UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~_________________________________~~

FORM 10-Q

~~_______________________________________________________~~


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March ~~31, 2023~~29, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number : 001-35803

~~_______________________________________________________~~

Mallinckrodt plc

(Exact name of registrant as specified in its charter)

~~_______________________________________________________~~


Ireland						98-1088325
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

College Business & Technology Park, Cruiserath,

Blanchardstown, Dublin 15, Ireland

(Address of principal executive offices) (Zip Code)

Telephone: +353 1 696 0000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


~~(Title of each class)~~	~~(Trading Symbol(s))~~	~~(Name of each exchange on which registered)~~
~~Ordinary shares, par value $0.01 per share~~	~~MNK~~	~~NYSE American LLC~~

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

☐

Accelerated Filer

☒☐

Emerging Growth Company

☐

Non-accelerated Filer

☐☒

Smaller Reporting 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May ~~5, 2023,~~3, 2024, the registrant had ~~13,170,932~~19,696,335 ordinary shares outstanding at $0.01 par value.

MALLINCKRODT PLC

INDEX


		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).
	Condensed Consolidated Statements of Operations for the three months ended March 29, 2024 (Successor) and March 31, 2023 ~~(Successor)~~ ~~and~~ ~~April 1, 2022~~ (Predecessor).	2
	Condensed Consolidated Statements of Comprehensive Operations for the three months ended March 29, 2024 (Successor) and March 31, 2023 ~~(Successor)~~ ~~and~~ ~~April 1, 2022~~ (Predecessor).	3
	Condensed Consolidated Balance Sheets as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor).	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 29, 2024 (Successor) and March 31, 2023 ~~(Successor)~~ ~~and~~ ~~April 1, 2022~~ (Predecessor).	5
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 29, 2024 (Successor) and March 31, 2023 ~~(Successor)~~ ~~and~~ ~~April 1, 2022~~ (Predecessor).	6
	Notes to Condensed Consolidated Financial Statements.	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	2125
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2935
Item 4.	Controls and Procedures.	3035

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings.	3136
Item 1A.	Risk Factors.	3136
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3136
Item 5.	Other Information.	36
Item 6.	Exhibits.	3237

SIGNATURES		3338

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.			Financial Statements.

MALLINCKRODT PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(~~unaudited,~~unaudited; in millions, except per share data)

Successor

Predecessor

Three Months
Ended
March 29, 2024

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Research and development expenses

Restructuring charges, net

Liabilities management and separation costs

Successor

Predecessor

Operating loss

Three Months
Ended
March 31, 2023

Three Months
Ended
April 1, 2022

Net sales

424.6

490.9

Cost of sales

374.8

315.2

Gross profit

49.8

175.7

Selling, general and administrative expenses

122.9

152.5

Research and development expenses

28.3

37.2

Restructuring charges, net

1.2

6.8

Operating loss

(102.6)

(20.8)

Interest expense

(162.0)

(58.2)

Interest expense

Interest income

4.7

0.4

Other expense, net

(14.6)

(4.1)

Interest income

Other income (expense), net

Reorganization items, net

(5.6)

(43.4)

Loss from continuing operations before income taxes

(280.1)

(126.1)

Loss from continuing operations before income taxes

Income tax benefit

(30.8)

(5.9)

Loss from continuing operations

(249.3)

(120.2)

Loss from continuing operations

Income from discontinued operations, net of income taxes

—

0.6

Net loss

(249.3)

(119.6)

Net loss

Basic (loss) income per share (Note 5):

Basic (loss) income per share (Note 6):

Loss from continuing operations

(18.93)

(1.42)

Income from discontinued operations

—

0.01

Income from discontinued operations

Net loss

(18.93)

(1.41)

Basic weighted-average shares outstanding

13.2

84.7

Basic weighted-average shares outstanding

Diluted (loss) income per share (Note 5):

Diluted (loss) income per share (Note 6):

Loss from continuing operations

(18.93)

(1.42)

Income from discontinued operations

—

0.01

Income from discontinued operations

Net loss

(18.93)

(1.41)

Diluted weighted-average shares outstanding

13.2

84.7

Diluted weighted-average shares outstanding

~~See Notes to Condensed Consolidated Financial Statements.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

MALLINCKRODT PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(~~unaudited,~~unaudited; in millions)

Successor

Predecessor

Three Months
Ended
March 31, 2023

Three Months
Ended
April 1, 2022

Successor

Predecessor

Three Months
Ended
March 29, 2024

Net loss

(249.3)

(119.6)

Other comprehensive loss, net of tax:

Net loss

Other comprehensive (loss) income, net of tax:

Currency translation adjustments

1.8

0.2

Derivatives, net of tax

(4.3)

—

Derivatives, net of tax

Benefit plans, net of tax

(0.1)

(0.2)

Total other comprehensive loss, net of tax

(2.6)

—

Total other comprehensive loss, net of tax

Comprehensive loss

(251.9)

(119.6)

Comprehensive loss

~~See Notes to Condensed Consolidated Financial Statements.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Co ntents

MALLINCKRODT PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~unaudited,~~unaudited; in millions, except share data)

Successor
March 31,
2023 December 30,
2022
Assets
Current Assets:
Cash and cash equivalents $ 480.0 $ 409.5
Accounts receivable, less allowance for doubtful accounts of $5.1 and $4.4 395.1 405.3
Inventories 895.4 947.6
Prepaid expenses and other current assets 120.7 273.4
Total current assets 1,891.2 2,035.8
Property, plant and equipment, net 454.4 457.6
Intangible assets, net 2,710.6 2,843.8
Deferred income taxes 509.4 475.5
Other assets 205.2 201.1
Total Assets $ 5,770.8 $ 6,013.8
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 44.1 $ 44.1
Accounts payable 86.4 114.0
Accrued payroll and payroll-related costs 35.4 49.5
Accrued interest 76.8 29.0
Acthar Gel-Related Settlement 16.5 16.5
Opioid-Related Litigation Settlement liability 200.0 200.0
Accrued and other current liabilities 234.5 290.7
Total current liabilities 693.7 743.8
Long-term debt 3,041.6 3,027.7
Acthar Gel-Related Settlement 81.2 75.0
Opioid-Related Litigation Settlement liability 419.6 379.9
Pension and postretirement benefits 41.2 41.0
Environmental liabilities 35.6 35.8
Other income tax liabilities 18.5 18.2
Other liabilities 75.0 78.7
Total Liabilities 4,406.4 4,400.1
Shareholders' Equity:
Successor preferred shares, $0.01 par value, 500,000,000 authorized; none issued and outstanding — —
Successor ordinary A shares, €1.00 par value, 40,000 authorized; none issued and outstanding — —
Successor ordinary shares, $0.01 par value, 500,000,000 authorized; 13,170,932 issued and outstanding 0.1 0.1
Additional paid-in capital 2,193.6 2,191.0
Accumulated other comprehensive income 8.2 10.8
Retained deficit (837.5) (588.2)
Total Shareholders' Equity 1,364.4 1,613.7
Total Liabilities and Shareholders' Equity $ 5,770.8 $ 6,013.8


	Successor
	March 29, 2024		December 29, 2023
Assets
Current Assets:
Cash and cash equivalents	$	253.6	$	262.7
Accounts receivable, less allowance for doubtful accounts of $7.0 and $6.5	377.1		377.5
Inventories	896.9		982.7
Prepaid expenses and other current assets	144.2		138.9

Total current assets	1,671.8		1,761.8
Property, plant and equipment, net	326.6		321.7

Intangible assets, net	583.7		608.4

Deferred income taxes	797.1		801.0
Other assets	250.4		240.7
Total Assets	$	3,629.6	$	3,733.6

Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	6.5	$	6.5
Accounts payable	82.5		100.4
Accrued payroll and payroll-related costs	39.1		82.8
Accrued interest	47.3		20.1
Acthar Gel-Related Settlement	21.5		21.5

Accrued and other current liabilities	279.1		269.9

Total current liabilities	476.0		501.2
Long-term debt	1,747.9		1,755.9
Acthar Gel-Related Settlement	133.5		128.5

Pension and postretirement benefits	40.1		40.6
Environmental liabilities	34.8		35.1

Other income tax liabilities	20.0		19.6

Other liabilities	85.4		92.5

Total Liabilities	2,537.7		2,573.4
Commitments and contingencies (Note 12)
Shareholders' Equity:



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

Ordinary shares, $0.01 par value, 500,000,000 authorized; 19,696,335 issued and outstanding	0.2		0.2

Additional paid-in capital	1,196.5		1,194.6
Accumulated other comprehensive (loss) income	(1.2)		3.6
Retained deficit	(103.6)		(38.2)
Total Shareholders' Equity	1,091.9		1,160.2
Total Liabilities and Shareholders' Equity	$	3,629.6	$	3,733.6

~~See Notes to Condensed Consolidated Financial Statements.~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

MALLINCKRODT PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(~~unaudited,~~unaudited; in millions)

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Cash Flows From Operating Activities:
Net loss $ (249.3) $ (119.6)
Adjustments to reconcile net cash from operating activities:
Depreciation and amortization 145.1 177.2
Share-based compensation 2.6 1.2
Deferred income taxes (33.4) (0.9)
Reorganization items, net — 2.9
Non-cash accretion expense 69.9 —
Other non-cash items 20.0 12.3
Changes in assets and liabilities:
Accounts receivable, net 9.6 73.8
Inventories 48.0 (27.0)
Accounts payable (20.4) 0.4
Income taxes 138.9 (7.8)
Other (31.1) (63.3)
Net cash from operating activities 99.9 49.2
Cash Flows From Investing Activities:
Capital expenditures (19.3) (23.6)
Other 0.3 0.2
Net cash from investing activities (19.0) (23.4)
Cash Flows From Financing Activities:
Repayment of external debt (11.0) (4.6)
Net cash from financing activities (11.0) (4.6)
Effect of currency rate changes on cash 0.3 (0.7)
Net change in cash, cash equivalents and restricted cash 70.2 20.5
Cash, cash equivalents and restricted cash at beginning of period 466.7 1,405.2
Cash, cash equivalents and restricted cash at end of period $ 536.9 $ 1,425.7
Cash and cash equivalents at end of period $ 480.0 $ 1,365.3
Restricted cash included in prepaid expenses and other current assets at end of period 21.5 24.0
Restricted cash included in other long-term assets at end of period 35.4 36.4
Cash, cash equivalents and restricted cash at end of period $ 536.9 $ 1,425.7


	Successor		Predecessor

	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Cash Flows From Operating Activities:
Net loss	$	(65.4)	$	(249.3)
Adjustments to reconcile net cash from operating activities:
Depreciation and amortization	35.1		145.1
Share-based compensation	1.9		2.6
Deferred income taxes	3.9		(33.4)




Non-cash (amortization) accretion expense	(1.1)		69.9
Other non-cash items	(0.6)		20.0
Changes in assets and liabilities:
Accounts receivable, net	(0.8)		9.6
Inventories	78.7		48.0
Accounts payable	(13.3)		(20.4)

Income taxes	(6.4)		138.9



Other	(16.2)		(31.1)
Net cash from operating activities	15.8		99.9
Cash Flows From Investing Activities:
Capital expenditures	(24.6)		(19.3)


Other	0.4		0.3
Net cash from investing activities	(24.2)		(19.0)
Cash Flows From Financing Activities:

Repayment of debt	(2.2)		(11.0)




Net cash from financing activities	(2.2)		(11.0)
Effect of currency rate changes on cash	(1.3)		0.3
Net change in cash, cash equivalents and restricted cash	(11.9)		70.2
Cash, cash equivalents and restricted cash at beginning of period	343.4		466.7
Cash, cash equivalents and restricted cash at end of period	$	331.5	$	536.9

Cash and cash equivalents at end of period	$	253.6	$	480.0
Restricted cash included in prepaid expenses and other current assets at end of period	37.1		21.5
Restricted cash included in other long-term assets at end of period	40.8		35.4
Cash, cash equivalents and restricted cash at end of period	$	331.5	$	536.9

~~See Notes to Condensed Consolidated Financial Statements.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

MALLINCKRODT PLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ~~SHAREHOLDERS'~~SHAREHOLDERS’ EQUITY

(~~unaudited,~~unaudited; in millions)

Ordinary Shares Treasury Shares Additional
Paid-In Capital Retained Deficit Accumulated Other Comprehensive (Loss) Income
Total
Shareholders'
Equity
Number
Par
Value
Number Amount
Balance as of December 31, 2021 (Predecessor) 94.3 $ 18.9 9.6 $ (1,616.1) $ 5,597.8 $ (3,678.9) $ (8.3) $ 313.4
Net loss — — — — — (119.6) — (119.6)
Share-based compensation — — — — 1.2 — — 1.2
Balance as of April 1, 2022 (Predecessor) 94.3 $ 18.9 9.6 $ (1,616.1) $ 5,599.0 $ (3,798.5) $ (8.3) $ 195.0
Balance as of December 30, 2022 (Successor) 13.2 $ 0.1 — $ — $ 2,191.0 $ (588.2) $ 10.8 $ 1,613.7
Net loss — — — — — (249.3) — (249.3)
Other comprehensive loss — — — — — — (2.6) (2.6)
Share-based compensation — — — — 2.6 — — 2.6
Balance as of March 31, 2023 (Successor) 13.2 $ 0.1 — $ — $ 2,193.6 $ (837.5) $ 8.2 $ 1,364.4

~~See Notes to Condensed Consolidated Financial Statements.~~


	Ordinary Shares			Additional Paid-In Capital	Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
	Number	Par Value
Balance as of December 29, 2023 (Successor)	19.7	$	0.2		$	1,194.6	$	(38.2)	$	3.6	1,160.2
Net loss	—	—			—		(65.4)		—		(65.4)
Other comprehensive loss	—	—			—		—		(4.8)		(4.8)

Share-based compensation	—	—			1.9		—		—		1.9
Balance as of March 29, 2024 (Successor)	19.7	$	0.2		$	1,196.5	$	(103.6)	$	(1.2)	$	1,091.9


Balance as of December 30, 2022 (Predecessor)	13.2	$	0.1		$	2,191.0	$	(588.2)	$	10.8	$	1,613.7
Net loss	—	—			—		(249.3)		—		(249.3)
Other comprehensive loss	—	—			—		—		(2.6)		(2.6)

Share-based compensation	—	—			2.6		—		—		2.6
Balance as of March 31, 2023 (Predecessor)	13.2	$	0.1		$	2,193.6	$	(837.5)	$	8.2	$	1,364.4

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of C ontents

MALLINCKRODT PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(~~unaudited,~~unaudited; dollars in millions, except share data, per share data, and where indicated)


1.			Background and Basis of Presentation

Background

Mallinckrodt plc is a global business of multiple wholly owned subsidiaries (collectively, ~~"Mallinckrodt"~~“Mallinckrodt” or ~~"the Company"~~the “Company”) that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, hepatology, nephrology, pulmonology, ophthalmology and oncology; immunotherapy and neonatal respiratory critical care therapies; ~~analgesics; cultured skin substitutes~~analgesics and gastrointestinal products.

The Company operates in two reportable segments, which are further described below:

•Specialty Brands includes innovative specialty pharmaceutical brands; and

•Specialty Generics includes niche specialty generic drugs and active pharmaceutical ingredients ("(“API(s)"”).

The Company owns or has rights to use the trademarks and trade names that are used in conjunction with the operation of its business. One of the more important trademarks that the Company owns or has rights to use that appears in this Quarterly Report on Form 10-Q is ~~"Mallinckrodt,"~~“Mallinckrodt,” which is a registered trademark or the subject of pending trademark applications in the United States ("(“U.S."”) and other jurisdictions. Solely for convenience, the Company only uses the ™ or ® symbols the first time any trademark or trade name is mentioned in the following notes. Such references are not intended to indicate in any way that the Company will not assert, to the fullest extent permitted under applicable law, its rights to its trademarks and trade names. Each trademark or trade name of any other company appearing in the following notes is, to the Company's knowledge, owned by such other company.

2023 Chapter 11 Cases

On August 28, 2023, the Company voluntarily initiated Chapter 11 proceedings (“2023 Chapter 11 Cases”) under chapter 11 of title 11 (“Chapter 11”) of the United States Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (“Bankruptcy Court”). On September 20, 2023, the directors of the Company initiated examinership proceedings with respect to Mallinckrodt plc by presenting a petition to the High Court of Ireland pursuant to Section 510(1)(b) of the Companies Act 2014 seeking the appointment of an examiner to Mallinckrodt plc. On October 10, 2023, the Bankruptcy Court entered an order confirming a plan of reorganization (“2023 Plan”). Subsequent to the Bankruptcy Court’s order confirming the 2023 Plan, the High Court of Ireland made an order confirming a scheme of arrangement on November 10, 2023, which is based on and consistent in all respects with the 2023 Plan (“2023 Scheme of Arrangement”). The 2023 Plan and the 2023 Scheme of Arrangement became effective on November 14, 2023, (“2023 Effective Date”), and the Company emerged from the 2023 Chapter 11 Cases and the Irish examinership proceedings (together, the “2023 Bankruptcy Proceedings”) on that date. See Note 2 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2023 filed with the SEC on March 26, 2024 (“Annual Report on Form 10-K”) for further information on the 2023 Plan and emergence from the 2023 Bankruptcy Proceedings.

As of December 30, 2023, professional fees directly related to the 2023 Bankruptcy Proceedings that were previously reflected as reorganization items, net, are being classified on a go-forward basis within selling, general and administrative (“SG&A”) expenses. Cash paid for these professional fees for the three months ended March 29, 2024 (Successor) was $8.6 million.

2020 Chapter 11 Cases

Reorganization items, net for the Predecessor period represents amounts incurred after the effective date of the plan of reorganization and scheme of arrangement for the 2020 Chapter 11 Cases and the Irish examinership proceedings (together, the “2020 Bankruptcy Proceedings”) in 2022 that directly resulted from the 2020 Bankruptcy Proceedings and were entirely comprised of professional fees associated with the implementation of the plan of reorganization and scheme of arrangement. Cash paid for reorganization items, net for the three months ended March 31, 2023 (Predecessor) was $9.4 million.

Table of Cont ents

Adoption of Fresh-Start Accounting

Upon emergence from the 2023 Bankruptcy Proceedings on November 14, 2023, the Company adopted fresh-start accounting in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 852 - Reorganizations (“ASC 852”), and became a new entity for financial reporting purposes as of the 2023 Effective Date. References to “Successor” relate to the financial position of the reorganized Company as of December 29, 2023 and March 29, 2024 and results of operations of the reorganized Company subsequent to November 14, 2023, while references to “Predecessor” relate to the financial position of the Company as of December 30, 2022 and results of operations of the Company for the period from December 31, 2022 through November 14, 2023. All emergence-related transactions related to the 2023 Effective Date were recorded as of November 14, 2023. Accordingly, the unaudited condensed consolidated financial statements for the Successor periods are not comparable to the unaudited condensed consolidated financial statements for the Predecessor periods. See Note 3 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for further information.

