certain market volatility benchmarks and the risk associated with Royalty Pharma achieving the underlying projected royalties. The table below represents the volatility and rate of return:

Year Ended

Volatility 30.0 %

Rate of return 7.92 %

Goodwill

Goodwill represents amounts paid for an acquisition in excess of the fair value of net assets received. After completing the divestiture of our Rosemont Pharmaceuticals business, we have five reporting units subject to impairment testing annually, which we performed on the first day of the fourth quarter of the years ended December 31, 2020 and 2019. We perform impairment testing more frequently if events suggest an impairment may exist. We had triggering events during the second, third, and fourth quarters of the year ended December 31, 2020 and the second quarter of the year ended December 31, 2019, and we performed interim impairment tests in those periods. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows and market valuation multiples. The estimates associated with the goodwill impairment tests are considered critical due to the judgments required in determining fair value amounts, including projected future cash flows that include assumptions about future performance. The discount rates used in testing each of our reporting units’ goodwill for impairment during our interim and annual testing were based on the weighted average cost of capital determined for each of our reporting units. In our annual impairment test as of September 27, 2020, discount rates ranged from 7.25% to 10.3%, and perpetual revenue growth rates ranged from 0.0% to 2.0%. In our annual impairment test as of September 29, 2019, discount rates ranged from 7.5% to 12.0%, and perpetual revenue growth rates ranged from 0.0% to 2.0%. Changes in these estimates may result in the recognition of an impairment loss. We recorded goodwill impairment losses of $346.8 million and $109.2 million related to our RX U.S. reporting unit during the years ended December 31, 2020 and December 31, 2019, respectively, which were recorded in Impairment charges on the Consolidated Statements of Operations. In the year ended December 31, 2018, we recorded a goodwill impairment of $136.7 million related to our animal health reporting unit which was subsequently divested on July 8, 2019.

The discounted cash flow forecasts used for our reporting units include assumptions about future activity levels in the near term and longer-term. If growth in our reporting units is lower than expected, we may experience deterioration in our cash flow forecasts that may indicate goodwill in one or more reporting units is impaired in future impairment tests. An increase in the discount rate could negatively impact the estimated fair value of the reporting units and lead to future impairment. Certain macroeconomic factors which are not controlled by the reporting units, such as rising inflation or interest rates, could cause an increase in the discount rate to occur. Deterioration in performance of our reporting units, such as lower than expected revenue or profitability that has a sustained impact on future periods, could also represent potential indicators of impairment requiring further analysis. In our annual impairment test as of September 27, 2020, we evaluated the weighted average cost of capital, market multiples, and forecasted cash flows of each reporting unit, among other factors.

Our RX U.S. reporting unit had an indication of potential impairment during the three months ended September 26, 2020 driven primarily by the stoppage of production and distribution of albuterol sulfate inhalation aerosol and voluntary nationwide recall to the retail level as a result of reports that some units may not dispense due to clogging, combined with a decline in market multiples. We prepared a quantitative analysis as of September 26, 2020 and

Perrigo Company plc - Item 7

Critical Accounting Estimates

determined the carrying value of the RX U.S. reporting unit exceeded its estimated fair value. We recognized a goodwill impairment of $202.4 million, leaving $811.1 million of goodwill in this reporting unit after the impairment.

Our RX U.S. reporting unit had additional indicators of impairment during the three months ended December 31, 2020. We prepared a quantitative test as of December 31, 2020 and determined the carrying value of the RX U.S. reporting unit exceeded its estimated fair value. We recognized a goodwill impairment of $144.4 million, leaving $673.1 million of goodwill in the reporting unit as of December 31, 2020. The RX U.S. reporting unit is at risk for future impairments if it experiences further deterioration in business performance or market multiples or increases in discount rates.

Our Branded Consumer Self-care ("BCS") reporting unit included in the CSCI segment had an indication of potential impairment during the three months ended June 27, 2020 driven by a decrease in forecasted cash flows in the second half of 2020 related to impacts from the COVID-19 pandemic. We prepared a quantitative analysis as of June 27, 2020 and determined that the fair value of the BCS reporting unit continued to exceed net book value by less than 10%. During our annual goodwill testing as of September 27, 2020 and September 29, 2019, we determined the fair value of the BCS reporting unit was less than 10.0% higher than its net book value in both analyses. As a result of the relatively narrow margin between fair value and net book value during the three months ended December 31, 2020 and 2019, this reporting unit is at risk for future impairments if it experiences deterioration in business performance or market multiples or increases in discount rates. Goodwill remaining in this reporting unit was $1,049.2 million as of December 31, 2020.

During our annual goodwill testing as of September 27, 2020 and September 29, 2019, we determined the fair value of the Oral Care International reporting unit included in the CSCI segment was less than 10.0% higher than its net book value, which was due to recent application of fair value acquisition accounting to the reporting unit's net assets rather than the presence of impairment indicators. With a margin between fair value and net book value in this range, the reporting unit is at risk for future goodwill impairments if it experiences deterioration in business performance or market multiples or increases in discount rates. Goodwill remaining in this reporting unit was $88.3 million as of December 31, 2020.

We performed sensitivity analyses on the discounted cash flow valuations that were prepared to estimate the enterprise values of each reporting unit. Discount rates and perpetual revenue growth rates were increased and decreased by increments of 25 or 50 basis points. For the BCS reporting unit, a 75 basis point increase in the discount rate, or a 50 basis point increase in the discount rate combined with a 25 basis point decrease in the residual growth rate, would indicate potential impairment for this reporting unit. For the Oral Care International reporting unit, a 50 basis point increase in the discount rate, or a 25 basis point increase in the discount rate combined with a 25 basis point decrease in the residual growth rate, would indicate potential impairment for this reporting unit. Our sensitivities for both the BCS and Oral Care International reporting units assume a corresponding decrease in market valuation multiples. Based on the sensitivity of the discount rate assumptions on these analyses, an increase in the discount rate over the next twelve months could negatively impact the estimated fair value of the reporting units and lead to a future impairment. Certain macroeconomic factors which are not controlled by the reporting units, such as rising inflation or interest rates, could cause an increase in the discount rate to occur. Deterioration in performance of our reporting units over the next twelve months, such as lower than expected revenue or profitability that has a sustained impact on future periods, could also represent potential indicators of impairment requiring further impairment analysis.

