Prestige Brands Holdings, Inc. Reports Fiscal 2016 Third Quarter and Year-to-Date Results

Prestige Brands Holdings, Inc. (NYSE:PBH) today announced results for the fiscal third quarter and nine month period ended December 31, 2015.

Key fiscal third quarter and nine month highlights include:

• Q3 revenues increased 3.2% on a constant currency basis to $200.2 million. Nine month reported revenues increased 14.1% to $598.4 million.
• Q3 Free Cash Flow of $45.0 million; Nine Month Adjusted Free Cash Flow of $134.7 million, an increase of 18.5%.
• Q3 Adjusted Net Income increased 11.6% to $28.4 million, or $0.53 per diluted share. Nine month Adjusted Net Income increased 19.5% to $87.5 million, or $1.65 per diluted share.

Fiscal Third Quarter Ended December 31, 2015

Reported revenues in the third quarter of fiscal year 2016 increased 1.3% to $200.2 million, compared to $197.6 million in the third quarter of fiscal year 2015. Revenues increased 3.2% excluding the impact of foreign currency fluctuations, driven by continued strong consumption levels across the Company’s core over-the-counter (OTC) healthcare brands. Foreign currency fluctuations negatively impacted reported revenues for the fiscal third quarter by $3.6 million.

Reported net income for the third quarter of fiscal 2016 totaled $28.0 million, or $0.53 per diluted share, compared to $21.3 million, or $0.40 per diluted share, in the third quarter of fiscal year 2015. Adjusted net income increased 11.6% to $28.4 million, or $0.53 per diluted share, compared to $25.4 million, or $0.48 per diluted share, in the third quarter of fiscal year 2015. Adjustments to net income in the third quarters of fiscal 2016 and fiscal 2015 consisted primarily of acquisition-related items.

Nine Months Ended December 31, 2015

Reported revenues for the nine months ended December 31, 2015 totaled $598.4 million, an increase of 14.1% compared to $524.6 million for the nine months ended December 31, 2014. Organic revenue for the nine months ended December 31, 2015 increased 2.1% excluding the impact of foreign currency fluctuations. Foreign currency fluctuations negatively impacted reported revenues for the fiscal nine months ended December 31, 2015 by $11.6 million.

Reported net income for the nine months ended December 31, 2015 totaled $86.0 million, or $1.62 per diluted share, compared to $54.5 million, or $1.04 per diluted share, for the nine months ended December 31, 2014. Adjusted net income for the nine months ended December 31, 2015 increased 19.5% to $87.5 million, or $1.65 per diluted share, compared to adjusted net income of $73.3 million, or $1.39 per diluted share, for the nine months ended December 31, 2014. Adjustments to net income for the nine month period ended December 31, 2015 were primarily related to the planned acquisition of DenTek and our CEO transition; adjustments to net income in the prior year comparable period were primarily related to the Insight and Hydralyte acquisitions.

Adjusted Free Cash Flow and Balance Sheet

Free Cash Flow totaled $45.0 million for the third quarter of fiscal 2016. For the nine months ended December 31, 2015, Adjusted Free Cash Flow was $134.7 million, compared to $113.6 million for the nine months ended December 31, 2014, an increase of 18.5%.

Adjusted EBITDA for the nine month period ended December 31, 2015 was $214.9 million, a 17.2% increase over the prior year nine month period’s Adjusted EBITDA of $183.4 million. The Company repaid $26.1 million of debt during the third fiscal quarter of 2016 and had a bank-defined net debt to EBITDA leverage ratio of 4.8. The Company had cash of $49.0 million as of December 31, 2015 in anticipation of funding the DenTek acquisition.

Segment Review

North American OTC Healthcare. Reported revenues were $165.1 million for the third fiscal quarter of 2016, a 2.6% increase over third quarter 2015 revenues of $160.8 million. For the nine month period ended December 31, 2015, reported revenues totaled $486.8 million, compared to $410.2 million for the nine months ended December 31, 2014, an increase of 18.7%. Results for the third quarter were favorably impacted by increased consumption trends among core OTC brands. The nine month period also benefited from the Insight acquisition.

