UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: +353 1 696 0000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 4, 2021, Mallinckrodt plc (the "Company" or "Mallinckrodt") provided its financial results for the three months ended March 26, 2021 in the attached Exhibit 99.1.
The information in this Current Report on Form 8-K, including Exhibit 99.1, should be read in conjunction with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 26, 2021.
The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as otherwise expressly set forth by specific reference in such a filing.
NON-GAAP FINANCIAL MEASURES
Exhibit 99.1 contains financial measures, including adjusted EBITDA and net sales growth on a constant-currency basis, which are considered "non-GAAP" financial measures under applicable U.S. Securities and Exchange Commission rules and regulations.
Adjusted EBITDA represents amounts prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) and adjusts for certain items that management believes are not reflective of the operational performance of the business. Consolidated adjusted EBITDA represents net loss, adjusted for interest expense, net, taxes, depreciation and amortization and certain items that management believes are not reflective of the operational performance of the business and additional adjustments. These adjustments include, but are not limited to, restructuring charges, net; non-restructuring impairment charges; discontinued operations; changes in fair value of contingent consideration obligations; significant legal and environmental charges; divestitures; separation costs; unrealized gain on equity investment; reorganization items, net; share-based compensation and other items identified by the Company.
Segment net sales growth on a constant-currency basis measures the change in segment net sales between current- and prior-year periods using a constant currency, the exchange rate in effect during the applicable prior-year period.
The Company has provided these adjusted financial measures because they are used by management, along with financial measures in accordance with GAAP, to evaluate the company's operating performance. In addition, the Company believes that they will be used by certain investors to measure Mallinckrodt's operating results. Management believes that presenting these adjusted measures provides useful information about the Company's performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are included in Exhibit 99.1.
These adjusted measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Exhibit | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MALLINCKRODT PLC | ||||||||||||||
| (registrant) | ||||||||||||||
| Date: | May 4, 2021 | By: | /s/ Bryan M. Reasons | |||||||||||
| Bryan M. Reasons | ||||||||||||||
Executive Vice President and Chief Financial Officer (principal financial officer) | ||||||||||||||
Exhibit 99.1
| MALLINCKRODT PLC | |||||||||||||||||
| (DEBTOR-IN-POSSESSION) | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (unaudited, in millions, except per share data) | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 26, 2021 | Percent of Net sales | March 27, 2020 | Percent of Net sales | ||||||||||||||
Net sales | $ | 558.0 | 100.0 | % | $ | 665.8 | 100.0 | % | |||||||||
| Cost of sales | 307.6 | 55.1 | 382.0 | 57.4 | |||||||||||||
| Gross profit | 250.4 | 44.9 | 283.8 | 42.6 | |||||||||||||
| Selling, general and administrative expenses | 136.0 | 24.4 | 231.1 | 34.7 | |||||||||||||
| Research and development expenses | 66.2 | 11.9 | 77.4 | 11.6 | |||||||||||||
