STAINES-UPON-THAMES, United
Kingdom, Nov. 5, 2019
/PRNewswire/ -- Mallinckrodt plc (NYSE: MNK), a global
biopharmaceutical company, today reported results for the three
months ended September 27, 2019. Unless otherwise noted, the
quarter comparisons are to the recast prior year comparable three
months ended September 28, 2018.
Net sales were $743.7 million in
the quarter with diluted loss per share from continuing operations
of $0.01 compared with income per
share of $1.34. Adjusted diluted EPS
were $2.07 versus $2.25, a decrease of 8.0%.
"We continue to be very pleased with the underlying financial
strength and cash flow generation capability of our business,
resulting in the third consecutive increase to our EPS guidance
this year," said Mark Trudeau,
President and Chief Executive Officer of Mallinckrodt. "In addition, we are
particularly pleased with the ongoing progress of our research and
development activities, including successful Phase 3 study results
for StrataGraft and terlipressin, data generation for Acthar in
rheumatoid arthritis and multiple sclerosis, and our collaboration
with Silence Therapeutics in RNAi technology."
Trudeau continued, "We remain focused on strengthening our
balance sheet through debt reduction and we also are working to
resolve near term uncertainties in our business, particularly
opioid litigation and the separation of our Specialty Generics
segment."
COMPANY FINANCIAL RESULTS
Gross profit was
$324.3 million with gross profit as a
percentage of net sales of 43.6%, compared with 45.8%, driven by
increased amortization expense and product mix. Adjusted gross
profit was $533.2 million, compared
with $583.0 million, with adjusted
gross profit as a percentage of net sales of 71.7%, compared with
72.9%, driven primarily by product mix.
Selling, general and administrative (SG&A) expenses were
$205.7 million or 27.7% of net sales,
as compared to $193.4 million, or
24.2%, driven primarily by legal settlement expenses and separation
costs, while partially offset by a reduction in the fair value of
contingent consideration due to market conditions. Adjusted
SG&A expenses were $182.0 million
or 24.5% of net sales, compared with $205.2
million or 25.7%. Adjusted SG&A expenses decreased due
to focused efforts of ongoing on SG&A reductions.
Research and development expenses were $103.1 million or 13.9% of net sales, as compared
to $86.1 million or 10.8%, due
primarily to the $20.0 million
up-front payment for our collaboration with Silence Therapeutics in
RNAi technology platform for complement-mediated diseases.
Interest expense was $77.6 million
as compared to $93.6 million, a
reduction of 17.1%, driven by our continued focus on
deleveraging.
Income tax benefit was $27.6
million, for an effective tax rate of 96.8%. The adjusted
effective tax rate was 18.3%.
Nine-Month Fiscal 2019 Results
Net sales were
$2,357.6 million, compared with
$2,380.7 million. The decrease is
primarily attributed to Acthar® Gel (repository
corticotropin injection), partially offset by strength in the
hospital products and AMITIZA® (lubiprostone).
On a GAAP1 basis, net income was $160.6 million compared with $111.4 million. Diluted EPS were $1.91 compared to $1.31.
Adjusted net income was $551.9
million, compared with $511.0
million. Adjusted diluted EPS were $6.55 compared with $6.00.
BUSINESS SEGMENT RESULTS
Specialty Brands Segment
Net sales for the segment in
the third quarter 2019 were $580.4
million.
- Acthar Gel net sales were $229.8
million, a 20.8% decrease, driven primarily by continued
reimbursement challenges impacting new and returning patients, and
continued payer scrutiny on overall specialty pharmaceutical
spending.
- INOMAX® (nitric oxide) gas, for inhalation, net
sales were $136.8 million, up 2.7%
driven by more significant utilization in multi-year, unlimited use
contracts, while strong customer demand for the product
continues.
- OFIRMEV® (acetaminophen) injection net sales were
$86.1 million, a decrease of 1.1%,
due to lower demand and typical quarter-to-quarter order
variability.
- Therakos® immunology platform net sales were
$60.9 million, an increase of 1.5%,
or 3.3% on a constant-currency basis, primarily on growth in the
U.S. in Cutaneous T-Cell Lymphoma.
- AMITZA net sales were $52.6
million, up 9.1% due to continued strong utilization in
Japan, partially offset by an
increasingly more competitive landscape in the U.S.
Specialty Generics Segment
The segment reported third
quarter net sales in 2019 of $163.3
million, an increase of 2.1%, driven by share recapture
across the business, somewhat offset in the quarter by the
suspension of the spin-off.
LIQUIDITY
Cash provided by operating activities in the
third quarter was $66.7 million, with
free cash flow of $35.6 million,
which was impacted by working capital changes from a particular
customer in the Specialty Generics segment as well as the
$15.4 million payment related to a
legacy legal matter settlement. For the year to date, operating
cash flow has been $534.1 million and
free cash flow $425.4 million.
During the quarter, the company drew the remaining $495.0 million on its revolving credit facility,
and used its cash to retire its $200.0
million remaining balance on the accounts receivable
securitization program and repurchase $72.9
million face value of debt at a discount. As of
today's earnings announcement, the current cash balance is
approximately $600.0 million.
2019 FINANCIAL GUIDANCE UPDATE
Mallinckrodt is raising guidance for the 2019
fiscal year by increasing the lower end of its adjusted diluted EPS
guidance range by $0.10 on the
strength of the earnings results today. The revised 2019
fiscal year adjusted diluted EPS guidance range is $8.50 to $8.70.
