Background and Basis of Presentation

9 Months Ended

Sep. 26, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

1. Background and Basis of Presentation

Background

Mallinckrodt plc is a global business of multiple wholly owned subsidiaries (collectively, “Mallinckrodt” or “the Company”) that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. On July 31, 2025, the Company completed its previously announced Business Combination (defined below) with Endo, Inc. (which has since been converted to Endo LP, “Endo”). The Company’s operating results for the three and nine months ended September 26, 2025 reflect the consolidated results of two months of Endo’s performance in its consolidated and segment results. On November 10, 2025, the Company completed its previously announced Separation (defined below). Refer to Note 3 for further information on the Business Combination and Separation.

For the periods presented in this Quarterly Report on Form 10-Q, the Company operated its business in three reportable segments as a result of the Business Combination:

•The Specialty Brands segment, which represents a combination of Mallinckrodt’s historical “Specialty Brands” reportable segment and Endo’s historical “Branded Pharmaceuticals” reportable segment, is focused on autoimmune and rare diseases in areas including endocrinology, gastroenterology, hepatology, neonatal respiratory critical care, nephrology, neurology, pulmonology, ophthalmology, orthopedics, rheumatology, and urology.

•The Generics segment represents a combination of Mallinckrodt’s historical “Specialty Generics” reportable segment and Endo’s historical “Generic Pharmaceuticals” reportable segment and includes a product portfolio consisting of certain controlled substances, patches, solid oral extended-release products, solid oral immediate-release products, liquids, semi-solids, powders, and opthalmics and includes products that treat and manage a wide variety of medical conditions, as well as active pharmaceutical ingredients (“APIs”).

•The Sterile Injectables segment, represents Endo’s historical “Sterile Injectables” reportable segment, which primarily consists of vial and ready-to-use (“RTU”) products that are protected by certain patent rights and have inherent scientific, regulatory, legal and technical complexities, including being difficult to formulate or manufacture.

Refer to Note 15 for additional information on the Company’s segments.

The Company is incorporated and maintains its principal executive offices in Ireland. The Company owns or has rights to use the trademarks and trade names that are used in conjunction with the operation of its business. Two of the more important trademarks that the Company owns or has rights to use that appear in this Quarterly Report on Form 10-Q are “Mallinckrodt,” and “Endo,” which are registered trademarks or the subject of pending trademark applications in the United States (“U.S.”) and other jurisdictions. Solely for convenience, the Company only uses the ™ or ® symbols the first time any trademark or trade name is mentioned in the following notes. Such references are not intended to indicate in any way that the Company will not assert, to the fullest extent permitted under applicable law, its rights to its trademarks and trade names. Each trademark or trade name of any other company appearing in the following notes is, to the Company's knowledge, owned by such other company.

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in U.S. dollars and in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ from those estimates. The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and entities in which they own or control more than 50.0% of the voting shares. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows and financial position have been made. All intercompany balances and transactions have been eliminated in consolidation and all normal recurring adjustments necessary for a fair statement have been included in the results reported.

The results of entities disposed of are included in the unaudited condensed consolidated financial statements up to the date of disposal, and where appropriate, these operations have been reported in discontinued operations. Divestitures of product lines and businesses not meeting the criteria for discontinued operations have been reflected in continuing operations.

The fiscal year-end balance sheet data was derived from audited consolidated financial statements, but does not include all of the annual disclosures required by GAAP; accordingly these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited annual consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 27, 2024, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2025 (“2024 Form 10-K”).

Fiscal Year

The Company has reported its results based on a “52-53 week” year ending on the last Friday of December. Unless otherwise indicated, the three and nine months ended September 26, 2025 and September 27, 2024 refer to the thirteen and thirty-nine week periods ended September 26, 2025 and September 27, 2024, respectively.

In the fourth quarter of fiscal year 2025, the Company determined to change its fiscal year end from a 52-53-week year, ending on the last Friday of December, to a calendar year, ending on December 31, 2025. The Company will make the fiscal year change on a prospective basis for fiscal year 2025 and will not adjust operating results for prior periods. Effective for fiscal year 2026, the Company’s fiscal year will begin on January 1 and end on December 31 of each year.

The number of operating days in the quarterly periods in fiscal year 2026 under a calendar year end will change as compared to the 52-53 weeks periods in fiscal year 2025 and prior periods, which will have an impact on the Company’s quarterly financial results as well as the comparative presentation of period over period information. The change in the Company’s fiscal year end to a calendar year end results in five additional operating days in fiscal year 2025, because fiscal year 2025 began on December 28, 2024, and will end on December 31, 2025, instead of December 26, 2025, and two additional operating days in the fiscal year 2026.

Summary of Significant Accounting Policies

A summary of the Company’s significant accounting policies is included in Note 4 in the 2024 Form 10-K. Changes or additions to these significant accounting policies primarily resulting from the Business Combination are set forth below.

Acquisitions

The Company accounts for business combinations under the acquisition method of accounting. Assets acquired and liabilities assumed are generally recognized at their estimated fair values at the date of acquisition. The determination of the estimated fair value of assets acquired and liabilities assumed requires significant estimates and assumptions. Any excess of the purchase price over the estimated fair value of the identifiable net assets acquired is recorded as goodwill. Based on the assessment of additional information during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the estimated fair value of assets acquired and liabilities assumed.

Government Assistance Transactions

In connection with the Business Combination, the Company acquired the U.S. Government Cooperative Agreement (as defined below). Under the terms of the U.S. Government Cooperative Agreement, the Rochester, Michigan manufacturing facility will establish new sterile fill-finish manufacturing assets capable of processing liquid or lyophilized products requiring Biosafety Level (“BSL”) 2 containment in order to establish and sustain BSL 2 sterile fill-finish production capacity to create and maintain industrial base capabilities for the national defense. In connection with the Separation, the U.S. Government Cooperative Agreement was transitioned to Par Health, Inc. (“Par Health”) and/or certain of its subsidiaries. Refer to Note 13 for further information on the U.S. Government Cooperative Agreement.

The Company concluded that reimbursements it receives pursuant to the U.S. Government Cooperative Agreement are not within the scope of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) because the U.S. government does not meet the definition of a “customer” as defined by ASC 606. The Company accounts for the U.S. Government Cooperative Agreement under other guidance, including elements of the contract for which there is no authoritative guidance under GAAP by applying certain accounting principles in International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”) by analogy.

Under this model, reimbursements the Company receives from the U.S. government for qualifying capital expenditures meet the definition of grants related to assets as the primary purpose for the reimbursements is to fund the purchase and construction of capital assets to increase production capacity. Under IAS 20, government grants related to assets are presented in the Condensed Consolidated Balance Sheets either by presenting the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset. Either of these two methods of presentation of grants related to assets in the Condensed Consolidated Balance Sheets are regarded as acceptable alternatives under IAS 20. Reimbursements received prior to the asset being placed into service are recognized as deferred income in the Condensed Consolidated Balance Sheets as either Accrued and other current liabilities (for any current portion) or Other liabilities (for any noncurrent portion) when there is reasonable assurance the conditions of the grant will be met and the grant will be received. When the constructed capital assets are placed into service, the Company deducts the grant reimbursement from property, plant and equipment and the grant income is recognized over the useful life of the asset as a reduction to depreciation expense.