Basis of Presentation

On October 12, 2020 ("Petition Date"), Mallinckrodt plc and substantially all of its U.S. subsidiaries, including certain subsidiaries of Mallinckrodt plc operating the Specialty Generics business ("Specialty Generics Subsidiaries") and the Specialty Brands business ("Specialty Brands Subsidiaries"), and certain of the Company's international subsidiaries (together with the Company, Specialty Generics Subsidiaries and Specialty Brands Subsidiaries, the "Debtors") voluntarily initiated proceedings ("Chapter 11 Cases") under chapter 11 of title 11 ("Chapter 11") of the United States Code ("Bankruptcy Code"). On March 2, 2022, the U.S. Bankruptcy Court for the District of Delaware ("Bankruptcy Court") entered an order confirming the fourth amended plan of reorganization (with technical modifications) ("Plan"). Subsequent to the filing of the Chapter 11 Cases, Chapter 11 proceedings commenced by a limited subset of the Debtors were recognized and given effect in Canada, and separately the High Court of Ireland made an order confirming a scheme of arrangement on April 27, 2022, which is based on and consistent in all respects with the Plan ("Scheme of Arrangement"). On June 8, 2022, the Bankruptcy Court entered an order approving a minor modification to the Plan. The Plan became effective on June 16, 2022 ("Effective Date"), and on such date the Company emerged from the Chapter 11 and the Scheme of Arrangement became effective concurrently.

~~Upon emergence from Chapter 11, the Company adopted fresh-start accounting in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 852 -~~ ~~Reorganizations~~, and became a new entity for financial reporting purposes as of the Effective Date. References to "Successor" relate to the financial position as of June 16, 2022 and results of operations of the reorganized Company subsequent to June 16, 2022, while references to "Predecessor" relate to the financial position prior to June 16, 2022 and results of operations of the Company prior to, and including, June 16, 2022. All emergence-related transactions of the Predecessor were recorded as of June 16, 2022. Accordingly, the unaudited condensed consolidated financial statements for the Successor are not comparable to the unaudited condensed consolidated financial statements for the Predecessor.

Reorganization items, net for the Successor represents amounts incurred after the Effective Date that directly resulted from Chapter 11 and were entirely comprised of professional fees associated with the implementation of the Plan. Reorganization items, net for the Predecessor represents amounts incurred after the Petition Date but prior to emergence as a direct result of the Chapter 11 Cases and were comprised of bankruptcy-related professional fees and adjustments to reflect the carrying value of liabilities subject to compromise ("LSTC") at their estimated allowed claim amounts, as such adjustments were approved by the Bankruptcy Court. Cash paid for reorganization items, net for the three months ended March 31, 2023 (Successor) and April 1, 2022 (Successor) was $9.4 million and $79.1 million, respectively.

The Company also reassessed and updated its product line net sales presentation for its Specialty Generics segment. Beginning with the Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2022 (Successor), the Company's unaudited condensed consolidated financial statements reflect the updated product line net sales structure for its Specialty Generics segment. Prior year amounts have been recast to conform to current presentation.

The unaudited condensed consolidated financial statements have been prepared in U.S. dollars and in accordance with generally accepted accounting principles ~~generally accepted~~ in the U.S. ~~("GAAP"~~(“GAAP”). The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ from those estimates. The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and entities in which they own or control more than 50.0% of the voting ~~shares, or have the ability to control through similar rights.~~shares. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows and financial position have been made. All intercompany balances and transactions have been eliminated in consolidation and all normal recurring adjustments necessary for a fair ~~presentation~~statement have been included in the results reported. ~~The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.~~

The results of entities disposed of are included in the unaudited condensed consolidated financial statements up to the date of disposal, and where appropriate, these operations have been reported in discontinued operations. Divestitures of product lines and businesses not meeting the criteria for discontinued operations have been reflected in operating loss.

The fiscal ~~year end~~year-end balance sheet data was derived from audited consolidated financial statements, but does not include all of the annual disclosures required by GAAP; accordingly these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited annual consolidated financial statements included in its Annual Report on Form 10-K

Summary of Significant Accounting Policies

Share-Based Compensation

The Company recognizes the cost of employee services received in exchange for awards of equity or liability-based instruments based on the grant-date fair value of those awards. That cost is recognized over the requisite service period, which is the period an employee is required to provide service in exchange for the ~~fiscal year ended December 30, 2022 filed with~~award (generally the ~~U.S. Securities~~vesting period). The cost for liability-based instruments is remeasured accordingly each reporting period throughout the requisite service period.

As of the 2023 Effective Date, the Company’s ordinary shares were no longer traded on an active market. Accordingly, the fair value of those share-based awards granted after the 2023 Effective Date requires the valuation of the Company’s equity utilizing the application of significant estimates, assumptions, and ~~Exchange Commission ("SEC")~~judgments. With the assistance of a third-party valuation advisor, the estimated fair value of total share-based awards was based on ~~March 3, 2023 ("Annual Report~~an income approach, a calculation of the present value of the future cash flows to be generated by the business based on ~~Form 10-K").~~its projection. The basis of the discounted cash flow analysis used in developing the equity value was based on Company prepared projections that included a variety of estimates and assumptions, including but not limited to expected future revenue and expenses, future cash flows, discount rates, and the probability of possible future events. While the Company considers such estimates and assumptions reasonable, they are inherently subject to significant business, economic and competitive uncertainties, many of which are beyond the Company’s control and, therefore, may not be realized. Changes in these estimates and assumptions may have had a significant effect on the determination of the Company’s equity value.

Fiscal Year

The Company reports its results based on a ~~"52-53 week"~~“52-53 week” year ending on the last Friday of December. Unless otherwise indicated, the three months ended March 29, 2024 (Successor) refers to the thirteen week period ended March 29, 2024 (Successor) and the three months ended March 31, 2023 ~~(Successor)~~(Predecessor) refers to the thirteen week period ended March 31, 2023 ~~(Successor)~~(Predecessor).

Table of Cont ents


2.			Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

The FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures in November 2023. This ASU expands on reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The required disclosure, which is on an annual and interim basis, specifies that significant segment expenses are expenses that are regularly provided to the chief operating decision maker and are used to evaluate performance by segment to make decisions about resource allocations. ASU 2023-07 is effective for the Company beginning with the fiscal year ending December 27, 2024 and interim periods within the fiscal year ending December 26, 2025, with early adoption permitted. The Company is currently evaluating the impact the disclosure requirements of this standard will have on the disclosures within the consolidated financial statements.

The FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in December 2023. This ASU requires public business entities to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the “rate reconciliation”) for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. ASU 2023-09 is effective for the Company for the fiscal year ending December 25, 2025. The Company is currently evaluating the disclosure requirements of this standard and the ~~three months ended April 1, 2022 (Predecessor) refers to the thirteen week period ended April 1, 2022 (Predecessor).~~impact on its consolidated financial statements.


2.3.			Revenue from Contracts with Customers

Product Sales Revenue

See Note 1314 for presentation of the Company's net sales by product family.

Reserves for variable consideration

The following table reflects activity in the Company's sales reserve accounts:


		Rebates and Chargebacks (1)		Product Returns		Other Sales Deductions		Total		Rebates and Chargebacks (1)	Product Returns	Other Sales Deductions	Total
Balance as of December 31, 2021 (Predecessor)		$	241.8	$	21.5	$	9.5	$	272.8
Balance as of December 30, 2022 (Predecessor)
Provisions	Provisions	370.8		2.4		9.7		382.9
Payments or credits	Payments or credits	(412.0)		(4.3)		(10.0)		(426.3)
Balance as of April 1, 2022 (Predecessor)		$	200.6	$	19.6	$	9.2	$	229.4
Balance as of March 31, 2023 (Predecessor)

Balance as of December 30, 2022 (Successor)		$	265.3	$	16.0	$	12.7	$	294.0

Balance as of December 29, 2023 (Successor)

Balance as of December 29, 2023 (Successor)

Balance as of December 29, 2023 (Successor)
Provisions	Provisions	355.6		3.2		9.5		368.3
Payments or credits	Payments or credits	(404.3)		(4.0)		(15.0)		(423.3)
Balance as of March 31, 2023 (Successor)		$	216.6	$	15.2	$	7.2	$	239.0
Balance as of March 29, 2024 (Successor)

(1)Includes ~~$58.9~~$44.7 million and ~~$89.3~~$59.0 million of accrued Medicaid and ~~$44.6~~$34.9 million and ~~$55.3~~$35.1 million of accrued rebates as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor), respectively, included within accrued and other current liabilities in the unaudited condensed consolidated balance sheets.

Product sales transferred to customers at a point in time and over time were as follows:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Product sales transferred at a point in time 80.2 % 79.5 %
Product sales transferred over time 19.8 20.5


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Product sales transferred at a point in time	84.7	%	80.2	%
Product sales transferred over time	15.3		19.8

Table of Cont ents

Transaction price allocated to the remaining performance obligations

The following table includes estimated revenue from contracts extending greater than one year for certain of the Company's hospital products that are expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of March ~~31, 2023~~29, 2024 (Successor):


Remainder of Fiscal ~~2023~~2024	$	~~56.6~~62.8
~~Fiscal 2024~~	~~37.7~~
Fiscal 2025	~~13.2~~51.8
Fiscal 2026	20.1
Thereafter	~~0.2~~3.4

~~Product Royalty Revenues~~

~~The Company licenses certain rights to Amitiza~~® (lubiprostone) ("Amitiza") to third parties in exchange for royalties on net sales of the product. The Company receives a double-digit royalty based on a percentage of the gross profits of the licensed products sold during the term of the agreements. The Company recognizes such royalty revenue as the related sales occur. The associated royalty revenue recognized was as follows:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Royalty revenue $ 3.4 $ 20.0


3.4.			Restructuring and Related Charges

The Company, from time to time, seeks more cost-effective means to improve profitability and to respond to changes in its markets. As such, the Company may incur restructuring costs as a component of the Company’s operating costs. During fiscal 2021 (Predecessor) and 2018 (Predecessor), the ~~Company launched~~Company’s predecessor board of directors approved restructuring programs, ~~designed to improve its cost structure,~~ neither of which has pre-determined actions or a specified time period. Charges of $50.0 million to $100.0 million were ~~provided~~authorized for under the 2021 program and $100.0 million to $125.0 million were ~~provided~~authorized for under the 2018 program. The 2021 program ~~will commence~~commenced upon substantial completion of the 2018 program, which occurred during the first quarter of 2024.

During the first quarter of 2024, the Company committed to a plan to cease commercialization and ~~has not commenced~~clinical development, and wind down production of StrataGraft® (“StrataGraft”). As a result, the Company recorded restructuring and related charges, net, within the Specialty Brands segment related to StrataGraft of $10.2 million, which include (i) $4.6 million of one-time termination benefits and (ii) $5.6 million in contract termination costs.

Additionally, the Company recorded a $2.5 million net gain within SG&A, which included a $5.1 million non-cash gain related to the write-off of a lease liability, offset by a $2.6 million lease termination cash penalty. The termination penalty is currently recorded in accrued and other current liabilities on the unaudited condensed consolidated balance sheet as of March ~~31, 2023~~29, 2024 (Successor).

These actions began in the first quarter of 2024 and are expected to be completed in the first quarter of 2025. The Company currently expects to incur approximately $2.0 million of additional one-time termination benefits within the Specialty Brands segment through the first quarter of 2025. The exact timing to complete all actions and final costs associated will depend on a number of factors and are subject to change.

Net restructuring and related charges by segment were as follows:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Specialty Generics $ — $ 3.5
Corporate 1.9 3.3
Restructuring and related charges, net 1.9 6.8
Less: accelerated depreciation (0.7) —
Restructuring charges, net $ 1.2 $ 6.8


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Specialty Brands	$	10.2	$	—

Corporate	—		1.9
Restructuring and related charges, net	10.2		1.9
Less: accelerated depreciation	—		(0.7)
Restructuring charges, net	$	10.2	$	1.2

Net restructuring and related charges by program were comprised of the following:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
2018 Program $ 1.9 $ 6.8
Less: non-cash charges, including accelerated depreciation (0.8) (2.1)
Total charges expected to be settled in cash $ 1.1 $ 4.7


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
2021 Program	$	10.2	$	—
2018 Program	—		1.9
Less: non-cash charges, including accelerated depreciation	—		(0.8)
Total charges expected to be settled in cash	$	10.2	$	1.1

910

Table of Cont ents

The following table summarizes ~~cash activity for restructuring reserves for the 2018 Program, which primarily related to employee severance and benefits:~~


	~~2018 Program~~
~~Balance as of December 30, 2022 (Successor)~~	$	~~4.6~~
~~Charges from continuing operations~~	~~1.2~~
~~Changes in estimate from continuing operations~~	~~(0.1)~~
~~Cash payments~~	~~(4.2)~~
~~Balance as of March 31, 2023 (Successor)~~	$	~~1.5~~

~~As of March 31, 2023 (Successor), net restructuring and related charges incurred cumulative to date for the 2018 Program were as follows:~~

Successor Predecessor
Specialty Brands $ — $ 3.1
Specialty Generics 0.8 18.5
Corporate 13.2 84.0
$ 14.0 $ 105.6

~~All of~~ the restructuring reserves, ~~were~~which are included in accrued and other current liabilities on the Company's unaudited condensed consolidated balance ~~sheets. Amounts paid in~~sheet:


	2021 Program
	Severance		Contract Costs		Total
Balance as of December 29, 2023 (Successor)	$	—	$	—	$	—
Charges from continuing operations	4.6		5.6		10.2

Cash payments	(2.8)		(3.2)		(6.0)
Balance as of March 29, 2024 (Successor)	$	1.8	$	2.4	$	4.2

Cumulative net restructuring and related charges incurred for the ~~future may differ from the amount currently recorded.~~2021 and 2018 Programs were as follows as of March 29, 2024 (Successor):


	2021 Program		2018 Program
Specialty Brands	$	10.2	$	3.1
Specialty Generics	—		19.3
Corporate	—		96.9
	$	10.2	$	119.3


4.5.			Income Taxes

The ~~Company's~~Company recognized an income tax ~~expense (benefit) was~~benefit of $0.7 million on a loss from continuing operations before income taxes of $66.3 million for the three months ended March 29, 2024 (Successor). This resulted in an effective tax rate of 1.1%. The effective tax rate is lower than the Irish statutory tax rate of 12.5% primarily due to the impact of valuation allowances recorded for current year interest limitations, the mix of pretax earnings in various jurisdictions, and remaining effects of adoption of fresh-start accounting as ~~follows:~~

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Current tax expense (benefit) $ 2.6 $ (5.0)
Deferred tax benefit (33.4) (0.9)
Income tax benefit $ (30.8) $ (5.9)

a result of emergence from the 2023 Bankruptcy Proceedings.

The Company recognized an income tax benefit of $30.8 million on a loss from continuing operations before income taxes of $280.1 million for the three months ended March 31, 2023 ~~(Successor)~~(Predecessor). This resulted in an effective tax rate of 11.0%. The ~~income~~effective tax ~~provision consisted~~rate is lower than the Irish statutory tax rate of ~~a deferred income~~12.5% primarily due to the impact of valuation allowances recorded for current year interest limitations, permanent non-deductible tax ~~benefit predominately related to intangible asset amortization, accretion expense associated with our settlement obligations~~items, and ~~debt, inventory step-up amortization expense and other operating activity, partially offset by current income tax expense related to a decrease~~the mix of pretax earnings in ~~prepaid income taxes.~~various jurisdictions.

~~The income tax benefit of $30.8 million for~~During the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~consisted of $27.4 million attributed to pretax earnings in various jurisdictions, $2.1 million attributed to separation costs, reorganization items,~~, net ~~and restructuring charges, and $1.3 million attributed to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.~~

~~The Company recognized an income tax benefit of $5.9 million on a loss from continuing operations before~~cash payments for income taxes ~~of $126.1~~were $1.9 million ~~for the three months ended April 1, 2022 (Predecessor). This resulted in an effective tax rate of 4.7%. The current and deferred income tax benefits were predominantly~~ related to ~~an increase to prepaid taxes and intangible asset amortization partially offset by utilization of loss carryforwards in non-valuation allowance jurisdictions.~~

The income tax benefit of $5.9 million for the three months ended April 1, 2022 (Predecessor) consisted of $4.8 million attributed to pretax earnings in various jurisdictions and $1.9 million attributed to separation costs, reorganization items, net and restructuring charges, partially offset by $0.8 million attributed to the CARES Act.

operational activity. During the three months ended March 31, 2023 ~~(Successor)~~(Predecessor), net cash refunds for income taxes were $136.3 million, including refunds of $139.3 million received as a result of provisions in the CARES Act and net payments of $3.0 million related to operational activity. ~~During~~

On December 20, 2021, the Organisation for Economic Co-operation and Development (“OECD”) released the Global Anti-Base Erosion (“GloBE”) Model Rules (“Pillar Two”) providing a legislative framework for the Income Inclusion Rule and the Under-Taxed Payment Rule (“UTPR”). Pillar Two is designed to ensure that large multinational enterprise groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate, principally creating a 15% minimum global effective tax rate. On December 15, 2022, the E.U. member states, as well as many other countries, adopted a directive implementing the Pillar Two global minimum tax rules. On December 20, 2022, the OECD released three ~~months ended April 1, 2022 (Predecessor), net cash payments~~guidance documents related to Pillar Two. These documents included guidance on safe harbors and penalty relief and consultation papers on the GloBE Information Return and Tax Certainty for ~~income taxes were $2.7 million.~~

the GloBE rules. A number of jurisdictions have transposed the directive into national legislation with the rules to be applicable for fiscal years beginning on or after December 31, 2023, with the exception of the UTPR which is to be applicable for fiscal years beginning on or after December 31, 2024. As the Company's fiscal year end was December 29, 2023, Pillar Two is not effective until the Company’s fiscal year ending December 25, 2025. The Company is closely monitoring developments and is evaluating the impacts these new rules will have on its tax rate, including the eligibility to qualify for the safe harbor rules.

The Company's unrecognized tax benefits, excluding interest, totaled $24.8 million as of both March 31, 2023 (Successor) and December 30, 2022 (Successor). If favorably settled, these balances would benefit the effective tax rate. The total amount of accrued interest and penalties related to these obligations was $3.1$33.0 million and ~~$2.8~~$33.3 million as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor), respectively.

