Mallinckrodt Reports Improved Revenue and Profitability in Q3 2024, Net Loss Narrows

Mallinckrodt plc reported its financial results for the three and nine months ended September 27, 2024, reflecting significant improvements in revenue and profitability compared to the previous fiscal period. For the three months, net sales reached $505.5 million, a 1.7% increase from $497.0 million in the same period last year. Gross profit surged to $221.1 million, up 46.6% from $150.8 million, resulting in a gross profit margin of 43.7%, compared to 30.3% previously. Operating income for the quarter was $36.4 million, a notable recovery from an operating loss of $282.0 million in the prior year.

For the nine-month period, net sales totaled $1,487.6 million, marking a 6.5% increase from $1,396.6 million. Gross profit for the nine months was $580.1 million, nearly doubling from $305.5 million, with an improved gross profit margin of 39.0% compared to 21.9% in the previous year. Operating income for the nine months was $46.1 million, a significant turnaround from an operating loss of $441.2 million.

Despite these gains, the company reported a net loss of $26.2 million for the third quarter, a substantial improvement from a net loss of $1,724.8 million in the prior year. For the nine months, the net loss was $134.9 million, down from $2,721.9 million. Basic loss per share also improved, with a loss of $(1.33) for the third quarter compared to $(128.60) in the previous year.

Strategically, Mallinckrodt is undergoing significant changes following its emergence from Chapter 11 bankruptcy on November 14, 2023. The company has entered into a Purchase and Sale Agreement to divest its Therakos business for a base price of $925.0 million, expected to close in the fourth quarter of 2024. Proceeds from this transaction will be used to reduce debt, which stood at $1,643.5 million as of September 27, 2024.

The company has also implemented a Transaction Incentive Plan to reward executives upon the completion of qualifying asset sales, with expected payments totaling approximately $30.1 million related to the Therakos divestiture. Additionally, Mallinckrodt has seen a notable increase in cash and cash equivalents, rising to $410.5 million from $262.7 million at the end of the previous fiscal year.

Overall, Mallinckrodt's financial performance indicates a recovery trajectory, driven by improved sales across its product lines, particularly in the Specialty Generics segment, while navigating the complexities of its recent restructuring and divestiture efforts.