Assertio Holdings, Inc. (“Assertio” or the “Company”) (Nasdaq:
ASRT), a leading commercial pharmaceutical company bringing
differentiated products to patients, today reported financial
results for the first quarter ended March 31, 2021.
Financial Highlights:
(unaudited)
(in millions) |
First-Quarter 2021 |
First-Quarter 2020 |
Net Product Sales (GAAP) |
$ |
26.4 |
|
$ |
9.3 |
|
Pro-Forma Net Product Sales
(Non-GAAP)(1) |
n/a |
|
$ |
28.3 |
|
Net Income (GAAP) |
$ |
4.5 |
|
$ |
41.2 |
|
Adjusted EBITDA
(Non-GAAP)(2) |
$ |
15.7 |
|
$ |
3.9 |
|
(1) Pro-forma net product sales represent product sales as if the
Zyla Merger had been completed as of January 1, 2020.
Reconciliation is provided in the schedules attached.
(2) Adjusted
EBITDA is reconciled to the corresponding GAAP measures in the
schedules attached.
“This quarter provides our first data point in
demonstrating the strength of our diversified portfolio and
non-personal promotional model, which showed resiliency in the face
of the continued effects of COVID-19, the impact of payor pressure,
and our shift to a leaner operational profile,” said Dan Peisert,
President and Chief Executive Officer of Assertio. “As we continue
to execute on our transformation and gain increasing confidence
that our model is transferable across a number of therapeutic
areas, we are actively seeking additional assets that will address
unmet needs for patients, benefit from our commercial platform, and
increase value to Assertio.”
First Quarter 2021 and Subsequent
Highlights:
- Raised $45.3 Million in Cash,
Net of Placement Fees, on Closing of Registered Direct
Offerings: On February 9 and February 12, 2021, the
Company announced the closing of registered direct offerings that
resulted in Assertio receiving $45.3 million in cash, net of
placement fees. The proceeds from these offerings enhance the
Company’s liquidity, accelerate its transformational business plan,
and open up new avenues for potential business development
activities.
- Poised to Realize $45.0
Million of Annualized Cost Savings After One-time Restructuring
Costs: The Company has taken all necessary actions to
realize its previously announced $45.0 million of annualized cost
savings, after the effect of one-time restructuring costs, of which
$40.0 million is expected to be realized in 2021.
- Launched Direct to Patient
Digital Campaign with Cove, a Leading Migraine Telemedicine
Platform, to Increase Accessibility of
CAMBIA® and
SPRIX®: On May 5, 2021,
the Company announced its collaboration with Cove, which will
increase access to CAMBIA and SPRIX through Cove’s innovative and
continuous online physician care.
2021 Financial Guidance
The Company is providing the following 2021
financial guidance:
Net Product Sales (GAAP)(1) |
$85.0 - $92.0 Million |
Adjusted EBITDA
(Non-GAAP)(2) |
$34.0 - $40.0 Million |
(1) The Company has not forecasted any amount for
future impact of revenue adjustments related to products that the
Company is no longer commercializing. (2) See “Non-GAAP Financial
Measures” below for additional information.
COVID-19
Following the outbreak of COVID-19 during early
2020, the Company’s priority was and remains the health and safety
of its employees, their families, and the patients it serves. As a
result, in March 2020, the Company initiated remote working
arrangements and maintained flexible work arrangements for
individuals, which continued through the remainder of 2020 and into
2021. In addition to the health and safety of its employees, the
Company is focused on ensuring that it continues making its
products accessible to the patients who need them. Because COVID-19
impacted its ability to see in-person providers who prescribe its
products, the Company adapted its approach during 2020 and
increased its virtual visits. Additionally, due to the limitations
on elective surgeries, the Company has experienced a decline in
prescriptions associated with those elective procedures.
