Mallinckrodt plc Reports Earnings for the Second Quarter 2020 and Highlights Pipeline Advancements
- Second quarter net sales of
$166.5 million net of the retrospective one-time Acthar® Gel Medicaid liability; adjusted net sales of$700.9 million , a decline of 14.9%, due primarily to demand impacts related to COVID-19 and competitive and payer pressures on certain products - Diluted loss per share of
$11.04 with adjusted diluted earnings per share (EPS) of$1.89 , a decline of 25.3% - Operating cash flows of
$170.9 million in the quarter with free cash flow of$159.5 million - Key pipeline advancements include:
- A positive vote by the
U.S. Food and Drug Administration (FDA) advisory committee for terlipressin - Completion of a rolling submission of a Biologics License Application (BLA) to the FDA for StrataGraft® regenerative skin tissue
- Company continues to work to resolve outstanding issues related to opioids, Acthar Gel, and other risks, as well as address overall debt levels, and is considering with its external advisors all options to address legal and financial challenges. While no final determination has been made, it is possible that
Mallinckrodt plc and most of its subsidiaries could file for Chapter 11 reorganization in the near term
Net sales were
"Our reported GAAP net sales were impacted by the retrospective one-time Acthar Gel Medicaid liability, and our normalized operating results also displayed a contraction this quarter due to the COVID-19 health crisis along with increased competitive and payer pressures on certain products. Amidst these challenges, we continued to operate well, which is a testament to our employees' hard work and commitment to our business, patients and customers," said
Trudeau continued, "Looking ahead, we expect our current challenges to continue in the back half of the year. We remain committed to ensuring patients have uninterrupted access to our medicines throughout the COVID-19 health crisis. We continue to be highly focused in the near term on addressing all legal and financial challenges impacting the business."
COMPANY FINANCIAL RESULTS
Second Quarter 2020 Results
Gross loss was
Selling, general and administrative (SG&A) expenses were
Research and development expenses were
Interest expense was
Income tax expense was
Six-Month Fiscal 2020 Results
Net sales were
Net loss was
BUSINESS SEGMENT RESULTS
Specialty Brands Segment
Net sales for the segment in the second quarter 2020 were
- Acthar Gel net sales were
$213.7 million , a 19.8% decrease, primarily driven by continued reimbursement challenges impacting new and returning patients; continued reduction in new patients as a result of COVID-19 pandemic, which is anticipated to impact results in the second half of the year; continued payer scrutiny on overall specialty pharmaceutical spending; and, to a partial extent, the change in the Medicaid rebate calculation. - INOMAX® (nitric oxide) gas, for inhalation, net sales were
$154.9 million , an increase of 10.9%, or 11.0% on a constant-currency basis, driven by an overall increased consumption of nitric oxide by the Company's customers, including strong utilization within COVID-19 patients. The INOmax Total Care service offering remains a differentiating feature among competition. - OFIRMEV® net sales were
$52.4 million , a decrease of 42.1%, impacted by the overall reduction in elective surgeries due to public health orders and institutions being focused on responding to the COVID-19 pandemic. Therakos ® immunology platform net sales were$47.8 million , a decrease of 21.5%, or 20.7% on a constant-currency basis, driven largely by COVID-19 stay-at-home directives impacting patients' abilities to receive treatment in hospitals or apheresis centers.- AMITIZA® (lubiprostone) net sales were
$49.4 million , down 5.0% due to continued impact of competition in theU.S. and the biennial price reduction inJapan .
Specialty Generics Segment
Net sales for the segment in the second quarter were
LIQUIDITY
Cash provided by operating activities in the second quarter was
The cash balance at the end of the second quarter was
BUSINESS AND LITIGATION UPDATE
The Company has identified several negative conditions and events impacting the business as of
CONFERENCE CALL AND WEBCAST
Mallinckrodt will hold a conference call on
- At the Mallinckrodt website: http://www.mallinckrodt.com/investors/events-calendar/.
