Mallinckrodt plc Reports First Quarter 2025 Financial Results and Reaffirms Full-Year Guidance

2025
 Guidance

Total Net Sales

 $1.7 billion to $1.8 billion

Adjusted EBITDA

 $480 million to $520 million

(i)

transaction-related risks, including the parties’ ability to successfully integrate our business and Endo’s business and unanticipated costs of such integration, which may result in the combined company not operating as effectively and efficiently as expected; uncertainties related to a future separation of the combined generics pharmaceuticals businesses of Mallinckrodt and Endo and Endo’s sterile injectables business; the risk that the expected benefits and synergies of the proposed transactions may not be fully realized in a timely manner, or at all; the risk associated with Mallinckrodt’s and Endo’s ability to obtain the approval of their shareholders and stockholders, respectively, required to consummate the proposed business combination transaction (including the fact that it may not be completed on the anticipated timeline or at all); the risk that the conditions to the proposed business combination transaction may not be satisfied (or waived to the extent permitted by law) on a timely basis or at all or the failure of the proposed business combination transaction to close for any other reason or to close on the anticipated terms, including the intended tax treatment; the risk that any regulatory approval, consent or authorization that may be required for the proposed business combination transaction may not be obtained or may be obtained subject to conditions that are not anticipated; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed business combination transaction; unanticipated difficulties, liabilities or expenditures relating to the proposed transactions; the effect of the announcement, pendency or completion of the proposed transactions on the parties’ business relationships and business operations generally; certain restrictions on the ability of Mallinckrodt and Endo to pursue certain business activities or strategic transactions during the pendency of the proposed business combination transaction; the effect of the announcement, pendency or completion of the proposed transactions on the long-term value of Mallinckrodt’s ordinary shares and Endo’s common stock; risks that the proposed transactions may disrupt current plans and operations of Mallinckrodt and Endo and their respective management teams and potential difficulties in hiring, retaining and motivating employees as a result of the proposed transactions; risks related to our increased indebtedness as a result of the proposed business combination transaction; significant transaction costs related to the proposed business combination transaction; potential litigation relating to the proposed transactions that could be instituted against Mallinckrodt, Endo or their respective officers or directors; rating agency actions and Mallinckrodt’s and Endo’s ability to access short- and long-term debt markets on a timely and affordable basis; and risks related to the financing in connection with the transaction;

(ii)