Accordingly, given recent unfavorable changes in
its product payor mix, as well as the continued near-term impact
from the COVID-19 pandemic, the Company implemented a restructuring
plan in December 2020 which, it believes, allows the business to
continue to provide its differentiated products to patients and
better positions itself for future success. The Company believes
that it is prepared with sufficient product inventory, technology
to facilitate virtual and / or digital communications, and
operations prepared to adapt its work environment as needed. The
extent to which its operations may continue to be impacted by the
COVID-19 pandemic will depend largely on future developments, which
are highly uncertain and cannot be accurately predicted, including
new information which may emerge concerning the severity of the
outbreak, actions by government authorities to contain the outbreak
or treat its impact, and the distribution, efficacy and public
acceptance of COVID-19 vaccines.
Earnings Conference Call
InformationAssertio’s management will host a conference
call to discuss the first quarter 2021 financial results today:
Date: |
Thursday, May 6, 2021 |
Time: |
4:30 p.m. ET |
Webcast (live and archive): |
assertiotx.com (Events & Webcasts, Investor page) |
Dial-in numbers: |
1-888-771-4371 (domestic) |
|
1-847-585-4405 (international) |
Conference number: |
50155264 |
The live webcast and replay may be accessed at
http://investor.assertiotx.com/. Please connect to the Company’s
website at least 15 minutes prior to the live webcast to ensure
adequate time for any software download that may be needed. The
replay will be available approximately two hours after the call on
the Assertio website.
About Assertio
Assertio is a leading commercial pharmaceutical
company bringing differentiated products to patients. The Company
has a robust portfolio of branded prescription products in three
areas: neurology, hospital and pain and inflammation. Assertio has
grown through business development including licensing, mergers and
acquisitions. To learn more about Assertio, visit
www.assertiotx.com.
Investor Contact Max NemmersHead,
Investor Relations and Administration investor@assertiotx.com
Forward Looking Statements
Statements in this communication that are not
historical facts are forward-looking statements that reflect
Assertio's current expectations, assumptions and estimates of
future performance and economic conditions. These forward-looking
statements are made in reliance on the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements relate to, among other things, future
events or the future performance or operations of Assertio. All
statements other than historical facts may be forward-looking
statements and can be identified by words such as "anticipate,"
"believe," "could," "design," "estimate," "expect," "forecast,"
"goal," "guidance," "imply," "intend," "may", "objective,"
"opportunity," "outlook," "plan," "position," "potential,"
"predict," "project," "prospective," "pursue," "seek," "should,"
"strategy," "target," "would," "will," "aim" or other similar
expressions that convey the uncertainty of future events or
outcomes are used to identify forward-looking statements. Such
forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties and other factors, some of
which are beyond the control of Assertio. Factors that could cause
Assertio's actual results to differ materially from those implied
in the forward-looking statements include: (1) risks related to
disruption of management time from ongoing business operations due
to the recent restructuring of Assertio’s workforce announced on
December 15, 2020 (the “Restructuring”) and/or the integration of
the merger with Zyla Life Sciences (the “Merger”); (2) unexpected
costs, charges or expenses resulting from the Restructuring and/or
the Merger; (3) the ability of the Assertio to retain key
personnel; (4) potential adverse changes to business relationships
resulting from the Merger; (5) the combined company's ability to
achieve the growth prospects and synergies expected from the
Merger, as well as delays, challenges and expenses associated with
integrating the combined company’s existing businesses; (6)
negative effects of the Merger on the market price of Assertio's
common stock, credit ratings and operating results; (7)
legislative, regulatory and economic developments, including
changing business conditions in the industries in which Assertio
operates; (8) Assertio's ability to successfully pursue and
complete business development, strategic partnerships, and
investment opportunities to build and grow for the future; (9) the
commercial success and market acceptance of Assertio's products;
(10) coverage of Assertio’s products by payors and pharmacy benefit
managers; (11) Assertio’s ability to execute on its sales,
