On February 28, 2023 Mallinckrodt plc (NYSE American: MNK) ("Mallinckrodt" or the "Company"), a global specialty pharmaceutical company, reported results for the fourth quarter ended December 30, 2022 (Press release, Mallinckrodt, FEB 28, 2023, View Source [SID1234627908]).

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"We are pleased with our performance this quarter as we continued the steady execution of our strategic priorities," said Siggi Olafsson, President and Chief Executive Officer. "We finished 2022 by exceeding our EBITDA guidance and achieving the high end of our net sales guidance for the year. We also increased cash on hand, reflecting our ongoing efforts to strengthen the balance sheet and optimize our cost structure. Rounding out our executive team, we welcomed Chief Scientific Officer Dr. Peter Richardson, who will play a critical role in leading our portfolio and pipeline expansion efforts and bringing value-enhancing therapies to market."

Mr. Olafsson continued, "Looking ahead, 2023 is an important year for Mallinckrodt. We have some meaningful opportunities in the business, namely the ongoing launches of Terlivaz (terlipressin) and StrataGraft (allogeneic cultured keratinocytes and dermal fibroblasts in murine collagen – dsat) and bringing INOmax Evolve to the market if approved. We are encouraged by the momentum in our launch of Terlivaz, and we will continue to focus on returning Therakos to growth and building on strong performance in our Specialty Generics segment. We are also prepared to navigate a number of challenges, including the loss of royalty revenue from Amitiza (lubiprostone) and Acthar Gel (Repository Corticotropin Injection) competition. In all, we believe Mallinckrodt is well-positioned to stabilize the business in the near term and achieve sustainable growth in the long term. We have made solid progress on our key initiatives and remain committed to advancing our business strategy while improving outcomes for patients with severe and critical conditions."

Fourth Quarter 2022 Financial Results1

Mallinckrodt’s net sales in the fourth quarter 2022 were $489.3 million, as compared to $597.2 million in the fourth quarter 2021. This reflects a decrease of 18.1% on a reported basis and 17.6% on a constant currency basis. These year-over-year comparisons were negatively impacted from an additional selling week in the comparable period in 2021. The Company believes this negatively affected the reported growth rate by approximately 6 to 9 percentage points for the quarter.

The Company’s Specialty Brands segment reported net sales of $320.7 million, as compared to $397.4 million. This reflects a decrease of 19.3% on a reported basis and 18.6% on a constant currency basis, primarily due to the extra selling week in the comparable period in 2021; the impact of competition; reduced utilization of certain products due to the continued impact of the pandemic; and continued scrutiny on overall specialty pharmaceutical spending.

Mallinckrodt’s Specialty Generics segment reported net sales of $168.6 million, as compared to $199.8 million. This reflects a decrease of 15.6% on a reported basis and 15.5% on a constant currency basis, primarily due to the extra selling week in the comparable period in 2021 and a decline in acetaminophen (APAP) product sales due to the planned manufacturing shutdown, partially offset by growth in finished dosage products.

The Company recorded a net loss for the fourth quarter of $249.5 million, as compared to a net loss of $204.0 million. Diluted loss per share for the fourth quarter was $18.94 with adjusted diluted earnings per share of $4.07.

Mallinckrodt’s Adjusted EBITDA in the fourth quarter was $175.5 million, as compared to $231.7 million. This decrease is primarily due to lower net sales and growth in investments associated with the launches of Terlivaz and StrataGraft, partially offset by the impact from cost structure improvements in both selling, general and administrative (SG&A) expenses and research and development (R&D) expenses as a result of the Company’s initiatives to improve its overall cost structure and favorable impact from foreign currency.

Mallinckrodt’s cash balance at the end of the fourth quarter was $409.5 million. The Company continues to maintain an undrawn accounts receivable financing facility up to $200 million, ending the quarter with approximately $610 million in liquidity.

Total principal debt outstanding at the end of the fourth quarter was $3.534 billion, with net debt of $3.125 billion. Mallinckrodt repurchased $47.7 million amount of its second lien notes due 2025 and 2029 at a discount of $21.4 million during the year.

Fiscal Year 2022 Financial Results2

Mallinckrodt net sales for the 2022 fiscal year includes $874.6 million in the Predecessor period and $1.040 billion in the Successor period for total net sales in the year of $1.914 billion as compared to $2.209 billion in fiscal 2021, with the annual decline driven by similar activities noted in the quarterly comparisons, including the impact of the extra selling week in the fiscal year 2021. The total net sales for the 2022 fiscal year includes net sales from the Specialty Brands segment of $1.270 billion and Specialty Generics segment of $644.8 million.

The Company reported net loss in the Predecessor period of $313.1 million and a net loss in the Successor period of $598.1 million for an aggregate net loss of $911.2 million for the 2022 fiscal year.

Mallinckrodt’s Adjusted EBITDA for the 2022 fiscal year was $674.9 million.

2023 Financial Guidance3

For the full-year 2023, Mallinckrodt expects:

2023 Guidance

Total net sales

$1.700 billion to $1.820 billion

Adjusted EBITDA

$510 million to $560 million

The Company does not provide a reconciliation of forward-looking non-GAAP guidance to the comparable GAAP measures as these items are inherently uncertain and difficult to estimate and cannot be predicted without unreasonable effort. Please see the "Reconciliation of Non-GAAP Financial Guidance" included in this release for a reconciliation of GAAP and non-GAAP financial measures for the fourth quarter and year to date.

Conference Call and Webcast

Mallinckrodt will hold a conference call today, February 28, 2023 at 8:30 a.m. Eastern Time to discuss its financial results and performance for the fourth quarter and fiscal 2022. The live call and subsequent replay can be accessed as follows:

Live Call Participant Registration (including dial-in): https://register.vevent.com/register/BI6e1a95af3f634687b3c55b1ae6b4ffd8
Directly via the webcast link (live and replay): View Source
At the Company’s website: https://ir.mallinckrodt.com/