International OTC Healthcare. Reported revenues totaled $13.8 million for the third fiscal quarter of 2016, a decrease of 11.2% over third quarter 2015 revenues of $15.6 million, or, on a constant currency basis, which excludes $2.4 million of foreign currency impact, an increase of 4.7%. For the nine months ended December 31, 2015, reported revenues totaled $43.3 million, compared to $45.2 million for the nine months ended December 31, 2014, a decrease of 4.3%, or, on a constant currency basis, which excludes $7.1 million of foreign currency impact, an increase of 13.6%.

Household Cleaning. Reported revenues totaled $21.3 million for the third fiscal quarter of 2016, a 0.4% increase over third quarter 2015 revenues of $21.2 million. Reported revenues for the nine months ended December 31, 2015 totaled $68.3 million, compared to $69.1 million for the nine months ended December 31, 2014, a decrease of 1.2%.

Commentary & Outlook

“We are extremely pleased with our solid third quarter and year-to-date results, which reflect continued consumption-driven performance trends among our core OTC brands,” said Ron Lombardi, President and CEO. “Our core OTC and International brands grew 5.7% during the fiscal third quarter, excluding the effects of foreign currency fluctuations. These results reflect our continued investment in brand-building and are highlighted by solid performance across the portfolio,” he said.

“With the Federal Trade Commission (FTC) having completed its review of the DenTek acquisition, we now expect to close on this transaction in early February. We expect the integration of DenTek into our portfolio will be smooth and efficient, benefitting from our core competencies of acquiring, integrating and growing businesses through investment in brand-building and innovation. DenTek is an excellent strategic fit with our acquisition criteria and shares our outsourced business model. The product line will strengthen our existing oral care platform and benefit from our proven brand-building ability over the long-term. This transaction will mark our seventh acquisition in the past six years, continuing our proven strategy to grow our portfolio and increase shareholder value.”

Mr. Lombardi continued, “For the fiscal year ending March 31, 2016, we are reconfirming our previously provided outlook, which recognizes the impact of foreign currency fluctuations, and excludes any potential sales, earnings or acquisition and integration costs from DenTek in the fourth fiscal quarter ending March 31, 2016. For the second half of the fiscal year, we continue to expect revenue growth between +0.5% and +1.5%, full year revenue growth of +10% to +11% and adjusted free cash flow of $175 million or more. We continue to anticipate fiscal 2016 adjusted earnings per share to be at the high end of our previously provided range of $2.05-$2.10, or slightly above,” he said.

Q3 Conference Call, Accompanying Slide Presentation & Replay

The Company will host a conference call to review its third quarter results on February 4, 2016 at 8:30 am EDT. The toll-free dial-in numbers are 877-784-9650 within North America and 530-379-4717 outside of North America. The Company will provide a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 855-859-2056 within North America and at 404-537-3406 from outside North America.

Non-GAAP Financial Information

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section of our earnings release.

About Prestige Brands Holdings, Inc.

The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, Australia, and in certain international markets. Core brands include Monistat® women’s health products, Nix® lice treatment, Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, Little Remedies® pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada. Visit the Company's website at www.prestigebrands.com.

Note Regarding Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "outlook," "may," "will," "would," "expect," “intend,” “estimate,” “anticipate,” “believe,” or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, our expectations regarding the closing of the DenTek acquisition and the integration of DenTek into our product portfolio, the expected impact of the acquisition on our oral care platform, and our expected future operating results, including revenue growth, adjusted EPS, and anticipated adjusted free cash flow. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those expected as a result of a variety of factors, including the impact of our advertising and promotional initiatives, competition in our industry, supplier issues, unexpected costs, the integration of the DenTek acquisition, and the success of our brand-building investments and integration of newly acquired products. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2015, Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, and other periodic reports filed with the Securities and Exchange Commission.

