Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 27, 2025

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value Measurements

14. 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 as follows:

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

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

•Level 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:

			Fair Value Measurement Using Fair Value Hierarchy:
	June 27, 2025		Level 1		Level 2		Level 3
Assets:
Debt and equity securities held in rabbi trusts	$	26.2	$	17.3	$	8.9	$	—
Equity securities	9.8		9.8		—		—
Interest rate cap	2.3		—		2.3		—
	$	38.3	$	27.1	$	11.2	$	—
Liabilities:
Deferred compensation liabilities	$	21.1	$	—	$	21.1	$	—
Contingent consideration liabilities	18.3		—		—		18.3
	$	39.4	$	—	$	21.1	$	18.3

			Fair Value Measurement Using Fair Value Hierarchy:
	December 27, 2024		Level 1		Level 2		Level 3
Assets:
Debt and equity securities held in rabbi trusts	$	25.4	$	17.4	$	8.0	$	—
Equity securities	12.0		12.0		—		—
Interest rate cap	5.3		—		5.3		—
	$	42.7	$	29.4	$	13.3	$	—
Liabilities:
Deferred compensation liabilities	$	22.5	$	—	$	22.5	$	—
Contingent consideration liabilities	17.5		—		—		17.5
	$	40.0	$	—	$	22.5	$	17.5

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.

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 and six months ended June 27, 2025 included $4.0 million of unrealized gains and $2.2 million of unrealized losses, respectively, on equity securities related to investments in Silence Therapeutics plc and Panbela Therapeutics, Inc, while the three and six months ended June 28, 2024 included $4.3 million of unrealized losses and $2.7 million of unrealized gains, respectively. These amounts were recorded within other income (expense), net, in the unaudited condensed consolidated statements 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, subject to the non-exercise of termination rights by the counterparty, provides the Company with interest rate protection, through March 26, 2026, to the extent that the one-month secured overnight funding rate (“SOFR”) exceeds 3.84%. For purposes of the interest rate cap, SOFR is measured on a predetermined business day of every month, which may not coincide with either the Company’s fiscal period end or the date that SOFR is determined for purposes of the First and Second-Out Takeback Term Loans. The impact of the interest rate cap on the Company’s applicable interest rates as disclosed in Note 11 reflects the SOFR rate in effect on June 27, 2025.

The interest rate cap agreement is not accounted for as a cash flow hedge and the changes in fair value of the interest rate cap were recorded within other income (expense), net, in the unaudited condensed consolidated statements of operations. The fair value of the interest rate cap is included in other assets on the Company’s unaudited condensed consolidated balance sheets as of June 27, 2025 and December 27, 2024.

The Company elected to use the income approach to value the interest rate cap derivative using observable 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 SOFR rate curves, futures and volatilities. Mid-market pricing is used as a practical expedient in the fair value measurements. The three and six months ended June 27, 2025 included $0.4 million and $3.0 million of unrealized losses, respectively, related to the changes in fair value of the interest rate cap in other income (expense), net, in the unaudited condensed consolidated statements of operations, while the three and six months ended June 28, 2024 included $0.8 million of unrealized loss and $1.3 million of unrealized gain, respectively.

Debt derivative liabilities. The debt derivative liabilities related to the Company's First and Second-Out Takeback Term Loans and Takeback Notes was 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 were 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, which included significant unobservable inputs of probability and estimated timing of mandatory prepayment event before November 2025.

The debt derivative liability is recorded at fair value, with the changes in fair value reported within earnings. The debt derivative liability was zero as of both June 27, 2025 and December 27, 2024. The three and six months ended June 28, 2024 included a $0.6 million decrease and a $5.3 million increase in debt derivative liability, respectively, recognized in other income (expense), net, within the unaudited condensed consolidated statements of operations.

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 liability. The Company will provide consideration for the Terlivaz® contingent value right agreement (“CVR”) primarily based upon 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 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 June 27, 2025 and December 27, 2024 to be $18.3 million and $17.5 million, respectively. The contingent consideration liability was classified within other liabilities in the unaudited condensed consolidated balance sheets as of June 27, 2025 and December 27, 2024. The three and six months ended June 27, 2025 included $0.9 million and $0.8 million of expense, respectively, within SG&A in the unaudited condensed consolidated statements of operations, while the three and six months ended June 28, 2024 included $0.7 million and $2.1 million of expense, respectively.

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 June 27, 2025 and December 27, 2024:

•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 $61.2 million and $63.1 million as of June 27, 2025 and December 27, 2024 (Level 1), respectively.

•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 $44.9 million and $43.7 million as of June 27, 2025 and December 27, 2024, respectively. These contracts are included in other assets on the unaudited condensed consolidated balance sheets.

•The Company's Takeback 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 Takeback Term Loans are not available in an active market, they are classified as Level 2 for purposes of developing an estimate of fair value. The following table presents the carrying values and estimated fair values of the Company's debt as of the end of each period:

	June 27, 2025				December 27, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
Level 1:
14.75% Second-Out Takeback Notes due November 2028	$	501.7	$	495.3	$	505.4	$	511.6
Level 2:
Second-Out Takeback Term Loan Due November 2028	405.4		400.0		410.2		415.4
Total Debt	$	907.1	$	895.3	$	915.6	$	927.0

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:

	Three Months Ended				Six Months Ended
	June 27, 2025		June 28, 2024		June 27, 2025		June 28, 2024
FFF Enterprises, Inc.	34.2	%	21.6	%	30.9	%	20.9	%
Cencora, Inc.	18.6		16.8		19.8		16.0

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:

	June 27, 2025		December 27, 2024
Cencora, Inc.	39.4	%	34.9	%
McKesson Corporation	16.6		19.8
FFF Enterprises, Inc.	13.9		12.1

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

	Three Months Ended				Six Months Ended
	June 27, 2025		June 28, 2024		June 27, 2025		June 28, 2024
Acthar Gel	36.1	%	22.9	%	32.1	%	22.5	%
INOmax	12.8		12.9		13.7		13.9
Therakos (Note 3)	*		13.1		*		12.8
APAP	*		*		*		10.1

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