| Restructuring charges, net | 0.4 | 0.1 | (1.8) | (0.3) | |||||||||||||
| Non-restructuring impairment charges | 64.5 | 11.6 | — | — | |||||||||||||
| Losses on divestiture | 0.8 | 0.1 | 0.2 | — | |||||||||||||
| Opioid-related litigation settlement gain | — | — | (16.8) | (2.5) | |||||||||||||
| Operating loss | (17.5) | (3.1) | (6.3) | (0.9) | |||||||||||||
| Interest expense | (59.6) | (10.7) | (74.5) | (11.2) | |||||||||||||
| Interest income | 1.9 | 0.3 | 3.5 | 0.5 | |||||||||||||
| Other income, net | 8.1 | 1.5 | 1.7 | 0.3 | |||||||||||||
| Reorganization items, net | (93.5) | (16.8) | — | — | |||||||||||||
| Loss from continuing operations before income taxes | (160.6) | (28.8) | (75.6) | (11.4) | |||||||||||||
| Income tax benefit | (16.4) | (2.9) | (18.9) | (2.8) | |||||||||||||
| Loss from continuing operations | (144.2) | (25.8) | (56.7) | (8.5) | |||||||||||||
| Income from discontinued operations, net of income taxes | 0.3 | 0.1 | 6.5 | 1.0 | |||||||||||||
| Net loss | $ | (143.9) | (25.8) | % | $ | (50.2) | (7.5) | % | |||||||||
| Basic loss per share: | |||||||||||||||||
| Loss from continuing operations | $ | (1.70) | $ | (0.67) | |||||||||||||
| Income from discontinued operations | — | 0.08 | |||||||||||||||
| Net loss | $ | (1.70) | $ | (0.60) | |||||||||||||
| Diluted loss per share: | |||||||||||||||||
| Loss from continuing operations | $ | (1.70) | $ | (0.67) | |||||||||||||
| Income from discontinued operations | — | 0.08 | |||||||||||||||
| Net loss | $ | (1.70) | $ | (0.60) | |||||||||||||
| Weighted-average number of shares outstanding | |||||||||||||||||
| Basic weighted-average shares outstanding | 84.6 | 84.2 | |||||||||||||||
| Diluted weighted-average shares outstanding | 84.6 | 84.2 | |||||||||||||||
1
| MALLINCKRODT PLC | |||||||||||||||||||||||||||||
| (DEBTOR-IN-POSSESSION) | |||||||||||||||||||||||||||||
| CONSOLIDATED ADJUSTED EBITDA | |||||||||||||||||||||||||||||
| (unaudited, in millions) | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| March 26, 2021 | March 27, 2020 | ||||||||||||||||||||||||||||
| Gross Profit | SG&A | R&D | Adjusted EBITDA | Gross Profit | SG&A | R&D | Adjusted EBITDA | ||||||||||||||||||||||
| Net loss | $ | 250.4 | $ | 136.0 | $ | 66.2 | $ | (143.9) | $ | 283.8 | $ | 231.1 | $ | 77.4 | $ | (50.2) | |||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Interest expense, net | — | — | — | 57.7 | — | — | — | 71.0 | |||||||||||||||||||||
| Income taxes | — | — | — | (16.4) | — | — | — | (18.9) | |||||||||||||||||||||
| Depreciation | 17.9 | (4.8) | (1.6) | 24.3 | 18.4 | (5.3) | (1.8) | 25.5 | |||||||||||||||||||||
| Amortization | 144.4 | (0.9) | — | 145.3 | 196.7 | (0.9) | — | 197.6 | |||||||||||||||||||||
| Restructuring charges, net | — | — | — | 0.4 | — | — | — | (1.8) | |||||||||||||||||||||
| Non-restructuring impairment charge | — | — | — | 64.5 | — | — | — | — | |||||||||||||||||||||
| Income from discontinued operations | — | — | — | (0.3) | — | — | — | (6.5) | |||||||||||||||||||||
| Change in contingent consideration fair value | — | 10.8 | — | (10.8) | — | 0.8 | — | (0.8) | |||||||||||||||||||||
| Significant legal and environmental charges | — | — | — | — | — | (22.5) | — | 5.7 | |||||||||||||||||||||
| Losses on divestiture | — | — | — | 0.8 | — | — | — | 0.2 | |||||||||||||||||||||
| Separation costs | — | (0.6) | — | 0.6 | — | (21.3) | — | 21.3 | |||||||||||||||||||||
| Unrealized gain on equity investment | — | — | — | (6.9) | — | — | — | (5.4) | |||||||||||||||||||||
| Reorganization items, net | — | — | — | 93.5 | — | — | — | — | |||||||||||||||||||||