- 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 theU.S. , the dial-in number is (224) 357-2393. Callers will need to provide the Conference ID of 5970869. Dial-in 15 minutes in advance of the call is encouraged to avoid connection delays. - Through an audio replay: A replay of the call will be available beginning at
11:30 a.m. Eastern Time onTuesday, Aug. 4, 2020 , and ending at11:30 a.m. Eastern Time onTuesday, Aug. 18, 2020 . Dial-in numbers forU.S. -based participants are (855) 859-2056 or (800) 585-8367. Participants outside theU.S. should use the replay dial-in number of (404) 537-3406. All callers will be required to provide the Conference ID of 5970869.
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 net sales, 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 net sales, 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 net sales, 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; restructuring and related charges, net; inventory step-up expense; discontinued operations; changes in fair value of contingent consideration obligations; significant legal and environmental charges (inclusive of the CMS retrospective liability); losses on divestiture; unrealized gain on equity investment; gains on debt extinguishment, net; separation costs; tax effects of aforementioned adjustments, changes in uncertain tax positions, tax impacts related to substantial doubt about the Company's ability to continue as a going concern, legislative changes and tax 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 loss, divided by loss from continuing and income from 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 loss and adjusted net income, changes in uncertain tax positions, tax impacts related to the substantial doubt about the Company's ability to continue as a going concern, tax impacts of legislative changes and tax impacts from certain transactions, such as acquisitions or reorganizations.
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.
Free cash flow for the second quarter represents net cash provided by operating activities of
Free cash flow for the year to date represents net cash provided by operating activities of
Net debt as of
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.
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.
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, legal, economic, business, competitive and/or regulatory factors affecting Mallinckrodt's businesses, 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: the dispute between Mallinckrodt, HHS and CMS, including the lawsuit filed by Mallinckrodt and any related appeals, as well as the time and expense of litigating this dispute; the impact of this dispute on Mallinckrodt's expectations for performance, as well as the financial impact of the retrospective one-time Acthar Gel Medicaid liability on Mallinckrodt or any other related impacts; the impact of the outbreak of the COVID-19 coronavirus; the possibility that
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
CONTACTS
Investor Relations
Vice President, Finance and Investor Relations Officer
