Mallinckrodt plc

Mallinckrodt reported first-quarter 2023 net sales of $425 million versus $491 million in the prior-year period, down 13% on a constant-currency basis. Specialty Brands net sales were $252 million versus $339 million, down 26%, while Specialty Generics net sales were $173 million versus $152 million, up 14%. The company reported a GAAP net loss of $249 million, diluted loss per share of $18.93, adjusted diluted EPS of $1.68, and adjusted EBITDA of $124 million versus $177 million last year. Adjusted gross profit was 59.9% of net sales, adjusted SG&A was 27.5%, and R&D was 6.7% of net sales. For key products, Acthar contributed $82 million, INOmax $83 million, Therakos $59 million, Terlivaz $2 million, and Amitiza $25 million in quarterly net sales. The company ended the quarter with roughly $680 million of liquidity, $480 million of cash and cash equivalents, an undrawn A/R facility of up to $200 million, $3.523 billion of total principal debt, and $3.043 billion of net debt. Management reaffirmed full-year 2023 net sales and adjusted EBITDA guidance, said Specialty Generics is now expected to grow in 2023, and lowered full-year Acthar sales expectations to a 15% to 20% decline.

Siggi Olafsson said the company had a solid start to 2023 and emphasized three priorities: strengthening the balance sheet, stabilizing the portfolio, and investing in the pipeline. He highlighted cash build, Specialty Generics growth, Terlivaz momentum, and the planned INOmax Evolve launch later this year as evidence of progress. On Acthar, he said the business remains under pressure from competition, specialty-pharma scrutiny, and affordability/reimbursement issues, but he remained confident in the long-term prospects and said the team is working closely with payers and prescribers to improve access.

Bryan Reasons walked through the quarter’s financial decline and noted that lower net sales and launch-related investment in Terlivaz and StrataGraft were the main reasons adjusted EBITDA fell to $124 million from $177 million. He pointed to offsetting cost controls that reduced SG&A and R&D, but said SG&A is expected to grow going forward as the company supports new launches and reinstates long-term incentive compensation. He also cited 59.9% adjusted gross margin, 27.5% adjusted SG&A, 6.7% R&D, roughly $680 million of liquidity, $480 million of cash and cash equivalents, and the new interest rate cap agreement to reduce floating-rate exposure.

The main analyst focus was Acthar: Rishi Parekh asked whether the 15% to 20% expected decline was full-year or second-quarter; management confirmed it was full-year. He also pressed on whether the weakness was mainly competition, payer reimbursement, pricing, or affordability, and Siggi said the biggest issue was affordability and reimbursement, while also citing slower returning-patient volumes tied to the 2022 salesforce restructuring and some competitive pressure. When asked what initiatives were being used to address affordability, management said it is working with payers to identify the patients most likely to benefit and secure reimbursement for appropriate use. On the next-generation delivery device, management said it is pursuing every option to bring it to market as quickly as possible, but did not provide a timeline or detailed strategy.