CONFERENCE CALL AND WEBCAST
Mallinckrodt will hold a conference call on
Tuesday, Nov. 5, 2019, beginning at
8:30 a.m. U.S. Eastern Time. This
call can be accessed in three ways:
- At the Mallinckrodt website:
http://www.mallinckrodt.com/investors.
- By telephone: For both listen-only participants and those who
wish to take part in the question-and-answer portion of the call,
the telephone dial-in number in the U.S. is (877) 359-9508. For
participants outside the U.S., the dial-in number is (224)
357-2393. Callers will need to provide the Conference ID of
6080969.
- Through an audio replay: A replay of the call will be available
beginning at 11:30 a.m. Eastern Time on
Tuesday, Nov. 5, 2019, and ending at 11:59 p.m. Eastern Time on Tuesday, Nov. 19,
2019. Dial-in numbers for U.S.-based participants are (855)
859-2056 or (800) 585-8367. Participants outside the U.S. should
use the replay dial-in number of (404) 537-3406. All callers will
be required to provide the Conference ID of 6080969.
ABOUT MALLINCKRODT
Mallinckrodt is a global business consisting of
multiple wholly owned subsidiaries that develop, manufacture,
market and distribute specialty pharmaceutical products and
therapies. The company's Specialty Brands reportable segment's
areas of focus include autoimmune and rare diseases in specialty
areas like neurology, rheumatology, nephrology, pulmonology and
ophthalmology; immunotherapy and neonatal respiratory critical care
therapies; analgesics and gastrointestinal products. Its Specialty
Generics reportable segment includes specialty generic drugs and
active pharmaceutical ingredients. To learn more about Mallinckrodt, visit www.mallinckrodt.com.
Mallinckrodt uses its website as a
channel of distribution of important company information, such as
press releases, investor presentations and other financial
information. It also uses its website to expedite public access to
time-critical information regarding the company in advance of or in
lieu of distributing a press release or a filing with the U.S.
Securities and Exchange Commission (SEC) disclosing the same
information. Therefore, investors should look to the Investor
Relations page of the website for important and time-critical
information. Visitors to the website can also register to receive
automatic e-mail and other notifications alerting them when new
information is made available on the Investor Relations page of the
website.
NON-GAAP FINANCIAL MEASURES
This press release
contains financial measures, including adjusted net income,
adjusted diluted earnings per share, adjusted gross profit,
adjusted SG&A, net sales growth on a constant-currency basis,
adjusted effective tax rate, net debt and free cash flow, which are
considered "non-GAAP" financial measures under applicable SEC rules
and
regulations.
Adjusted net income, adjusted gross profit and adjusted SG&A
represent amounts prepared in accordance with accounting principles
generally accepted in the U.S. (GAAP) and adjusted for certain
items that management believes are not reflective of the
operational performance of the business. The adjustments for these
items are on a pre-tax basis for adjusted gross profit and adjusted
SG&A and on an after-tax basis for adjusted net income.
Adjustments to GAAP amounts include, as applicable to each measure,
amortization and non-restructuring impairment charges;
restructuring and related charges, net; inventory step-up expenses;
discontinued operations; changes in fair value of contingent
consideration obligations; acquisition-related expenses;
significant legal and environmental charges; losses/gains on
repurchase of debt; separation costs; research and development
upfront payments; tax effects of aforementioned adjustments,
changes in related uncertain tax positions, as well as impacts from
certain transactions, such as acquisitions or reorganizations; and
other items identified by the company. Adjusted diluted earnings
per share represent adjusted net income divided by the number of
diluted shares.
The adjusted effective tax rate is calculated as the income tax
effects on continuing and discontinued operations plus the income
tax impact included in Mallinckrodt's
reconciliation of net income, divided by income from continuing and
discontinued operations plus the pre-tax, non-income, tax-related
adjustments included in its reconciliation of adjusted net income
(excluding dilutive share impact). The income tax adjustment
included in the reconciliation of adjusted net income primarily
represents the tax impact of adjustments between net income and
adjusted net income, changes in related uncertain tax positions, as
well as tax impacts from certain transactions, such as acquisitions
or reorganizations.
Net sales growth on a constant-currency basis measures the
change in net sales between current- and prior-year periods using a
constant currency, the exchange rate in effect during the
applicable prior-year period.
Free cash flow for the third quarter represents net cash
provided by operating activities of $66.7
million less capital expenditures of $31.1 million, each as prepared in accordance
with GAAP.
Free cash flow for the year to date represents net cash provided
by operating activities of $534.1
million less capital expenditures of $108.7 million, each as prepared in accordance
with GAAP.
Net debt as of September 27, 2019
represents total debt principal of $5,810.9
million less cash of $498.8
million, each as prepared in accordance with GAAP.
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 these adjusted
measures 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.
These adjusted measures should be considered supplemental to and
not a substitute for financial information prepared in accordance
with GAAP. The company's definition of these adjusted measures may
differ from similarly titled measures used by others.
Because adjusted financial measures exclude the effect of items
that will increase or decrease the company's reported results of
operations, management strongly encourages investors to review the
company's consolidated financial statements and publicly filed
reports in their entirety. A reconciliation of certain of these
historical adjusted financial measures to the most directly
comparable GAAP financial measures is included in the tables
accompanying this release.