Within the next twelve months, the unrecognized tax benefits and the related interest and penalties are not expected to ~~significantly change.~~

Certain of the Company's subsidiaries continue to be subject to examination by taxing authorities. The earliest open years subject to examination for both the U.S federal and state jurisdictions and various foreign jurisdictions, including Ireland, Japan, Luxembourg, Switzerland and the United Kingdom is 2013.change significantly.


5.6.			Loss per Share

Loss per share is computed by dividing net loss by the number of weighted-average shares outstanding during the period. Dilutive securities, including participating securities, have not been included in the computation of loss per share as the Company reported a net loss from continuing operations during all periods presented ~~below and therefore, the impact would be anti-dilutive.~~below.

Table of Cont ents

The weighted-average number of shares outstanding used in the computations of both basic and diluted loss per share were as follows (in millions):

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Basic and diluted 13.2 84.7

The computation of diluted weighted-average shares outstanding for the three months ended March 31, 2023 (Successor) and April 1, 2022 (Predecessor) excluded approximately zero and 5.1 million shares of equity awards, respectively, because the effect would have been anti-dilutive.

Successor

Predecessor

Three Months
Ended
March 29, 2024

Three Months
Ended
March 31, 2023

Basic and diluted

19.7

13.2


6.7.			Inventories

Inventories were comprised of the ~~following at the end of each period:~~ following:


		Successor
		March 31, 2023		December 30, 2022
Raw materials and supplies		$	89.9	$	80.2
	Successor									Successor
	March 29, 2024								March 29, 2024		December 29, 2023
Raw materials
Work in process	Work in process	523.3		552.1		Work in process	459.1	501.8		501.8
Finished goods	Finished goods	282.2		315.3		Finished goods	337.7	382.9		382.9
		$	895.4	$	947.6
	$


7.8.			Property, Plant and Equipment

The gross carrying amount and accumulated depreciation of property, plant and equipment were comprised of the ~~following at the end of each period:~~following:

Successor
March 31,
2023 December 30,
2022
Property, plant and equipment, gross $ 492.5 $ 485.0
Less: accumulated depreciation (38.1) (27.4)
Property, plant and equipment, net $ 454.4 $ 457.6


	Successor
	March 29, 2024		December 29, 2023
Property, plant and equipment, gross	$	346.5	$	331.3
Less: accumulated depreciation	(19.9)		(9.6)
Property, plant and equipment, net	$	326.6	$	321.7

Depreciation expense was as follows:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Depreciation expense $ 11.9 $ 22.1


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Depreciation expense	$	10.3	$	11.9


8.9.			Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets were comprised of the ~~following at the end~~following:


	Successor
	March 29, 2024				December 29, 2023
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

Completed technology	$	624.6	$	40.9	$	624.6	$	16.2

Table of ~~each period:~~Cont ents

Successor
March 31, 2023 December 30, 2022
Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
Amortizable:
Completed technology $ 3,041.2 $ 451.9 $ 3,041.2 $ 318.7
Non-Amortizable:
In-process research and development 121.3 121.3

Intangible asset amortization expense was as follows:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Amortization expense $ 133.2 $ 155.1


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Amortization expense	$	24.8	$	133.2

The estimated aggregate amortization expense on intangible assets owned by the Company is expected to be as follows:

Successor

Remainder of Fiscal 2023

376.0

Fiscal 2024

446.1

Successor

Remainder of Fiscal 2024

65.6

Fiscal 2025

385.1

Fiscal 2025

74.8

Fiscal 2026

337.5

Fiscal 2026

68.4

Fiscal 2027

284.4

Fiscal 2027

62.0

Fiscal 2028

55.6

Fiscal 2029

46.3


9.10.			Debt

Debt was comprised of the following at the end of each period:

Successor
March 31, 2023 December 30, 2022
Principal Carrying Value Unamortized Discount and Debt Issuance Costs Principal Carrying Value Unamortized Discount and Debt Issuance Costs
Current maturities of long-term debt:
2017 Replacement Term loan due September 2027 $ 34.8 $ 34.8 $ — $ 34.8 $ 34.8 $ —
2018 Replacement Term loan due September 2027 9.3 9.3 — 9.3 9.3 —
Total current debt 44.1 44.1 — 44.1 44.1 —
Long-term debt:
10.00% first lien senior secured notes due April 2025 495.0 478.0 — 495.0 475.9 —
10.00% second lien senior secured notes due April 2025 321.9 249.8 — 321.9 242.2 —
2017 Replacement Term loan due September 2027 1,330.6 1,186.6 — 1,339.3 1,187.3 —
2018 Replacement Term loan due September 2027 353.2 317.3 — 355.5 317.6 —
11.50% first lien senior secured notes due December 2028 650.0 650.0 19.9 650.0 650.0 20.8
10.00% second lien senior secured notes due June 2029 328.3 179.8 — 328.3 175.5 —
Total long-term debt 3,479.0 3,061.5 19.9 3,490.0 3,048.5 20.8
Total debt $ 3,523.1 $ 3,105.6 $ 19.9 $ 3,534.1 $ 3,092.6 $ 20.8


	Successor
	March 29, 2024						December 29, 2023
	Principal		Carrying Value		Unamortized Discount and Debt Issuance Costs		Principal		Carrying Value		Unamortized Discount and Debt Issuance Costs
Current maturities of long-term debt:
First-Out Takeback Term Loan due November 2028	$	1.7	$	1.7	$	—	$	1.7	$	1.7	$	—
Second-Out Takeback Term Loan due November 2028	4.8		4.8		—		4.8		4.8		—


Total current debt	6.5		6.5		—		6.5		6.5		—
Long-term debt:
First-Out Takeback Term Loan due November 2028	$	226.6	240.4		$	—	$	227.1	$	241.7	$	—
Second-Out Takeback Term Loan due November 2028	634.0		676.7		—		635.6		680.7		—
14.75% Second-Out Takeback Notes due November 2028	778.6		833.5		—		778.6		836.4		—
Receivables financing facility due December 2027	—		—		2.7		—		—		2.9
Total long-term debt	1,639.2		1,750.6		2.7		1,641.3		1,758.8		2.9
Total debt	$	1,645.7	$	1,757.1	$	2.7	$	1,647.8	$	1,765.3	$	2.9

Takeback debt

In connection with emergence from the 2023 Bankruptcy Proceedings, the Company entered into a new senior secured first lien term loan facility with an aggregate principal amount of approximately $871.4 million (“First and Second-Out Takeback Term Loans”), consisting of approximately $229.4 million of “first-out” Takeback Term Loans (“First-Out Takeback Term Loans”) and approximately $642.0 million of “second-out” Takeback Term Loans (“Second-Out Takeback Term Loans”). The Company also issued approximately $778.6 million in aggregate principal amount of “second-out” 14.75% senior secured first lien notes due 2028 (“Takeback Notes” and, together with the Second-Out Takeback Term Loans, the “Second-Out Takeback Debt” and, together with the Takeback Term Loans, the “Takeback Debt”).

Table of Cont ents

Applicable interest rate

As of March ~~31, 2023~~29, 2024 (Successor), the applicable interest rate and outstanding principal on the Company's debt instruments were as follows:

Applicable Interest Rate Outstanding Principal
Fixed-rate instruments 10.54 % $ 1,795.2
2017 Replacement Term Loan due September 2027 (1)
9.94 1,365.4
2018 Replacement Term Loan due September 2027 (1)
10.19 362.5



	Applicable Interest Rate		Outstanding Principal
Fixed-rate instruments	14.75	%	$	778.6
First-Out Takeback Term Loans (1)	11.34		228.3
Second-Out Takeback Term Loans (1)	13.34		638.8

(1)Includes the impact of the interest rate cap agreement, which is discussed further in Note ~~12.~~13.


~~10.~~11.			Guarantees

In disposing of assets or businesses, the Company has from time to time provided representations, warranties and indemnities to cover various risks and liabilities, including unknown damage to assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities related to periods prior to disposition. The Company assesses the probability of potential liabilities related to such representations, warranties and indemnities and adjusts potential liabilities as a result of changes in facts and circumstances. The Company believes, given the information currently available, that the ultimate resolutions will not have a material adverse effect on its financial condition, results of operations and cash flows.

In connection with the sale of the Specialty Chemical business (formerly known as Mallinckrodt Baker) in fiscal 2010, the Company agreed to indemnify the purchaser with respect to various matters, including certain environmental, health, safety, tax and other matters. The indemnification obligations relating to certain environmental, health and safety matters have a term of 17 years from the sale, while some of the other indemnification obligations have an indefinite term.

On October 12, 2020, the Company voluntarily initiated the 2020 Bankruptcy Proceedings. The liability relating to all of these indemnification obligations was governed by a contract that was rejected as part of ~~Chapter 11~~the 2020 Bankruptcy Proceedings and is no longer a liability of the Successor Company. The Company was required to pay $30.0 million into an escrow account as collateral to the purchaser. The contract governing the escrow account was assumed in the ~~Chapter 11 proceedings.~~2020 Bankruptcy Proceedings. As of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor), ~~$19.5~~$20.5 million and ~~$19.3~~$20.2 million remained in restricted cash, included in other long-term assets on the unaudited condensed consolidated balance sheets, respectively. As of March ~~31, 2023~~29, 2024 (Successor), the Company does not expect to make future payments related to these indemnification obligations.

As of March ~~31,~~29, 2024 (Successor), the Company had various other letters of credit, guarantees and surety bonds totaling $31.5 million and restricted cash of $43.6 million held in segregated accounts primarily to collateralize surety bonds for the Company's environmental liabilities. Comparatively, as of December 29, 2023 (Successor), the Company had various other letters of credit, guarantees and surety bonds totaling ~~$29.9~~$31.4 million and restricted cash of ~~$37.4~~$42.9 million held in segregated accounts primarily to collateralize surety bonds for the Company's environmental liabilities.


~~11.~~12.			Commitments and Contingencies

The Company is subject to various legal proceedings and claims, including government investigations, environmental matters, product liability matters, patent infringement claims, antitrust matters, securities class action lawsuits, personal injury claims, employment disputes, contractual and other commercial disputes, and ~~all~~ other legal proceedings, all in the ordinary course of business, including those described below. Although it is not feasible to predict the ~~outcomes~~outcome of these matters, the Company believes, unless otherwise indicated below, given the information currently available, that ~~their~~the ultimate resolution of any particular matter, or matters that have the same legal or factual issues, will not have a material adverse effect on its financial condition, results of operations and cash flows.

Governmental Proceedings

~~Acthar Gel-Related Matters~~

~~SEC Subpoena.~~ Florida Civil Investigative Demand.In ~~August~~or around February 2019, the Company received a ~~subpoena~~civil investigative demand (“CID”) from the ~~SEC~~U.S. Attorney's Office for the Middle District of Florida for documents related to alleged payments to healthcare providers in Florida and whether those payments violated the Anti-Kickback Statute. The Company has cooperated with the investigation.

Table of Cont ents

Generic Pricing Subpoena. In March 2018, the Company received a grand jury subpoena issued by the U.S. District Court for the Eastern District of Pennsylvania (“EDPA”) pursuant to which the Antitrust Division of the Department of Justice is seeking documents regarding generic products and pricing, communications with generic competitors and other related matters. The Company is in the process of responding to this subpoena and is cooperating in the investigation.

MNK 2011 Inc. (formerly known as Mallinckrodt Inc.) v. U.S. Food and Drug Administration and United States of America. In November 2014, the FDA reclassified the Company's ~~disclosure of its dispute~~Methylphenidate ER in the Orange Book: Approved Drug Products with ~~the U.S. Department of Health and Human Services ("HHS"~~Therapeutic Equivalence (“Orange Book”) and Centers for Medicare and Medicaid Services (together with HHS, the "Agency") concerning the base date average manufacturer price for Acthar Gel under the Medicaid Drug Rebate Program, which was also the subject of litigation that. In November 2014, the Company filed ~~against the Agency. The SEC issued subsequent subpoenas on January 7, 2022 and September 28, 2022, requesting additional documents from the Company.~~

In connection with the investigation, on January 13, 2023, the SEC staff issued Wells Notices to the Company and individuals, including certain of its current and former executive officers, who were employed during 2019 (collectively, the “Individuals”). The notices indicate that the SEC staff has made a preliminary determination to recommend that the SEC file an enforcement action against the Company that would allege violations of the federal securities laws, and against the Individuals that would allege violations of the federal securities laws and/or aiding and abetting violations of the federal securities laws. The recommendation as to the Company may involve an injunction, a cease-and-desist order and/or other appropriate relief.

~~The actions recommended by the SEC staff would allege, among other things, that (a) the Company improperly omitted to disclose the dispute with the Agency prior to the litigation filed by the Company~~Complaint in ~~federal court on May 21, 2019, and (b) the Company’s disclosure of the civil investigative demand received from~~ the U.S. ~~Attorney’s Office~~District Court for the District of ~~Massachusetts~~Maryland Greenbelt Division against the FDA and the U.S. (“MD Complaint”) for judicial review of the FDA's reclassification. In July 2015, the court granted the FDA's motion to dismiss with respect to three of the five counts in ~~January 2019~~the MD Complaint and granted summary judgment in favor of the FDA with respect to the two remaining counts (“~~Boston CID”~~MD Order”). On October 18, 2016, the FDA initiated proceedings, proposing to withdraw approval of the Company's Abbreviated New Drug Application (“ANDA”) ~~should have stated~~for Methylphenidate ER. On October 21, 2016, the U.S. Court of Appeals for the Fourth Circuit issued an order placing the Company's appeal of the MD Order in abeyance pending the outcome of the withdrawal proceedings. The parties exchanged documents and in April 2018, the Company filed its submission in support of its position in the withdrawal proceedings. A potential outcome of the withdrawal proceedings is that the ~~Boston CID~~Company's Methylphenidate ER products may lose their FDA approval and have to be withdrawn from the market.

U.S. Attorney's Office Subpoena. On August 22, 2023, the Company received a grand jury subpoena from the U.S. Attorney's Office for the Western District of Virginia (“USAO”) seeking production of data and information for the time period from July 17, 2017 to the present, including information and data relating to the Company's reporting of suspicious orders for controlled substances, chargebacks and other transactions, and communications between the Company and the U.S. Drug Enforcement Administration (“DEA”) regarding those issues. The Company's legal representatives discussed the intended scope of the subpoena and initial timeline with the USAO in August and September 2023. On September 27, 2023, the Company received a second grand jury subpoena from the USAO for documents pertaining to financial accounts related to the prior requests. On March 13, 2024, the Company received an additional grand jury subpoena from the USAO requesting additional information regarding financial transactions involving prescription drug products.

On October 11, 2023, the Company’s ~~dispute~~legal representatives met with the ~~Agency.~~

~~A Wells Notice is neither a formal charge of wrongdoing nor a final determination~~USAO to, among other things, share information with the USAO about the operating injunction under which the Company's Specialty Generics segment has been operating since October 2020 and which was agreed to by 50 state and territory attorneys general and entered by the Bankruptcy Court (“operating injunction”). Among other things, the operating injunction provides that Specialty Generics must retain an independent monitor to evaluate and audit compliance with the recipient has violated any law. Under the SEC procedures, a recipient of a Wells Notice has an opportunity to respond and make a submission to the SEC staff setting forth the recipient’s interests and position in regard to the subject matteroperating injunction. R. Gil Kerlikowske, former Director of the ~~investigation.~~Office of National Drug Control Policy and former Commissioner of U.S. Customs and Border Protection, currently serves as the monitor and issues periodic reports on Specialty Generics' compliance program, which can be found on the Company's web site at https://www.mallinckrodt.com/corporate-responsibility/corporate-compliance/.

The Company believes that ~~it has complied~~Specialty Generics is in compliance with ~~all applicable laws~~its obligations through its compliance program for controlled substances. Prior to the existing operating injunction, Specialty Generics operated under a compliance-related memorandum of understanding with DEA established in July 2017 that expired in July 2020.

The Company is in the process of responding to the subpoenas and ~~regulations,~~is cooperating in the investigation. The Company cannot predict the eventual scope, duration or outcome of the investigation at this time.

Patent Litigation

Branded Products. The Company will continue to vigorously enforce its intellectual property rights relating to its Branded products to prevent the marketing of infringing generic or competing products prior to the expiration of patents covering those products, which, if unsuccessful, could adversely affect the Company's ability to successfully maximize the value of individual Branded products and ~~it has provided~~have an adverse effect on its financial condition, results of operations and cash flows. In the case of litigation filed against potential generic or competing products to Company's Branded products, those litigation matters can either be settled or the litigation pursued through a trial and any potential appeals of the lower court decision.

Generic Products. The Company continues to pursue development of a portfolio of generic products, some of which require submission ~~explaining~~of a Paragraph IV certification against patents listed in the FDA's Orange Book for the Branded product asserting that the Company's proposed generic product does not infringe and/or the Orange Book patent(s) are invalid and/or unenforceable. In the case of litigation filed against Company for such potential generic products, those litigation matters can either be settled or the litigation pursued through a trial and any potential appeals of the lower court decision in order to successfully launch those generic products in the future.

Table of Cont ents

Mallinckrodt Pharmaceuticals Ireland Limited et al. v. Airgas Therapeutics LLC et al. On December 30, 2022, the Company initiated litigation against Airgas Therapeutics, LLC, Airgas USA LLC, and Air Liquide S.A. (collectively “Airgas”) in the District of Delaware following notice from Airgas of its abbreviated new drug application (“ANDA”) submission seeking approval from the FDA for a generic version of INOmax® (nitric oxide) gas, for inhalation (“INOmax”). Airgas's ANDA received final approval from the FDA in July 2023, and according to Airgas' counsel, the original ANDA was filed in April 2011. The case is at an early stage and discovery is ongoing. In October 2023, the parties completed briefing on the Company’s ~~position~~motion for preliminary injunction seeking to prevent defendants Airgas Therapeutics LLC and Airgas USA LLC from infringing the Company’s U.S. patents during the pendency of the litigation; no hearing date has been scheduled at this time. On February 12, 2024, the court entered stipulations of consent for filing of an amended complaint. On March 22, 2024, the court granted Air Liquide S.A.’s motion to dismiss. AirGas Therapeutics, LLC and AirGas USA LLC remain parties to the litigation. The court set a trial date of September 8, 2025.