risks related to Mallinckrodt’s business, including potential changes in Mallinckrodt’s business strategy and performance; exposure to global economic conditions and market uncertainty; Mallinckrodt’s initiative to explore a variety of potential divestiture, financing and other transactional opportunities; the exercise of contingent value rights by the Opioid Master Disbursement Trust II (the “Trust”); governmental investigations and inquiries, regulatory actions, and lawsuits, in each case related to Mallinckrodt or its officers; Mallinckrodt’s contractual and court-ordered compliance obligations that, if violated, could result in penalties; compliance with and restrictions under the global settlement to resolve all opioid-related claims; matters related to Acthar Gel, including the settlement with governmental parties to resolve certain disputes and compliance with and restrictions under the related corporate integrity agreement; the ability to maintain relationships with Mallinckrodt’s suppliers, customers, employees and other third parties following the emergence from the 2023 bankruptcy proceedings; scrutiny from governments, legislative bodies and enforcement agencies related to sales, marketing and pricing practices; pricing pressure on certain of Mallinckrodt’s products due to legal changes or changes in insurers’ or other payers’ reimbursement practices resulting from recent increased public scrutiny of healthcare and pharmaceutical costs; the reimbursement practices of governmental health administration authorities, private health coverage insurers and other third-party payers; complex reporting and payment obligations under the Medicare and Medicaid rebate programs and other governmental purchasing and rebate programs; cost containment efforts of customers, purchasing groups, third-party payers and governmental organizations; changes in or failure to comply with relevant laws and regulations; any undesirable side effects caused by Mallinckrodt’s approved and investigational products, which could limit their commercial profile or result in other negative consequences; Mallinckrodt’s and its partners’ ability to successfully develop, commercialize or launch new products or expand commercial opportunities of existing products, including Acthar Gel (repository corticotropin injection) SelfJect™ and the INOmax Evolve DS delivery system; Mallinckrodt’s ability to successfully identify or discover additional products or product candidates; Mallinckrodt’s ability to navigate price fluctuations and pressures, including the ability to achieve anticipated benefits of price increases of its products; competition; Mallinckrodt’s ability to protect intellectual property rights, including in relation to ongoing and future litigation; limited clinical trial data for Acthar Gel; the timing, expense and uncertainty associated with clinical studies and related regulatory processes; product liability losses and other litigation liability; material health, safety and environmental laws and related liabilities; business development activities or other strategic transactions; attraction and retention of key personnel; the effectiveness of information technology infrastructure, including risks of external attacks or failures; customer concentration; Mallinckrodt’s reliance on certain individual products that are material to its financial performance; Mallinckrodt’s ability to receive sufficient procurement and production quotas granted by the U.S. Drug Enforcement Administration; complex manufacturing processes; reliance on third-party manufacturers and supply chain providers and related market disruptions; conducting business internationally; Mallinckrodt’s significant levels of intangible assets and related impairment testing; natural disasters or other catastrophic events; Mallinckrodt’s substantial indebtedness and settlement obligation, its ability to generate sufficient cash to reduce its indebtedness and its potential need and ability to incur further indebtedness; restrictions contained in the agreements governing Mallinckrodt’s indebtedness and settlement obligation on Mallinckrodt’s operations, future financings and use of proceeds; Mallinckrodt’s variable rate indebtedness; Mallinckrodt’s tax treatment by the Internal Revenue Service under Section 7874 and Section 382 of the Internal Revenue Code of 1986, as amended; future changes to applicable tax laws or the impact of disputes with governmental tax authorities; the impact of Irish laws; the impact on the holders of Mallinckrodt’s ordinary shares if Mallinckrodt were to cease to be a reporting company in the United States; the comparability of Mallinckrodt’s post-emergence financial results and the projections filed with the Bankruptcy Court; and the lack of comparability of Mallinckrodt’s historical financial statements and information contained in its financial statements after the adoption of fresh-start accounting following emergence from the 2023 bankruptcy proceedings; and

(iii)

risks related to Endo’s business, including future capital expenditures, expenses, revenues, economic performance, financial conditions, market growth and future prospects; Endo changes in competitive, market or regulatory conditions; changes in legislation or regulations; global political changes, including those related to the new U.S. presidential administration; Endo’s use of artificial intelligence and data science; the ability to obtain and maintain adequate protection for intellectual property rights; the impacts of competition such as those related to XIAFLEX^®; the timing and uncertainty of the results of both the research and development and regulatory processes; health care and cost containment reforms, including government pricing, tax and reimbursement policies; litigation; the performance including the approval, introduction and consumer and physician acceptance of current and new products; the performance of third parties upon whom Endo relies for goods and services; issues associated with Endo’s supply chain; Endo’s ability to develop and expand its product pipeline and to launch new products and to continue to develop the market for XIAFLEX^® and other branded, sterile injectable or generic products; the effectiveness of advertising and other promotional campaigns; and the timely and successful implementation of business development opportunities and/or any other strategic priorities.

MALLINCKRODT PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

Three Months

Ended

March 28, 2025

Three Months

Ended

March 29, 2024

Percent of

Net sales

Percent of

Net sales

Net sales

$            419.9

100.0 %

$             467.8

100.0 %

Cost of sales

217.0

51.7

303.8

64.9

Gross profit

202.9

48.3

164.0

35.1

Selling, general and administrative expenses

147.5

35.1

136.9

29.3

Combination, integration, and other related expenses

20.5

4.9

—

—

Research and development expenses

20.5

4.9

27.9

6.0

Restructuring charges, net

(2.0)

(0.5)

10.2

2.2

Liabilities management and separation costs

1.4

0.3

6.7

1.4

Operating income (loss)

15.0

3.6

(17.7)

(3.8)

Interest expense

(32.8)

(7.8)

(59.1)

(12.6)

