Mallinckrodt plc

08/03/2021 | Press release | Distributed by Public on 08/03/2021 04:58

Second Quarter Financial Results (Form 8-K)



MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share data)
Three Months Ended
June 25,
2021 		Percent of
Net sales 		June 26,
2020 		Percent of
Net sales
Net sales (includes retrospective one-time charge of $534.4 million related to the Medicaid lawsuit for the three months ended June 26, 2020)
$ 546.4 100.0 % $ 166.5 100.0 %
Cost of sales 331.6 60.7 386.7 232.3
Gross profit (loss) 214.8 39.3 (220.2) (132.3)
Selling, general and administrative expenses 145.0 26.5 231.3 138.9
Research and development expenses 52.8 9.7 82.9 49.8
Restructuring charges, net 6.1 1.1 14.4 8.6
Non-restructuring impairment charges - - 63.5 38.1
Gains on divestiture - - (0.6) (0.4)
Opioid-related litigation settlement loss - - 8.5 5.1
Medicaid lawsuit - - 105.3 63.2
Operating income (loss) 10.9 2.0 (725.5) (435.7)
Interest expense (52.4) (9.6) (64.2) (38.6)
Interest income - - 1.0 0.6
Other income (expense), net 11.3 2.1 (0.6) (0.4)
Reorganization items, net (109.5) (20.0) - -
Loss from continuing operations before income taxes (139.7) (25.6) (789.3) (474.1)
Income tax (benefit) expense (33.5) (6.1) 161.3 96.9
Loss from continuing operations (106.2) (19.4) (950.6) (570.9)
Income from discontinued operations, net of income taxes 0.4 0.1 17.5 10.5
Net loss $ (105.8) (19.4) % $ (933.1) (560.4) %
Basic loss per share:
Loss from continuing operations $ (1.25) $ (11.25)
Income from discontinued operations - 0.21
Net loss $ (1.25) $ (11.04)
Diluted loss per share:
Loss from continuing operations $ (1.25) $ (11.25)
Income from discontinued operations - 0.21
Net loss $ (1.25) $ (11.04)
Weighted-average number of shares outstanding
Basic weighted-average shares outstanding 84.7 84.5
Diluted weighted-average shares outstanding 84.7 84.5

1

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
CONSOLIDATED ADJUSTED EBITDA
(unaudited, in millions)
Three Months Ended
June 25, 2021 June 26, 2020
Gross Profit SG&A R&D Adjusted EBITDA Gross Profit SG&A R&D Adjusted EBITDA
Net loss $ 214.8 $ 145.0 $ 52.8 $ (105.8) $ (220.2) $ 231.3 $ 82.9 $ (933.1)
Adjustments:
Interest expense, net - - - 52.4 - - - 63.2
Income taxes - - - (33.5) - - - 161.3
Depreciation (1)
17.0 (4.3) (1.5) 22.8 17.5 (5.5) (1.7) 24.7
Amortization 144.4 (0.8) - 145.2 190.8 (0.8) - 191.6
Restructuring charges, net - - - 6.1 - - - 14.4
Non-restructuring impairment charge - - - - - - - 63.5
Income from discontinued operations - - - (0.4) - - - (17.5)
Change in contingent consideration fair value - (5.3) - 5.3 - 4.9 - (4.9)
Significant legal and environmental charges - - - - 534.4 (17.2) - 665.4
Gains on divestiture - - - - - - - (0.6)
Separation costs - (0.3) - 0.3 - (20.7) - 20.7
Unrealized (gain) loss on equity investment - - - (4.8) - - - 2.4
R&D upfront payment - - - - - - (5.0) 5.0
Reorganization items, net - - - 109.5 - - - -
Share-based compensation 0.1 (1.9) (0.4) 2.4 0.3 (5.2) (1.1) 6.6
As adjusted: $ 376.3 $ 132.4 $ 50.9 $ 199.5 $ 522.8 $ 186.8 $ 75.1 $ 262.7
(1)Includes $0.6 million of accelerated depreciation in selling general and administrative ('SG&A') related to restructuring charges incurred during the three months ended June 25, 2021.