Many of the patents asserted against Airgas were previously asserted in the District of Delaware against Praxair Distribution, Inc. and Praxair, Inc. (collectively “Praxair”) in 2015 and 2016 following Praxair's submissions with FDA seeking approval for a nitric oxide drug product and delivery system. The litigation against Praxair resulted in Praxair's launch of a competitive nitric oxide product. The Company continues to develop and pursue patent protection of next generation nitric oxide delivery systems and additional uses of nitric oxide and intends to vigorously enforce its intellectual property rights against any parties that may seek to market a generic version of the Company's INOmax product and/or next generation delivery systems.

Amitiza® (“Amitiza”) Patent Challenges. The Company was granted numerous Japanese patents related to Amitiza. The Company has received notifications of petitions for invalidation trials described below, each of which was filed with the Japan Patent Office (“JPO”) and relates to Amitiza and its ~~belief~~use in Japan. The JPO has the authority to determine the validity of each of these patent grants and each of these patent term extension (“PTE”) registration grants. A party may appeal the JPO’s determination to a court of law.

In October 2023, the Company received notification that ~~no enforcement action~~Sawai Pharmaceutical Co., Ltd. (“Sawai”) had filed petitions for two invalidation trials against two PTE registrations for JP Patent No. 4332353. In December 2023, the Company received notification that Sawai had filed a petition for an invalidation trial against JP Patent Appln. No. 2002-586947. In April 2024, the Company received notification that Sawai had filed petitions for invalidation trials with respect to only the 12µg strength of Amitiza, against PTE registrations of three additional patents (JP Patent No. 4786866, JP Patent Appln. No. 2003-543603 and JP Patent Appln. No. 2004-564537), and against one patent itself (JP Patent No. 4786866).

In January 2024, the Company received notification that Towa Pharmaceutical Co., Ltd. had filed a petition for an invalidation trial against the PTE registration for JP Patent Appln. No. 2002-586947.

Each of these challenges is ~~warranted or appropriate.~~at an early stage. The Company ~~understands~~believes that each of these patents and/or PTE registrations is valid, and the Company will vigorously defend these patents and PTE registrations.

Commercial and Securities Litigation

Putative Class Action Securities Litigation (Continental General). On July 7, 2023, a putative class action lawsuit was filed against the Company, its Chief Executive Officer (“CEO”) Sigurdur Olafsson, its Chief Financial Officer (“CFO”) Bryan Reasons, and the Chairman of the Board, Paul Bisaro, in the U.S. District Court for the Southern District of New Jersey, captioned Continental General Insurance Company and Percy Rockdale, LLC v. Mallinckrodt plc et al., No. 23-cv-03662. The complaint purports to be brought on behalf of all persons who purchased or otherwise acquired Mallinckrodt's securities between June 17, 2022 and June 14, 2023. The lawsuit generally alleges that the ~~Individuals have provided similar submissions~~defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder related to the ~~SEC staff.~~Company’s business, operations, and prospects, including its financial strength, its ability to timely make certain payments related to Mallinckrodt’s Opioid-Related Litigation Settlement and the risk of additional filings for bankruptcy protection. The ~~outcome of~~lawsuit seeks monetary damages in an unspecified amount. A lead plaintiff was designated by the court on September 10, 2023. On December 26, 2023, an amended complaint was filed by the lead plaintiff against Olafsson, Reasons, and Bisaro (“Continental Defendants”). As to the Company, any liability to the plaintiffs in this matter was discharged upon emergence from the 2023 Bankruptcy Proceedings. The Continental Defendants filed a motion to dismiss on February 26, 2024.

Table of Cont ents

Putative Class Action Securities Litigation (Strougo). In July 2019, a putative class action lawsuit was filed against the Company, its former CEO Mark C. Trudeau, its CFO Bryan M. Reasons, its former Interim CFO George A. Kegler and its former CFO Matthew K. Harbaugh, in the U.S. District Court for the Southern District of New York, captioned Barbara Strougo v. Mallinckrodt plc, et al. The complaint purports to be brought on behalf of all persons who purchased or otherwise acquired Mallinckrodt's securities between February 28, 2018 and July 16, 2019. The lawsuit generally alleges that the defendants made false and/or misleading statements in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder related to the Company's clinical study designed to assess the efficacy and safety of its Acthar Gel in patients with amyotrophic lateral sclerosis. The lawsuit seeks monetary damages in an unspecified amount. On July 30, 2020, the court approved the transfer of the case to the U.S. District Court for the District of New Jersey. On August 10, 2020, an amended complaint was filed by the lead plaintiff alleging an expanded putative class period of May 3, 2016 through March 18, 2020 against the Company and Mark C. Trudeau, Bryan M. Reasons, George A. Kegler and Matthew K. Harbaugh, as well as newly named defendants Kathleen A. Schaefer, Angus C. Russell, Melvin D. Booth, JoAnn A. Reed, Paul R. Carter, and Mark J. Casey (collectively with Trudeau, Reasons, Kegler and Harbaugh, the “Strougo Defendants”) The amended complaint claims that the defendants made various false and/or misleading statements and/or failed to disclose various material facts regarding Acthar Gel and its results of operations. On October 1, 2020, the defendants filed a motion to dismiss the amended complaint. On March 17, 2022, the Strougo action was administratively closed. On March 29, 2022, the Strougo action was reinstated only with respect to the Strougo Defendants, and the Strougo Defendants filed their reply in support of their motion to dismiss on May 2, 2022. As to the Company, this matter was resolved in bankruptcy with no further liability against the Company. However, the Company has indemnification obligations as to the Strougo Defendants. On December 16, 2022, the District Court issued an order denying the Strougo Defendants' motion to dismiss in all respects. The Strougo Defendants answered the complaint, and the case is ~~uncertain,~~now in the discovery phase. In March 2024, the parties conducted an in-person mediation session, which did not result in a resolution. The parties have agreed to pursue additional settlement negotiations, and the Company cannot reasonably estimate the amount or range of probable loss at this time. There can be no assurances that the Company will be successful in negotiating a favorable settlement.

Local 542. In May 2018, the International Union of Operating Engineers (“IUOE”) Local 542 filed a non-class complaint against the Company and other defendants in Pennsylvania state court alleging improper pricing and distribution of Acthar Gel, in violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, aiding and abetting, unjust enrichment and negligent misrepresentation captioned Int'l Union of Operating Engineers Local 542 v. Mallinckrodt ARD Inc., et al. Plaintiff filed an amended complaint in August 2018, the Company's objections to which were denied by the court. In January 2021, the Company removed this case to the EDPA. In March 2021, the EDPA granted the Company's motion to transfer the case to the U.S. District Court for the District of Delaware (“District of Delaware”) and denied without prejudice Local 542's motion to remand the case to state court. In June 2021, the District of Delaware referred this case to the Bankruptcy Court in Delaware. On November 17, 2022, Local 542 filed a motion to withdraw the reference to the Bankruptcy Court, and the case was transferred back to the District of Delaware at Case No. 22-cv-01502. On June 27, 2023, the District of Delaware entered an order to withdraw reference of the action to the Bankruptcy Court and to transfer the case back to the EDPA to be remanded to state court. On January 9, 2024, the Court of Common Pleas entered an order marking the claims against the Mallinckrodt defendants “discontinued and ended without prejudice.”

Generic Pharmaceutical Antitrust Multi-District Litigation.

In August 2016, a multi-district litigation (“MDL”) was established in the EDPA relating to allegations of antitrust violations with respect to generic pharmaceutical pricing (“Generic Pricing MDL”). Plaintiffs in the Generic Pricing MDL, captioned In re: Generic Pharmaceuticals Pricing Antitrust Litigation, allege a conspiracy of price-fixing and customer allocation among generic drug manufacturers beginning in or around July 2009. The Generic Pricing MDL includes lawsuits against the Company and dozens of other pharmaceutical companies, including a complaint filed by Attorneys General for 51 States, Territories and the District of Columbia seeking monetary damages and injunctive relief. While the Company is not subject to monetary damages in connection with these matters as a result of the 2023 Plan and vigorously disagrees with the plaintiffs' characterization of the facts and law, the Company is ~~unable~~not able to reasonably estimate whether any injunctive relief will be granted, and if granted, whether it will materially impact the ~~potential exposure associated with this matter.~~Company's financial position or operations.

Environmental Remediation and Litigation Proceedings

The Company is involved in various stages of investigation and cleanup related to environmental remediation matters at a number of sites, including ~~those~~as described below. The ultimate cost of site cleanup and timing of future cash outlays is difficult to predict, given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations and alternative cleanup methods. The Company concluded that, as of March ~~31, 2023~~29, 2024 (Successor), it was probable that it would incur remediation costs in the range of ~~$18.1~~$17.1 million to ~~$48.1~~$51.4 million. The Company also concluded that, as of March ~~31, 2023~~29, 2024 (Successor), the best estimate within this range was ~~$36.5~~$35.6 million, of which ~~$0.9~~$0.8 million was included in accrued and other current liabilities and the remainder was included in environmental liabilities on the unaudited condensed consolidated balance sheet as of March ~~31, 2023~~29, 2024 (Successor). While it is not possible at this time to determine with certainty the ultimate outcome of these matters, the Company believes, given the information currently available, that the final resolution of all known claims, after taking into account amounts already accrued, will not have a material adverse effect on its financial condition, results of operations and cash flows.

Table of Cont ents

Lower Passaic River, New Jersey. The Company and approximately 70 other companies ("(“Cooperating Parties ~~Group"~~Group” or ~~"CPG"~~“CPG”) are parties to a May 2007 Administrative Order on Consent with the U.S. Environmental Protection Agency ~~("EPA"~~(“EPA”) to perform a remedial investigation and feasibility study ("(“RI/~~FS"~~FS”) of the 17-mile stretch known as the Lower Passaic River Study Area (“River”). The Company's potential liability stems from former operations at Lodi and Belleville, New Jersey (the “Lodi facility” and the “Belleville facility” respectively). In April 2014, the EPA issued a revised Focused Feasibility Study ~~("FFS"~~(“FFS”), with remedial alternatives to address cleanup of the lower 8-mile stretch of the River. The EPA estimated that the cost for the remediation alternatives ranged from $365.0 million to $3.2 billion and the EPA's preferred approach had an estimated cost of $1.7 billion. In April 2015, the CPG

presented a draft of the RI/FS of the River to the EPA that included alternative remedial actions for the entire 17-mile stretch of the River. In March 2016, the EPA issued the Record of Decision ("(“ROD(s)"”) for the lower 8 miles of the River with a slight modification on its preferred approach and a revised estimated cost of $1.38 billion. In October 2016, the EPA announced that Occidental Chemicals Corporation had entered into an agreement to develop the remedial design.

In August 2018, the EPA finalized a buyout offer of ~~$280,600~~$0.3 million with the Company, limited to its former Lodi facility, for the lower 8 miles of the River. In September 2021, the EPA issued the ROD for the upper 9 miles of the River selecting source control as the remedy for the upper 9 miles with an estimated cost of $441.0 million. In September 2022, the Company entered into a conditional $0.3 million Early Cash-Out Consent Decree (“CD”) with the EPA as a buyout for its portion of the upper part of the River related to its former Lodi facility; finalization of the CD is subject to the EPA approval following the public comment period. The comment period ~~that ended March 2023.~~resulted in a modification to the CD by the EPA which includes a cost reopener of $3.7 billion to the covenant not to sue. The United States filed the modified CD with the U. S. District Court for the District of New Jersey on January 17, 2024, and a motion for entry and response to comments was filed on January 31, 2024. At least one party in the litigation has filed a brief in opposition to the motion to enter the modified CD. The court has not yet ruled on the motion.

The portion of the liability related to the Belleville facility was discharged against the Company as a result of the ~~Plan.~~plan of reorganization related to the 2020 Bankruptcy Proceedings (“2020 Plan”). Any reserves associated with this contingency were included in ~~LSTC~~liabilities subject to compromise as of ~~the Effective Date,~~June 16, 2022 (Predecessor), and any related liabilities were discharged under the Bankruptcy Code. The portion of the liability related to the Lodi facility remains a part of the reserve until the CD is lodged.

As of March ~~31, 2023,~~29, 2024 (Successor), the Company estimated that its remaining liability related to the River was ~~$21.0~~$21.1 million, which was included within environmental liabilities on the unaudited condensed consolidated balance sheet as of March ~~31, 2023~~29, 2024 (Successor). Despite the issuance of the revised FFS and the RODs for both the lower and upper River by the EPA, the RI/FS by the CPG, and the ~~cash out settlement~~conditional CD by the EPA, there are many uncertainties associated with the final agreed-upon remediation, potential future liabilities and the Company's allocable share of the remediation. Given those uncertainties, the amounts accrued may not be indicative of the amounts for which the Company may be ultimately responsible and will be refined as the remediation progresses.

Bankruptcy Litigation and Appeals

~~First Lien Noteholder Matters.~~ The Plan proposed to reinstate the issuers' existing 10.00% First Lien Senior Secured Notes due 2025 ("Existing First Lien Notes") in an aggregate principal amount of $495.0 million and the note documents relating thereto. Certain holders of the Existing First Lien Notes and the trustee in respect thereof (collectively, the "Noteholder Parties"), objected to the proposed reinstatement, arguing, among other things, that the Company was required to pay a significant make-whole premium as a condition to reinstatement of the Existing First Lien Notes. In the course of confirming the Plan, the Bankruptcy Court overruled these objections.

On March 30, 2022, the Noteholder Parties appealed the confirmation order's approval of the reinstatement of the Existing First Lien Notes to the United States District Court for the District of Delaware. The Company and the Existing First Lien Notes Trustee reached an agreement to hold the trustee's appeal in abeyance, to be determined by the result of the holders' appeals, subject to certain conditions, which was approved by the District Court. Briefing on the merits of the Noteholder Parties' appeals was completed on July 1, 2022. On the same date, the Company moved to dismiss the Noteholder Parties' appeals as equitably moot. Briefing on the motion was completed on August 5, 2022 and supplemental declarations have been filed in the appeal. Oral argument was held on the Noteholder Parties' appeals on May 5, 2023, and the court took the matter under advisement.

~~At this stage, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with these appeals. The Company will continue to vigorously defend the Plan.~~

Sanofi. On October ~~12,~~13, 2021, in the Company's ~~bankruptcy,~~2020 Bankruptcy Proceedings, sanofi-aventis U.S. LLC ~~("Sanofi"~~(“Sanofi”) filed a motion asking the Bankruptcy Court for an order determining that, under the Bankruptcy Code, the Company could not discharge certain alleged royalty obligations owed to Sanofi under an asset purchase agreement through which the Company acquired certain intellectual property from Sanofi's predecessor ("(“Sanofi ~~Motion"~~Motion”). On November 8,4, 2021, the Bankruptcy Court denied the Sanofi Motion and ordered that any royalty obligations allegedly owed to Sanofi constitute prepetition unsecured claims that may be discharged under the Bankruptcy Code. On November 19, 2021, Sanofi appealed the Bankruptcy Court's ruling of the Sanofi Motion to the District Court. Briefing was completed on March 10, 2022 and the District Court affirmed on December ~~20,~~21, 2022, for which Sanofi filed a notice of appeal to the Third Circuit Court of Appeals on January 17, 2023. On April 25, 2024, the Third Circuit ruled in favor of the Company in all respects, stating that royalty obligations owed to Sanofi ~~had also appealed~~were discharged in bankruptcy.

Stratatech. Consummation of the ~~Bankruptcy Court's confirmation order, but pursuant~~2020 Plan discharged the Company's liability with respect to certain contingent consideration provided to the ~~terms~~prior securityholders of ~~a settlement between Sanofi and~~Stratatech Corporation (“Stratatech”). However, Russell Smestad, as the ~~General Unsecured Claims Trustee appointed pursuant to the Plan, it is expected that Sanofi will dismiss its appeal~~representative of ~~the confirmation order with prejudice in the near term.~~

~~Banks et al. v. Cotter Corporation et al. v. Mallinckrodt LLC, et al.~~ ~~On January 29, 2023, the named plaintiffs in~~ ~~Banks et al. v. Cotter Corporation et al. v. Mallinckrodt LLC, et al.~~ ~~No. 20-CV-1227 (E.D. Mo.) filed a motion to amend their class-action petition to add Mallinckrodt LLC as a defendant. Mallinckrodt LLC~~these securityholders, has filed a motion in the Bankruptcy Court for an order either (i) granting allowance and immediate payment of an administrative expense claim in the amount of the liability of $20 million or (ii) finding that the claim was not susceptible to ~~enjoin this petition on~~discharge and should be paid in full. The Company believes that the ~~grounds that these alleged claims were discharged pursuant~~securityholders’ motion is without merit and intends to vigorously oppose it.

Discovery was substantially complete prior to the ~~Plan and confirmation order. On April 11,~~2023 Bankruptcy Proceedings. Litigation of the securityholders’ motion was stayed automatically when the Company commenced the 2023 Bankruptcy Proceedings on August 28, 2023. Since the 2023 Debtors emerged from the 2023 Bankruptcy Proceedings on November 14, 2023, the ~~court held oral argument on the motion~~Court set a schedule to ~~enjoin. Both motions remain pending until~~complete discovery and other pre-hearing procedures. No hearing date before the Bankruptcy Court ~~adjudicates the motion to enjoin. Under the confirmation order, any liability Mallinckrodt LLC may have in connection with the~~ ~~Banks~~ ~~litigation was discharged upon emergence from Chapter 11, with the limited exception of liability that is indemnified by the U.S. government.~~has been set.

1518

Table of Cont ents

Other Matters

The ~~Company's~~Company is a defendant in a number of other pending legal proceedings relating to present and ~~claims are further described within~~former operations, acquisitions and dispositions. The Company does not expect the ~~notes~~outcome of these proceedings, either individually or in the aggregate, to ~~the~~have a material adverse effect on its financial ~~statements included within the Company's Annual Report on Form 10-K.~~condition, results of operations and cash flows.


~~12.~~13.			Financial Instruments and Fair Value Measurements

Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes a three-level fair value hierarchy ~~which maximizes the use of observable inputs and minimizes the use of unobservable inputs used in measuring fair value. The levels within the hierarchy are~~ as follows:

•

Level 1—1 — observable inputs such as quoted prices in active markets for identical assets or liabilities;

•Level 2—2 — significant other observable inputs that are observable either directly or indirectly; and

•Level 3—3 — significant unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions.