Guidance on the company's 2019 diluted earnings per share and
effective tax rate has been provided only on a non-GAAP basis. This
is due to the inherent difficulty of forecasting the timing or
amount of items that would be included in the most directly
comparable forward-looking GAAP financial measures. Because
reconciliation is not available without unreasonable effort, it is
not included in this release.
Further information regarding non-GAAP financial measures can be
found on the Investor Relations page of the company's website.
CAUTIONARY STATEMENTS RELATED TO FORWARD-LOOKING
STATEMENTS
Statements in this document that are not strictly
historical, including statements regarding future financial
condition and operating results, economic, business, competitive
and/or regulatory factors affecting Mallinckrodt's businesses, plans for the Specialty
Generics business including the suspension of the previously
announced plans to spin off that business, and any other statements
regarding events or developments the company believes or
anticipates will or may occur in the future, may be
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and involve a number of
risks and uncertainties.
There are a number of important factors that could cause actual
events to differ materially from those suggested or indicated by
such forward-looking statements and you should not place undue
reliance on any such forward-looking statements. These factors
include risks and uncertainties related to, among other things:
general economic conditions and conditions affecting the industries
in which Mallinckrodt operates; the
commercial success of Mallinckrodt's
products; Mallinckrodt's ability to
realize anticipated growth, synergies and cost savings from
acquisitions; conditions that could necessitate an evaluation of
Mallinckrodt's intangible assets for
possible impairment; changes in laws and regulations; Mallinckrodt's ability to successfully integrate
acquisitions of operations, technology, products and businesses
generally and to realize anticipated growth, synergies and cost
savings; Mallinckrodt's and
Mallinckrodt's licensers' ability to
successfully develop or commercialize new products; Mallinckrodt's and Mallinckrodt's licensers' ability to protect
intellectual property rights; Mallinckrodt's ability to receive procurement and
production quotas granted by the U.S. Drug Enforcement
Administration; customer concentration; Mallinckrodt's reliance on certain individual
products that are material to its financial performance; cost
containment efforts of customers, purchasing groups, third-party
payers and governmental organizations; the reimbursement practices
of a small number of public or private insurers; pricing pressure
on certain of Mallinckrodt's products
due to legal changes or changes in insurers' reimbursement
practices resulting from recent increased public scrutiny of
healthcare and pharmaceutical costs; limited clinical trial data
for Acthar Gel; complex reporting and payment obligations under
healthcare rebate programs; Mallinckrodt's ability to navigate price
fluctuations; future changes to U.S. and foreign tax laws;
Mallinckrodt's ability to achieve
expected benefits from restructuring activities; complex
manufacturing processes; competition; product liability losses and
other litigation liability; ongoing governmental investigations;
material health, safety and environmental liabilities; retention of
key personnel; conducting business internationally; the
effectiveness of information technology infrastructure; and
cybersecurity and data leakage risks; Mallinckrodt's substantial indebtedness and its
ability to generate sufficient cash to reduce its indebtedness; any
future actions taken with respect to the Specialty Generics
business; and Mallinckrodt's ability to
complete the exchange offers, the consent solicitations and the
transactions contemplated by the exchange agreement, including the
expected timing of completion of the exchange offers and receipt of
requisite consents in the consent solicitations.
These and other factors are identified and described in more
detail in the "Risk Factors" section of Mallinckrodt's Annual Report on Form 10-K for the
fiscal year ended December 28, 2018
and the "Risk Factors" section of Exhibit 99.2 to Mallinckrodt's Current Report on Form 8-K filed on
November 5, 2019. The forward-looking
statements made herein speak only as of the date hereof and
Mallinckrodt does not assume any
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events and
developments or otherwise, except as required by law.
CONTACTS
Investor Relations
Daniel J. Speciale, CPA
Vice President, Investor Relations and IRO
314-654-3638
daniel.speciale@mnk.com
Media
Daniel Yunger
Kekst CNC
212-521-4879
mallinckrodt@kekstcnc.com
Mallinckrodt, the "M" brand mark and
the Mallinckrodt Pharmaceuticals logo are trademarks of a
Mallinckrodt company. Other brands are
trademarks of a Mallinckrodt company or
their respective owners. © 2019 08/19.