2

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
SEGMENT OPERATING INCOME (1)
(unaudited, in millions)
Three Months Ended
June 25,
2021 		June 26,
2020
Specialty Brands $ 186.6 $ 252.7
Specialty Generics 26.9 49.2
Segment operating income 213.5 301.9
Unallocated amounts:
Corporate and unallocated expenses (2)
(25.7) (52.7)
Depreciation and amortization (168.1) (216.3)
Share-based compensation (2.4) (6.6)
Restructuring charges, net (6.1) (14.4)
Non-restructuring impairment charge - (63.5)
Separation costs (0.3) (20.7)
R&D upfront payment - (5.0)
Opioid-related litigation settlement loss - (8.5)
Medicaid lawsuit - (639.7)
Operating income (loss) $ 10.9 $ (725.5)
(1)During the three months ended September 25, 2020, the Company began excluding depreciation and share-based compensation from its evaluation of the operating results of its segments. As a result, prior period segment operating income has been recast to reflect this change on a comparable basis.
(2)Includes administration expenses and certain compensation, legal, environmental and other costs not charged to the Company's reportable segments.
3

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
SEGMENT NET SALES AND CONSTANT-CURRENCY GROWTH
(unaudited, in millions)
Three Months Ended
June 25,
2021 		June 26,
2020 		Percent
change 		Currency impact Constant-currency growth
Specialty Brands $ 381.5 $ 522.8 (27.0) % 0.4 % (27.4) %
Specialty Generics 164.9 178.1 (7.4) 0.2 (7.6)
Segment net sales 546.4 700.9 (22.0) 0.3 (22.3)
Medicaid lawsuit - (534.4) * * *
Net sales $ 546.4 $ 166.5 228.2 % 0.3 % 227.9 %
*Not meaningful

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
SELECT PRODUCT LINE NET SALES AND CONSTANT-CURRENCY GROWTH
(unaudited, in millions)
Three Months Ended
June 25,
2021 		June 26,
2020 		Percent
change 		Currency impact Constant-currency growth
Specialty Brands
Acthar Gel $ 151.5 $ 213.7 (29.1) % - % (29.1) %
INOmax 105.9 154.9 (31.6) 0.2 (31.8)
Ofirmev 6.5 52.4 (87.6) - (87.6)
Therakos 68.5 47.8 43.3 3.5 39.8
Amitiza 44.8 49.4 (9.3) - (9.3)
Other 4.3 4.6 (6.5) - (6.5)
Specialty Brands Total 381.5 522.8 (27.0) 0.4 (27.4)
Specialty Generics
Hydrocodone (API) and hydrocodone-containing tablets 20.5 25.4 (19.3) - (19.3)
Oxycodone (API) and oxycodone-containing tablets 17.1 15.0 14.0 - 14.0
Acetaminophen (API) 51.7 55.5 (6.8) - (6.8)
Other controlled substances 69.0 77.8 (11.3) 0.5 (11.8)
Other 6.6 4.4 50.0 - 50.0
Specialty Generics Total 164.9 178.1 (7.4) 0.2 (7.6)
Segment net sales 546.4 700.9 (22.0) 0.3 (22.3)
Medicaid lawsuit - (534.4) * * *
Net sales $ 546.4 $ 166.5 228.2 % 0.3 % 227.9 %
*Not meaningful

4

MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share data)
Six Months Ended
June 25,
2021 		Percent of
Net sales 		June 26,
2020 		Percent of
Net sales
Net sales (includes retrospective one-time charge of $534.4 million related to the Medicaid lawsuit for the six months ended June 26, 2020)
$ 1,104.4 100.0 % $ 832.3 100.0 %
Cost of sales 639.2 57.9 768.7 92.4
Gross profit 465.2 42.1 63.6 7.6
Selling, general and administrative expenses 281.0 25.4 462.4 55.6
Research and development expenses 119.0 10.8 160.3 19.3
Restructuring charges, net 6.5 0.6 12.6 1.5
Non-restructuring impairment charges 64.5 5.8 63.5 7.6
Losses (gains) on divestiture 0.8 0.1 (0.4) -
Opioid-related litigation settlement gain - - (8.3) (1.0)
Medicaid lawsuit - - 105.3 12.7
Operating loss (6.6) (0.6) (731.8) (87.9)
Interest expense (112.0) (10.1) (138.7) (16.7)
Interest income 1.9 0.2 4.5 0.5
Other income, net 19.4 1.8 1.1 0.1
Reorganization items, net (203.0) (18.4) - -
Loss from continuing operations before income taxes
(300.3) (27.2) (864.9) (103.9)
Income tax (benefit) expense (49.9) (4.5) 142.4 17.1
Loss from continuing operations (250.4) (22.7) (1,007.3) (121.0)
Income from discontinued operations, net of income taxes
0.7 0.1 24.0 2.9
Net loss $ (249.7) (22.6) % $ (983.3) (118.1) %
Basic loss per share:
Loss from continuing operations $ (2.96) $ (11.95)
Income from discontinued operations 0.01 0.28
Net loss $ (2.95) $ (11.66)
Diluted loss per share:
Loss from continuing operations $ (2.96) $ (11.95)
Income from discontinued operations 0.01 0.28
Net loss $ (2.95) $ (11.66)
Weighted-average number of shares outstanding:
Basic 84.7 84.3
Diluted 84.7 84.3
5