The following tables provide a summary of the significant assets and liabilities that are measured at fair value on a recurring basis at the end of each period:


		March 31, 2023 (Successor)			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
				Fair Value Measurement Using Fair Value Hierarchy:										Fair Value Measurement Using Fair Value Hierarchy:
											March 29, 2024 (Successor)	Level 1	Level 2	Level 3
Assets:	Assets:
Debt and equity securities held in rabbi trusts
Debt and equity securities held in rabbi trusts
Debt and equity securities held in rabbi trusts	Debt and equity securities held in rabbi trusts	$	38.2		$	26.1	$	12.1	$	—
Equity securities	Equity securities	10.3			10.3		—		—
Interest rate cap	Interest rate cap	14.9			—		14.9		—
		$	63.4		$	36.4	$	27.0	$	—
	$
Liabilities:	Liabilities:
Debt derivative liability
Debt derivative liability
Debt derivative liability
Deferred compensation liabilities	Deferred compensation liabilities	$	19.0		$	—	$	19.0	$	—
Contingent consideration liabilities	Contingent consideration liabilities	7.7			—		—		7.7
		$	26.7		$	—	$	19.0	$	7.7
	$


		December 30, 2022 (Predecessor)			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
				Fair Value Measurement Using Fair Value Hierarchy:											Fair Value Measurement Using Fair Value Hierarchy:
	December 29, 2023 (Successor)										December 29, 2023 (Successor)	Level 1	Level 2	Level 3
Assets:	Assets:
Debt and equity securities held in rabbi trusts	Debt and equity securities held in rabbi trusts	$	36.6		$	24.8	$	11.8	$	—
Debt and equity securities held in rabbi trusts
Debt and equity securities held in rabbi trusts
Equity securities	Equity securities	25.5			25.5		—		—
		$	62.1		$	50.3	$	11.8	$	—
Interest rate cap
	$
Liabilities:	Liabilities:
Debt derivative liabilities
Debt derivative liabilities
Debt derivative liabilities
Deferred compensation liabilities	Deferred compensation liabilities	$	26.0		$	—	$	26.0	$	—
Contingent consideration liabilities	Contingent consideration liabilities	7.3			—		—		7.3

		$	33.3		$	—	$	26.0	$	7.3
	$

Debt and equity securities held in rabbi trusts. Debt securities held in rabbi trusts primarily consist of U.S. government and agency securities and corporate bonds. When quoted prices are available in an active market, the investments are classified as level 1. When quoted market prices for a security are not available in an active market, they are classified as level 2. Equity securities held in rabbi trusts primarily consist of U.S. common stocks, which are valued using quoted market prices reported on nationally recognized securities exchanges.

Table of Cont ents

Equity securities. Equity securities consist of shares in Silence Therapeutics plc and Panbela Therapeutics, Inc. for which quoted prices are available in an active market; therefore, these investments are classified as level 1 and are valued based on quoted market prices reported on internationally recognized securities exchanges. The three months ended March 29, 2024 (Successor) included $7.0 million of unrealized gains on equity securities related to our investments in Silence Therapeutics plc and Panbela Therapeutics, Inc, while the three months ended March 31, 2023 (Predecessor) included an unrealized loss of $15.1 million and were recorded within other income (expense) in the unaudited condensed consolidated statement of operations.

Interest rate cap. The Company is exposed to interest rate risk on its variable-rate debt. During the three months ended March 31, 2023, the Company entered into an interest rate cap agreement, which serves to reduce the volatility on future interest expense cash outflows. The interest rate cap agreement has a total notional value of $860.0 million with an upfront premium of $20.0 million and provides the Company with interest rate protection, ~~(i) for the period March 16, 2023 through July 19, 2023 to the extent that the one-month London Interbank Offered Rate ("LIBOR") exceeds 4.65%, and (ii) for the period July 20, 2023~~ through March 26, 2026, to the extent that the one-month ~~Secured Overnight Financing Rate ("SOFR"~~secured overnight funding rate (“SOFR”) exceeds 3.84%.

The interest rate cap agreement ~~qualifies~~is not accounted for as a cash flow ~~hedge. The premium paid is recognized in income on a rational basis,~~hedge and the changes in ~~the~~ fair value of the interest rate cap ~~are~~were recorded within ~~accumulated~~ other ~~comprehensive~~ income ~~("AOCI") and are subsequently reclassed into interest expense~~(expense) in the ~~period when the hedged interest affects earnings.~~unaudited condensed consolidated statement of operations. The fair value of the interest rate cap is included in other assets on the Company’s unaudited condensed consolidated balance sheet as of March ~~31, 2023~~29, 2024 (Successor).

The Company elected to use the income approach to value the interest rate cap derivative using observable ~~Level~~level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted) reflecting current market expectations about those future amounts. Level 2 inputs for derivative valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts) and inputs other than quoted prices that are observable such as ~~LIBOR or~~ SOFR rate curves, futures and volatilities. Mid-market pricing is used as a practical expedient in the fair value measurements. ~~The Company recognized an unrealized loss of $5.0 million within AOCI during~~During the three months ended March ~~31, 2023~~29, 2024 (Successor), ~~with $0.3~~the Company recognized a $2.1 million ~~being reclassified into earnings as a component of interest expense, net. It is expected that over the next 12 months, $6.7 million of the estimated losses~~unrealized gain in ~~AOCI will be recognized into interest expense, net. The cash payment of the $20.0 million premium and~~ other ~~corresponding activity related to the interest rate cap were reflected as cash flows from operating activities~~income (expense) in the unaudited condensed consolidated statement of operations related to the changes in fair value of the interest rate cap.

Debt derivative liabilities. The debt derivative liabilities related to the Company's First and Second-Out Takeback Term Loans and Takeback Notes are measured using a 'with and without' valuation model to compare the fair values of each debt instrument including the identified embedded derivative feature. The “with” value corresponds to the fair value of each instrument assuming mandatory prepayment upon an asset sale. The “without” value corresponds to the fair value of each instrument assuming no mandatory prepayment upon an asset sale. These derivative liabilities are classified as level 3 and the fair value of the debt instruments including the embedded derivative features were determined using the Black-Derman-Toy model based on three potential scenarios included in the tables below which includes significant unobservable inputs. The estimated settlement value of each scenario, which would include any required applicable premium, is then discounted to present value using a discount rate that is a 3.08% and 4.58% credit spread for the First and Second-Out Takeback Term Loans, respectively, plus the U.S. treasury yield commensurate with the cash ~~flows for~~flow payment date. The applicable premium estimates were calculated at each mandatory prepayment event date in accordance with the contractual definition and were based, in part, on subjective assumptions. These subjective assumptions relate to scenario-related proceeds from an asset sale, inclusive of estimated transaction fees and related taxes. The debt derivative liability is recorded at fair value, with the changes in fair value reported within earnings. The debt derivative liability was $21.0 million and $15.1 million as of March 29, 2024 (Successor) and December 29, 2023 (Successor), respectively, and was recorded within accrued and other current liabilities within the unaudited condensed consolidated balance sheets as of March 29, 2024 (Successor) and December 29, 2023 (Successor). The $5.9 million increase in debt derivative liability during the three months ended March ~~31, 2023~~29, 2024 (Successor). was recognized in other income (expense), net. Significant assumptions utilized in the determination of the fair value are as follows:

First and Second-Out Takeback Term Loans:

Input

Scenario 1

Scenario 2

Scenario 3

Remaining term (years)

4.6

Maturity Date

November 14, 2028

Coupon Rate

7.50% - 9.50% + SOFR

Probability of mandatory prepayment event before November 2025 (1)

35.00%

12.25%

Estimated timing of mandatory prepayment event before November 2025 (1)

September 2024

November 2024

September and November 2024

(1) Represents a significant unobservable input

Table of Cont ents

Takeback Notes:

Input

Scenario 1

Scenario 2

Scenario 3

Remaining term (years)

4.6

Maturity Date

November 14, 2028

Coupon Rate

14.75%

Probability of mandatory prepayment event before November 2025 (1)

35.00%

12.25%

Estimated timing of mandatory prepayment event before November 2025 (1)

September 2024

November 2024

September and November 2024

(1) Represents a significant unobservable input

Deferred compensation liabilities. The Company maintains a non-qualified deferred compensation plan in the U.S., which permits eligible employees of the Company to defer a portion of their compensation. A recordkeeping account is set up for each participant and the participant chooses from a variety of funds for the deemed investment of their accounts. The recordkeeping accounts generally correspond to the funds offered in the Company's U.S. tax-qualified defined contribution retirement plan and the account balance fluctuates with the investment returns on those funds.

Contingent consideration ~~liabilities.~~liability. In accordance with the 2020 Plan and the Scheme of Arrangement related to the 2020 Irish examinership proceedings, the Company will provide consideration for athe Terlivaz contingent value right ~~("CVR"~~agreement (“CVR”) ~~associated with Terlivaz~~® primarily in the form of the achievement of a cumulative net sales milestone. The determination of fair value is dependent upon a number of factors, which include projections of future net sales, a weighted average cost of capital, and certain other market place data. The Company assesses the likelihood and timing of making such payments at each balance sheet date. The fair value of the contingent payment was measured based on the net present value of a probability-weighted assessment. The Company determined the fair value of the Terlivaz CVR as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor) to be ~~$7.7~~$16.1 million and ~~$7.3~~$14.7 million, respectively. All contingent consideration liabilities were classified within other liabilities in the unaudited condensed consolidated balance sheets as of March 29, 2024 (Successor) and December 29, 2023 (Successor).

Financial Instruments Not Measured at Fair Value

The following methods and assumptions were used by the Company in estimating fair values for financial instruments not measured at fair value as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor):

•The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and the majority of other current assets and liabilities approximate fair value because of their short-term nature. The Company classifies cash on hand and deposits in banks, including commercial paper, money market accounts and other highly liquid investments it may hold from time to time, with an original maturity of three months or less, as cash and cash equivalents (level 1). The fair value of restricted cash was equivalent to its carrying value of ~~$56.9~~$77.9 million and ~~$57.2~~$80.7 million as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor) (level 1), respectively. Included within the balance as of the 2023 Effective Date was $24.0 million related to the funding of a professional fee escrow account upon emergence from the 2023 Bankruptcy Proceedings. As of March 29, 2024 (Successor), the professional fee escrow balance was $13.8 million.

•The Company's life insurance contracts are carried at cash surrender value, which is based on the present value of future cash flows under the terms of the contracts (level 3). Significant assumptions used in determining the cash surrender value include the amount and timing of future cash flows, interest rates and mortality charges. The fair value of these contracts approximates the carrying value of ~~$46.4~~$44.8 million and ~~$46.7~~$45.3 million as of March ~~31, 2023~~29, 2024 (Successor) and December ~~30, 2022~~29, 2023 (Successor), respectively. These contracts are included in other assets on the unaudited condensed consolidated balance sheets.

•The Company's 10.00% and 11.50% first and second lien senior secured notes are classified as level 1, as quoted prices are available in an active market for these notes. Since quoted market prices for the Company's term loans are not available in an active market, they are classified as level 2 for purposes of developing an estimate of fair value.

1721

Table of Cont ents

The following table presents the carrying values and estimated fair values of the Company's debt as of the end of each period:

Successor
March 31, 2023 December 30, 2022
Carrying
Value Fair
Value Carrying
Value Fair
Value
Level 1:
10.00% first lien senior secured notes due April 2025 $ 478.0 $ 415.6 $ 475.9 $ 425.9
10.00% second lien senior secured notes due April 2025 249.8 222.1 242.2 216.8
11.50% first lien senior secured notes due December 2028 650.0 536.6 650.0 552.6
10.00% second lien senior secured notes due June 2029 179.8 192.0 175.5 176.7
Level 2:
2017 Replacement Term loan due September 2027 1,221.4 1,005.3 1,222.1 1,037.8
2018 Replacement Term loan due September 2027 326.6 262.6 326.9 274.8
Total Debt $ 3,105.6 $ 2,634.2 $ 3,092.6 $ 2,684.6


	Successor
	March 29, 2024				December 29, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Level 1:
14.75% Second-Out Takeback Notes due November 2028	$	833.5	$	854.5	$	836.4	$	844.4

Level 2:
First-Out Takeback Term Loan Due November 2028	242.1		232.2		243.4		232.8
Second-Out Takeback Term Loan Due November 2028	681.5		653.9		685.5		654.0
Total Debt	$	1,757.1	$	1,740.6	$	1,765.3	$	1,731.2

Concentration of Credit and Other Risks

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of accounts receivable. The Company generally does not require collateral from customers. A portion of the Company's accounts receivable outside the U.S. includes sales to government-owned or supported healthcare systems in several countries, which are subject to payment delays. Payment is dependent upon the financial stability and creditworthiness of those countries' national economies.

The following table shows net sales attributable to distributors that accounted for 10.0% or more of the Company's total net sales:

~~Successor~~

~~Predecessor~~

Three Months
Ended
March 31, 2023

Three Months
Ended
April 1, 2022

~~FFF Enterprises, Inc.~~

~~18.8~~

~~CuraScript, Inc.~~

~~26.0~~


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
FFF Enterprises, Inc.	20.1	%	18.8	%
Cencora, Inc. (formerly known as AmerisourceBergen Corp.)	15.0		*

* Net sales to this distributor was less than 10.0% of the Company's total net sales for the respective periods presented above.

The following table shows accounts receivable attributable to distributors that accounted for 10.0% or more of the Company's gross accounts receivable at the end of each period:

Successor
March 31,
2023 December 30,
2022
AmerisourceBergen Corporation 26.1 % 23.3 %
McKesson Corporation 19.0 17.3
FFF Enterprises, Inc. * 16.2

*Accounts receivable attributable to this distributor was less than 10.0% of total gross accounts receivable at the end of the respective period presented above.


	Successor
	March 29, 2024		December 29, 2023
Cencora, Inc.	33.3	%	24.2	%
McKesson Corporation	19.9		20.0

The following table shows net sales attributable to products that accounted for 10.0% or more of the Company's total net sales:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
INOmax 19.5 % 20.2 %
Acthar Gel 19.3 26.0
Therakos 13.8 12.2
APAP 10.9 *

*Net sales attributable to this product was less than 10.0% of total net sales for the respective period presented above.


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Acthar Gel	22.0	%	19.3	%
INOmax	15.0		19.5
Therakos	12.4		13.8
APAP	11.0		10.9

1822

Table of Cont ents


~~13.~~14.			Segment Data

The Company operates in two reportable segments, which are further described below:

•Specialty Brands includes innovative specialty pharmaceutical brands; and

•Specialty Generics includes niche specialty generic drugs and APIs.

Management measures and evaluates the Company's operating segments based on segment net sales and operating income. Management excludes corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management and the chief operating decision maker evaluate the operating results of the segments excluding such items. These items may include, but are not limited to, depreciation and amortization, share-based compensation, net restructuring charges, non-restructuring impairment charges and liabilities management and separation costs. Although these amounts are excluded from segment operating income, as applicable, they are included in reported consolidated operating loss and are reflected in the reconciliations presented below.

Selected information by reportable segment was as follows:

Successor

Predecessor

Three Months
Ended
March 31, 2023

Three Months
Ended
April 1, 2022

Successor

Predecessor

Three Months
Ended
March 29, 2024

Net sales:

Specialty Brands

252.0

339.4

Specialty Brands

Specialty Generics

172.6

151.5

Net sales

424.6

490.9

Net sales

Operating income (loss):

Specialty Brands

32.4

164.8

Specialty Brands

Specialty Generics

32.8

34.4

Segment operating income

65.2

199.2

Segment operating income

Unallocated amounts:

Corporate and unallocated expenses (1)

(14.0)

(32.8)

Corporate and unallocated expenses (1)

Depreciation and amortization

(145.1)

(177.2)

Share-based compensation

(2.6)

(1.2)

Share-based compensation

Restructuring charges, net

(1.2)

(6.8)

Separation costs (2)

(4.9)

(2.0)

Liabilities management and separation costs (2)

Operating loss

(102.6)

(20.8)

Operating loss

Interest expense

Interest income

Other income (expense), net

Reorganization items, net (3)

Loss from continuing operations before income taxes

(1)Includes administration expenses and certain compensation, legal, environmental and other costs not charged to the Company's reportable segments.

(2)Represents costs included in ~~selling, general and administrative expenses,~~SG&A, primarily related to professional fees and costs incurred as the Company explores potential sales of non-core assets to enable further deleveraging ~~post-emergence.~~post-emergence from the 2023 Bankruptcy Proceedings and the Company’s emergence from the Chapter 11 cases and Irish examinership proceedings in 2022.

(3)As of December 30, 2023, professional fees directly related to the 2023 Bankruptcy Proceedings that were previously reflected as reorganization items, net, are being classified on a go-forward basis within SG&A expenses.

1923

Table of Cont ents

Net sales by product family within the Company's reportable segments were as follows:

Successor Predecessor
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022
Acthar Gel $ 82.0 $ 127.7
INOmax 82.7 99.0
Therakos 58.7 59.9
Amitiza (1)
24.5 47.7
Terlivaz 2.2 —
Other 1.9 5.1
Specialty Brands 252.0 339.4
Opioids 62.2 50.0
ADHD 22.4 10.8
Addiction treatment 15.6 15.9
Other 1.8 2.8
Generics 102.0 79.5
Controlled substances 18.5 20.4
APAP 46.4 46.3
Other 5.7 5.3
API 70.6 72.0
Specialty Generics 172.6 151.5
Net sales $ 424.6 $ 490.9

~~(1)Amitiza consists of both product net sales and royalties. Refer to Note 2 for further details on Amitiza's revenues.~~


	Successor		Predecessor
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023
Acthar Gel	$	102.8	$	82.0
INOmax	70.2		82.7
Therakos	58.2		58.7
Amitiza	19.4		24.5
Terlivaz	6.0		2.2
Other	0.7		1.9
Specialty Brands	257.3		252.0

Opioids	81.9		62.2
ADHD	31.7		22.4
Addiction treatment	15.4		15.6
Other	1.5		1.8
Generics	130.5		102.0
Controlled substances	22.9		18.5
APAP	51.7		46.4
Other	5.4		5.7
API	80.0		70.6
Specialty Generics	210.5		172.6
Net sales	$	467.8	$	424.6


~~14.~~			~~Subsequent Events~~

~~Commitments and Contingencies~~

~~Certain litigation matters occurred on, or prior to, March 31, 2023 (Successor), but had subsequent updates through the issuance of this report. See further discussion in Note 11.~~

2024

Table of Contents

MALLINCKRODT PLC

MANAGEMENT’S DISCUSSION AND ANALYSIS


Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q includes forward-looking statements that are based on management's beliefs and assumptions and on information currently available to management. See ~~"Forward-Looking Statements"~~“Forward-Looking Statements” at the end of this Item 2 for important additional information and related considerations.

Overview

We are a global business consisting of multiple wholly owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, hepatology, nephrology, pulmonology, ophthalmology and oncology; immunotherapy and neonatal respiratory critical care therapies; ~~analgesics; cultured skin substitutes~~analgesics and gastrointestinal products.