1 Generally accepted accounting principles in
the United States
MALLINCKRODT
PLC
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited, in
millions, except per share data)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 27,
2019
|
Percent
of
Net
sales
|
|
September 28,
2018
|
Percent
of
Net
sales
|
Net sales
|
$
|
743.7
|
|
100.0
|
%
|
|
$
|
799.9
|
|
100.0
|
%
|
Cost of
sales
|
419.4
|
|
56.4
|
|
|
433.5
|
|
54.2
|
|
Gross
profit
|
324.3
|
|
43.6
|
|
|
366.4
|
|
45.8
|
|
Selling, general and
administrative expenses
|
205.7
|
|
27.7
|
|
|
193.4
|
|
24.2
|
|
Research and
development expenses
|
103.1
|
|
13.9
|
|
|
86.1
|
|
10.8
|
|
Restructuring
charges, net
|
7.2
|
|
1.0
|
|
|
14.8
|
|
1.9
|
|
Non-restructuring
impairment charge
|
—
|
|
—
|
|
|
2.0
|
|
0.3
|
|
Loss on
divestiture
|
—
|
|
—
|
|
|
0.6
|
|
0.1
|
|
Operating
income
|
8.3
|
|
1.1
|
|
|
69.5
|
|
8.7
|
|
Interest
expense
|
(77.6)
|
|
(10.4)
|
|
|
(93.6)
|
|
(11.7)
|
|
Interest
income
|
2.9
|
|
0.4
|
|
|
2.0
|
|
0.3
|
|
Other income,
net
|
37.9
|
|
5.1
|
|
|
13.4
|
|
1.7
|
|
Loss from continuing
operations before income taxes
|
(28.5)
|
|
(3.8)
|
|
|
(8.7)
|
|
(1.1)
|
|
Income tax
benefit
|
(27.6)
|
|
(3.7)
|
|
|
(122.9)
|
|
(15.4)
|
|
(Loss) income from
continuing operations
|
(0.9)
|
|
(0.1)
|
|
|
114.2
|
|
14.3
|
|
Loss from
discontinued operations, net of income taxes
|
(0.2)
|
|
—
|
|
|
(0.4)
|
|
(0.1)
|
|
Net (loss)
income
|
$
|
(1.1)
|
|
(0.1)
|
%
|
|
$
|
113.8
|
|
14.2
|
%
|
|
|
|
|
|
|
Basic earnings per
share:
|
|
|
|
|
|
(Loss) income from
continuing operations
|
$
|
(0.01)
|
|
|
|
$
|
1.37
|
|
|
Loss from
discontinued operations
|
—
|
|
|
|
—
|
|
|
Net (loss)
income
|
$
|
(0.01)
|
|
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
Basic
weighted-average shares outstanding
|
84.0
|
|
|
|
83.2
|
|
|
|
|
|
|
|
|
Diluted earnings
per share:
|
|
|
|
|
|
(Loss) income from
continuing operations
|
$
|
(0.01)
|
|
|
|
$
|
1.34
|
|
|
Loss from
discontinued operations
|
—
|
|
|
|
—
|
|
|
Net (loss)
income
|
$
|
(0.01)
|
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares outstanding
|
84.0
|
|
|
|
85.0
|
|
|
MALLINCKRODT
PLC
|
NON-GAAP
MEASURES
|
(unaudited, in
millions except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 27,
2019
|
|
September 28,
2018
|
|
Gross
profit
|
SG&A
|
Net
(loss)
income
|
|
Diluted net (loss)
income
per share
(1)
|
|
Gross
profit
|
SG&A
|
Net
income
|
|
Diluted
net
income
per share
|
GAAP
|
$
|
324.3
|
|
$
|
205.7
|
|
$
|
(1.1)
|
|
|
$
|
(0.01)
|
|
|
$
|
366.4
|
|
$
|
193.4
|
|
$
|
113.8
|
|
|
$
|
1.34
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset
amortization
|
208.9
|
|
(1.5)
|
|
210.4
|
|
|
2.50
|
|
|
182.7
|
|
(1.6)
|
|
184.2
|
|
|
2.17
|
|
Non-restructuring
impairment charge
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
2.0
|
|
|
0.02
|
|
Restructuring and
related charges, net (2)
|
—
|
|
—
|
|
7.2
|
|
|
0.09
|
|
|
2.9
|
|
(1.9)
|
|
19.6
|
|
|
0.23
|
|
Inventory step-up
expense
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
31.0
|
|
—
|
|
31.0
|
|
|
0.36
|
|
Loss from
discontinued operations
|
—
|
|
—
|
|
0.2
|
|
|
—
|
|
|
—
|
|
—
|
|
0.4
|
|
|
—
|
|
Change in contingent
consideration fair value
|
—
|
|
25.8
|
|
(25.8)
|
|
|
(0.31)
|
|
|
—
|
|
4.2
|
|
(4.2)
|
|
|
(0.05)
|
|
Acquisition-related
expenses
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
(0.7)
|
|
0.7
|
|
|
0.01
|
|
Divestiture
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
0.6
|
|
|
0.01
|
|
Gain on repurchase of
debt
|
—
|
|
—
|
|
(18.7)
|
|
|
(0.22)
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Write off of
unamortized debt discount and fees
|
—
|
|
—
|
|
0.8
|
|
|
0.01
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Separation
costs
|
—
|
|
(19.8)
|
|
19.8
|
|
|
0.24
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Significant legal and
environmental charges
|
—
|
|
(28.2)
|
|
28.2
|
|
|
0.33
|
|
|
—
|
|
11.8
|
|
(11.8)
|
|
|
(0.14)
|
|
R&D upfront
payment (3)
|
—
|
|
—
|
|
20.0
|
|
|
0.24
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Legal entity and
intercompany financing reorganization
|
—
|
|
—
|
|
3.0
|
|
|
0.04
|
|
|
—
|
|
—
|
|
(82.3)
|
|
|
(0.97)
|
|
U.S. Tax
Reform
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
(9.1)
|
|
|
(0.11)
|
|
Income taxes
(4)
|
—
|
|
—
|
|
(69.5)
|
|
|
(0.83)
|
|
|
—
|
|
—
|
|
(54.0)
|
|
|
(0.64)
|
|
As
adjusted
|
$
|
533.2
|
|
$
|
182.0
|
|
$
|
174.5
|
|
|
$
|
2.07
|
|
|
$
|
583.0
|
|
$
|
205.2
|
|
$
|
190.9
|
|
|
$
|
2.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of net
sales
|
71.7
|
%
|
24.5
|
%
|
23.5
|
%
|
|
|
|
72.9
|
%
|
25.7
|
%
|
23.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In periods where the
Company reports a net loss from continuing operations, potential
ordinary shares outstanding are excluded from the calculation of
diluted earnings per share, prepared in accordance with GAAP, as
they would be anti-dilutive. These potentially dilutive shares are
included in the calculation of adjusted diluted earnings per share
when dilutive. As a result, the adjusted diluted earnings per share
utilized a weighted average share count of 84.2 shares for the
three months ended September 27, 2019.
