Discontinued Operations and Disposal Groups

12 Months Ended

Dec. 27, 2024

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

5. Divestiture

On August 3, 2024, the Company entered into a Purchase and Sale Agreement for the Company’s Therakos business for a base purchase price of $925.0 million. On November 29, 2024, the Company completed the divestiture of its Therakos business for total cash consideration of $887.6 million, net of preliminary purchase price adjustments (“Initial Net Purchase Price”). The Company recorded a gain on sale of $754.4 million, comprised of the $887.6 million of initial net proceeds less the elimination of $125.5 million of net assets divested and $7.7 million in success-based professional fees. The Company was required to use the proceeds to make a mandatory prepayment on certain portions of its debt, which are further described in Note 14.

The Therakos business did not qualify as discontinued operations as it did not represent a strategic shift that will have a major effect on the Company’s operations and financial results. The following table summarizes income (loss) from continuing operations before income taxes for the Therakos business, which was reflected within the Specialty Brands segment through the divestiture date. Certain amounts that the Company considers to be non-operational are excluded from income (loss) from continuing operations before income taxes for the Therakos business. These items may include, but are not limited to, corporate and unallocated expenses and liabilities management and separation costs.

	Successor				Predecessor
	Year Ended December 27, 2024		Period from November 15, 2023 through December 29, 2023		Period from December 31, 2022 through November 14, 2023		Period from June 17, 2022 through December 30, 2022		Period from January 1, 2022 through June 16, 2022
Income (loss) from continuing operations before income taxes (1)	$	66.7	$	5.1	$	(27.4)	$	(79.1)	$	37.3

(1)Includes inventory step-up expense of $66.3 million, $13.0 million, $30.1 million, $62.3 million and zero during the year ended December 27, 2024 (Successor) the period November 15, 2023 through December 29, 2023 (Successor), the period December 31, 2022 through November 14, 2023 (Predecessor), the period June 17, 2022 through December 30, 2022 (Predecessor), and the period January 1, 2022 through June 16, 2022 (Predecessor). Also includes intangible asset amortization of $16.1 million, $4.6 million, $142.7 million, $102.7 million and $35.5 million during the year ended December 27, 2024 (Successor) the period November 15, 2023 through December 29, 2023 (Successor), the period December 31, 2022 through November 14, 2023 (Predecessor), the period June 17, 2022 through December 30, 2022 (Predecessor), and the period January 1, 2022 through June 16, 2022 (Predecessor), respectively.

Transaction Incentive Plan

On February 2, 2024, the Board of Directors adopted a transaction incentive plan (as amended on August 4, 2024 and December 2, 2024, the “A&R TrIP”), which is intended to compensate designated Mallinckrodt executive officers and directors with bonus payments to be made upon the consummation of qualifying strategic transactions and dispositions (each, a “Qualifying Transaction”). Each bonus payment earned under the A&R TrIP will be generally delivered 50% in connection with closing of the applicable Qualifying Transaction and 50% on the earlier of (a) December 31, 2026 and (b) a significant asset transaction, as defined in the A&R TrIP (“Final Payment Date”); provided, however that in the event that a Qualifying Transaction closes following a qualifying significant event or a significant asset transaction, 100% of the applicable bonus payment earned with respect to such Qualifying Transaction generally will be paid in connection with closing of such Qualifying Transaction or, if later, when the associated proceeds are received. The A&R TrIP is effective from January 1, 2024 through the Final Payment Date. The service period required related to the Therakos divestiture for the A&R TrIP is August 3, 2024 through the Final Payment Date.

In accordance with the A&R TrIP, the Company made payments of $13.6 million to participants during the year ended December 27, 2024. Subject to the finalization of the purchase price, the Company expects to make additional payments to participants of approximately $16.4 million by the Final Payment Date. The Company accrued $2.7 million within accrued payroll and payroll-related costs in the consolidated balance sheet as of December 27, 2024 (Successor), while the corresponding expense was recorded within selling, general and administrative expense (“SG&A”) on the consolidated statement of operations during the year ended December 27, 2024 (Successor). There was no comparable expense accrued related to the A&R TrIP during the prior periods.

Transition Services Agreement

In connection with the Therakos divestiture, the Company entered into a transition services agreement (“TSA”) effective upon closing to provide certain business support services generally for up to 18 months after the closing date or a longer period for certain services. These services include, but are not limited to, information technology, procurement, distribution, logistics and order to delivery, compliance, accounting, finance, and administrative activities. Revenue associated with the TSA will be recorded within other (expense) income, net, and expenses associated with servicing the TSA are recorded within their natural expense classification, respectively, on the consolidated statement of operations. Net revenue under the TSA was $1.0 million during the year ended December 27, 2024 (Successor).