We operate our business in two reportable segments, which are further described below:

•Specialty Brands includes innovative specialty pharmaceutical brands; and

•Specialty Generics includes niche specialty generic drugs and active pharmaceutical ingredients ("(“API(s)"”).

For further information on our business and products, refer to our Annual Report on Form 10-K for the fiscal year ended December ~~30, 2022 ("~~29, 2023 (“Annual Report on Form ~~10-K"~~10-K”), filed with the United States ("(“U.S."”) Securities and Exchange Commission ~~("SEC"~~(“SEC”) on March ~~3, 2023.~~26, 2024.

2023 Emergence from ~~bankruptcy~~Bankruptcy

On October 12, 2020 ("Petition Date"), Mallinckrodt plc and substantially all of its U.S. subsidiaries, including certain subsidiaries of Mallinckrodt plc operating the Specialty Generics business and the Specialty Brands business and certain of the Company's international subsidiaries (collectively the "Debtors")August 28, 2023, we voluntarily initiated ~~proceedings ("~~Chapter 11 ~~Cases"~~proceedings (“2023 Chapter 11 Cases”) under chapter 11 of title 11 ("(“Chapter ~~11"~~11”) of the United States ~~Code. The fourth amended~~Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (“Bankruptcy Court”). On September 20, 2023, our directors of the Company initiated examinership proceedings with respect to Mallinckrodt plc by presenting a petition to the High Court of Ireland pursuant to Section 510(1)(b) of the Companies Act 2014 seeking the appointment of an examiner to Mallinckrodt plc. On October 10, 2023, the Bankruptcy Court entered an order confirming a plan of reorganization ~~(with technical modifications) ("Plan"~~(“2023 Plan”). Subsequent to the Bankruptcy Court’s order confirming the 2023 Plan, the High Court of Ireland made an order confirming a scheme of arrangement on November 10, 2023, which is based on and consistent in all respects with the 2023 Plan (“2023 Scheme of Arrangement”). The 2023 Plan and the 2023 Scheme of Arrangement became effective on ~~June 16, 2022 ("~~November 14, 2023, (“2023 Effective ~~Date"~~Date”), and ~~on such date the Company~~we emerged from the 2023 Chapter ~~11.~~11 Cases and the Irish examinership proceedings (together, the “2023 Bankruptcy Proceedings”) on that date.

Upon emergence from ~~Chapter 11,~~ the ~~Company~~2023 Bankruptcy Proceedings on November 14, 2023, we adopted fresh-start accounting in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 852 - Reorganizations (“ASC 852”), and became a new entity for financial reporting purposes as of the 2023 Effective Date. References to ~~"Successor"~~“Successor” relate to the financial position of the reorganized Company as of ~~June 16, 2022~~December 29, 2023 and March 29, 2024 and results of operations of the reorganized Company subsequent to ~~June 16, 2022,~~November 14, 2023, while references to ~~"Predecessor"~~“Predecessor” relate to the financial position ~~prior to June 16,~~of the Company as of December 30, 2022 and results of operations of the Company ~~prior to, and including, June 16, 2022.~~for the period from December 31, 2022 through November 14, 2023. All emergence-related transactions ofrelated to the ~~Predecessor~~2023 Effective Date were recorded as of ~~June 16, 2022.~~November 14, 2023. Accordingly, the unaudited condensed consolidated financial statements for the Successor periods are not comparable to the ~~unaudited condensed consolidated financial statements for~~Predecessor period.

As of December 30, 2023, professional fees directly related to the ~~Predecessor.~~

~~Significant Events~~

~~Reorganization items, net~~

~~During the three months ended March 31,~~ 2023 ~~(Successor) and April 1, 2022 (Predecessor), we incurred $5.6 million and $43.4 million of~~Bankruptcy Proceedings that were previously reflected as reorganization items, net, ~~respectively. The Successor expenses represent amounts incurred after the Effective Date that directly resulted from Chapter 11~~are being classified on a go-forward basis within selling, general and ~~were entirely comprised of~~administrative (“SG&A”) expenses. Further, we expect a significant reduction in professional fees ~~associated with~~directly related to the implementation of the ~~Plan. The Predecessor expenses represent amounts incurred after the Petition Date as~~2023 Plan during 2024.

As a ~~direct~~ result of our emergence from the ~~Chapter 11 Cases~~2023 Bankruptcy Proceedings, we had significant changes to our Board of Directors, with the majority of our non-employee directors being newly appointed to the Board of Directors in February 2024. As a result, our Board of Directors may determine, from time to time, to implement changes in our business strategy. At the direction of our Board of Directors, we are engaged in a process of evaluating the assets across our portfolio, in both our Specialty Brands and ~~are comprised~~Specialty Generics segments, and pursuing divestiture opportunities, with a goal of ~~professional fees~~further reducing our debt and ~~adjustments~~providing a stronger base to ~~reflect the carrying value of liabilities subject~~maximize long-term shareholder value. We have engaged Lazard to ~~compromise ("LSTC") at their estimated allowed claim amounts.~~

assist with this process.

2125

Table of Contents

Business Factors Influencing the Results of Operations

We cannot adequately benchmark certain operating results of the three months ended March ~~31, 2023~~29, 2024 (Successor) against the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor) as the comparison of Successor and Predecessor ~~periods~~period would not be in accordance with ~~GAAP.~~U.S generally accepted accounting principles (“GAAP”). We do not believe that reviewing the results of the Successor period in isolation would be useful in identifying trends in or reaching conclusions regarding our overall operating performance. Management believes that our key performance metrics such as net sales and segment results of operations for the three months ended March ~~31, 2023~~29, 2024 (Successor) provide a meaningful comparison and are useful in identifying current business trends when compared to the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). Accordingly, in addition to presenting our results of operations as reported in our unaudited condensed consolidated financial statements in accordance with GAAP, the discussion in ~~"Results~~“Results of ~~Operations"~~Operations” and ~~"Segment Results"~~“Segment Results” below utilizes a comparison of the three months ended March ~~31, 2023~~29, 2024 (Successor) against the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor).

Specialty Brands

Net sales of Acthar® Gel for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $45.7~~increased $20.8 million, or ~~35.8%~~25.4%, to ~~$82.0~~$102.8 million driven primarily by continued ~~scrutiny on overall specialty pharmaceutical spending, slower than expected returning patient volumes and~~demand stabilization, as the ~~entrance of new competition in fiscal 2022. Competition intensified with the commercial launch of a purified cortrophin gel~~ product ~~in 2022 and this competitive pressure is expected~~benefited from order variability primarily due to ~~continue to negatively impact sales of Acthar Gel in 2023. The ongoing competition is expected to continue to have an adverse effect on our financial condition, results of operations and cash flows.~~seasonality. We continue to differentiate Acthar Gel ~~through pre-clinical studies and~~ through product enhancements, including the development of the Acthar Gel ~~self-injection~~delivery device and its Supplemental New Drug Application submission, which ~~has been completed, but we do not~~was approved by the U.S Food and Drug Administration (“FDA”) on March 1, 2024. We anticipate a launch in ~~2023. We continue to work toward~~ the ~~resolution~~third quarter of ~~a regulatory matter involving one of our partners and not specific to our device. If approved, this~~2024. This product is expected to create an easier and more patient-friendly application for single unit dosage indications.

Net sales of ~~Amitiza~~® for the three months ended March 31, 2023 (Successor) decreased $23.2 million, or 48.6%, to $24.5 million driven primarily by a decline in royalties associated with loss of exclusivity in the U.S. Additional generic competitors have entered the market in 2023, resulting in the elimination of the Par U.S. royalties.

~~Net sales of~~ INOmax® for the three months ended March ~~31, 2023~~29, 2024 (Successor) decreased ~~$16.3~~$12.5 million, or ~~16.5%~~15.1%, to ~~$82.7~~$70.2 million driven primarily by continued competition from alternative nitric oxide products, which could continue to adversely affect our ability to successfully maximize the value of INOmax and have an adverse effect on our financial condition, results of operations and cash flows. We ~~continue to develop and pursue patent protection~~received FDA approval of ~~next generation nitric oxide delivery systems and additional uses of nitric oxide through~~ our ~~submission of a~~ 510(k) ~~premarket notification to the U.S. Food and Drug Administration~~ for INOmax Evolve our ~~next generation~~next-generation nitric oxide delivery system. We ~~further~~expect the platform to be available in U.S. hospitals in the beginning of the second half of 2024. We intend to vigorously enforce our intellectual property rights relating to our nitric oxide products against any additional parties that may seek to market an alternative version of our INOmax product and/or our next generation delivery systems.

Net sales of Amitiza® for the three months ended March 29, 2024 (Successor) decreased $5.1 million, or 20.8%, to $19.4 million driven primarily by a decline in royalties associated with decreased sales to Takeda Pharmaceuticals.

Specialty Generics

Net sales from the Specialty Generics segment for the three months ended March ~~31, 2023~~29, 2024 (Successor) increased ~~$21.1~~$37.9 million, or ~~13.9%~~22.0%, to ~~$172.6~~$210.5 million driven primarily by an increase in finished-dosage generics net sales of ~~$22.5~~$28.5 million driven by ~~the Company's~~our ability to manufacture and supply product during periods of market disruption ~~offset by a decrease~~coupled with an increase in API net sales of ~~$1.4~~$9.4 million.

The FDA has announced plans to require manufacturers of opioid analgesics dispensed in outpatient settings to make prepaid mail-back envelopes available to dispensing pharmacies as a new drug disposal option for patients. This measure, if and when implemented as announced, would result in increased costs to us, which could negatively impact our results of operations if we are unable to pass such costs to our customers. At this time, we are unable to estimate the potential impact of this measure.

Results of Operations

Three Months Ended March ~~31, 2023~~29, 2024 (Successor) Compared with Three Months Ended ~~April 1, 2022~~March 31, 2023 (Predecessor)

Net Sales

Net sales by geographic area were as follows (dollars in millions):

Successor Predecessor Non-GAAP
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022 Percentage
Change
U.S. $ 379.6 $ 449.8 (15.6) %
Europe, Middle East and Africa 40.6 33.3 21.9
Other geographic areas 4.4 7.8 (43.6)
Net sales $ 424.6 $ 490.9 (13.5)


	Successor		Predecessor		Non-GAAP
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023			Percentage Change
U.S.	$	422.5	$	379.6		11.3	%
Europe, Middle East and Africa	42.5		40.6			4.7
Other geographic areas	2.8		4.4			(36.4)
Net sales	$	467.8	$	424.6		10.2	%

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Net sales for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $66.3~~increased $43.2 million, or ~~13.5%~~10.2%, to ~~$424.6~~$467.8 million, compared with ~~$490.9~~$424.6 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). This ~~decrease~~increase was primarily driven by an increase in finished-dosage generics and API net sales within our Specialty Generics segment and Acthar Gel within our Specialty Brands segment, partially offset by a decrease in net sales of ~~Acthar Gel,~~INOmax and Amitiza ~~and INOmax~~ within our Specialty Brands segment, as previously mentioned. For further information on changes in our net sales, refer to ~~"Segment Results"~~“Segment Results” within this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Operating Loss

Gross profit. Gross profit for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $125.9~~increased $114.2 million, or ~~71.7%~~229.3%, to ~~$49.8~~$164.0 million, compared with ~~$175.7~~$49.8 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). Gross profit margin was 35.1% for the three months ended March 29, 2024 (Successor), compared with 11.7% for the three months ended March 31, 2023 ~~(Successor), compared with 35.8%~~(Predecessor). These increases were driven by lower intangible asset amortization expense of $24.8 million for the three months ended ~~April 1, 2022~~March 29, 2024 (Successor), compared with $133.2 million for the three months ended March 31, 2023 (Predecessor)~~. These decreases were primarily~~, as a result of the decreased intangible assets fair value from the 2023 fresh-start accounting. The increase in gross profit was also driven by the ~~decrease~~increase in net sales, ~~and~~as discussed above, as well as a change in product ~~mix, coupled~~mix. These increases were partially offset by inventory step-up amortization of $103.3 million for the three months ended March 29, 2024 (Successor), compared with $71.4 million of inventory step-up amortization expense. These decreases were partially offset, and serving to increase gross profit, by a decrease of $20.9 million in intangible assets amortization expense as a result of fresh-start accounting.for the three months ended March 31, 2023 (Predecessor).

Selling, general and administrative expenses. ~~Selling general and administrative ("~~SG~~&A")~~&A expenses for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $29.6~~increased $18.9 million, or ~~19.4%~~16.0%, to ~~$122.9~~$136.9 million, compared with ~~$152.5~~$118.0 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). As a percentage of net sales, SG&A expenses were ~~28.9%~~29.3% and ~~31.1%~~27.8% for the three months ended March ~~31, 2023~~29, 2024 (Successor) and ~~April 1, 2022~~March 31, 2023 (Predecessor), respectively. ~~The three months ended April 1, 2022 (Predecessor) included an $11.1~~These increases were primarily driven by $8.0 million ~~increase~~of professional fees incurred subsequent to ~~certain of~~ our ~~environmental liabilities. The remaining decrease was attributable to a foreign currency remeasurement gain of $0.4 million~~emergence from the 2023 Bankruptcy Proceedings during the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~as compared to a loss of $5.4 million during the three months ended April 1, 2022 (Predecessor),~~ coupled with ~~cost containment initiatives.~~incremental compensation costs.

Research and development expenses. Research and development ("(“R~~&D"~~&D”) expenses for the three months ended March ~~31, 2023~~29, 2024 (Successor) decreased ~~$8.9~~$0.4 million, or ~~23.9%~~1.4%, to ~~$28.3~~$27.9 million, compared with ~~$37.2~~$28.3 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). As a percentage of net sales, R&D expenses were ~~6.7%~~6.0% and ~~7.6%~~6.7% for the three months ended March ~~31, 2023~~29, 2024 (Successor) and ~~April 1, 2022~~March 31, 2023 (Predecessor), respectively. These decreases were primarily driven by ~~cost containment initiatives coupled with~~ the completion of certain development programs. We continue to focus current R&D activities on performing clinical studies and publishing clinical and non-clinical experiences and evidence that support health economic activities and patient outcomes.

Restructuring charges, net. During the three months ended March 29, 2024 (Successor), we incurred $10.2 million related to one-time termination benefits and contract termination costs related to the ceased commercialization and clinical development and wind down of production of StrataGraft®. During the three months ended March 31, 2023 ~~(Successor) and April 1, 2022~~ (Predecessor), we incurred $1.2 million ~~and $6.8 million of restructuring charges, net, respectively,~~ primarily related to employee severance and related benefits.

Liabilities management and separation costs. Liabilities management and separation costs were $6.7 million during the three months ended March 29, 2024 (Successor) compared to $4.9 million during the three months ended March 31, 2023 (Predecessor). Both periods were primarily related to professional fees and costs incurred as we explored potential sales of non-core assets to enable further deleveraging post-emergence from the 2023 Bankruptcy Proceedings and the Chapter 11 cases in 2022, respectively.

Non-Operating Items

Interest expense and interest income. During the three months ended March ~~31, 2023~~29, 2024 (Successor) and ~~April 1, 2022~~March 31, 2023 (Predecessor), net interest expense was ~~$157.3~~$52.3 million and ~~$57.8~~$157.3 million, respectively. During the three months ended March ~~31, 2023~~29, 2024 (Successor), interest expense included ~~$45.9 million and $24.0~~$4.9 million of accretion expense associated with our settlement obligations ~~and debt, respectively. The three months ended March 31, 2023 (Successor) also reflect increased interest rates on our variable interest rate debt as~~ compared to ~~the three months ended April 1, 2022 (Predecessor). Interest expense during the predecessor period included cash adequate protection payments of $15.7~~$45.9 million ~~on certain of our predecessor senior secured debt instruments. The increase in our interest income of $4.3 million was primarily driven by higher interest earned on our money market funds~~ during the three months ended March 31, 2023 (Predecessor), respectively. The decrease in accretion expense associated with our settlement obligations was driven by our elimination of the opioid-related litigation liability during the 2023 Bankruptcy Proceedings. Further reducing our interest expense, net, was $6.1 million of amortization of debt compared to $24.0 million of accretion expense associated with debt during the three months ended March 29, 2024 (Successor) and March 31, 2023 (Predecessor), respectively. The decrease in interest expense was also impacted by a lower average outstanding debt balance during the three months ended March 29, 2024 (Successor) that yielded a decrease in interest expense as compared to the three months ended March 31, 2023 (Predecessor). The increase in our interest income of $2.1 million was primarily driven by interest income of $3.3 million from our interest rate cap agreement.

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Other ~~expense,~~income (expense), net. During the three months ended March ~~31, 2023~~29, 2024 (Successor) and ~~April 1, 2022~~March 31, 2023 (Predecessor), we incurred other income of $3.7 million and other expense of $14.6 ~~million and $4.1~~ million, respectively. The three months ended March ~~31, 2023~~29, 2024 (Successor) included ~~$15.1~~$7.0 million of unrealized ~~losses~~gains on equity securities related to our investments in Silence Therapeutics plc ~~("Silence")~~ and Panbela Therapeutics, Inc, while the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor) included ~~$3.7~~an unrealized loss of $15.1 million ofon our equity security investments. During the three months ended March 29, 2024 (Successor), we recorded a $3.8 million unrealized ~~losses on equity securities~~net loss related to the changes in fair value of our ~~investment in Silence.~~derivative assets and liabilities.

Reorganization items, net. During the three months ended March 31, 2023 ~~(Successor) and April 1, 2022~~ (Predecessor), we recorded $5.6 million ~~and $43.4 million~~ in reorganization items, net, ~~respectively. The Successor expenses represent amounts incurred after the Effective Date that directly resulted from the Chapter 11 Cases and were entirely comprised of~~which represented professional fees associated with the implementation of the ~~Plan. The Predecessor expenses represent amounts incurred~~plan of reorganization after the ~~Petition Date as a direct result of the~~emergence from our Chapter 11 ~~Cases and were comprised~~cases in 2022. As of December 30, 2023, professional fees ~~and adjustments~~directly related to ~~reflect~~ the ~~carrying value of LSTC at their estimated allowed claim amounts.~~2023 Bankruptcy Proceedings that were previously reflected as reorganization items, net, are being classified on a go-forward basis within SG&A expenses.

Income tax benefit. We recognized an income tax benefit of $0.7 million on a loss from continuing operations before income taxes of $66.3 million for the three months ended March 29, 2024 (Successor). This resulted in an effective tax rate of 1.1%. The effective tax rate is lower than the Irish statutory tax rate of 12.5% primarily due to the impact of valuation allowances recorded for current year interest limitations, the mix of pretax earnings in various jurisdictions, and remaining effects of adoption of fresh-start accounting as a result of emergence from the 2023 Bankruptcy Proceedings.