|
(2)
|
Includes pre-tax
accelerated depreciation.
|
(3)
|
Represents research
and development ("R&D") expense incurred related to an upfront
payment made to Silence in connection with a license and
collaboration agreement entered into in July 2019.
|
(4)
|
Includes tax effects
of above adjustments (unless otherwise separately stated), changes
in related uncertain tax positions, as well as certain installment
sale transactions and other intercompany transactions.
|
MALLINCKRODT
PLC
|
SEGMENT NET SALES
AND CONSTANT-CURRENCY GROWTH
|
(unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
September 27,
2019
|
|
September 28,
2018
|
|
Percent
change
|
|
Currency
impact
|
|
Constant-
currency
growth
|
Specialty
Brands
|
$
|
580.4
|
|
|
$
|
640.0
|
|
|
(9.3)
|
%
|
|
(0.2)
|
%
|
|
(9.1)
|
%
|
Specialty Generics
(1)
|
163.3
|
|
|
159.9
|
|
|
2.1
|
%
|
|
—
|
|
|
2.1
|
|
Net sales
|
$
|
743.7
|
|
|
$
|
799.9
|
|
|
(7.0)
|
%
|
|
(0.2)
|
%
|
|
(6.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes net sales
from an ongoing, post-divestiture supply agreement with the
acquirer of the contrast media and delivery systems ("CMDS")
business.
|
MALLINCKRODT
PLC
|
SELECT PRODUCT
LINE NET SALES AND CONSTANT-CURRENCY GROWTH
|
(unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
September 27,
2019
|
|
September 28,
2018
|
|
Percent
change
|
|
Currency
impact
|
|
Constant-
currency
growth
|
Specialty
Brands
|
|
|
|
|
|
|
|
|
|
Acthar Gel
|
$
|
229.8
|
|
|
$
|
290.1
|
|
|
(20.8)
|
%
|
|
—
|
%
|
|
(20.8)
|
%
|
Inomax
|
136.8
|
|
|
133.2
|
|
|
2.7
|
|
|
(0.1)
|
|
|
2.8
|
|
Ofirmev
|
86.1
|
|
|
87.1
|
|
|
(1.1)
|
|
|
—
|
|
|
(1.1)
|
|
Therakos
|
60.9
|
|
|
60.0
|
|
|
1.5
|
|
|
(1.8)
|
|
|
3.3
|
|
Amitiza
|
52.6
|
|
|
48.2
|
|
|
9.1
|
|
|
—
|
|
|
9.1
|
|
BioVectra
|
10.5
|
|
|
13.9
|
|
|
(24.5)
|
|
|
(0.6)
|
|
|
(23.9)
|
|
Other
|
3.7
|
|
|
7.5
|
|
|
(50.7)
|
|
|
(1.3)
|
|
|
(49.4)
|
|
Specialty Brands
Total
|
$
|
580.4
|
|
|
$
|
640.0
|
|
|
(9.3)
|
%
|
|
(0.2)
|
%
|
|
(9.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
Specialty
Generics
|
|
|
|
|
|
|
|
|
|
Hydrocodone (API) and
hydrocodone-containing tablets
|
$
|
15.7
|
|
|
$
|
15.5
|
|
|
1.3
|
%
|
|
—
|
%
|
|
1.3
|
%
|
Oxycodone (API) and
oxycodone-containing tablets(1)
|
17.2
|
|
|
13.6
|
|
|
26.5
|
|
|
—
|
|
|
26.5
|
|
Acetaminophen (API)
(1)
|
48.5
|
|
|
47.9
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
Other controlled
substances (1)
|
72.9
|
|
|
69.5
|
|
|
4.9
|
|
|
(0.1)
|
|
|
5.0
|
|
Other
(1)
|
9.0
|
|
|
13.4
|
|
|
(32.8)
|
|
|
—
|
|
|
(32.8)
|
|
Specialty Generics
Total
|
$
|
163.3
|
|
|
$
|
159.9
|
|
|
2.1
|
%
|
|
—
|
%
|
|
2.1
|
%
|
|
|
(1)
|
Prior period amounts
have been reclassified to conform to current period
presentation.