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
CONSOLIDATED ADJUSTED EBITDA
(unaudited, in millions)
Six Months Ended
June 25, 2021 June 26, 2020
Gross Profit SG&A R&D Adjusted EBITDA Gross Profit SG&A R&D Adjusted EBITDA
Net loss $ 465.2 $ 281.0 $ 119.0 $ (249.7) $ 63.6 $ 462.4 $ 160.3 $ (983.3)
Adjustments:
Interest expense, net - - - 110.1 - - - 134.2
Income taxes - - - (49.9) - - - 142.4
Depreciation (1)
34.9 (9.1) (3.1) 47.1 35.9 (10.8) (3.5) 50.2
Amortization 288.8 (1.7) - 290.5 387.5 (1.7) - 389.2
Restructuring charges, net - - - 6.5 - - - 12.6
Non-restructuring impairment charges - - - 64.5 - - - 63.5
Income from discontinued operations - - - (0.7) - - - (24.0)
Change in contingent consideration fair value - 5.5 - (5.5) - 5.7 - (5.7)
Significant legal and environmental charges - - - - 534.4 (39.7) - 671.1
Losses (gains) on divestiture - - - 0.8 - - - (0.4)
Separation costs - (0.9) - 0.9 - (42.0) - 42.0
Unrealized gain on equity investment - - - (11.7) - - - (3.0)
R&D upfront payment - - - - - - (5.0) 5.0
Reorganization items, net - - - 203.0 - - - -
Share-based compensation 0.3 (4.7) (1.0) 6.0 0.6 (10.6) (2.1) 13.3
As adjusted: $ 789.2 $ 270.1 $ 114.9 $ 411.9 $ 1,022.0 $ 363.3 $ 149.7 $ 507.1
(1)Includes $1.3 million of accelerated depreciation in SG&A related to restructuring charges incurred during the six months ended June 25, 2021.

6

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
SEGMENT OPERATING INCOME (1)
(unaudited, in millions)
Six Months Ended
June 25,
2021 		June 26,
2020
Specialty Brands $ 398.7 $ 473.2
Specialty Generics 58.6 112.4
Segment operating income 457.3 585.6
Unallocated amounts:
Corporate and unallocated expenses (2)
(48.3) (110.2)
Depreciation and amortization (337.7) (439.4)
Share-based compensation (6.0) (13.3)
Restructuring charges, net (6.5) (12.6)
Non-restructuring impairment charges (64.5) (63.5)
Separation costs (0.9) (42.0)
R&D upfront payment - (5.0)
Opioid-related litigation settlement gain - 8.3
Medicaid lawsuit - (639.7)
Operating loss $ (6.6) $ (731.8)
(1)During the three months ended September 25, 2020, the Company began excluding depreciation and share-based compensation from its evaluation of the operating results of its segments. As a result, prior period segment operating income has been recast to reflect this change on a comparable basis.
(2)Includes administration expenses and certain compensation, legal, environmental and other costs not charged to the Company's reportable segments.

7


MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
SEGMENT NET SALES AND CONSTANT-CURRENCY GROWTH
(unaudited, in millions)
Six Months Ended
June 25,
2021 		June 26,
2020 		Percent
change 		Currency impact Constant-currency growth
Specialty Brands $ 789.9 $ 1,013.4 (22.1) % 0.4 % (22.5) %
Specialty Generics 314.5 353.3 (11.0) 0.2 (11.2)
Segment net sales 1,104.4 1,366.7 (19.2) 0.3 (19.5)
Medicaid lawsuit - (534.4) * * *
Net sales $ 1,104.4 $ 832.3 32.7 % 0.3 % 32.4 %
*Not meaningful