We recognized an income tax benefit of $30.8 million on a loss from continuing operations before income taxes of $280.1 million for the three months ended March 31, 2023 ~~(Successor)~~(Predecessor). This resulted in an effective tax rate of 11.0%. The ~~income~~effective tax ~~benefit was comprised~~rate is lower than the Irish statutory tax rate of ~~$2.6 million~~12.5% primarily due to the impact of valuation allowances recorded for current year interest limitations, permanent non-deductible tax ~~expense~~items, and ~~$33.4 million~~the mix of ~~deferred tax benefit. The income tax provision consisted of deferred income tax benefit predominately related to intangible asset amortization, accretion expense associated~~

with our settlement obligations and debt, inventory step-up amortization expense and other operating activity, partially offset by current income tax expense related to a decrease in prepaid income taxes.

~~The income tax benefit of $30.8 million for the three months ended March 31, 2023 (Successor) consisted of $27.4 million attributed to~~ pretax earnings in various jurisdictions, $2.1 million attributed to separation costs, reorganization items, net and restructuring charges, and $1.3 million attributed to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.

We recognized an income tax benefit of $5.9 million on a loss from continuing operations before income taxes of $126.1 million for the three months ended April 1, 2022 (Predecessor). This resulted in an effective tax rate of 4.7%. The income tax benefit was comprised of $5.0 million of current income tax benefit and $0.9 million of deferred income tax benefit, which predominantly related to an increase to prepaid taxes and intangible asset amortization, partially offset by utilization of loss carryforwards in non-valuation allowance jurisdictions.

Segment Results

Management measures and evaluates our operating segments based on segment net sales and operating income. Management excludes corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management and the chief operating decision maker evaluate the operating results of the segments excluding such items. These items may include, but are not limited to, depreciation and amortization, share-based compensation, net restructuring charges, non-restructuring impairment charges and liabilities management and separation costs. Although these amounts are excluded from segment operating income, as applicable, they are included in reported consolidated operating loss and are reflected in the reconciliations presented below. Selected information by business segment is as follows:

Three Months Ended March ~~31, 2023~~29, 2024 (Successor) Compared with Three Months Ended ~~April 1, 2022~~March 31, 2023 (Predecessor)

Net Sales

Net sales by segment are shown in the following table (dollars in millions):

Successor Predecessor Non-GAAP
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022 Percentage
Change
Specialty Brands $ 252.0 $ 339.4 (25.8) %
Specialty Generics 172.6 151.5 13.9
Net sales $ 424.6 $ 490.9 (13.5) %


	Successor		Predecessor		Non-GAAP
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023			Percentage Change
Specialty Brands	$	257.3	$	252.0		2.1	%
Specialty Generics	210.5		172.6			22.0
Net sales	$	467.8	$	424.6		10.2	%

Specialty Brands. Net sales for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $87.4~~increased $5.3 million, or ~~25.8%~~2.1%, to ~~$252.0~~$257.3 million, compared with ~~$339.4~~$252.0 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). As previously discussed, the ~~decrease~~increase in net sales was primarily driven by a ~~$45.7~~$20.8 million, or ~~35.8%~~25.4%, increase in Acthar Gel partially offset by a $12.5 million, or 15.1%, decrease in ~~Acthar Gel,~~INOmax and a ~~$23.2~~$5.1 million, or ~~48.6% decrease in Amitiza, and a $16.3 million, or 16.5%~~20.8%, decrease in ~~INOmax.~~Amitiza.

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Net sales for Specialty Brands by geography were as follows (dollars in millions):

Successor Predecessor Non-GAAP
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022 Percentage
Change
U.S. $ 233.3 $ 318.3 (26.7) %
Europe, Middle East and Africa 15.7 16.6 (5.4)
Other 3.0 4.5 (33.3)
Net sales $ 252.0 $ 339.4 (25.8) %


	Successor		Predecessor		Non-GAAP
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023			Percentage Change
U.S.	$	239.6	$	233.3		2.7	%
Europe, Middle East and Africa	15.9		15.7			1.3
Other	1.8		3.0			(40.0)
Net sales	$	257.3	$	252.0		2.1	%

Net sales for Specialty Brands by key products were as follows (dollars in millions):

Successor Predecessor Non-GAAP
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022 Percentage
Change
Acthar Gel $ 82.0 $ 127.7 (35.8) %
INOmax 82.7 99.0 (16.5)
Therakos 58.7 59.9 (2.0)
Amitiza 24.5 47.7 (48.6)
Terlivaz 2.2 — —
Other 1.9 5.1 (62.7)
Specialty Brands $ 252.0 $ 339.4 (25.8) %


	Successor		Predecessor		Non-GAAP
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023			Percentage Change
Acthar Gel	$	102.8	$	82.0		25.4	%
INOmax	70.2		82.7			(15.1)
Therakos	58.2		58.7			(0.9)
Amitiza	19.4		24.5			(20.8)
Terlivaz	6.0		2.2			172.7
Other	0.7		1.9			(63.2)
Specialty Brands	$	257.3	$	252.0		2.1	%

Specialty Generics. Net sales for the three months ended March ~~31, 2023~~29, 2024 (Successor) increased ~~$21.1~~$37.9 million, or ~~13.9%~~22.0%, to ~~$172.6~~$210.5 million, compared with ~~$151.5~~$172.6 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). As previously discussed, the increase in net sales was ~~due to an~~primarily driven by a $28.5 million, or 27.9% increase, in finished-dosage ~~generics~~generic net sales ~~of $22.5~~driven by our opioid and ADHD products and a $9.4 million, or ~~28.3%~~13.3%, ~~partially offset by a decrease~~increase in API net ~~sales of $1.4 million, or 1.9%.~~sales.

Net sales for Specialty Generics by geography were as follows (dollars in millions):

Successor Predecessor Non-GAAP
Three Months
Ended
March 31, 2023 Three Months
Ended
April 1, 2022 Percentage
Change
U.S. $ 146.3 $ 131.5 11.3 %
Europe, Middle East and Africa 24.9 16.7 49.1
Other 1.4 3.3 (57.6)
Net sales $ 172.6 $ 151.5 13.9 %


	Successor		Predecessor		Non-GAAP
	Three Months Ended March 29, 2024		Three Months Ended March 31, 2023			Percentage Change
U.S.	$	182.9	$	146.3		25.0	%
Europe, Middle East and Africa	26.6		24.9			6.8
Other	1.0		1.4			(28.6)
Net sales	$	210.5	$	172.6		22.0	%

Net sales for Specialty Generics by key products were as follows (dollars in millions):


		Successor		Predecessor		Non-GAAP
		Three Months Ended March 31, 2023		Three Months Ended April 1, 2022		Percentage Change
		Successor
		Successor
		Successor											Predecessor				Non-GAAP
	Three Months Ended March 29, 2024										Three Months Ended March 29, 2024					Three Months Ended March 31, 2023				Percentage Change
Opioids	Opioids	$	62.2	$	50.0	24.4	%	Opioids	$	81.9		$		$	62.2			31.7	%
ADHD	ADHD	22.4		10.8		107.4
Addiction treatment	Addiction treatment	15.6		15.9		(1.9)
Other	Other	1.8		2.8		(35.7)
Generics	Generics	102.0		79.5		28.3
Controlled substances	Controlled substances	18.5		20.4		(9.3)
APAP	APAP	46.4		46.3		0.2
Other	Other	5.7		5.3		7.5
API	API	70.6		72.0		(1.9)
Specialty Generics	Specialty Generics	$	172.6	$	151.5	13.9	%	Specialty Generics	$	210.5		$		$	172.6			22.0	%

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Table of Contents

Operating Loss

Operating ~~loss~~income by segment for the three months ended March ~~31, 2023~~29, 2024 (Successor) and ~~the three months April 1, 2022~~March 31, 2023 (Predecessor) is shown in the following table (dollars in millions):

Successor

Predecessor

Three Months
Ended
March 31, 2023

Three Months
Ended
April 1, 2022

Successor

Three Months
Ended
March 29, 2024

Specialty Brands (1)

32.4

164.8

Specialty Generics (2)

32.8

34.4

Specialty Generics (2)

Segment operating income

65.2

199.2

Unallocated amounts:

Corporate and unallocated expenses (3)

(14.0)

(32.8)

Depreciation and amortization

(145.1)

(177.2)

Depreciation and amortization

Share-based compensation

(2.6)

(1.2)

Restructuring charges, net

(1.2)

(6.8)

Non-restructuring impairment charges

—

(2.0)

Separation costs (4)

(4.9)

—

Restructuring charges, net

Liabilities management and separation costs (4)

Total operating loss

(102.6)

(20.8)

Total operating loss

Interest expense

Interest income

Other income (expense), net

Reorganization items, net

Loss from continuing operations before income taxes

(1)~~Includes $61.1 million of~~The three months ended March 29, 2024 (Successor) and March 31, 2023 (Predecessor) included inventory fair-value step-up expense ~~during~~of $72.0 million and $61.1 million, respectively.

(2)The three months ended March 29, 2024 (Successor) and March 31, 2023 (Predecessor) included inventory fair-value step-up expense of $31.3 million and $10.3 million, respectively. Additionally, the three months ended March ~~31, 2023~~29, 2024 (Successor).

~~(2)Includes $10.3~~ included $2.0 million of ~~inventory fair-value step-up expense during the three months ended March 31, 2023 (Successor).~~fresh-start inventory-related income.

(3)Includes administration expenses and certain compensation, legal, environmental and other costs not charged to ~~the Company's~~our reportable segments.

(4)Represents costs included in SG&A, primarily related to expenses incurred related to professional fees and costs incurred as we explore potential sales of non-core assets to enable further deleveraging ~~post-emergence.~~post-emergence from the 2023 Bankruptcy Proceedings and the Chapter 11 cases in 2022.

Specialty Brands. Operating income for the three months ended March ~~31, 2023~~29, 2024 (Successor) decreased ~~$132.4~~$2.5 million, to ~~$32.4~~$29.9 million, compared with ~~$164.8~~$32.4 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). Operating margin decreased to 11.6% for the three months ended March 29, 2024 (Successor), compared with 12.9% for the three months ended March 31, 2023 ~~(Successor), compared with 48.6% for the three months ended April 1, 2022~~ (Predecessor). These decreases in operating income and margin were primarily driven by a $10.9 million increase of inventory step-up expense to $72.0 million for the ~~$87.4 million, or 25.7%~~months ended March 29, 2024 (Successor), ~~decrease in net sales and a change in product mix, coupled~~compared with $61.1 million of inventory fair-value step-up expense, which resulted in a $155.5 million, or 53.2%, decrease in gross profit. Partially offsetting the decrease in operating income and serving to increase operating margin was a $14.5 million, or 14.9%, decrease in SG&A expenses primarily driven by cost containment initiatives coupled with a $0.6 million foreign currency remeasurement gain and a $5.3 million foreign currency remeasurement loss duringfor the three months ended March 31, 2023 ~~(Successor) and April 1, 2022~~ (Predecessor)~~, respectively, and~~. The decrease was partially offset by a $5.3 million increase in net sales as discussed above, resulting in an ~~$8.6 million, or 28.5%,~~net decrease in ~~combined R&D expenses~~gross profit of $0.6 million. The decrease in operating income also ~~driven by continued cost containment initiatives.~~included a $1.4 million increase in SG&A expenses.

Specialty Generics. Operating income for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $1.6~~increased $5.4 million, to ~~$32.8~~$38.2 million, compared with ~~$34.4~~an operating income of $32.8 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). Operating margin decreased to 18.1% for the three months ended March 29, 2024 (Successor), compared with 19.0% for the three months ended March 31, 2023 (Predecessor). The increases in operating income were primarily driven by a $37.9 million increase in net sales as described above, offset by a $21.0 million increase of inventory step-up expense to $31.3 million for the months ended March 29, 2024 (Successor), compared with ~~22.7%~~$10.3 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor)~~. These decreases~~, which reduced our operating margin, resulting in a $6.4 million increase to gross profit. The increase in operating income ~~and margin were primarily driven by $10.3 million of inventory fair-value step-up expense,~~was partially offset by an$1.9 million increase ~~in net sales.~~to SG&A expense.

Corporate and unallocated expenses. Corporate and unallocated expenses for the three months ended March ~~31, 2023~~29, 2024 (Successor) ~~decreased $18.8~~increased $17.9 million, to ~~$14.0~~$31.9 million, compared with ~~$32.8~~$14.0 million for the three months ended ~~April 1, 2022~~March 31, 2023 (Predecessor). The increase in corporate and unallocated expense was primarily driven by $8.0 million of professional fees related to the implementation of the 2023 Plan during the three months ended ~~April 1, 2022 (Predecessor) included an $11.1 million increase to certain~~March 29, 2024 (Successor) coupled with increased compensation costs.

Table of ~~our environmental liabilities. The remaining decrease primarily related to continued cost containment initiatives.~~Contents

Liquidity and Capital Resources.

Significant factors driving our liquidity position include cash flows generated from operating activities, financing transactions (inclusive of interest on our variable-rate debt instruments), capital expenditures, cash paid in connection with ~~legal settlements,~~settlement obligations, acquisitions and licensing agreements and cash received as a result of our divestitures. We have historically generated and expect to continue to generate positive cash flows from operations, and we believe that our sources of liquidity are adequate to fund our operations for the next twelve months and the foreseeable future. Our ability to fund our capital needs, including to repay our outstanding indebtedness and meet our settlement ~~obligations, will be~~obligation, particularly over the long-term, is impacted by our ongoing ability to generate cash from operations and access to capital markets. As discussed in greater detail in our Annual Report on Form 10-K, certain of our secured indebtedness has near-term maturity dates, most notably our First Lien Senior Secured Notes due April 2025 and our Second Lien Senior Secured Notes due April 2025. See the discussion of risks related to our outstanding indebtedness contained in Part I, Item 1A. ~~"Risk Factors"~~“Risk Factors” of our Annual Report on Form 10-K under the heading ~~"Risk~~“Risk Factors ~~- Risk~~— Risks Related to ~~our~~Our Indebtedness and Settlement ~~Obligations."~~

Obligation.” In addition, with a goal of further reducing our debt and providing a stronger base to maximize long-term shareholder value, we are also evaluating the assets across our portfolio and pursuing divestiture opportunities. At the request of some of our holders, we expect to continue to consider whether and when it would be advisable to suspend our reporting obligations under the Securities Exchange Act of 1934, as amended.

Pursuant to the ~~Plan,~~plan of reorganization from our Chapter 11 cases from 2022, we will make ~~payments~~a payment of ~~$200.0 million and $16.5~~$21.5 million, inclusive of interest, related to our ~~opioid and~~ Acthar Gel-related ~~settlements, respectively,~~settlement, upon the ~~one-year~~two-year anniversary of the ~~Effective Date. Additionally, during~~effective date of our emergence from the three months ended March 31, 2023 (Successor), the Company received a $133.8 million tax refund, plus $5.5 million of interest, related to the CARES Act income tax refund receivable. The remaining CARES Act income tax refund was received during April 2023.Chapter 11 cases on June 16, 2022.

We are exposed to interest rate risk on our variable-rate debt. OnIn March ~~14,~~ 2023, we entered into an interest rate cap agreement. Subsequent to the 2023 Bankruptcy Proceedings, the agreement ~~by converting a portion~~converts substantially all of our variable-rate debt to a fixed rate through the expiration date of the interest rate cap, which serves to reduce the volatility on future interest expense cash outflows. The interest rate cap agreement has a total notional value of $860.0 million with an upfront premium of $20.0 million and provides us with interest rate protection, ~~(i) for the period March 16, 2023 through July 19, 2023 to the extent that one-month London Interbank Offered Rate ("LIBOR") exceeds 4.65%, and (ii) for the period July 20, 2023~~ through March 26, 2026, to the extent that one-month ~~Secured Overnight Financing Rate~~secured overnight funding rate (“SOFR”) exceeds 3.84%. Refer to Note 1213 of the notes to the unaudited condensed consolidated financial statements for additional information.

A summary of our cash flows from operating, investing and financing activities is provided in the following table (dollars in millions):

Successor

Predecessor

Three Months
Ended
March 31, 2023

Three Months
Ended
April 1, 2022

Successor

Predecessor

Three Months
Ended
March 29, 2024

Net cash from:

Operating activities

99.9

49.2

Operating activities

Investing activities

(19.0)

(23.4)

Financing activities

(11.0)

(4.6)

Financing activities

Effect of currency exchange rate changes on cash and cash equivalents

0.3

(0.7)

Net increase in cash, cash equivalents and restricted cash

70.2

20.5

Effect of currency exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash, cash equivalents and restricted cash

Operating Activities

Net cash provided by operating activities of $15.8 million for the three months ended March 29, 2024 (Successor) was attributable to a net loss of $65.4 million, adjusted for non-cash items of $39.2 million primarily driven by depreciation and amortization of $35.1 million, partially offset with $42.0 million of cash inflow from net changes in working capital. The change in working capital was primarily driven by a $78.7 million decrease in inventory partially offset by $13.3 million decrease in accounts payable, a $6.4 million outflow in income taxes and a $16.2 million net cash outflow related to other assets and liabilities.

Net cash provided by operating activities of $99.9 million for the three months ended March 31, 2023 ~~(Successor)~~(Predecessor) was attributable to a net loss of $249.3 million, adjusted for non-cash items of $204.2 million, driven by depreciation and amortization of $145.1 million and accretion on our settlement obligations and debt of $69.9 million, partially offset with $145.0 million of cash inflow from net changes in working capital. The change in working capital was primarily driven by a $138.9 million inflow in income taxes predominately related to CARES Act income tax refunds of $139.3 million received, a $48.0 million increase in inventory and a $9.6 million increase in accounts receivable, partially offset by $31.1 million net cash outflow related to other assets and liabilities and a $20.4 million decrease in accounts payable.

Net cash provided by operating activities of $49.2 million for the three months ended April 1, 2022 (Predecessor) was attributable to a net loss of $119.6 million, adjusted for non-cash items of $192.7 million, driven by depreciation and amortization of $177.2 million coupled with cash used in working capital of $23.9 million. The change in working capital was primarily driven by a $63.3 million net cash outflow related to a decrease in accrued consulting fees and accrued payroll, a $27.0 million increase in inventory and a $7.8 million outflow in income taxes primarily driven by an increase in prepaid income taxes, partially offset by a $73.8 million decrease in accounts receivable primarily due to lower net sales.

