Equity

9 Months Ended

Sep. 26, 2025

Equity [Abstract]

Equity

7. Equity

Share Based Compensation

On February 2, 2024, the Board adopted the Mallinckrodt Pharmaceuticals 2024 Stock and Incentive Plan, as amended (“2024 Plan”), which provides for the grant of share options, share appreciation rights, long-term performance awards and other share-based awards. The maximum number of ordinary shares to be issued as awards, subject to adjustment as provided under the terms of the 2024 Plan, was 10% of the total ordinary shares (calculated on a fully-diluted basis) as of the November 14, 2023. On August 13, 2025, the Board adopted the Mallinckrodt Pharmaceuticals 2025 Stock and Incentive Plan (“2025 Plan”), which provides for the grant of stock options, stock appreciation rights, long-term performance awards and other share-based awards. The maximum number of ordinary shares to be issued as awards, subject to adjustment as provided under the terms of the 2025 Plan, is 5,771,538 ordinary shares. Effective with the adoption of the 2025 Plan, no further awards will be granted under the 2024 Plan.

Restricted share units (“RSUs”). Recipients of RSUs have no voting rights and receive dividend equivalent units that vest upon the vesting of the related shares. RSUs generally vest in equal annual installments over a period of three years. Restrictions on RSUs lapse upon normal retirement or disability (as such terms are defined in the 2024 Plan or the 2025 Plan, as applicable), or death of the employee. The grant-date fair value of RSUs is recognized as expense on a graded basis over the service period. The fair market value of RSUs granted is determined based on the valuation of the Company’s equity utilizing the application of significant estimates, assumptions, and judgments.

Performance share units (“PSUs”). Similar to recipients of RSUs, recipients of PSUs have no voting rights and receive dividend equivalent units. The grant-date fair value of PSUs, which are deemed probable to vest, are generally recognized as expense from the grant-date through the end of the performance period. The vesting of PSUs and related dividend equivalent units is based on a realized value of the Company, as defined by the awards.

Endo Conversion Awards

In connection with the Business Combination, the Company assumed the Endo, Inc. 2024 Stock Incentive Plan (“Endo Plan”). As a result of the Business Combination, each outstanding RSU award in respect of Endo common stock that was subject only to time-based vesting requirements (an “Endo RSU award”) and that was held by an employee or Endo or a subsidiary of Endo, was assumed by the Company and converted into a RSU award in respect of a number of Mallinckrodt ordinary shares equal to (i) the total number of Endo common stock underlying such Endo RSU award as of immediately prior to the merger effective time multiplied by (ii) the sum of (x) the per share stock consideration plus (y) the quotient obtained by dividing the per share cash consideration by the Mallinckrodt per share price. Each assumed Endo RSU award continues to have, and is subject to, the same terms and conditions (including vesting schedules) that applied to the corresponding Endo RSU award immediately prior to the merger effective time.

As a result of the Business Combination, each RSU award in respect of Endo common stock that was subject, in whole or in part, to performance-based vesting conditions (an “Endo PSU award”) was assumed by the Company and converted into an RSU award in respect of a number of Mallinckrodt ordinary shares equal to the product of (i) the total number of Endo common stock underlying such Endo PSU award as of immediately prior to the merger effective time, assuming performance goals are achieved based on target performance, multiplied by (ii) the sum of (x) the per share stock consideration plus (y) the quotient obtained by dividing the per share cash consideration by the Mallinckrodt per share price. Each Endo PSU award otherwise continues to be subject to the same terms and conditions (including vesting) that applied to the corresponding Endo PSU award immediately prior to the merger effective time.

As a result of the conversion, 220,953 RSUs were awarded with a grant date value of $92.30 per share. Of the total grant-date fair value, $1.9 million was recorded as a component of purchase consideration as shown in Note 3 and the remaining fair value of the award will be recognized as expense over the requisite service period of the award. The total compensation expense recognized during the three months ended September 26, 2025 was $6.0 million, and as of September 26, 2025, there was $12.1 million of unrecognized compensation expense related to the non-vested awards granted.

PSU Conversion

The Business Combination qualified as a “Qualifying Significant Event” that was not also a change of control under the terms of Mallinckrodt’s existing PSUs, which were held by existing employees and non-employee directors of Mallinckrodt. Therefore, as a result of the Business Combination, Mallinckrodt’s existing PSUs were converted into Mallinckrodt RSUs that will fully vest on December 25, 2026. The remaining fair value of the award will be recognized as expense over the requisite service period of the award.

Inducement Awards

During the three months ended September 27, 2025, certain executives and non-employee directors of Mallinckrodt were granted inducement awards, resulting in 189,863 RSUs being awarded with a grant date value of $92.30 per share. The total compensation expense recognized during the three months ended September 26, 2025 was $1.2 million, and as of September 26, 2025, there was $16.0 million of unrecognized compensation expense related to the non-vested awards granted.

Opioid Contingent Value Rights Awards

As previously disclosed, on November 14, 2023, the Company entered into a contingent value right agreement (“CVR Agreement”) with the Opioid Master Disbursement Trust II (the “Trust”). In connection with the consummation of the Separation, on November 10, 2025, the Company and the Trust entered into an agreement to cancel the contingent value rights issued under the CVR Agreement (“CVRs”) and terminate the CVR Agreement in exchange for a payment by the Company of $35.0 million to the Trust (“CVR Termination Agreement”). Pursuant to the CVR Termination Agreement, on November 10, 2025, the CVRs were cancelled and the CVR Agreement was terminated. The CVR Termination Agreement also included customary representations and warranties and a waiver of certain claims.

Loss Per Share

The weighted-average number of shares outstanding used in the computations of basic and diluted loss per share were as follows (in millions of shares):

	Three Months Ended		Nine Months Ended
	September 26, 2025	September 27, 2024	September 26, 2025	September 27, 2024
Basic	32.3	19.7	23.9	19.7
Dilutive impact of restricted share units	—	—	—	—
Diluted	32.3	19.7	23.9	19.7

On July 31, 2025, the Company completed the Business Combination, whereby the Company issued 19,650,663 ordinary shares. Refer to Note 3 for further information on the Business Combination.

A net loss cannot be diluted. When a company is in a net loss position, basic and diluted loss per share are the same. If the company records net income, the denominator of a diluted earnings per share calculation will include both the weighted average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be dilutive. Contingent value rights held by the Opioid Master Disbursement Trust II and outstanding equity awards that could potentially dilute per share amounts in the future were as follows (in millions of shares):

	Three Months Ended		Nine Months Ended
	September 26, 2025	September 27, 2024	September 26, 2025	September 27, 2024
Potentially dilutive share amounts	2.1	1.8	2.1	1.7