marketing and non-personal and digital promotion strategies,
including developing relationships with customers, physicians,
payors and other constituencies; (12) the entry of any generic
products for any of Assertio’s products; (13) the outcome of
Assertio’s opioid-related investigations, Assertio’s opioid-related
litigation and related claims for insurance coverage, and
Assertio’s securities class action and other disputes and
litigation, and the costs and expenses associated therewith; (14)
the outcome of Assertio’s antitrust litigation relating to the drug
Glumetza®; (15) Assertio's estimates regarding expenses, future
revenues, capital requirements and needs for additional financing;
(16) Assertio's ability to generate sufficient cash flow from its
business to make payments on its indebtedness; (17) Assertio's
ability to restructure or refinance its indebtedness and Assertio's
compliance with the terms and conditions of the agreements
governing its indebtedness; (18) compliance or non-compliance with
legal and regulatory requirements related to the development or
promotion of pharmaceutical products in the U.S.; (19) Assertio's
plans to acquire, in-license or co-promote other products, and/or
acquire companies; (20) Assertio's ability to raise additional
capital, if necessary; (21) variations in revenues obtained from
collaborative agreements; (22) Assertio's counterparties’
compliance or non-compliance with obligations under agreements;
(23) the ability of Assertio's common stock to retain compliance
with Nasdaq's minimum closing bid requirement of at least $1.00 per
share; (24) obtaining and maintaining intellectual property
protection for Assertio’s products; (25) Assertio’s ability to
operate its business without infringing the intellectual property
rights of others; (26) the impact of disasters, acts of terrorism
or global pandemics, including COVID-19; (27) general market
conditions; and (28) other risks listed in Assertio's filings with
the United States Securities and Exchange Commission ("SEC"). These
risks are more fully described in Assertio's Annual Report on Form
10-K and Quarterly Reports on Form 10-Q filed with the SEC and in
other filings Assertio makes with the SEC from time to time.
Investors and potential investors are urged not to place undue
reliance on forward-looking statements in this communication, which
speak only as of this date. While Assertio may elect to update
these forward-looking statements at some point in the future, it
specifically disclaims any obligation to update or revise any
forward-looking-statements contained in this press release whether
as a result of new information or future events, except as may be
required by applicable law. Nothing contained herein constitutes or
will be deemed to constitute a forecast, projection or estimate of
the future financial performance or expected results of
Assertio.
Non-GAAP Financial MeasuresTo
supplement the Company’s financial results presented on a U.S.
generally accepted accounting principles (GAAP) basis, the Company
has included information about non-GAAP measures of EBITDA and
adjusted EBITDA as useful operating metrics. The Company believes
that the presentation of these non-GAAP financial measures, when
viewed with results under GAAP and the accompanying reconciliation,
provides supplementary information to analysts, investors, lenders,
and the Company’s management in assessing the Company’s performance
and results from period to period. The Company uses these non-GAAP
measures internally to understand, manage and evaluate the
Company’s performance, and in part, in the determination of bonuses
for executive officers and employees. These non-GAAP financial
measures should be considered in addition to, and not a substitute
for, or superior to, net income or other financial measures
calculated in accordance with GAAP. Non-GAAP financial measures
used by us may be calculated differently from, and therefore may
not be comparable to, non-GAAP measures used by other
companies.
This release also includes estimated non-GAAP
adjusted EBITDA information, which the Company believes enables
investors to better understand the anticipated performance of the
business, but should be considered a supplement to, and not as a
substitute for or superior to, financial measures calculated in
accordance with GAAP. No reconciliation of estimated non-GAAP
adjusted EBITDA to estimated net income is provided in this release
because some of the information necessary for estimated net income
such as income taxes, fair value change in contingent
consideration, and stock based compensation is not yet
ascertainable or accessible and the Company is unable to quantify
these amounts that would be required to be included in estimated
net income without unreasonable efforts.