We continue to monitor the progress of our reporting units and assess them for potential impairment should impairment indicators arise, as applicable, and at least annually during our fourth quarter impairment testing.

See Item 8. Note 4 and Note 7 for further information.

Recently Issued Accounting Standards Pronouncements

See Item 8. Note 1 for information regarding recently issued accounting standards.

Perrigo Company plc - Item 7A

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

We are a global company with operations primarily throughout North America, Europe, Australia, Mexico, and Israel. We transact business in each location's local currency and in foreign currencies, thereby creating exposures to changes in exchange rates. Our largest exposure is the movement of the U.S. dollar relative to the euro. In addition, our U.S. operations continue to expand their export business, primarily in Canada, China, and Europe, and are subject to fluctuations in the respective exchange rates relative to the U.S. dollar. A large portion of the sales of our Israeli operations is in foreign currencies, primarily U.S. dollars and Euros, while these operations largely incur costs in their local currency.

Due to different sales and cost structures, certain segments experience a negative impact and certain segments a positive impact as a result of changes in exchange rates. We estimate the translation effect of a ten percent devaluation of the U.S. dollar relative to the other foreign currencies in which we transact business would have increased operating income of our non-U.S. operating units by approximately $29.1 million for the year ended December 31, 2020. This sensitivity analysis has inherent limitations. The analysis disregards the possibility that rates of multiple foreign currencies will not always move in the same direction relative to the value of the U.S. dollar over time and does not account for foreign exchange derivatives that we utilize to mitigate fluctuations in exchange rates.

In addition, we enter into certain purchase commitments for materials that, although denominated in U.S. dollars, are linked to foreign currency valuations. These commitments generally contain a range for which the price of materials may fluctuate over time given the value of a foreign currency.

The translation of the assets and liabilities of our non-U.S. dollar denominated operations is made using local currency exchange rates as of the end of the year. Translation adjustments are not included in determining net income but are disclosed in Accumulated Other Comprehensive Income ("AOCI") within shareholders’ equity on the Consolidated Balance Sheets until a sale or substantially complete liquidation of the net investment in the subsidiary takes place. In certain markets, we could recognize a significant gain or loss related to unrealized cumulative translation adjustments if we were to exit the market and liquidate our net investment. As of December 31, 2020, cumulative net currency translation adjustments increased shareholders’ equity by $407.3 million.

We monitor and strive to manage risk related to foreign currency exchange rates. Exposures that cannot be naturally offset within a local entity to an immaterial amount are often hedged with foreign exchange derivatives or netted with offsetting exposures at other entities. We cannot predict future changes in foreign currency movements and fluctuations that could materially impact earnings.

Interest Rate Risk

We are exposed to interest rate changes primarily as a result of interest income earned on our investment of cash on hand and interest expense on borrowings.

We have in the past, and may in the future, enter into certain derivative financial instruments related to the management of interest rate risk, when available on a cost-effective basis. These instruments are managed on a consolidated basis to efficiently net exposures and thus take advantage of any natural offsets. Gains and losses on hedging transactions are offset by gains and losses on the underlying exposures being hedged. We do not use derivative financial instruments for speculative purposes.

See Item 8. Note 9 and Note 1 for further information regarding our derivative instruments and hedging activities.

Perrigo Company plc - Item 8

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE NO.

Report of Independent Registered Public Accounting Firm 88

Consolidated Statements of Operations 92

Consolidated Statements of Comprehensive Income (Loss) 93

Consolidated Balance Sheets 94

Consolidated Statements of Cash Flows 95

Consolidated Statements of Shareholders' Equity 97

Notes to Consolidated Financial Statements

1 Summary of Significant Accounting Policies 98

2 Revenue Recognition 107

3 Acquisitions and Divestitures 109

4 Goodwill and Intangible Assets 115

5 Accounts Receivable Factoring 119

7 Fair Value Measurements 119

9 Derivative Instruments and Hedging Activities 125

12 Earnings per Share and Shareholders' Equity 135

13 Share-Based Compensation Plans 136

14 Accumulated Other Comprehensive Income (Loss) 141

16 Post-Employment Plans 148

17 Commitments and Contingencies 152

18 Collaboration Agreements and Other Contractual Arrangements 166

19 Restructuring Charges 167

20 Segment and Geographic Information 168

21 Quarterly Financial Data (unaudited) 169

Management’s Annual Report on Internal Control over Financial Reporting 170

Report of Independent Registered Public Accounting Firm 173

Perrigo Company plc - Item 8

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Perrigo Company plc

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Perrigo Company plc (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Adoption of Accounting Standards Update (ASU) No. 2017-04

As discussed in Note 4 to the consolidated financial statements, the Company changed its method of accounting for goodwill in 2019 due to the adoption of ASU No. 2017-04, Intangibles – Goodwill and Other.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Perrigo Company plc - Item 8

Uncertain Tax Positions

Perrigo Company plc - Item 8

Chargebacks and Product Returns

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2008.

Grand Rapids, Michigan

PRGO US Equity

PRGO · 10-K · period ended 2020-12-31

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PRGO US Equity☆

PRGO · 10-K · period ended 2020-12-31

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PRGO US Equity