|
MALLINCKRODT
PLC
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited, in
millions, except per share data)
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
September 27,
2019
|
Percent
of
Net
sales
|
|
September 28,
2018
|
Percent
of
Net
sales
|
Net sales
|
$
|
2,357.6
|
|
100.0
|
%
|
|
$
|
2,380.7
|
|
100.0
|
%
|
Cost of
sales
|
1,309.3
|
|
55.5
|
|
|
1,272.8
|
|
53.5
|
|
Gross
profit
|
1,048.3
|
|
44.5
|
|
|
1,107.9
|
|
46.5
|
|
Selling, general and
administrative expenses
|
661.8
|
|
28.1
|
|
|
594.5
|
|
25.0
|
|
Research and
development expenses
|
268.0
|
|
11.4
|
|
|
260.7
|
|
11.0
|
|
Restructuring
charges, net
|
11.2
|
|
0.5
|
|
|
101.8
|
|
4.3
|
|
Non-restructuring
impairment charges
|
113.5
|
|
4.8
|
|
|
2.0
|
|
0.1
|
|
Loss on
divestiture
|
—
|
|
—
|
|
|
0.6
|
|
—
|
|
Operating (loss)
income
|
(6.2)
|
|
(0.3)
|
|
|
148.3
|
|
6.2
|
|
Interest
expense
|
(231.8)
|
|
(9.8)
|
|
|
(280.1)
|
|
(11.8)
|
|
Interest
income
|
6.6
|
|
0.3
|
|
|
6.6
|
|
0.3
|
|
Other income,
net
|
128.6
|
|
5.5
|
|
|
17.8
|
|
0.7
|
|
Loss from continuing
operations before income taxes
|
(102.8)
|
|
(4.4)
|
|
|
(107.4)
|
|
(4.5)
|
|
Income tax
benefit
|
(256.6)
|
|
(10.9)
|
|
|
(203.9)
|
|
(8.6)
|
|
Income from
continuing operations
|
153.8
|
|
6.5
|
|
|
96.5
|
|
4.1
|
|
Income from
discontinued operations, net of income taxes
|
6.8
|
|
0.3
|
|
|
14.9
|
|
0.6
|
|
Net income
|
$
|
160.6
|
|
6.8
|
%
|
|
$
|
111.4
|
|
4.7
|
%
|
|
|
|
|
|
|
Basic earnings per
share:
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.84
|
|
|
|
$
|
1.15
|
|
|
Income from
discontinued operations
|
0.08
|
|
|
|
0.18
|
|
|
Net income
|
$
|
1.92
|
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
Basic
weighted-average shares outstanding
|
83.8
|
|
|
|
84.2
|
|
|
|
|
|
|
|
|
Diluted earnings
per share:
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.83
|
|
|
|
$
|
1.13
|
|
|
Income from
discontinued operations
|
0.08
|
|
|
|
0.17
|
|
|
Net income
|
$
|
1.91
|
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares outstanding
|
84.2
|
|
|
|
85.2
|
|
|
MALLINCKRODT
PLC
|
NON-GAAP
MEASURES
|
(unaudited, in
millions except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
September 27,
2019
|
|
September 28,
2018
|
|
Gross
profit
|
SG&A
|
Net
income
|
|
Diluted net
income
per
share
|
|
Gross
profit
|
SG&A
|
Net
income
|
|
Diluted
net
income
per share
|
GAAP
|
$
|
1,048.3
|
|
$
|
661.8
|
|
$
|
160.6
|
|
|
$
|
1.91
|
|
|
$
|
1,107.9
|
|
$
|
594.5
|
|
$
|
111.4
|
|
|
$
|
1.31
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset
amortization
|
645.1
|
|
(4.7)
|
|
649.8
|
|
|
7.72
|
|
|
541.6
|
|
(5.0)
|
|
546.5
|
|
|
6.41
|
|
Non-restructuring
impairment charges (1)
|
—
|
|
—
|
|
113.5
|
|
|
1.35
|
|
|
—
|
|
—
|
|
2.0
|
|
|
0.02
|
|
Restructuring and
related charges, net (2)
|
—
|
|
—
|
|
11.2
|
|
|
0.13
|
|
|
2.9
|
|
(1.9)
|
|
106.6
|
|
|
1.25
|
|
Inventory step-up
expense
|
10.0
|
|
—
|
|
10.0
|
|
|
0.12
|
|
|
79.5
|
|
—
|
|
79.5
|
|
|
0.93
|
|
Income from
discontinued operations
|
—
|
|
—
|
|
(6.8)
|
|
|
(0.08)
|
|
|
—
|
|
—
|
|
(14.9)
|
|
|
(0.17)
|
|
Change in contingent
consideration fair value
|
—
|
|
23.5
|
|
(23.5)
|
|
|
(0.28)
|
|
|
—
|
|
33.3
|
|
(33.3)
|
|
|
(0.39)
|
|
Acquisition-related
expenses
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
(3.8)
|
|
3.8
|
|
|
0.04
|
|
Divestiture
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
0.6
|
|
|
0.01
|
|
Gain on repurchase of
debt
|
—
|
|
—
|
|
(98.6)
|
|
|
(1.17)
|
|
|
—
|
|
—
|
|
(6.5)
|
|
|
(0.08)
|
|
Write off of
unamortized debt discount and fees
|
—
|
|
—
|
|
9.4
|
|
|
0.11
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Significant legal and
environmental charges
|
—
|
|
(28.2)
|
|
28.2
|
|
|
0.33
|
|
|
—
|
|
11.8
|
|
(11.8)
|
|
|
(0.14)
|
|
R&D upfront
payment (3)
|
—
|
|
—
|
|
20.0
|
|
|
0.24
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Separation
costs
|
—
|
|
(50.4)
|
|
50.4
|
|
|
0.60
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Legal entity and
intercompany financing reorganization
|
—
|
|
—
|
|
(186.8)
|
|
|
(2.22)
|
|
|
—
|
|
—
|
|
(82.3)
|
|
|
(0.97)
|
|
U.S. Tax
Reform
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
(9.1)
|
|
|
(0.11)
|
|
Income taxes
(4)
|
—
|
|
—
|
|
(185.5)
|
|
|
(2.20)
|
|
|
—
|
|
—
|
|
(181.5)
|
|
|
(2.13)
|
|
As
adjusted
|
$
|
1,703.4
|
|
$
|
602.0
|
|
$
|
551.9
|
|
|
$
|
6.55
|
|
|
$
|
1,731.9
|
|
$
|
628.9
|
|
$
|
511.0
|
|
|
$
|
6.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of net
sales
|
72.3
|
%
|
25.5
|
%
|
23.4
|
%
|
|
|
|
72.7
|
%
|
26.4
|
%
|
21.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents in-process
research and development intangible asset impairment of $113.5
million related to stannsoporfin during the nine months ended
September 27, 2019 and impairment of a license associated with a
product we elected to discontinue during the three months ended
September 28, 2018.
