This Under-the-Radar Healthcare Stock Yields Nearly 8.5%. Here's Whether That Income Is Too Good to Be True.

Perrigo (NYSE: PRGO) is a healthcare company that appears stable on the surface, but recent financial performance has been disappointing. The company recently replaced its CEO, leaving a temporary CEO in place while a search for a permanent leader continues.

Perrigo manufactures and sells over-the-counter drugs, and most of its revenue comes from private-label generic drugs. The business model is supposed to be steady, much like other consumer staples companies. However, Perrigo reported weak second-quarter 2026 earnings, with core sales falling 3.1% year over year and organic sales declining 3.5%. Even more concerning, core earnings dropped nearly 21%, to $0.46 per share.

The company's top line has been trending downwards for over a decade, and its margins have been declining as well. Interim President and Chief Executive Officer Albert Manzone explained that the company is executing its Three-S plan, which includes strengthening areas of the business, improving operational performance, streamlining its portfolio, and reducing debt.

However, the streamlining effort may be shrinking the company, as Perrigo is selling non-core assets. The interim CEO noted that proceeds from these sales may be used to reduce debt, but there is also a risk that the company could cut its dividend.

Given the weak financial performance, shrinking business, and the possibility of a dividend cut, dividend investors should be cautious when considering Perrigo.