Prestige Brands Holdings, Inc.
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
		Three Months Ended December 31,													Nine Months Ended December 31,
(In thousands, except per share data)		2015						2014							2015						2014
Revenues
Net sales		$		199,485				$		196,435					$		596,034				$		520,981
Other revenues		710						1,171							2,358						3,596
Total revenues		200,195						197,606							598,392						524,577
Cost of Sales
Cost of sales (exclusive of depreciation shown below)		83,411						85,861							249,432						228,424
Gross profit		116,784						111,745							348,960						296,153
Operating Expenses
Advertising and promotion		29,935						30,144							84,250						74,284
General and administrative		18,135						19,454							52,186						63,588
Depreciation and amortization		6,071						5,154							17,478						11,967
Total operating expenses		54,141						54,752							153,914						149,839
Operating income		62,643						56,993							195,046						146,314
Other (income) expense
Interest income		(31			)			(20			)				(91			)			(67			)
Interest expense		19,493						24,612							62,104						57,505
Gain on sale of asset		—						(1,133			)				—						(1,133			)
Loss on extinguishment of debt		—						—							451						—
Total other expense		19,462						23,459							62,464						56,305
Income before income taxes		43,181						33,534							132,582						90,009
Provision for income taxes		15,186						12,241							46,611						35,521
Net income		$		27,995				$		21,293					$		85,971				$		54,488
Earnings per share:
Basic		$		0.53				$		0.41					$		1.63				$		1.05
Diluted		$		0.53				$		0.40					$		1.62				$		1.04
Weighted average shares outstanding:
Basic		52,824						52,278							52,727						52,110
Diluted		53,203						52,730							53,106						52,622
Comprehensive income, net of tax:
Currency translation adjustments		4,922						(8,779			)				(6,562			)			(16,883			)
Total other comprehensive loss		4,922						(8,779			)				(6,562			)			(16,883			)
Comprehensive income		$		32,917				$		12,514					$		79,409				$		37,605

Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands) Assets		December 31, 2015						March 31, 2015
Current assets
Cash and cash equivalents		$		48,973				$		21,318
Accounts receivable, net		85,085						87,858
Inventories		80,671						74,000
Deferred income tax assets		8,406						8,097
Prepaid expenses and other current assets		5,020						10,434
Total current assets		228,155						201,707
Property and equipment, net		12,302						13,744
Goodwill		282,679						290,651
Intangible assets, net		2,116,511						2,134,700
Other long-term assets		1,352						1,165
Total Assets		$		2,640,999				$		2,641,967
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$		28,539				$		46,115
Accrued interest payable		9,359						11,974
Other accrued liabilities		48,823						40,948
Total current liabilities		86,721						99,037
Long-term debt
Principal amount		1,477,500						1,593,600
Less unamortized debt costs		(30,468			)			(32,327			)
Long-term debt, net		1,447,032						1,561,273
Deferred income tax liabilities		383,485						351,569
Other long-term liabilities		2,823						2,464
Total Liabilities		1,920,061						2,014,343
Stockholders' Equity
Preferred stock - $0.01 par value
Authorized - 5,000 shares
Issued and outstanding - None		—						—
Common stock - $0.01 par value
Authorized - 250,000 shares
Issued - 53,059 shares at December 31, 2015 and 52,562 shares at March 31, 2015		530						525
Additional paid-in capital		442,127						426,584
Treasury stock, at cost - 306 shares at December 31, 2015 and 266 shares at March 31, 2015		(5,121			)			(3,478			)
Accumulated other comprehensive loss, net of tax		(29,974			)			(23,412			)
Retained earnings		313,376						227,405
Total Stockholders' Equity		720,938						627,624
Total Liabilities and Stockholders' Equity		$		2,640,999				$		2,641,967

Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
		Nine Months Ended December 31,
(In thousands)		2015						2014
Operating Activities
Net income		$		85,971				$		54,488
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		17,478						11,967
Gain on sale of asset		—						(1,133			)
Deferred income taxes		31,591						19,517
Amortization of debt origination costs		5,433						5,904
Stock-based compensation costs		7,098						4,919
Loss on extinguishment of debt		451						—
Lease termination costs		—						1,125
(Gain) loss on sale or disposal of property and equipment		(36			)			321
Changes in operating assets and liabilities, net of effects from acquisitions
Accounts receivable		2,453						2,113
Inventories		(7,114			)			14,478
Prepaid expenses and other current assets		5,472						7,598
Accounts payable		(17,553			)			(25,452			)
Accrued liabilities		5,207						8,297
Net cash provided by operating activities		136,451						104,142
Investing Activities
Purchases of property and equipment		(2,540			)			(3,700			)
Proceeds from the sale of property and equipment		344						—
Proceeds from sale of business		—						18,500
Proceeds from sale of asset		—						10,000
Proceeds from Insight Pharmaceuticals working capital arbitration settlement		7,237						—
Acquisition of Insight Pharmaceuticals, less cash acquired		—						(749,666			)
Acquisition of the Hydralyte brand		—						(77,991			)
Net cash provided by (used in) investing activities		5,041						(802,857			)
Financing Activities
Term loan borrowings		—						720,000
Term loan repayments		(50,000			)			(80,000			)
Borrowings under revolving credit agreement		15,000						124,600
Repayments under revolving credit agreement		(81,100			)			(58,500			)
Payments of debt origination costs		(4,211			)			(16,072			)
Proceeds from exercise of stock options		6,600						3,654
Proceeds from restricted stock exercises		544						57
Excess tax benefits from share-based awards		1,850						1,030
Fair value of shares surrendered as payment of tax withholding		(2,187			)			(1,688			)
Net cash (used in) provided by financing activities		(113,504			)			693,081
Effects of exchange rate changes on cash and cash equivalents		(333			)			(746			)
Increase (decrease) in cash and cash equivalents		27,655						(6,380			)
Cash and cash equivalents - beginning of period		21,318						28,331
Cash and cash equivalents - end of period		$		48,973				$		21,951
Interest paid		$		58,867				$		49,435
Income taxes paid		$		9,014				$		7,135

Prestige Brands Holdings, Inc.
Consolidated Statements of Income
Business Segments
(Unaudited)
			Three Months Ended December 31, 2015
(In thousands)			North American OTC Healthcare							International OTC Healthcare							Household Cleaning							Consolidated
Gross segment revenues*			$		165,278					$		13,812					$		20,623					$		199,713
Elimination of intersegment revenues			(228			)				—							—							(228			)
Third-party segment revenues			165,050							13,812							20,623							199,485
Other revenues*			—							9							701							710
Total segment revenues			165,050							13,821							21,324							200,195
Cost of sales			62,654							4,965							15,792							83,411
Gross profit			102,396							8,856							5,532							116,784
Advertising and promotion			26,472							2,838							625							29,935
Contribution margin			$		75,924					$		6,018					$		4,907					86,849
Other operating expenses																								24,206
Operating income																								62,643
Other expense																								19,462
Income before income taxes																								43,181
Provision for income taxes																								15,186
Net income																								$		27,995
			Nine Months Ended December 31, 2015
(In thousands)			North American OTC Healthcare							International OTC Healthcare							Household Cleaning							Consolidated
Gross segment revenues*			$		489,224					$		43,254					$		65,984					$		598,462
Elimination of intersegment revenues			(2,428			)				—							—							(2,428			)
Third-party segment revenues			486,796							43,254							65,984							596,034
Other revenues*			14							41							2,303							2,358
Total segment revenues			486,810							43,295							68,287							598,392
Cost of sales			182,279							16,347							50,806							249,432
Gross profit			304,531							26,948							17,481							348,960
Advertising and promotion			74,107							8,338							1,805							84,250
Contribution margin			$		230,424					$		18,610					$		15,676					264,710
Other operating expenses																								69,664
Operating income																								195,046
Other expense																								62,464
Income before income taxes																								132,582
Provision for income taxes																								46,611
Net income																								$		85,971
			Three Months Ended December 31, 2014
(In thousands)			North American OTC Healthcare							International OTC Healthcare							Household Cleaning							Consolidated
Gross segment revenues*			$		162,163					$		15,563					$		20,218					$		197,944
Elimination of intersegment revenues			(1,509			)				—							—							(1,509			)
Third-party segment revenues			160,654							15,563							20,218							196,435
Other revenues			151							4							1,016							1,171
Total segment revenues			160,805							15,567							21,234							197,606
Cost of sales			63,479							6,247							16,135							85,861
Gross profit			97,326							9,320							5,099							111,745
Advertising and promotion			26,779							2,776							589							30,144
Contribution margin			$		70,547					$		6,544					$		4,510					81,601
Other operating expenses																								24,608
Operating income																								56,993
Other expense																								23,459
Income before income taxes																								33,534
Provision for income taxes																								12,241
Net income																								$		21,293
			Nine Months Ended December 31, 2014
(In thousands)			North American OTC Healthcare							International OTC Healthcare							Household Cleaning							Consolidated
Gross segment revenues*			$		412,703					$		45,157					$		66,057					$		523,917
Elimination of intersegment revenues			(2,936			)				—							—							(2,936			)
Third-party segment revenues			409,767							45,157							66,057							520,981
Other revenues			478							62							3,056							3,596
Total segment revenues			410,245							45,219							69,113							524,577
Cost of sales			158,005							17,926							52,493							228,424
Gross profit			252,240							27,293							16,620							296,153
Advertising and promotion			64,573							8,151							1,560							74,284
Contribution margin			$		187,667					$		19,142					$		15,060					221,869
Other operating expenses																								75,555
Operating income																								146,314
Other expense																								56,305
Income before income taxes																								90,009
Provision for income taxes																								35,521
Net income																								$		54,488