314-654-3638
daniel.speciale@mnk.com
Media
Michael Freitag / Aaron Palash / Aura Reinhard
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
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. © 2020 08/20.
|
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(unaudited, in millions, except per share data) |
|||||||||||
Three Months Ended |
|||||||||||
|
Percent of |
|
Percent of |
||||||||
Net sales (includes a retrospective one-time charge of |
$ |
166.5 |
100.0 |
% |
$ |
823.3 |
100.0 |
% |
|||
Cost of sales |
386.7 |
232.3 |
434.4 |
52.8 |
|||||||
Gross (loss) profit |
(220.2) |
(132.3) |
388.9 |
47.2 |
|||||||
Selling, general and administrative expenses |
231.3 |
138.9 |
225.9 |
27.4 |
|||||||
Research and development expenses |
82.9 |
49.8 |
79.6 |
9.7 |
|||||||
Restructuring charges, net |
14.4 |
8.6 |
(0.2) |
— |
|||||||
Non-restructuring impairment charges |
63.5 |
38.1 |
113.5 |
13.8 |
|||||||
Gains on divestiture |
(0.6) |
(0.4) |
— |
— |
|||||||
Opioid-related litigation settlement |
8.5 |
5.1 |
— |
— |
|||||||
Medicaid lawsuit |
105.3 |
63.2 |
— |
— |
|||||||
Operating loss |
(725.5) |
(435.7) |
(29.9) |
(3.6) |
|||||||
Interest expense |
(64.2) |
(38.6) |
(71.5) |
(8.7) |
|||||||
Interest income |
1.0 |
0.6 |
2.2 |
0.3 |
|||||||
Other (expense) income, net |
(0.6) |
(0.4) |
74.4 |
9.0 |
|||||||
Loss from continuing operations before income taxes |
(789.3) |
(474.1) |
(24.8) |
(3.0) |
|||||||
Income tax expense (benefit) |
161.3 |
96.9 |
(24.3) |
(3.0) |
|||||||
Loss from continuing operations |
(950.6) |
(570.9) |
(0.5) |
(0.1) |
|||||||
Income from discontinued operations, net of income taxes |
17.5 |
10.5 |
7.3 |
0.9 |
|||||||
Net (loss) income |
$ |
(933.1) |
(560.4) |
% |
$ |
6.8 |
0.8 |
% |
|||
Basic (loss) earnings per share: |
|||||||||||
Loss from continuing operations |
$ |
(11.25) |
$ |
(0.01) |
|||||||
Income from discontinued operations |
0.21 |
0.09 |
|||||||||
Net (loss) income |
$ |
(11.04) |
$ |
0.08 |
|||||||
Diluted (loss) earnings per share: |
|||||||||||
Loss from continuing operations |
$ |
(11.25) |
$ |
(0.01) |
|||||||
Income from discontinued operations |
0.21 |
0.09 |
|||||||||
Net (loss) income |
$ |
(11.04) |
$ |
0.08 |
|||||||
Weighted-average number of shares outstanding |
|||||||||||
Basic weighted-average shares outstanding |
84.5 |
83.8 |
|||||||||
Diluted weighted-average shares outstanding |
84.5 |
83.8 |
|
|||||||||||||||||||||||||||||||||
NON-GAAP MEASURES |
|||||||||||||||||||||||||||||||||
(unaudited, in millions except per share data) |
|||||||||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
Net |
Gross |
SG&A |
Net |
Diluted |
Net |
Gross |
SG&A |
Net |
Diluted |
||||||||||||||||||||||||
GAAP |
$ |
166.5 |
$ |
(220.2) |
$ |
231.3 |
$ |
(933.1) |
$ |
(11.04) |
$ |
823.3 |
$ |
388.9 |
$ |
225.9 |
$ |
6.8 |
$ |
0.08 |
|||||||||||||
Adjustments: |
|||||||||||||||||||||||||||||||||
Intangible asset amortization |
— |
190.8 |
(0.8) |
191.6 |
2.26 |
— |
215.0 |
(1.6) |
216.6 |
2.58 |
|||||||||||||||||||||||
Restructuring and related charges, net |
— |
— |
— |
14.4 |
0.17 |
— |