Interest income

5.8

1.4

6.8

1.5

Loss on divestiture

(6.2)

(1.5)

—

—

Other (expense) income, net

(5.8)

(1.4)

3.7

0.8

Loss from continuing operations before income taxes

(24.0)

(5.7)

(66.3)

(14.2)

Income tax expense (benefit)

3.9

0.9

(0.1)

Loss from continuing operations

(27.9)

(6.6)

(65.6)

(14.0)

Income from discontinued operations, net of income taxes

0.2

—

0.2

—

Net loss

$           (27.7)

(6.6) %

$             (65.4)

(14.0) %

Basic and diluted (loss) income per share:

Loss from continuing operations

$           (1.42)

$             (3.33)

Income from discontinued operations

0.01

0.01

Net loss

$           (1.41)

$             (3.32)

Weighted-average number of shares outstanding

Basic

19.7

19.7

Diluted

19.7

19.7

MALLINCKRODT PLC

CONSOLIDATED ADJUSTED EBITDA

(unaudited, in millions)

Three Months

Ended

March 28, 2025

Three Months

Ended

March 29, 2024

Gross
profit

SG&A

R&D

Adjusted
EBITDA

Gross
profit

SG&A

R&D

Adjusted
EBITDA

Net loss

$     202.9

$     147.5

$       20.5

$   (27.7)

$     164.0

$     136.9

$       27.9

$      (65.4)

Adjustments:

Interest expense, net

—

—

—

27.0

—

—

—

52.3

Income tax expense (benefit)

—

—

—

3.9

—

—

—

(0.7)

Depreciation

8.4

(0.5)

(0.2)

9.1

9.4

(0.5)

(0.4)

10.3

Amortization

13.4

—

—

13.4

24.8

—

—

24.8

Combination, integration, and other related
expenses ⁽¹⁾

—

—

—

20.5

—

—

—

—

Restructuring charges, net ⁽²⁾

—

—

—

(2.0)

—

2.5

—

7.7

Liabilities management and separation costs ⁽³⁾

—

—

—

1.4

—

—

—

6.7

Loss on divestiture

—

—

—

6.2

—

—

—

—

Reorganization items, net ⁽⁴⁾

—

—

—

—

—

(8.0)

—

8.0

Income from discontinued operations

—

—

—

(0.2)

—

—

—

(0.2)

Change in contingent consideration fair value

—

0.1

—

(0.1)

—

(1.4)

—

1.4

Change in derivative asset & liabilities fair value

—

—

—

2.6

—

—

—

3.8

Unrealized loss (gain) on equity investment

—

—

—

6.2

—

—

—

(7.0)

Share-based compensation

0.2

(9.1)

(0.4)

9.7

—

(1.8)

(0.1)

1.9

Fresh-start inventory-related expense ⁽⁵⁾

32.3

—

—

32.3

101.3

—

—

101.3

As adjusted:

$     257.2

$     138.0

$       19.9

$   102.3

$     299.5

$     127.7

$       27.4

$     144.9

(1)

Represents legal, financial, and other advisory and consulting expenses, which primarily relate to shareholder matters, integration planning, and regulatory costs associated with the proposed Business Combination.

(2)

Includes a net $2.5 million gain on termination of a lease in SG&A during the three months ended March 29, 2024.

(3)

Represents costs primarily related to professional fees incurred as we explored potential sales of non-core assets to enable further deleveraging post-emergence from the 2023 Bankruptcy Proceedings during the three months ended March 28, 2025 and March 29, 2024.

(4)

As of December 30, 2023, professional fees directly related to the 2023 Bankruptcy Proceedings that were previously reflected as reorganization items, net, are classified within SG&A expenses.

(5)

Represents inventory step-up amortization of $32.3 million for the three months ended March 28, 2025 and $103.3 million and $2.0 million of fresh-start inventory-related income for the three months ended March 29, 2024.

