Mallinckrodt Reports Decline in Q2 2025 Sales, Despite Increased Gross Profit

Mallinckrodt plc reported a decline in financial performance for the second quarter of 2025, with net sales of $485.1 million, down 5.7% from $514.3 million in the same period last year. The decrease was attributed to the divestiture of the Therakos business and competitive pressures affecting key products like INOmax. Despite the overall decline in sales, the company saw a significant increase in gross profit, which rose to $231.8 million from $195.0 million, driven by a reduction in inventory step-up expenses and lower intangible asset amortization costs.

The company's operating income for the quarter increased to $33.0 million, compared to $27.4 million in the prior year, reflecting improved cost management despite rising selling, general, and administrative expenses, which increased to $150.6 million from $127.9 million. The increase in SG&A expenses was primarily due to higher commercial investments in Acthar Gel and legal fees associated with the ongoing Business Combination with Endo, which was completed on July 31, 2025. The transaction incurred $22.6 million in combination, integration, and other related expenses during the quarter.

In terms of operational metrics, Mallinckrodt's Specialty Brands segment reported net sales of $264.3 million, a decrease of 3.7% year-over-year, while the Specialty Generics segment saw a more pronounced decline of 7.9%, with sales of $220.8 million. The company noted a 48.8% increase in Acthar Gel sales, attributed to the successful launch of the SelfJect device, which has received positive feedback from healthcare providers. However, sales of INOmax fell by 6.8%, reflecting increased competition in the market.

As of June 27, 2025, Mallinckrodt's total assets were approximately $3.29 billion, with total liabilities of $1.64 billion, resulting in shareholders' equity of $1.64 billion. The company reported a net loss of $25.3 million for the six months ended June 27, 2025, an improvement from a loss of $108.7 million in the same period the previous year. The company’s cash and cash equivalents increased to $497.8 million, up from $382.6 million at the end of 2024, indicating improved liquidity.

Looking ahead, Mallinckrodt plans to separate its Specialty Generics segment from the combined entity with Endo, with expectations to complete this separation in the fourth quarter of 2025. The company anticipates that the Business Combination will enhance its product diversity and operational capabilities, although it acknowledges the challenges posed by increased debt levels and ongoing market pressures. The company remains focused on leveraging its existing cash flows and operational efficiencies to navigate these challenges and support future growth initiatives.