— |
— |
(0.2) |
— |
|||||||||||||||||||||||
Non-restructuring impairment charge |
— |
— |
— |
63.5 |
0.75 |
— |
— |
— |
113.5 |
1.35 |
|||||||||||||||||||||||
Income from discontinued operations |
— |
— |
— |
(17.5) |
(0.21) |
— |
— |
— |
(7.3) |
(0.09) |
|||||||||||||||||||||||
Change in contingent consideration fair value |
— |
— |
4.9 |
(4.9) |
(0.06) |
— |
— |
3.2 |
(3.2) |
(0.04) |
|||||||||||||||||||||||
Significant legal and environmental charges (2) |
534.4 |
534.4 |
(17.2) |
665.4 |
7.86 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Divestitures |
— |
— |
— |
(0.6) |
(0.01) |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Separation costs |
— |
— |
(20.7) |
20.7 |
0.24 |
— |
— |
(18.9) |
18.9 |
0.22 |
|||||||||||||||||||||||
Gains on debt extinguishment, net |
— |
— |
— |
— |
— |
— |
— |
— |
(62.3) |
(0.74) |
|||||||||||||||||||||||
Unrealized loss on equity investment |
— |
— |
— |
2.4 |
0.03 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
R&D upfront payment (3) |
— |
— |
— |
5.0 |
0.06 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Legal entity and intercompany financing reorganization |
— |
— |
— |
(6.3) |
(0.07) |
— |
— |
— |
3.0 |
0.04 |
|||||||||||||||||||||||
Income taxes (4) |
— |
— |
— |
159.9 |
1.89 |
— |
— |
— |
(72.8) |
(0.87) |
|||||||||||||||||||||||
As adjusted |
$ |
700.9 |
$ |
505.0 |
$ |
197.5 |
$ |
160.5 |
$ |
1.89 |
$ |
823.3 |
$ |
603.9 |
$ |
208.6 |
$ |
213.0 |
$ |
2.53 |
|||||||||||||
Percent of adjusted net sales |
100.0 |
% |
72.1 |
% |
28.2 |
% |
22.9 |
% |
100.0 |
% |
73.4 |
% |
25.3 |
% |
25.9 |
% |
|||||||||||||||||
(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 84.7 shares and 84.1 shares for the three months ended |
(2) |
Effective |
(3) |
Represents research and development ("R&D") expense incurred related to an upfront payment made in |
(4) |
Includes tax effects of above adjustments (unless otherwise separately stated), changes in uncertain tax positions, tax impacts related to the substantial doubt about the Company's ability to continue as a going concern, legislative changes and certain intercompany transactions. |
|
||||||||||||||||
SEGMENT NET SALES AND CONSTANT-CURRENCY GROWTH |
||||||||||||||||
(unaudited, in millions) |
||||||||||||||||
Three Months Ended |
||||||||||||||||
|
|
Percent |
Currency |
Constant- |
||||||||||||
Specialty Brands (1) |
$ |
522.8 |
$ |
627.8 |
(16.7) |
% |
(0.1) |
% |
(16.6) |
% |
||||||
Specialty Generics |
178.1 |
195.5 |
(8.9) |
(0.1) |
(8.8) |
|||||||||||
Segment net sales |
$ |
700.9 |
$ |
823.3 |
(14.9) |
% |
(0.1) |
% |
(14.8) |
% |
||||||
Medicaid lawsuit |
(534.4) |
— |
* |
* |
* |
|||||||||||
Net sales |
$ |
166.5 |
$ |
823.3 |
(79.8) |
% |
(0.1) |
% |
(79.7) |
% |
*Not meaningful |
|
(1) |
The three months ended |
|
||||||||||||||||
SELECT PRODUCT LINE NET SALES AND CONSTANT-CURRENCY GROWTH |
||||||||||||||||
(unaudited, in millions) |
||||||||||||||||
Three Months Ended |
||||||||||||||||
|
|
Percent |
Currency |
Constant- |
||||||||||||
Specialty Brands |
||||||||||||||||
Acthar Gel (1) |
$ |
213.7 |
$ |
266.4 |
(19.8) |
% |
— |
% |