MALLINCKRODT PLC

SEGMENT OPERATING INCOME

(unaudited, in millions)

Three Months Ended March 28, 2025

Specialty
Brands

Specialty
Generics

Total

Net sales

$             207.3

$             212.6

$             419.9

Cost of sales ⁽¹⁾

92.4

121.5

213.9

Selling, general and administrative expenses

59.0

26.9

85.9

Research and development expenses

7.3

5.2

12.5

Restructuring charges, net

(2.0)

—

(2.0)

Segment operating income

$               50.6

$               59.0

109.6

Corporate and unallocated expenses:

Cost of sales ⁽²⁾

3.1

Selling, general and administrative expenses ⁽²⁾

61.6

Combination, integration, and other related expenses ⁽⁴⁾

20.5

Research and development expenses ⁽²⁾

8.0

Liabilities management and separation costs ⁽³⁾

1.4

Operating income

15.0

Interest expense

(32.8)

Interest income

5.8

Loss on divestiture

(6.2)

Other expense, net

(5.8)

Loss from continuing operations before income taxes

$             (24.0)

Depreciation and amortization

$               12.1

$                 9.8

Three Months Ended March 29, 2024

Specialty
Brands

Specialty
Generics

Total

Net sales

$             257.3

$             210.5

$             467.8

Cost of sales ⁽¹⁾

142.5

159.3

301.8

Selling, general and administrative expenses

59.1

19.4

78.5

Research and development expenses

13.4

5.9

19.3

Restructuring charges, net

10.2

—

10.2

Segment operating income

$               32.1

$               25.9

58.0

Corporate and unallocated expenses:

Cost of sales ⁽²⁾

2.0

Selling, general and administrative expenses ⁽²⁾

58.4

Research and development expenses ⁽²⁾

8.6

Liabilities management and separation costs ⁽³⁾

6.7

Operating loss

(17.7)

Interest expense

(59.1)

Interest income

6.8

Other income, net

3.7

Loss from continuing operations before income taxes

$             (66.3)

Depreciation and amortization

$               22.4

$               12.2

(1)

Includes $32.3 million and $72.0 million of inventory fair-value step-up expense within the Specialty Brands segment during the three months ended March 28, 2025 and March 29, 2024, respectively. Includes $31.3 million of inventory fair-value step-up expense within the Specialty Generics segment during the three months ended March 29, 2024.

(2)

Includes certain compensation, information technology, legal, environmental and other costs not charged to our reportable segments.

(3)

Represents costs primarily related to professional fees incurred as we explored potential sales of non-core assets to enable further deleveraging post-emergence from the 2023 Bankruptcy Proceedings.

(4)

Represents legal, financial, and other advisory and consulting expenses, which primarily relate to shareholder matters, integration planning, and regulatory costs associated with the proposed Business Combination.

MALLINCKRODT PLC

SELECT PRODUCT LINE NET SALES AND CONSTANT-CURRENCY GROWTH

(unaudited, in millions)

Non-GAAP Measure

Three Months

Ended

March 28,
2025

Three Months

Ended

March 29,
2024

Percent

change

Currency
impact

Constant-
currency
growth (loss)

Specialty Brands

Acthar Gel

$             115.4

$             102.8

12.3 %

— %

12.3 %

INOmax

62.5

70.2

(11.0)

(0.1)

(10.9)

Therakos⁽¹⁾

—

58.2

(100.0)

—

(100.0)

Amitiza

20.2

19.4

4.1

—

4.1

Terlivaz

7.4

6.0

23.3

—

23.3

Other

1.8

0.7

157.1

—

157.1

Specialty Brands

207.3

257.3

(19.4)

—

(19.4)

Specialty Generics

Opioids

83.7

81.9

2.2

—

2.2

ADHD

47.2

31.7

48.9

—

48.9

Addiction treatment

18.5

15.4

20.1

(0.4)

20.5

Other

3.9

1.5

160.0

—

160.0

Generics

153.3

130.5

17.5

—

17.5

Controlled substances

19.1

22.9

(16.6)

—

(16.6)

APAP

33.8

51.7

(34.6)

—

(34.6)

Other

6.4

5.4

18.5

—

18.5

API

59.3

80.0

(25.9)

—

(25.9)

Specialty Generics

212.6

210.5

1.0

—

1.0

Net sales

$             419.9

$             467.8

(10.2) %

— %

(10.2) %

(1)

On November 29, 2024, the Company completed the sale of the Therakos business. As result, there were three months of Therakos net sales during the three months ended March 29, 2024, which did not recur in the three months ended March 28, 2025. Excluding Therakos, total company and Specialty Brands net sales were $409.6 million and $199.1 million, respectively, for the three months ended March 29, 2024.