| Share-based compensation | 0.2 | (2.8) | (0.6) | 3.6 | 0.3 | (5.4) | (1.0) | 6.7 | |||||||||||||||||||||
| As adjusted: | $ | 412.9 | $ | 137.7 | $ | 64.0 | $ | 212.4 | $ | 499.2 | $ | 176.5 | $ | 74.6 | $ | 244.4 | |||||||||||||
2
| MALLINCKRODT PLC | |||||||||||
| (DEBTOR-IN-POSSESSION) | |||||||||||
SEGMENT OPERATING INCOME (1) | |||||||||||
| (unaudited, in millions) | |||||||||||
| Three Months Ended | |||||||||||
| March 26, 2021 | March 27, 2020 | ||||||||||
| Specialty Brands | $ | 212.1 | $ | 220.5 | |||||||
| Specialty Generics | 31.7 | 63.2 | |||||||||
| Segment operating income | 243.8 | 283.7 | |||||||||
| Unallocated amounts: | |||||||||||
Corporate and unallocated expenses (2) | (22.6) | (57.5) | |||||||||
| Depreciation and amortization | (169.6) | (223.1) | |||||||||
| Share-based compensation | (3.6) | (6.7) | |||||||||
| Restructuring charges, net | (0.4) | 1.8 | |||||||||
| Non-restructuring impairment charges | (64.5) | — | |||||||||
| Separation costs | (0.6) | (21.3) | |||||||||
| Opioid-related litigation settlement gain | — | 16.8 | |||||||||
| Operating loss | $ | (17.5) | $ | (6.3) | |||||||
(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 | |||||||||||||||||||||||||||||
| March 26, 2021 | March 27, 2020 | Percent change | Currency impact | Constant-currency growth | |||||||||||||||||||||||||
| Specialty Brands | $ | 408.4 | $ | 490.6 | (16.8) | % | 0.4 | % | (17.2) | % | |||||||||||||||||||
| Specialty Generics | 149.6 | 175.2 | (14.6) | 0.1 | (14.7) | ||||||||||||||||||||||||
| Net sales | $ | 558.0 | $ | 665.8 | (16.2) | % | 0.3 | % | (16.5) | % | |||||||||||||||||||
| MALLINCKRODT PLC | |||||||||||||||||||||||||||||
| (DEBTOR-IN-POSSESSION) | |||||||||||||||||||||||||||||
| SELECT PRODUCT LINE NET SALES AND CONSTANT-CURRENCY GROWTH | |||||||||||||||||||||||||||||
| (unaudited, in millions) | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| March 26, 2021 | March 27, 2020 | Percent change | Currency impact | Constant-currency growth | |||||||||||||||||||||||||
| Specialty Brands | |||||||||||||||||||||||||||||
| Acthar Gel | $ | 129.0 | $ | 167.6 | (23.0) | % | — | % | (23.0) | % | |||||||||||||||||||
| INOmax | 134.0 | 141.7 | (5.4) | 0.2 | (5.6) | ||||||||||||||||||||||||
| Ofirmev | 12.8 | 74.9 | (82.9) | — | (82.9) | ||||||||||||||||||||||||
| Therakos | 66.8 | 63.7 | 4.9 | 2.4 | 2.5 | ||||||||||||||||||||||||
| Amitiza | 61.4 | 41.1 | 49.4 | — | 49.4 | ||||||||||||||||||||||||
| Other | 4.4 | 1.6 | 175.0 | — | 175.0 | ||||||||||||||||||||||||
| Specialty Brands Total | $ | 408.4 | $ | 490.6 | (16.8) | 0.4 | (17.2) | ||||||||||||||||||||||
| Specialty Generics | |||||||||||||||||||||||||||||
| Hydrocodone (API) and hydrocodone-containing tablets | $ | 23.3 | $ | 26.5 | (12.1) | — | (12.1) | ||||||||||||||||||||||
| Oxycodone (API) and oxycodone-containing tablets | 17.2 | 16.9 | 1.8 | — | 1.8 | ||||||||||||||||||||||||
| Acetaminophen (API) | 45.5 | 44.1 | 3.2 | — | 3.2 | ||||||||||||||||||||||||
| Other controlled substances | 58.1 | 83.6 | (30.5) | 0.2 | (30.7) | ||||||||||||||||||||||||
| Other | 5.5 | 4.1 | 34.1 | — | 34.1 | ||||||||||||||||||||||||
| Specialty Generics Total | $ | 149.6 | $ | 175.2 | (14.6) | 0.1 | (14.7) | ||||||||||||||||||||||
4
| MALLINCKRODT PLC | |||||||||||
| (DEBTOR-IN-POSSESSION) | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (unaudited, in millions) | |||||||||||
| March 26, 2021 | December 25, 2020 | ||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 1,077.9 | $ | 1,070.6 | |||||||
| Accounts receivable, net | 477.4 | 538.8 | |||||||||
| Inventories | 363.4 | 344.9 | |||||||||