(19.8) |
% |
||||||
INOmax |
154.9 |
139.7 |
10.9 |
(0.1) |
11.0 |
|||||||||||
Ofirmev |
52.4 |
90.5 |
(42.1) |
— |
(42.1) |
|||||||||||
|
47.8 |
60.9 |
(21.5) |
(0.8) |
(20.7) |
|||||||||||
Amitiza |
49.4 |
52.0 |
(5.0) |
— |
(5.0) |
|||||||||||
Other (2) |
4.6 |
18.3 |
(74.9) |
— |
(74.9) |
|||||||||||
Specialty Brands Total |
$ |
522.8 |
$ |
627.8 |
(16.7) |
% |
(0.1) |
% |
(16.6) |
% |
||||||
Specialty Generics |
||||||||||||||||
Hydrocodone (API) and hydrocodone-containing tablets |
$ |
25.4 |
$ |
18.1 |
40.3 |
% |
— |
% |
40.3 |
% |
||||||
Oxycodone (API) and oxycodone-containing tablets |
15.0 |
19.6 |
(23.5) |
— |
(23.5) |
|||||||||||
Acetaminophen (API) |
55.5 |
48.4 |
14.7 |
— |
14.7 |
|||||||||||
Other controlled substances |
77.8 |
98.6 |
(21.1) |
(0.1) |
(21.0) |
|||||||||||
Other |
4.4 |
10.8 |
(59.3) |
— |
(59.3) |
|||||||||||
Specialty Generics Total |
$ |
178.1 |
$ |
195.5 |
(8.9) |
% |
(0.1) |
% |
(8.8) |
% |
||||||
Segment net sales |
$ |
700.9 |
$ |
823.3 |
(14.9) |
% |
(0.1) |
% |
(14.8) |
% |
||||||
Medicaid lawsuit |
$ |
(534.4) |
$ |
— |
* |
* |
* |
|||||||||
Net sales |
$ |
166.5 |
$ |
823.3 |
(79.8) |
% |
(0.1) |
% |
(79.7) |
% |
*Not meaningful |
|
(1) |
The three months ended |
(2) |
The three months ended |
|
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(unaudited, in millions, except per share data) |
|||||||||||
Six Months Ended |
|||||||||||
|
Percent of |
|
Percent of |
||||||||
Net sales (Includes a retrospective one-time charge of |
$ |
832.3 |
100.0 |
% |
$ |
1,613.9 |
100.0 |
% |
|||
Cost of sales |
768.7 |
92.4 |
889.9 |
55.1 |
|||||||
Gross profit |
63.6 |
7.6 |
724.0 |
44.9 |
|||||||
Selling, general and administrative expenses |
462.4 |
55.6 |
456.1 |
28.3 |
|||||||
Research and development expenses |
160.3 |
19.3 |
164.9 |
10.2 |
|||||||
Restructuring charges, net |
12.6 |
1.5 |
4.0 |
0.2 |
|||||||
Non-restructuring impairment charges |
63.5 |
7.6 |
113.5 |
7.0 |
|||||||
Gains on divestiture |
(0.4) |
— |
— |
— |
|||||||
Opioid-related litigation settlement |
(8.3) |
(1.0) |
— |
— |
|||||||
Medicaid lawsuit |
105.3 |
12.7 |
— |
— |
|||||||
Operating loss |
(731.8) |
(87.9) |
(14.5) |
(0.9) |
|||||||
Interest expense |
(138.7) |
(16.7) |
(154.2) |
(9.6) |
|||||||
Interest income |
4.5 |
0.5 |
3.7 |
0.2 |
|||||||
Other income, net |
1.1 |
0.1 |
90.7 |
5.6 |
|||||||
Loss from continuing operations before income taxes |
(864.9) |
(103.9) |
(74.3) |
(4.6) |
|||||||
Income tax expense (benefit) |
142.4 |
17.1 |
(229.0) |
(14.2) |
|||||||
(Loss) income from continuing operations |
(1,007.3) |
(121.0) |
154.7 |
9.6 |
|||||||
Income from discontinued operations, net of income taxes |
24.0 |
2.9 |
7.0 |
0.4 |
|||||||
Net (loss) income |
$ |
(983.3) |
(118.1) |
% |
$ |
161.7 |
10.0 |
% |
|||
Basic (loss) earnings per share: |
|||||||||||
(Loss) income from continuing operations |
$ |
(11.95) |
$ |
1.85 |
|||||||
Income from discontinued operations |
0.28 |
0.08 |
|||||||||
Net (loss) income |
(11.66) |
1.93 |
|||||||||
Diluted (loss) earnings per share: |
|||||||||||
(Loss) income from continuing operations |
$ |
(11.95) |