|
(2)
|
Includes pre-tax
accelerated depreciation.
|
(3)
|
Represents R&D
expense incurred related to an upfront payment made to Silence in
connection with a license and collaboration agreement entered into
in July 2019.
|
(4)
|
Includes tax effects
of above adjustments (unless otherwise separately stated), changes
in related uncertain tax positions, as well as certain installment
sale transactions and other intercompany transactions.
|
MALLINCKRODT
PLC
|
SEGMENT NET SALES
AND CONSTANT-CURRENCY GROWTH
|
(unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
September 27,
2019
|
|
September 28,
2018
|
|
Percent
change
|
|
Currency
impact
|
|
Constant-
currency
growth
|
Specialty
Brands
|
$
|
1,812.4
|
|
|
$
|
1,844.3
|
|
|
(1.7)
|
%
|
|
(0.3)
|
%
|
|
(1.4)
|
%
|
Specialty Generics
(1)
|
545.2
|
|
|
536.4
|
|
|
1.6
|
|
|
(0.1)
|
|
|
1.7
|
|
Net sales
|
$
|
2,357.6
|
|
|
$
|
2,380.7
|
|
|
(1.0)
|
%
|
|
(0.2)
|
%
|
|
(0.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes net sales
from an ongoing, post-divestiture supply agreement with the
acquirer of the CMDS business.
|
MALLINCKRODT
PLC
|
SELECT PRODUCT
LINE NET SALES AND CONSTANT-CURRENCY GROWTH
|
(unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
September 27,
2019
|
|
September 28,
2018
|
|
Percent
change
|
|
Currency
impact
|
|
Constant-
currency
growth
|
Specialty
Brands
|
|
|
|
|
|
|
|
|
|
Acthar Gel
|
$
|
720.1
|
|
|
$
|
827.1
|
|
|
(12.9)
|
%
|
|
—
|
%
|
|
(12.9)
|
%
|
Inomax
|
427.6
|
|
|
404.0
|
|
|
5.8
|
|
|
(0.1)
|
|
|
5.9
|
|
Ofirmev
|
272.2
|
|
|
254.7
|
|
|
6.9
|
|
|
—
|
|
|
6.9
|
|
Therakos
|
183.6
|
|
|
174.2
|
|
|
5.4
|
|
|
(1.9)
|
|
|
7.3
|
|
Amitiza
|
157.6
|
|
|
119.2
|
|
|
32.2
|
|
|
—
|
|
|
32.2
|
|
BioVectra
|
36.8
|
|
|
35.7
|
|
|
3.1
|
|
|
(3.3)
|
|
|
6.4
|
|
Other
|
14.5
|
|
|
29.4
|
|
|
(50.7)
|
|
|
(1.0)
|
|
|
(49.7)
|
|
Specialty Brands
Total
|
$
|
1,812.4
|
|
|
$
|
1,844.3
|
|
|
(1.7)
|
%
|
|
(0.3)
|
%
|
|
(1.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
Specialty
Generics
|
|
|
|
|
|
|
|
|
|
Hydrocodone (API) and
hydrocodone-containing tablets
|
$
|
51.2
|
|
|
$
|
46.3
|
|
|
10.6
|
%
|
|
—
|
%
|
|
10.6
|
%
|
Oxycodone (API) and
oxycodone-containing tablets(1)
|
53.3
|
|
|
43.3
|
|
|
23.1
|
|
|
—
|
|
|
23.1
|
|
Acetaminophen (API)
(1)
|
143.1
|
|
|
149.0
|
|
|
(4.0)
|
|
|
—
|
|
|
(4.0)
|
|
Other controlled
substances (1)
|
265.7
|
|
|
258.0
|
|
|
3.0
|
|
|
(0.2)
|
|
|
3.2
|
|
Other
(1)
|
31.9
|
|
|
39.8
|
|
|
(19.8)
|
|
|
—
|
|
|
(19.8)
|
|
Specialty Generics
Total
|
$
|
545.2
|
|
|
$
|
536.4
|
|
|
1.6
|
%
|
|
(0.1)
|
%
|
|
1.7
|
%
|
|
|
(1)
|
Prior period amounts
have been reclassified to conform to current period
presentation.
