Prestige Consumer Healthcare Announces \$1.045 Billion Acquisition of Breathe Right

Key Highlights

• Prestige Consumer Healthcare Inc. (NYSE: PBH) has entered into an agreement to acquire the Breathe Right brand and related over-the-counter (OTC) assets from Foundation Consumer Healthcare for \$1.045 billion in cash.
• Net purchase price is approximately \$900 million after anticipated tax benefits.
• The acquisition includes a portfolio of OTC brands centered around Breathe Right, the global leader in nasal strips for better breathing.
• Expected to close in the first half of fiscal 2027 (ending September 30, 2026), subject to customary closing conditions and regulatory approvals.
• The deal will be financed with cash on hand and a new term loan credit facility, with pro-forma bank-defined net leverage anticipated at ~4.0x at closing, and a clear path to reduce leverage below 3.0x by fiscal 2028.
• Transaction is immediately accretive to revenue, margins, EPS, and free cash flow.
• Breathe Right generated approximately \$200 million in revenue and \$95 million in EBITDA in the twelve months ended December 31, 2025, with an EBITDA purchase multiple of ~11.0x (or ~9.5x net of tax benefits).
• The addition of Breathe Right is expected to significantly strengthen Prestige’s scale, diversify its portfolio, and drive long-term value creation.

Strategic Rationale

• The acquisition adds a leading global brand in the highly attractive “better breathing” category, aligning with Prestige’s disciplined strategic, execution, and financial acquisition criteria.
• Breathe Right is the #1 nasal strip brand with significant global reach, long-standing brand equity since the early 1990s, and high consumer loyalty (89% consecutive repeat rate).
• Product portfolio includes Original, Extra Strength, Lavender, and Menthol variants, with proprietary technology and strong efficacy claims across use cases (sleep, snoring, sport, allergies, travel).
• Current household penetration stands at only ~3%, suggesting substantial room for growth.
• International operations represent ~15% of revenue, mainly in Europe, offering long-term expansion opportunities.
• Breathe Right will become the largest brand in Prestige’s portfolio and introduce a new product category to the company.

Financial Impact & Guidance

• The acquired business boasts a highly attractive financial profile: ~70%+ gross margin, 45%+ EBITDA margin, and strong free cash flow conversion.
• Prestige’s revenue will increase from approximately \$1.1 billion to \$1.3 billion on a pro forma basis.
• Company EBITDA margin is estimated at 35% post-acquisition; annualized EPS is expected to increase by at least \$0.25.
• Prestige expects to rapidly deleverage thanks to robust free cash flow, consistent with its track record in prior acquisitions.
• Clear path to return to long-term net leverage target (<3.0x) by fiscal 2028.
• Breathe Right’s stable operating model and strong revenue outlook further reinforce the company’s long-term growth algorithm.
• Transaction is anticipated to be immediately accretive to revenue, margins, earnings per share, and free cash flow.

Execution & Strategic Positioning

• Prestige has a proven track record of disciplined M&A, with 11+ acquisitions in the past 16 years, expanding both business and geographic capabilities.
• The company’s business model is built on a diversified portfolio of leading, trusted brands, an established organic growth playbook, and a scalable, efficient platform.
• Prestige’s five-year compounded annual growth rate (CAGR) through fiscal 2025 is 3.4% for total revenue, 2.4% for organic revenue, and 8.8% for adjusted EPS.
• The acquisition supports Prestige’s strategy of value creation through investing in growth, strong cash flow generation, and capital allocation optionality.

Important Shareholder Considerations

• Material event: This acquisition is a transformational transaction for Prestige, strengthening its position in the consumer healthcare sector and immediately enhancing key financial metrics.
• Potential share price impact: Given the scale, accretion, and rapid deleveraging profile, this news is likely to be viewed positively by investors and could move the share price.
• Risks: The transaction remains subject to closing conditions, including regulatory approvals. Shareholders should monitor for any updates or changes to the expected timeline or terms.
• The company has highlighted forward-looking statements and potential risks, including macroeconomic conditions, supply chain factors, and integration risks.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Investors should review Prestige Consumer Healthcare’s official filings and consult their financial advisors before making any investment decisions.

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