MALLINCKRODT PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)

March 28,

2025

December 27,

2024

Assets

Current Assets:

Cash and cash equivalents

$             422.2

$             382.6

Accounts receivable, less allowance for doubtful accounts of $4.1 and $6.2

402.7

395.3

Inventories

633.7

664.9

Prepaid expenses and other current assets

175.8

186.3

Total current assets

1,634.4

1,629.1

Property, plant and equipment, net

404.1

390.6

Intangible assets, net

406.1

419.4

Deferred income taxes

661.8

651.8

Other assets

203.1

211.7

Total Assets

$          3,309.5

$          3,302.6

Liabilities and Shareholders’ Equity

Current Liabilities:

Current maturities of long-term debt

$                 3.9

$                 3.9

Accounts payable

79.0

57.8

Accrued payroll and payroll-related costs

52.1

108.1

Accrued interest

26.9

9.2

Acthar Gel-Related Settlement

21.3

21.3

Accrued and other current liabilities

274.5

231.1

Total current liabilities

457.7

431.4

Long-term debt

905.4

909.5

Acthar Gel-Related Settlement

131.4

126.5

Pension and postretirement benefits

26.5

26.5

Environmental liabilities

34.3

34.3

Other income tax liabilities

26.2

25.7

Other liabilities

98.0

102.9

Total Liabilities

1,679.5

1,656.8

Shareholders’ Equity:

Ordinary A shares, €1.00 par value, 25,000 authorized; none issued and outstanding

—

—

Ordinary shares, $0.01 par value, 500,000,000 authorized; 19,762,306 and 19,696,335 issued;

 19,736,759 and 19,696,335 outstanding

0.2

0.2

Ordinary shares held in treasury at cost, 25,547 and zero

(1.9)

—

Additional paid-in capital

1,209.6

1,199.8

Accumulated other comprehensive income

9.2

6.1

Retained earnings

412.9

439.7

Total Shareholders’ Equity

1,630.0

1,645.8

Total Liabilities and Shareholders’ Equity

$          3,309.5

$          3,302.6

MALLINCKRODT PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

Three Months

Ended

March 28,
2025

Three Months

Ended

March 29,
2024

Cash Flows From Operating Activities:

Net loss

$             (27.7)

$             (65.4)

Adjustments to reconcile net cash from operating activities:

Depreciation and amortization

22.5

35.1

Share-based compensation

9.7

1.9

Deferred income taxes

(10.1)

3.9

Non-cash accretion (amortization) expense

1.6

(1.1)

Other non-cash items

8.4

(0.6)

Changes in assets and liabilities:

Accounts receivable, net

(5.4)

(0.8)

Inventories

30.1

78.7

Accounts payable

22.7

(13.3)

Income taxes

12.7

(6.4)

Other

1.8

(16.2)

Net cash from operating activities

66.3

15.8

Cash Flows From Investing Activities:

Capital expenditures

(24.3)

(24.6)

Other

0.3

0.4

Net cash from investing activities

(24.0)

(24.2)

Cash Flows From Financing Activities:

Repayment of debt

(1.0)

(2.2)

Repurchase of shares

(1.9)

—

Other

(0.2)

—

Net cash from financing activities

(3.1)

(2.2)

Effect of currency rate changes on cash

0.8

(1.3)

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

445.7

343.4

Cash, cash equivalents and restricted cash at end of period

$             485.7

$             331.5

Cash and cash equivalents at end of period

$             422.2

$             253.6

Restricted cash included in prepaid expenses and other current assets at end of period

21.7

37.1

Restricted cash included in other long-term assets at end of period

41.8

40.8

Cash, cash equivalents and restricted cash at end of period

$             485.7

$             331.5