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
SELECT PRODUCT LINE NET SALES
(unaudited, in millions)
Six Months Ended
June 25,
2021 		June 26,
2020 		Percent
change 		Currency impact Constant-currency growth
Specialty Brands
Acthar $ 280.5 $ 381.3 (26.4) % - % (26.4) %
Inomax 239.9 296.6 (19.1) 0.2 (19.3)
Ofirmev 19.3 127.3 (84.8) - (84.8)
Therakos 135.3 111.5 21.3 2.9 18.4
Amitiza 106.2 90.5 17.3 - 17.3
Other 8.7 6.2 40.3 - 40.3
Specialty Brands Total 789.9 1,013.4 (22.1) 0.4 (22.5)
Specialty Generics
Hydrocodone (API) and hydrocodone-containing tablets 43.8 51.9 (15.6) - (15.6)
Oxycodone (API) and oxycodone-containing tablets 34.3 31.9 7.5 - 7.5
Acetaminophen (API) 97.2 99.6 (2.4) - (2.4)
Other controlled substances 127.1 161.4 (21.3) 0.3 (21.6)
Other 12.1 8.5 42.4 - 42.4
Specialty Generics Total 314.5 353.3 (11.0) 0.2 (11.2)
Segment net sales 1,104.4 1,366.7 (19.2) 0.3 (19.5)
Medicaid lawsuit - (534.4) * * *
Net sales $ 1,104.4 $ 832.3 32.7 % 0.3 % 32.4 %
*Not meaningful

8

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)
June 25,
2021 		December 25,
2020
Assets
Current Assets:
Cash and cash equivalents $ 1,254.9 $ 1,070.6
Accounts receivable, net 449.8 538.8
Inventories 354.8 344.9
Prepaid expenses and other current assets 280.4 350.0
Total current assets 2,339.9 2,304.3
Property, plant and equipment, net 779.4 833.1
Intangible assets, net 5,829.4 6,184.5
Other assets 388.0 393.5
Total Assets $ 9,336.7 $ 9,715.4
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 1,703.0 $ 3,587.9
Accounts payable 101.7 93.3
Accrued payroll and payroll-related costs 102.5 79.4
Accrued interest 27.7 26.9
Accrued and other current liabilities 372.5 331.2
Total current liabilities 2,307.4 4,118.7
Pension and postretirement benefits 33.4 34.6
Environmental liabilities 59.2 59.8
Deferred income taxes 67.3 80.6
Other income tax liabilities 98.6 100.1
Other liabilities 94.4 109.8
Liabilities subject to compromise 5,900.4 4,192.6
Total Liabilities 8,560.7 8,696.2
Shareholders' Equity:
Preferred shares - -
Ordinary shares
18.9 18.8
Ordinary shares held in treasury at cost (1,616.1) (1,616.1)
Additional paid-in capital 5,593.6 5,587.6
Retained deficit (3,211.2) (2,961.5)
Accumulated other comprehensive loss (9.2) (9.6)
Total Shareholders' Equity 776.0 1,019.2
Total Liabilities and Shareholders' Equity $ 9,336.7 $ 9,715.4

9

MALLINCKRODT PLC
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Six Months Ended
June 25,
2021 		June 26,
2020
Cash Flows From Operating Activities:
Net loss $ (249.7) $ (983.3)
Adjustments to reconcile net cash from operating activities:
Depreciation and amortization 337.6 439.4
Share-based compensation 6.0 13.3
Deferred income taxes (13.2) 314.1
Non-cash impairment charges 64.5 63.5
Reorganization items, net 15.7 -
Other non-cash items (15.5) (12.9)
Changes in assets and liabilities:
Accounts receivable, net 89.0 83.6
Inventories (14.3) (27.2)
Accounts payable (2.3) (45.7)
Income taxes 22.8 (219.8)
Medicaid lawsuit (3.2) 639.7
Other 86.6 (40.1)
Net cash from operating activities 324.0 224.6
Cash Flows From Investing Activities:
Capital expenditures (29.2) (31.3)
Proceeds from divestitures, net of cash 15.7 (3.5)
Other 0.3 6.0
Net cash from investing activities (13.2) (28.8)
Cash Flows From Financing Activities:
Repayment of external debt (123.5) (129.6)
Debt financing costs - (9.1)
Repurchase of shares - (0.3)
Other - (19.2)
Net cash from financing activities (123.5) (158.2)
Effect of currency rate changes on cash 0.3 (0.5)
Net change in cash, cash equivalents and restricted cash 187.6 37.1
Cash, cash equivalents and restricted cash at beginning of period 1,127.0 822.6
Cash, cash equivalents and restricted cash at end of period $ 1,314.6 $ 859.7
Cash and cash equivalents at end of period $ 1,254.9 $ 818.3
Restricted cash included in prepaid expenses and other assets at end of period 23.4 5.4
Restricted cash included in other long-term assets at end of period 36.3 36.0
Cash, cash equivalents and restricted cash at end of period $ 1,314.6 $ 859.7
10