$ |
1.84 |
|||||||
Income from discontinued operations |
0.28 |
0.08 |
|||||||||
Net (loss) income |
(11.66) |
1.92 |
|||||||||
Weighted-average number of shares outstanding: |
|||||||||||
Basic |
84.3 |
83.7 |
|||||||||
Diluted |
84.3 |
84.3 |
|
|||||||||||||||||||||||||||||||||
NON-GAAP MEASURES |
|||||||||||||||||||||||||||||||||
(unaudited, in millions except per share data) |
|||||||||||||||||||||||||||||||||
Six Months Ended |
|||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
Net sales |
Gross |
SG&A |
Net (loss) |
Diluted per |
Net sales |
Gross |
SG&A |
Net |
Diluted |
||||||||||||||||||||||||
GAAP |
$ |
832.3 |
$ |
63.6 |
$ |
462.4 |
$ |
(983.3) |
$ |
(11.66) |
$ |
1,613.9 |
$ |
724.0 |
$ |
456.1 |
$ |
161.7 |
$ |
1.92 |
|||||||||||||
Adjustments: |
|||||||||||||||||||||||||||||||||
Intangible asset amortization |
— |
387.5 |
(1.7) |
389.2 |
4.60 |
— |
436.2 |
(3.2) |
439.4 |
5.21 |
|||||||||||||||||||||||
Restructuring and related charges, net |
— |
— |
— |
12.6 |
0.15 |
— |
— |
— |
4.0 |
0.05 |
|||||||||||||||||||||||
Non-restructuring impairment charge |
— |
— |
— |
63.5 |
0.75 |
— |
— |
— |
113.5 |
1.35 |
|||||||||||||||||||||||
Inventory step-up expense |
— |
— |
— |
— |
— |
— |
10.0 |
— |
10.0 |
0.12 |
|||||||||||||||||||||||
Income from discontinued operations |
— |
— |
— |
(24.0) |
(0.28) |
— |
— |
— |
(7.0) |
(0.08) |
|||||||||||||||||||||||
Change in contingent consideration fair value |
— |
— |
5.7 |
(5.7) |
(0.07) |
— |
— |
(2.3) |
2.3 |
0.03 |
|||||||||||||||||||||||
Significant legal and environmental charges (2) |
534.4 |
534.4 |
(39.7) |
671.1 |
7.92 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Divestitures |
— |
— |
— |
(0.4) |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Separation costs |
— |
— |
(42.0) |
42.0 |
0.50 |
— |
— |
(30.6) |
30.6 |
0.36 |
|||||||||||||||||||||||
Gain on debt extinguishment, net |
— |
— |
— |
— |
— |
— |
— |
— |
(71.3) |
(0.85) |
|||||||||||||||||||||||
Unrealized gain on equity investment |
— |
— |
— |
(3.0) |
(0.04) |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
R&D upfront payment (3) |
— |
— |
— |
5.0 |
0.06 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Reorganization of legal entity ownership |
— |
— |
— |
(6.3) |
(0.07) |
— |
— |
— |
(189.8) |
(2.25) |
|||||||||||||||||||||||
Income taxes (4) |
— |
— |
— |
138.1 |
1.63 |
— |
— |
— |
(116.0) |
(1.38) |
|||||||||||||||||||||||
As adjusted |
$ |
1,366.7 |
$ |
985.5 |
$ |
384.7 |
$ |
298.8 |
$ |
3.53 |
$ |
1,613.9 |
$ |
1,170.2 |
$ |
420.0 |
$ |
377.4 |
$ |
4.48 |
|||||||||||||
Percent of adjusted net sales |
100.0 |
% |
72.1 |
% |
28.1 |
% |
21.9 |
% |
100.0 |
% |
72.5 |
% |
26.0 |
% |
23.4 |
% |
|||||||||||||||||
(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 84.7 shares for the six months ended |
(2) |
Effective |
(3) |
Represents R&D expense incurred related to an upfront payment made in |
(4) |
Includes tax effects of above adjustments (unless otherwise separately stated), changes in uncertain tax positions, tax impacts related to the substantial doubt about the Company's ability to continue as a going concern, legislative changes and certain intercompany transactions.The six months ended |