* Certain immaterial amounts relating to intersegment revenues and other revenues were reclassified between the International OTC Healthcare segment and the North American OTC Healthcare segment. There were no changes to the consolidated financial statements for any periods presented.

About Non-GAAP Financial Measures

We define Non-GAAP Organic Revenues as Total Revenues excluding revenues associated with products acquired or divested in the periods presented. We define Non-GAAP Organic Revenues on a Constant Currency basis as Total Revenues excluding acquisitions and divestitures and the impact of current year foreign exchange rates on total revenues. We define Non-GAAP Total Revenues on a Constant Currency basis as Total Revenues excluding the impact of currency exchange rates on total revenues. We define Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, inventory step-up charges, certain other legal and professional fees, other acquisition-related costs, costs associated with our CEO transition, gain on sale of asset, and loss on extinguishment of debt. Non-GAAP Adjusted EBITDA Margin is calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues. We define Non-GAAP Adjusted Gross Margin as Gross Profit before inventory step up charges, and certain other acquisition and integration-related costs. Non-GAAP Adjusted Gross Margin percentage is calculated based on Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues. We define Non-GAAP Adjusted General and Administrative expenses as General and Administrative expenses minus certain other legal and professional fees, acquisition and other integration costs, and costs associated with our CEO transition. Non-GAAP Adjusted General and Administrative expense percentage is calculated based on Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues. We define Non-GAAP Adjusted Net Income as Net Income before inventory step-up charges, certain other legal and professional fees, other acquisition and integration-related costs, costs associated with our CEO transition, accelerated amortization of debt origination costs, gain on sale of asset, loss on extinguishment of debt, and the applicable tax impacts associated with these items and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period. We define Non-GAAP Free Cash Flow as net cash provided by operating activities less cash paid for capital expenditures. We define Non-GAAP Adjusted Free Cash Flow as net cash provided by operating activities less purchases of property and equipment plus payments associated with acquisitions for integration, transition, and other payments associated with acquisitions. Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

We are presenting Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow, because they provide additional ways to view our operation when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow is presented solely as a supplemental disclosure because (i) we believe it is a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow have limitations, and you should not consider these measures in isolation from or as an alternative to GAAP measures such as Total Revenues, General and Administrative expense, Operating income, Net income, and Net cash flow provided by operating activities, or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity.

The following tables set forth the reconciliation of Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow, all of which are non-GAAP financial measures, to GAAP Gross Profit, GAAP General and Administrative expense, GAAP Net Income, GAAP Diluted EPS and GAAP Net cash provided by operating activities, our most directly comparable financial measures presented in accordance with GAAP.

Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and Non-GAAP Organic Revenues on a Constant Currency basis and related growth percentages:

		Three Months Ended December 31,													Nine Months Ended December 31,
		2015						2014							2015						2014
(In thousands)
GAAP Total Revenues		$		200,195				$		197,606					$		598,392				$		524,577
Adjustments:
Hydralyte revenues (1)		—						—							(1,217			)			—
Insight revenues (2)		—						—							(73,630			)			—
Total adjustments		—						—							(74,847			)			—
Non-GAAP Organic Revenues		200,195						197,606							523,545						524,577
Organic Revenue Growth (Decline)		1.3			%										(0.2			)%
Impact of foreign currency exchange rates (3)								(3,614			)										(11,605			)
Non-GAAP Organic Revenues on a constant currency basis		$		200,195				$		193,992					$		523,545				$		512,972
Constant Currency Organic Revenue Growth		3.2			%										2.1			%

(1)		Revenue adjustments relate to our International OTC Healthcare segment
(2)		Revenue adjustments relate to our North American OTC Healthcare segment
(3)		Foreign currency exchange rate adjustments relate to all segments

Reconciliation of GAAP Total Revenues to Non-GAAP Total Revenues on a Constant Currency basis and related growth percentages:

		Three Months Ended December 31,													Nine Months Ended December 31,
		2015						2014							2015						2014
(In thousands)
GAAP Total Revenues		$		200,195				$		197,606					$		598,392				$		524,577
Impact of foreign currency exchange rates (1)								(3,614			)										(11,605			)
Non-GAAP Total Revenues on a constant currency basis		$		200,195				$		193,992					$		598,392				$		512,972
Constant Currency Revenue Growth		3.2			%										16.7			%

(1)		Foreign currency exchange rate adjustments relate to all segments

Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Margin and related Adjusted Gross Margin percentage:

		Three Months Ended December 31,													Nine Months Ended December 31,
		2015						2014							2015						2014
(In thousands)
GAAP Total Revenues		$		200,195				$		197,606					$		598,392				$		524,577
GAAP Gross Profit		$		116,784				$		111,745					$		348,960				$		296,153
Adjustments:
Inventory step-up charges and other costs associated with the Hydralyte acquisition (1)		—						—							—						246
Inventory step-up charges associated with Insight acquisition (2)		—						1,326							—						1,979
Total adjustments		—						1,326							—						2,225
Non-GAAP Adjusted Gross Margin		$		116,784				$		113,071					$		348,960				$		298,378
Non-GAAP Adjusted Gross Margin %		58.3			%			57.2			%				58.3			%			56.9			%

(1)		Inventory step-up charges and other costs relate to our International OTC Healthcare segment
(2)		Inventory step-up charges relate to our North American OTC Healthcare segment

Reconciliation of GAAP General and Administrative Expense to Non-GAAP Adjusted General and Administrative Expense and related Non-GAAP Adjusted General and Administrative Expense percentage:

		Three Months Ended December 31,													Nine Months Ended December 31,
		2015						2014							2015						2014
(In thousands)
GAAP General and Administrative Expense		$		18,135				$		19,454					$		52,186				$		63,588
Adjustments:
Costs associated with CEO transition		—						—							1,406						—
Legal and professional fees associated with acquisitions		1,016						477							1,016						10,334
Stamp/Duty Tax on Australian acquisition		—						—							—						2,940
Integration, transition and other costs associated with acquisitions		—						5,181							—						9,613
Total adjustments		1,016						5,658							2,422						22,887
Non-GAAP Adjusted General and Administrative Expense		$		17,119				$		13,796					$		49,764				$		40,701
Non-GAAP Adjusted General and Administrative Expense Percentage		8.6			%			7.0			%				8.3			%			7.8			%

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA and related Non-GAAP Adjusted EBITDA Margin:

		Three Months Ended December 31,													Nine Months Ended December 31,
		2015						2014							2015						2014
(In thousands)
GAAP Net Income		$		27,995				$		21,293					$		85,971				$		54,488
Interest expense, net		19,462						24,592							62,013						57,438
Provision for income taxes		15,186						12,241							46,611						35,521
Depreciation and amortization		6,071						5,154							17,478						11,967
Non-GAAP EBITDA:		68,714						63,280							212,073						159,414
Adjustments:
Inventory step-up charges and other costs associated with the Hydralyte acquisition (1)		—						—							—						246
Inventory step-up charges associated with Insight acquisition (2)		—						1,326							—						1,979
Costs associated with CEO transition (3)		—						—							1,406						—
Legal and professional fees associated with acquisitions (3)		1,016						477							1,016						10,334
Stamp/Duty Tax on Australian acquisition (3)		—						—							—						2,940
Integration, transition and other costs associated with acquisitions (3)		—						5,181							—						9,613
Gain on sale of asset		—						(1,133			)				—						(1,133			)
Loss on extinguishment of debt		—						—							451						—
Total adjustments		1,016						5,851							2,873						23,979
Non-GAAP Adjusted EBITDA		$		69,730				$		69,131					$		214,946				$		183,393
Non-GAAP Adjusted EBITDA Margin		34.8			%			35.0			%				35.9			%			35.0			%