|
MALLINCKRODT
PLC
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(unaudited, in
millions)
|
|
|
|
|
|
September 27,
2019
|
|
December 28,
2018
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
498.8
|
|
|
$
|
348.9
|
|
Accounts receivable,
net
|
538.8
|
|
|
623.3
|
|
Inventories
|
325.5
|
|
|
322.3
|
|
Prepaid expenses and
other current assets
|
122.2
|
|
|
132.7
|
|
Assets held for
sale
|
175.9
|
|
|
—
|
|
Total current
assets
|
1,661.2
|
|
|
1,427.2
|
|
Property, plant and
equipment, net
|
894.7
|
|
|
982.0
|
|
Intangible assets,
net
|
7,496.1
|
|
|
8,282.8
|
|
Other
assets
|
304.1
|
|
|
185.3
|
|
Total
Assets
|
$
|
10,356.1
|
|
|
$
|
10,877.3
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
|
716.1
|
|
|
$
|
22.4
|
|
Accounts
payable
|
100.9
|
|
|
147.5
|
|
Accrued payroll and
payroll-related costs
|
83.7
|
|
|
124.0
|
|
Accrued
interest
|
90.9
|
|
|
77.6
|
|
Accrued and other
current liabilities
|
506.5
|
|
|
572.2
|
|
Liabilities held for
sale
|
55.8
|
|
|
—
|
|
Total current
liabilities
|
1,553.9
|
|
|
943.7
|
|
Long-term
debt
|
5,048.7
|
|
|
6,069.2
|
|
Pension and
postretirement benefits
|
58.6
|
|
|
60.5
|
|
Environmental
liabilities
|
60.3
|
|
|
59.7
|
|
Deferred income
taxes
|
22.0
|
|
|
324.3
|
|
Other income tax
liabilities
|
253.5
|
|
|
228.0
|
|
Other
liabilities
|
278.7
|
|
|
304.6
|
|
Total
Liabilities
|
7,275.7
|
|
|
7,990.0
|
|
Shareholders'
Equity:
|
|
|
|
Preferred
shares
|
—
|
|
|
—
|
|
Ordinary
shares
|
18.7
|
|
|
18.5
|
|
Ordinary shares held
in treasury at cost
|
(1,615.6)
|
|
|
(1,617.4)
|
|
Additional paid-in
capital
|
5,559.2
|
|
|
5,528.2
|
|
Retained
deficit
|
(859.8)
|
|
|
(1,017.7)
|
|
Accumulated other
comprehensive loss
|
(22.1)
|
|
|
(24.3)
|
|
Total
Shareholders' Equity
|
3,080.4
|
|
|
2,887.3
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
10,356.1
|
|
|
$
|
10,877.3
|
|
MALLINCKRODT
PLC
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited, in
millions)
|
|
|
|
|
|
Nine Months
Ended
|
|
September 27,
2019
|
|
September 28,
2018
|
Cash Flows From
Operating Activities:
|
|
|
|
Net income
|
$
|
160.6
|
|
|
$
|
111.4
|
|
Adjustments to
reconcile net cash from operating activities:
|
|
|
|
Depreciation and
amortization
|
723.5
|
|
|
597.0
|
|
Share-based
compensation
|
30.6
|
|
|
27.9
|
|
Deferred income
taxes
|
(301.9)
|
|
|
(232.7)
|
|
Non-cash impairment
charges
|
113.5
|
|
|
2.0
|
|
Loss on
divestiture
|
—
|
|
|
0.6
|
|
Gain on repurchase of
debt
|
(98.6)
|
|
|
(6.5)
|
|
Other non-cash
items
|
(31.7)
|
|
|
2.8
|
|
Changes in assets and
liabilities, net of the effects of acquisitions:
|
|
|
|
Accounts receivable,
net
|
68.7
|
|
|
(59.0)
|
|
Inventories
|
(32.0)
|
|
|
43.1
|
|
Accounts
payable
|
(27.8)
|
|
|
(0.1)
|
|
Income
taxes
|
17.2
|
|
|
16.7
|
|
Other
|
(88.0)
|
|
|
(22.1)
|
|
Net cash from
operating activities
|
534.1
|
|
|
481.1
|
|
Cash Flows From
Investing Activities:
|
|
|
|
Capital
expenditures
|
(108.7)
|
|
|
(93.3)
|
|
Acquisitions, net of
cash
|
—
|
|
|
(699.9)
|
|
Proceeds from
divestiture, net of cash
|
—
|
|
|
313.2
|
|
Other
|
13.7
|
|
|
28.8
|
|
Net cash from
investing activities
|
(95.0)
|
|
|
(451.2)
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Issuance of external
debt
|
695.0
|
|
|
657.2
|
|
Repayment of external
debt
|
(940.1)
|
|
|
(1,563.4)
|
|
Debt financing
costs
|
—
|
|
|
(12.0)
|
|
Proceeds from
exercise of share options
|
0.5
|
|
|
1.0
|
|
Repurchase of
shares
|
(2.5)
|
|
|
(57.4)
|
|
Other
|
(18.1)
|
|
|
(24.3)
|
|
Net cash from
financing activities
|
(265.2)
|
|
|
(998.9)
|
|
Effect of currency
rate changes on cash
|
0.5
|
|
|
(0.9)
|
|
Net change in
cash, cash equivalents and restricted cash, including cash
classified within assets held for sale
|
174.4
|
|
|
(969.9)
|
|
Less: Net change in
cash classified within assets held for sale
|
(15.1)
|
|
|
—
|
|
Net change in
cash, cash equivalents and restricted cash
|
159.3
|
|
|
(969.9)
|
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
367.5
|
|
|
1,279.1
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
526.8
|
|
|
$
|
309.2
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
|
498.8
|
|
|
$
|
290.7
|
|
Restricted cash
included in other assets at end of period
|
28.0
|
|
|
18.5
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
526.8
|
|
|
$
|
309.2
|
|
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SOURCE Mallinckrodt plc