|
||||||||||||||||
SEGMENT NET SALES AND CONSTANT-CURRENCY GROWTH |
||||||||||||||||
(unaudited, in millions) |
||||||||||||||||
Six Months Ended |
||||||||||||||||
|
|
Percent |
Currency |
Constant- |
||||||||||||
Specialty Brands (1) |
$ |
1,013.4 |
$ |
1,232.0 |
(17.7) |
% |
(0.1) |
% |
(17.6) |
% |
||||||
Specialty Generics |
353.3 |
381.9 |
(7.5) |
— |
(7.5) |
|||||||||||
Segment net sales |
$ |
1,366.7 |
$ |
1,613.9 |
(15.3) |
% |
(0.1) |
% |
(15.2) |
% |
||||||
Medicaid lawsuit |
(534.4) |
— |
* |
* |
* |
|||||||||||
Net sales |
$ |
832.3 |
$ |
1,613.9 |
(48.4) |
% |
(0.1) |
% |
(48.3) |
% |
*Not meaningful |
|
(1) |
The six months ended |
|
||||||||||||||||
SELECT PRODUCT |
||||||||||||||||
(unaudited, in millions) |
||||||||||||||||
Six Months Ended |
||||||||||||||||
|
|
Percent |
Currency |
Constant- |
||||||||||||
Specialty Brands |
||||||||||||||||
Acthar (1) |
$ |
381.3 |
$ |
490.3 |
(22.2) |
% |
— |
% |
(22.2) |
|||||||
Inomax |
296.6 |
290.8 |
2.0 |
(0.1) |
2.1 |
|||||||||||
Ofirmev |
127.3 |
186.1 |
(31.6) |
— |
(31.6) |
|||||||||||
|
111.5 |
122.7 |
(9.1) |
(0.6) |
(8.5) |
|||||||||||
Amitiza |
90.5 |
105.0 |
(13.8) |
— |
(13.8) |
|||||||||||
Other (2) |
6.2 |
37.1 |
(83.3) |
— |
(83.3) |
|||||||||||
Specialty Brands Total |
$ |
1,013.4 |
$ |
1,232.0 |
(17.7) |
% |
(0.1) |
% |
(17.6) |
% |
||||||
Specialty Generics |
||||||||||||||||
Hydrocodone (API) and hydrocodone-containing tablets |
$ |
51.9 |
$ |
35.5 |
46.2 |
% |
— |
% |
46.2 |
|||||||
Oxycodone (API) and oxycodone-containing tablets |
31.9 |
36.1 |
(11.6) |
— |
(11.6) |
|||||||||||
Acetaminophen (API) |
99.6 |
94.6 |
5.3 |
— |
5.3 |
|||||||||||
Other controlled substances |
161.4 |
192.8 |
(16.3) |
(0.1) |
(16.2) |
|||||||||||
Other |
8.5 |
22.9 |
(62.9) |
— |
(62.9) |
|||||||||||
Specialty Generics Total |
$ |
353.3 |
$ |
381.9 |
(7.5) |
% |
— |
% |
(7.5) |
% |
||||||
Segment net sales |
1,366.7 |
1,613.9 |
(15.3) |
(0.1) |
(15.2) |
|||||||||||
Medicaid lawsuit |
(534.4) |
— |
* |
* |
* |
|||||||||||
Net sales |
$ |
832.3 |
$ |
1,613.9 |
(48.4) |
% |
(0.1) |
% |
(48.3) |
% |
*Not meaningful |
|
(1) |
The six months ended |
(2) |
The six months ended |
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(unaudited, in millions) |
|||||||
|
|
||||||
Assets |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ |
818.3 |
$ |
790.9 |
|||
Accounts receivable, net |
493.3 |
577.5 |
|||||
Inventories |
333.0 |
312.1 |
|||||
Prepaid expenses and other current assets |
310.2 |
150.2 |
|||||
Total current assets |
1,954.8 |
1,830.7 |
|||||
Property, plant and equipment, net |
864.7 |
896.5 |
|||||
Intangible assets, net |
6,566.5 |
7,018.0 |
|||||
Other assets |
304.1 |
593.7 |
|||||
Total Assets |
$ |
9,690.1 |
$ |
10,338.9 |
|||
Liabilities and Shareholders' Equity |
|||||||
Current Liabilities: |
|||||||
Current maturities of long-term debt |
$ |
19.5 |
$ |
633.6 |
|||
Accounts payable |
86.5 |
139.8 |
|||||
Accrued payroll and payroll-related costs |
132.5 |
105.2 |
|||||
Accrued interest |