(1)		Inventory step-up charges and other costs relate to our International OTC Healthcare segment
(2)		Inventory step-up charges relate to our North American OTC Healthcare segment
(3)		Adjustments relate to G&A expenses

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Adjusted Earnings Per Share:

		Three Months Ended December 31,																					Nine Months Ended December 31,
		2015				2015 Adjusted EPS						2014				2014 Adjusted EPS							2015				2015 Adjusted EPS						2014				2014 Adjusted EPS
(In thousands)
GAAP Net Income		$		27,995		$		0.53				$		21,293		$		0.40					$		85,971		$		1.62				$		54,488		$		1.04
Adjustments:
Inventory step-up charges and other costs associated with the Hydralyte acquisition (1)		—				—						—				—							—				—						246				—
Inventory step-up charges associated with Insight acquisition (2)		—				—						1,326				0.03							—				—						1,979				0.04
Costs associated with CEO transition (3)		—				—						—				—							1,406				0.03						—				—
Legal and professional fees associated with acquisitions (3)		1,016				0.02						477				0.01							1,016				0.02						10,334				0.20
Stamp/Duty Tax on Australian acquisition (3)		—				—						—				—							—				—						2,940				0.05
Integration, transition and other costs associated with acquisitions (3)		—				—						5,181				0.10							—				—						9,613				0.18
Accelerated amortization of debt origination costs		—				—						218				—							—				—						218				—
Gain on sale of asset		—				—						(1,133			)	(0.02			)				—				—						(1,133			)	(0.02			)
Loss on extinguishment of debt		—				—						—				—							451				0.01						—				—
Tax impact of adjustments		(657			)	(0.02			)			(1,950			)	(0.04			)				(1,314			)	(0.03			)			(5,419			)	(0.10			)
Total adjustments		359				—						4,119				0.08							1,559				0.03						18,778				0.35
Non-GAAP Adjusted Net Income and Adjusted EPS		$		28,354		$		0.53				$		25,412		$		0.48					$		87,530		$		1.65				$		73,266		$		1.39

(1)		Inventory step-up charges and other costs relate to our International OTC Healthcare segment
(2)		Inventory step-up charges relate to our North American OTC Healthcare segment
(3)		Adjustments relate to G&A expenses

Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:

		Three Months Ended December 31,													Nine Months Ended December 31,
		2015						2014							2015						2014
(In thousands)
GAAP Net Income		$		27,995				$		21,293					$		85,971				$		54,488
Adjustments:
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows		19,119						17,765							62,015						42,620
Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows		(1,253			)			8,026							(11,535			)			7,034
Total adjustments		17,866						25,791							50,480						49,654
GAAP Net cash provided by operating activities		45,861						47,084							136,451						104,142
Purchases of property and equipment		(857			)			(2,320			)				(2,540			)			(3,700			)
Non-GAAP Free Cash Flow		45,004						44,764							133,911						100,442
Integration, transition and other payments associated with acquisitions		796						784							796						13,201
Adjusted Non-GAAP Free Cash Flow		$		45,800				$		45,548					$		134,707				$		113,643

Outlook for Fiscal Year 2016:

Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:

			2016 Projected EPS
			Low							High
Projected FY'16 GAAP EPS			$		2.00					$		2.05
Adjustments:
Costs associated with term loan refinancing and CEO transition			0.05							0.05
Total Adjustments			0.05							0.05
Projected Non-GAAP Adjusted EPS			$		2.05					$		2.10

Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Free Cash Flow:

			2016 Projected Free Cash Flow
(In millions)
Projected FY'16 GAAP Net cash provided by operating activities			$	181
Additions to property and equipment for cash			(6		)
Projected Non-GAAP Free Cash Flow			$	175

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