| Prepaid expenses and other current assets | 367.9 | 350.0 | |||||||||
| Total current assets | 2,286.6 | 2,304.3 | |||||||||
| Property, plant and equipment, net | 794.4 | 833.1 | |||||||||
| Intangible assets, net | 5,974.7 | 6,184.5 | |||||||||
| Other assets | 380.5 | 393.5 | |||||||||
| Total Assets | $ | 9,436.2 | $ | 9,715.4 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Current Liabilities: | |||||||||||
| Current maturities of long-term debt | $ | 1,701.7 | $ | 3,587.9 | |||||||
| Accounts payable | 98.4 | 93.3 | |||||||||
| Accrued payroll and payroll-related costs | 80.4 | 79.4 | |||||||||
| Accrued interest | 27.8 | 26.9 | |||||||||
| Accrued and other current liabilities | 357.2 | 331.2 | |||||||||
| Total current liabilities | 2,265.5 | 4,118.7 | |||||||||
| Pension and postretirement benefits | 33.6 | 34.6 | |||||||||
| Environmental liabilities | 59.0 | 59.8 | |||||||||
| Deferred income taxes | 77.2 | 80.6 | |||||||||
| Other income tax liabilities | 106.7 | 100.1 | |||||||||
| Other liabilities | 101.1 | 109.8 | |||||||||
| Liabilities subject to compromise | 5,914.2 | 4,192.6 | |||||||||
| Total Liabilities | 8,557.3 | 8,696.2 | |||||||||
| Shareholders' Equity: | |||||||||||
| Preferred shares | — | — | |||||||||
Ordinary shares | 18.8 | 18.8 | |||||||||
| Ordinary shares held in treasury at cost | (1,616.1) | (1,616.1) | |||||||||
| Additional paid-in capital | 5,591.1 | 5,587.6 | |||||||||
| Retained deficit | (3,105.4) | (2,961.5) | |||||||||
| Accumulated other comprehensive loss | (9.5) | (9.6) | |||||||||
| Total Shareholders' Equity | 878.9 | 1,019.2 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 9,436.2 | $ | 9,715.4 | |||||||
5
| MALLINCKRODT PLC | |||||||||||
| (DEBTOR-IN-POSSESSION) | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (unaudited, in millions) | |||||||||||
| Three Months Ended | |||||||||||
| March 26, 2021 | March 27, 2020 | ||||||||||
| Cash Flows From Operating Activities: | |||||||||||
| Net loss | $ | (143.9) | $ | (50.2) | |||||||
| Adjustments to reconcile net cash from operating activities: | |||||||||||
| Depreciation and amortization | 169.6 | 223.1 | |||||||||
| Share-based compensation | 3.6 | 6.7 | |||||||||
| Deferred income taxes | (3.4) | 5.5 | |||||||||
| Non-cash impairment charges | 64.5 | — | |||||||||
| Reorganization items, net | 15.7 | — | |||||||||
| Other non-cash items | (11.9) | (19.4) | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable, net | 61.8 | 49.4 | |||||||||
| Inventories | (22.8) | (18.4) | |||||||||
| Accounts payable | 0.5 | (22.9) | |||||||||
| Income taxes | (21.2) | (34.9) | |||||||||
| Other | 38.9 | (85.2) | |||||||||
| Net cash from operating activities | 151.4 | 53.7 | |||||||||
| Cash Flows From Investing Activities: | |||||||||||
| Capital expenditures | (20.9) | (19.9) | |||||||||
| Other | (0.7) | 3.2 | |||||||||
| Net cash from investing activities | (21.6) | (16.7) | |||||||||
| Cash Flows From Financing Activities: | |||||||||||
| Repayment of external debt | (118.9) | (4.9) | |||||||||
| Debt financing costs | — | (4.0) | |||||||||
| Net cash from financing activities | (118.9) | (8.9) | |||||||||
| Effect of currency rate changes on cash | (0.4) | (1.5) | |||||||||
| Net change in cash, cash equivalents and restricted cash | 10.5 | 26.6 | |||||||||
| 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 | $ | 1,137.5 | $ | 849.2 | |||||||
| Cash and cash equivalents at end of period | $ | 1,077.9 | $ | 808.0 | |||||||
| 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 | 36.2 | 35.8 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,137.5 | $ | 849.2 | |||||||
6