67.2 |
62.9 |
|||||
Medicaid lawsuit |
639.7 |
— |
|||||
Accrued and other current liabilities |
375.5 |
485.4 |
|||||
Total current liabilities |
1,320.9 |
1,426.9 |
|||||
Long-term debt |
5,223.4 |
4,741.2 |
|||||
Opioid-related litigation settlement liability |
1,635.1 |
1,643.4 |
|||||
Pension and postretirement benefits |
61.4 |
62.4 |
|||||
Environmental liabilities |
60.3 |
60.0 |
|||||
Other income tax liabilities |
220.9 |
227.1 |
|||||
Other liabilities |
198.6 |
237.2 |
|||||
Total Liabilities |
8,720.6 |
8,398.2 |
|||||
Shareholders' Equity: |
|||||||
Preferred shares |
— |
— |
|||||
Ordinary shares |
18.8 |
18.7 |
|||||
Ordinary shares held in treasury at cost |
(1,616.0) |
(1,615.7) |
|||||
Additional paid-in capital |
5,575.7 |
5,562.5 |
|||||
Retained deficit |
(3,000.2) |
(2,016.9) |
|||||
Accumulated other comprehensive loss |
(8.8) |
(7.9) |
|||||
Total Shareholders' Equity |
969.5 |
1,940.7 |
|||||
Total Liabilities and Shareholders' Equity |
$ |
9,690.1 |
$ |
10,338.9 |
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(unaudited, in millions) |
|||||||
Six Months Ended |
|||||||
|
|
||||||
Cash Flows From Operating Activities: |
|||||||
Net (loss) income |
$ |
(983.3) |
$ |
161.7 |
|||
Adjustments to reconcile net cash from operating activities: |
|||||||
Depreciation and amortization |
439.4 |
488.6 |
|||||
Share-based compensation |
13.3 |
22.8 |
|||||
Deferred income taxes |
314.1 |
(271.2) |
|||||
Non-cash impairment charges |
63.5 |
113.5 |
|||||
Gains on divestitures |
(0.4) |
— |
|||||
Other non-cash items |
(12.5) |
(76.0) |
|||||
Changes in assets and liabilities: |
|||||||
Accounts receivable, net |
83.6 |
95.5 |
|||||
Inventories |
(27.2) |
(23.8) |
|||||
Accounts payable |
(45.7) |
7.2 |
|||||
Income taxes |
(219.8) |
22.4 |
|||||
Medicaid lawsuit |
639.7 |
— |
|||||
Other |
(40.1) |
(73.3) |
|||||
Net cash from operating activities |
224.6 |
467.4 |
|||||
Cash Flows From Investing Activities: |
|||||||
Capital expenditures |
(31.3) |
(77.6) |
|||||
Proceeds from divestiture, net of cash |
(3.5) |
— |
|||||
Other |
6.0 |
8.2 |
|||||
Net cash from investing activities |
(28.8) |
(69.4) |
|||||
Cash Flows From Financing Activities: |
|||||||
Issuance of external debt |
— |
200.0 |
|||||
Repayment of external debt |
(129.6) |
(685.9) |
|||||
Debt financing costs |
(9.1) |
— |
|||||
Repurchase of shares |
(0.3) |
(2.5) |
|||||
Other |
(19.2) |
(18.0) |
|||||
Net cash from financing activities |
(158.2) |
(506.4) |
|||||
Effect of currency rate changes on cash |
(0.5) |
0.8 |
|||||
Net change in cash, cash equivalents and restricted cash |
37.1 |
(107.6) |
|||||
Cash, cash equivalents and restricted cash at beginning of period |
822.6 |
367.5 |
|||||
Cash, cash equivalents and restricted cash at end of period |
$ |
859.7 |
$ |
259.9 |
|||
Cash and cash equivalents at end of period |
$ |
818.3 |
$ |
241.1 |
|||
Restricted cash included in other assets at end of period |
41.4 |
18.8 |
|||||
Cash, cash equivalents and restricted cash at end of period |
$ |
859.7 |
$ |
259.9 |
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