Investing Activities

Net cash used in investing activities was $24.2 million for the three months ended March 29, 2024 (Successor), compared with $19.0 million for the three months ended March 31, 2023 ~~(Successor), compared with $23.4 million for the three months ended April 1, 2022~~ (Predecessor) and was primarily driven by ~~$19.3~~$24.6 million and ~~$23.6~~$19.3 million of capital expenditures for the respective periods.

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Under our term loan credit agreement and our notes, the proceeds from the sale of assets and businesses must be either reinvested into capital expenditures or business development activities within one year of the respective transaction or we are required to make repayments on our term loans and offer to repurchase certain of our notes.

Financing Activities

Net cash used in financing activities was $2.2 million for the three months ended March 29, 2024 (Successor), compared with $11.0 million for the three months ended March 31, 2023 ~~(Successor), compared with $4.6 million for the three months ended April 1, 2022~~ (Predecessor) and was entirely attributable to debt repayments for both respective periods.

Cash Requirements and Sources from Existing Contractual Arrangements

See “Cash Requirements and Sources from Existing Contractual Arrangements” in Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for a description of our material cash requirements from known contractual obligations include debt obligations, legal settlements, lease obligations, purchase obligations and other liabilities reflected on our balance sheet.

Commitments and Contingencies

Legal Proceedings

See Note 1112 of the notes to the unaudited condensed consolidated financial statements for a description of the litigation, legal and administrative proceedings and claims as of March ~~31, 2023~~29, 2024 (Successor).

Guarantees

In disposing of assets or businesses, we have from time to time provided representations, warranties and indemnities to cover various risks and liabilities, including unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities related to periods prior to disposition. We assess the probability of potential liabilities related to such representations, warranties and indemnities and adjust potential liabilities as a result of changes in facts and circumstances. We believe, given the information currently available, that the ultimate resolutions will not have a material adverse effect on our financial condition, results of operations and cash flows. See Note 11 of the notes to the unaudited condensed consolidated financial statements, in Part I, Item 1 of this report.

Off-Balance Sheet Arrangements

As of March 29, 2024 (Successor), we had various letters of credit, guarantees and surety bonds totaling $31.5 million and restricted cash of $43.6 million held in segregated accounts primarily to collateralize surety bonds for our environmental liabilities. See Note 11 of the notes to the unaudited condensed consolidated financial statements, in Part I, Item 1 of this report.

Critical Accounting Estimates

The preparation of our unaudited condensed consolidated financial statements in conformity with ~~accounting principles generally accepted in the U.S. (GAAP)~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses.

We believe that our critical accounting estimates are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. ~~Refer~~During the three months ended March 29, 2024 (Successor), there were no significant changes to these policies or in the underlying accounting assumptions and estimates used in the above critical accounting policies from those disclosed in our Annual Report on Form 10-K, except for those related to share-based compensation described in Note 1 of the notes to the unaudited condensed consolidated financial statements, ~~for~~in Part I, Item 1, of this report.

Recently Issued Accounting Standards

See Note 2 of the ~~changes~~notes to the ~~underlying~~unaudited condensed consolidated financial statements, in Part I, Item 1, of this report for a discussion regarding recently issued accounting ~~assumptions and estimates used in the critical accounting estimates disclosed in our Annual Report on Form 10-K.~~standards.

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Forward-Looking Statements

We have made forward-looking statements in this Quarterly Report on Form 10-Q that are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words ~~"believe," "expect," "plan," "intend," "project," "anticipate," "approximately," "estimate," "predict," "potential," "continue," "may," "could," "should"~~“believe,” “expect,” “plan,” “intend,” “project,” “anticipate,” “approximately,” “estimate,” “predict,” “potential,” “continue,” “may,” “could,” “should” or the negative of these terms or similar expressions. ~~Forward-looking~~Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to, ~~statements regarding:~~the following:

•the comparability of Mallinckrodt’s post-emergence financial results ~~to its historical results~~ and the projections filed with the ~~bankruptcy court;~~Bankruptcy Court;

•the lack of comparability of Mallinckrodt’s historical financial statements and information contained in its financial statements after the adoption of fresh-start accounting following emergence from the 2023 Bankruptcy Proceedings;

•changes in Mallinckrodt’s board of directors, business strategy ~~that may be implemented by~~and performance;

•Mallinckrodt’s evaluation of the assets across its ~~Board;~~portfolio, and its related pursuit of any divestiture opportunities;

•the ~~listing~~exercise of ~~Mallinckrodt’s ordinary shares on NYSE American LLC, the emergence of an active trading market for Mallinckrodt’s ordinary shares and fluctuations in market price and trading volume;~~

• ~~Mallinckrodt’s tax treatment~~contingent value rights by the ~~Internal Revenue Service under Section 7874 and Section 382 of the Internal Revenue Code of 1986, as amended;~~Opioid Master Disbursement Trust II (the “Trust”);

•Mallinckrodt’s repurchases of debt securities;

•the ~~effects of the emergence from bankruptcy on the liquidity;~~

•liquidity, results of operations and businesses of Mallinckrodt and its subsidiaries;

•governmental investigations and inquiries, regulatory actions, and lawsuits, in each case related to Mallinckrodt or its officers;

•~~matters related to the~~ Mallinckrodt’s contractual and court-ordered compliance obligations that, if violated, could result in penalties;

•historical commercialization of opioids, including compliance with and restrictions under the global settlement to resolve all opioid-related claims;

•matters related to Acthar Gel, including the settlement with governmental parties to resolve certain disputes and compliance with and restrictions under the related corporate integrity agreement;

•the ability to maintain relationships with Mallinckrodt’s suppliers, customers, employees and other third parties ~~as a result of, and~~ following the emergence from ~~bankruptcy;~~the 2023 Bankruptcy Proceedings, as well as perceptions of the Company's increased performance and credit risks associated with its constrained liquidity position and capital structure, which reflects a recently increased risk of additional bankruptcy or insolvency proceedings;

•the possibility that Mallinckrodt may be unable to achieve its business and strategic goals even now that the emergence from ~~bankruptcy plan~~the 2023 Bankruptcy Proceedings was successfully consummated;

•the non-dischargeability of certain claims against Mallinckrodt as part of the bankruptcy process;

•developing, funding and executing Mallinckrodt’s business ~~plan and continuing as a going concern;~~plan;

•Mallinckrodt’s ~~post-bankruptcy~~ capital ~~structure;~~structure since its emergence from the 2023 Bankruptcy Proceedings;

•scrutiny from governments, legislative bodies and enforcement agencies related to sales, marketing and pricing practices;

•pricing pressure on certain of Mallinckrodt’s products due to legal changes or changes in insurers’ or other payers’ reimbursement practices resulting from recent increased public scrutiny of healthcare and pharmaceutical costs;

•the reimbursement practices of governmental health administration authorities, private health coverage insurers and other third-party payers;

•complex reporting and payment obligations under the Medicare and Medicaid rebate programs and other governmental purchasing and rebate programs;

•cost containment efforts of customers, purchasing groups, third-party payers and governmental organizations;

•changes in or failure to comply with relevant laws and regulations;

•any undesirable side effects caused by Mallinckrodt’s approved and investigational products, which could limit their commercial profile or result in other negative consequences;

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•Mallinckrodt’s and its partners’ ability to successfully develop, commercialize or ~~commercialize~~launch new products or expand commercial ~~opportunities;~~opportunities of existing products, including Acthar Gel (repository corticotropin injection) Single-Dose Pre-filled SelfJect™ Injector and the INOmax Evolve platform;

•Mallinckrodt’s ability to successfully identify or discover additional products or product candidates;

•Mallinckrodt’s ability to navigate price fluctuations;

•competition;

•Mallinckrodt’s and its partners’ ability to protect intellectual property ~~rights;~~rights, including in relation to ongoing and future litigation;

•limited clinical trial data for Acthar Gel;

•the timing, expense and uncertainty associated with clinical studies and related regulatory processes;

•product liability losses and other litigation liability;

•material health, safety and environmental liabilities;

•business development ~~activities;~~activities or other strategic transactions;

•attraction and retention of key personnel;

•the effectiveness of information technology infrastructure, including ~~cybersecurity and data leakage risks;~~risks of external attacks or failures;

•customer concentration;

•Mallinckrodt’s reliance on certain individual products that are material to its financial performance;

•Mallinckrodt’s ability to receive sufficient procurement and production quotas granted by the U.S. Drug Enforcement Administration;

•complex manufacturing processes;

•reliance on third-party manufacturers and supply chain providers and related market disruptions;

•conducting business internationally;

•Mallinckrodt’s ability to achieve expected benefits from prior or future restructuring activities;

•Mallinckrodt’s significant levels of intangible assets and related impairment testing;

•~~labor and employment laws and regulations;~~

•natural disasters or other catastrophic events;

•Mallinckrodt’s substantial indebtedness and settlement obligation, its ability to generate sufficient cash to reduce its indebtedness and its potential need and ability to incur further indebtedness;

•restrictions ~~on Mallinckrodt’s operations~~ contained in the agreements governing Mallinckrodt’s ~~indebtedness;~~indebtedness and settlement obligation on Mallinckrodt’s operations, future financings and use of proceeds;

•actions taken by third parties, including the Company's creditors, the Trust and other stakeholders;

•Mallinckrodt’s variable rate indebtedness;

•Mallinckrodt's tax treatment by the Internal Revenue Service under Section 7874 and Section 382 of the Internal Revenue Code of 1986, as amended;

•future changes to applicable tax laws or the impact of disputes with governmental tax authorities; ~~and~~

•the impact of Irish ~~laws.~~laws; and

•the impact on the holders of Mallinckrodt’s ordinary shares if Mallinckrodt’s were to cease to be a reporting company in the United States.

In addition to the above considerations, see the ~~"Risk Factors" sections~~“Risk Factors” section of our Annual Report on Form 10-K, and subsequent filings with the SEC that identify and describe in more detail the risks and uncertainties to which our businesses are subject. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.

These forward-looking statements are made as of the filing date of this Quarterly Report on Form 10-Q. We expressly disclaim any obligation to update these forward-looking statements other than as required by law. Given these uncertainties, one should not put undue reliance on any forward-looking statements.

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Mallinckrodt on the Internet

Financial results, news, and other information about Mallinckrodt can be accessed from the Company’s website at https://ir.mallinckrodt.com. This site includes important information on the Company’s locations, products and services, financial reports, news releases, and career opportunities. The Company’s periodic and current reports on Forms 10-K, 10-Q, 8-K, and other filings, including exhibits and supplemental schedules filed therewith, and amendments to those reports, filed with the SEC are available on the Company’s website, free of charge, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information contained on, or that may be accessed through, the Company’s website is not incorporated by reference in this Report and, accordingly, you should not consider that information part of this report.


Item 3.			Quantitative and Qualitative Disclosures About Market Risk.

Our operations include activities in the U.S. and countries outside of the U.S. These operations expose us to a variety of market risks, including the effects of changes in interest rates and currency exchange rates. We monitor and manage these financial exposures as an integral part of our overall risk management program. We do not utilize derivative instruments for trading or speculative purposes.

Interest Rate Risk

Our exposure to interest rate risk relates primarily to our variable-rate debt instruments, which bear interest based on ~~LIBOR~~SOFR plus margin. As of March ~~31, 2023~~29, 2024 (Successor), our outstanding debt included ~~$1,727.9~~$867.1 million ~~variable-rate debt~~ on our senior secured term loans. Assuming a one percent increase in the applicable interest rates, in excess of applicable minimum floors, annual interest expense for fiscal ~~2023~~2024 would increase by approximately $8.7 ~~million, which includes the impact of the~~million. However, we mitigate this exposure with our interest rate ~~cap.~~cap agreement. For additional information on the interest rate cap agreement, refer to Note 1213, of the notes to the unaudited condensed consolidated financial statements.

The remaining outstanding debt as of March ~~31, 2023~~29, 2024 (Successor) is fixed-rate debt. Changes in market interest rates generally affect the fair value of fixed-rate debt, but do not impact earnings or cash flows.

Currency Risk

Certain net sales and costs of our international operations are denominated in the local currency of the respective countries. As such, profits from these subsidiaries may be impacted by fluctuations in the value of these local currencies relative to the U.S. dollar.

We also have significant intercompany financing arrangements that may result in gains and losses in our results of operations. In an effort to mitigate the impact of currency exchange rate effects we may hedge certain operational and intercompany transactions; however, our hedging strategies may not fully offset gains and losses recognized in our results of operations.

The unaudited condensed consolidated statement of operations is exposed to currency risk from intercompany financing arrangements, which primarily consist of intercompany debt and intercompany cash pooling, where the denominated currency of the transaction differs from the functional currency of one or more of our subsidiaries. The aggregate potential unfavorable impact from a hypothetical 10.0% adverse change in foreign exchange rates was ~~$2.3~~$1.1 million as of March ~~31, 2023~~29, 2024 (Successor), with all other variables held constant. This hypothetical loss does not reflect any hypothetical benefits that would be derived from hedging activities, including cash holdings in similar foreign currencies, that we have historically utilized to mitigate our exposure to movements in foreign exchange rates.


Item 4.			Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended ("(“the Exchange ~~Act"~~Act”), is recorded, processed, summarized and reported within the specified time periods, and that such information is accumulated and communicated to management, including our ~~CEO~~Chief Executive Officer (“CEO”) and Chief Financial Officer ~~("CFO"~~(“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March ~~31, 2023~~29, 2024 (Successor) that have materially affected, or are likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION


Item 1.			Legal Proceedings.

See Note 1112 of the notes to the unaudited condensed consolidated financial statements for a description of the litigation, legal, and administrative proceedings and claims as of March ~~31, 2023~~29, 2024 (Successor), which isare incorporated herein by reference.


Item 1A.			Risk Factors.

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. ~~"Risk Factors"~~“Risk Factors” in our Annual Report on Form ~~10-K for the year ended December 30, 2022, filed with the SEC on March 3, 2023.~~10-K.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds.

None.


Item 5.			Other Information.

None of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K) during the period covered by this Report.

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Item 6.			Exhibits.


Exhibit Number						Exhibit

2.1						First Amended Plan of Reorganization of Mallinckrodt Plc and Its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed October 10, 2023).
3.1						Certificate of Incorporation of Mallinckrodt plc (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed July 1, 2013).
3.2						Memorandum and Articles of Association of Mallinckrodt plc (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed November 15, 2023).
4.1						Indenture, dated as of November 14, 2023, by and among the Issuers, the Guarantors, Wilmington Savings Fund Society, FSB, as first lien trustee and Acquiom Agency Services LLC, as Collateral Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed November 15, 2023).
4.2						Form of 14.750% senior secured first lien notes due 2028 (included in Exhibit 4.1).
10.1†						Employment Agreement Extension, by and between ST Shared Services LLC and Sigurdur Olafsson, dated January 25, 2024. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 26, 2024).
10.2†						Employment Agreement, by and between ST Shared Services LLC and Sigurdur Olafsson, dated February 2, 2024 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed February 2, 2024).
10.3†						Form of Second Amended and Restated Employment Agreement for Executive Officers (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed March 26, 2024).
10.4†						Amended and Restated Employment Agreement dated February 28, 2024, between Mallinckrodt Pharmaceuticals Ireland, Ltd. and Paul O'Neill (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed March 26, 2024).
10.5†						Mallinckrodt Pharmaceuticals 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed February 2, 2024).
10.6†						Form of Restricted Stock Unit Award for Officers under the Mallinckrodt plc 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed February 2, 2024).
10.7†						Form of Restricted Stock Unit Award for the CEO under the Mallinckrodt plc 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed February 2, 2024).
10.8†						Form of Restricted Stock Unit Award for Directors under the Mallinckrodt plc 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed February 2, 2024).
10.9†						Form of Performance Stock Unit Award for Officers under the Mallinckrodt plc 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed February 2, 2024).*
10.10†						Form of Performance Stock Unit Award for the CEO under the Mallinckrodt plc 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed February 2, 2024).*
10.11†						Form of Performance Stock Unit Award for Directors under the Mallinckrodt plc 2024 Stock and Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed February 2, 2024).*
10.12†						Mallinckrodt plc Transaction Incentive Plan (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed February 2, 2024).*
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101~~101.INS						~~Interactive Data File (Form 10-Q for the quarterly period ended March 31, 2023 filed in XBRL).~~Inline XBRL Instance Document. The financial information contained in the XBRL-related documents is ~~"unaudited"~~“unaudited” and ~~"unreviewed."~~“unreviewed.” The instance document does not appear in the interactive file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Taxonomy Schema Document
101.CAL						Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Presentation Linkbase Document
104						Cover Page Interactive Data File ~~(embedded within the inline~~(formatted as Inline XBRL ~~document~~ and ~~included~~contained in Exhibit ~~101)~~101.INS).

† Compensation plans or arrangements.

* Portions of the exhibit have been omitted in accordance with Item 601 of Regulation S-K.

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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, thereunto duly authorized.


			MALLINCKRODT PLC

			By:			/s/ Bryan M. Reasons
						Bryan M. Reasons Executive Vice President and Chief Financial Officer (~~principal financial~~Principal Financial and ~~accounting officer)~~Accounting Officer)

Date: May 9, ~~2023~~

2024

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	Ordinary Shares			Treasury Shares			Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive (Loss) Income		Total Shareholders' Equity
	Number	Par Value		Number	Amount
Balance as of December 31, 2021 (Predecessor)	94.3	$	18.9	9.6	$	(1,616.1)	$	5,597.8	$	(3,678.9)	$	(8.3)	$	313.4
Net loss	—	—		—	—		—		(119.6)		—		(119.6)


Share-based compensation	—	—		—	—		1.2		—		—		1.2
Balance as of April 1, 2022 (Predecessor)	94.3	$	18.9	9.6	$	(1,616.1)	$	5,599.0	$	(3,798.5)	$	(8.3)	$	195.0

Balance as of December 30, 2022 (Successor)	13.2	$	0.1	—	$	—	$	2,191.0	$	(588.2)	$	10.8	$	1,613.7
Net loss	—	—		—	—		—		(249.3)		—		(249.3)
Other comprehensive loss	—	—		—	—		—		—		(2.6)		(2.6)

Share-based compensation	—	—		—	—		2.6		—		—		2.6
Balance as of March 31, 2023 (Successor)	13.2	$	0.1	—	$	—	$	2,193.6	$	(837.5)	$	8.2	$	1,364.4


	Successor
	March 31, 2023				December 30, 2022
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable:
Completed technology	$	3,041.2	$	451.9	$	3,041.2	$	318.7





Non-Amortizable:

In-process research and development	121.3				121.3