Specified ItemsNon-GAAP measures
presented within this release exclude specified items. The Company
considers specified items to be significant income/expense items
not indicative of current operations. Specified items include
adjustments to interest expense, income tax expense (benefit),
depreciation expense, amortization expense, sales reserves
adjustments for products the Company is no longer selling,
stock-based compensation expense, fair value adjustments to
contingent consideration, restructuring costs, amortization of fair
value inventory step-up as result of purchase accounting, non-cash
adjustments to Collegium Commercialization agreement revenue,
transaction-related costs, gains or losses from adjustments to
long-lived assets and assets not part of current operations, and
gains or losses resulting from debt refinancing or
extinguishment.
Revisions to Specified Items As a
result of the Company’s December 2020 restructuring plan and
subsequent announcement of a new executive team, beginning with the
first quarter of 2021, the Company will no longer adjust for legal
costs and expenses incurred in connection with opioid-related
litigation, investigations and regulations pertaining to the
Company’s historical commercialization of opioid products as a
specified item in the non-GAAP measure adjusted EBITDA.
Management’s priorities include, amongst other items, operating
cash flows and mitigating legacy legal uncertainties and therefore
believes that investors will benefit from the ability to view the
profitability of the Company’s current and ongoing business
activities with such costs included. Given the timing of the
December 2020 restructuring plan and subsequent announcement of the
new executive team, Management believes the first quarter of 2021
is the appropriate time to make such an update. Prior period
amounts of Adjusted EBITDA have been recast to conform to this
presentation.
Pro forma ItemsThe Company is
providing non-GAAP pro forma net product sales to show the net
product sales as if the Zyla Merger had been completed as of
January 1, 2020, and therefore the Company operated on a combined
basis, including Zyla, for the entirety of 2020 periods presented
in this release. The Company believes this supplemental information
is useful to help investors understand the results of the combined
operations, including Zyla, and assess the Company’s performance
from period to period.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME(in thousands, except per
share amounts)(unaudited)
|
Three Months Ended March 31, |
|
2021 |
|
2020 |
Revenues: |
|
|
|
Product sales, net |
$ |
26,405 |
|
|
$ |
9,252 |
|
Commercialization agreement, net |
— |
|
|
11,258 |
|
Royalties and milestones |
434 |
|
|
407 |
|
Total revenues |
26,839 |
|
|
20,917 |
|
Costs and expenses: |
|
|
|
Cost of sales |
3,966 |
|
|
1,399 |
|
Research and development expenses |
— |
|
|
1,041 |
|
Selling, general and administrative expenses |
7,730 |
|
|
27,314 |
|
Amortization of intangible assets |
6,547 |
|
|
7,795 |
|
Restructuring charges |
1,089 |
|
|
— |
|
Total costs and expenses |
19,332 |
|
|
37,549 |
|
Income (Loss) from operations |
7,507 |
|
|
(16,632 |
) |
Other (expense) income : |
|
|
|
Interest expense |
(2,684 |
) |
|
(8,674 |
) |
Other gain (loss) |
269 |
|
|
(3,325 |
) |
Gain on sale of Gralise |
— |
|
|
127,505 |
|
Loss on sale of NUCYNTA |
— |
|
|
(15,755 |
) |
Loss on debt extinguishment |
— |
|
|
(39,841 |
) |
Total other (expense) income |
(2,415 |
) |
|
59,910 |
|
Net income before income taxes |
5,092 |
|
|
43,278 |
|
Income tax expense |
(548 |
) |
|
(2,048 |
) |
Net income and Comprehensive income |
$ |
4,544 |
|
|
$ |
41,230 |
|
|
|
|
|
Basic net income per share |
$ |
0.03 |
|
|
$ |
0.51 |
|
Diluted net income per share |
$ |
0.03 |
|
|
$ |
0.51 |
|
Shares used in computing basic net income per share |
151,296 |
|
|
81,111 |
|
Shares used in computing diluted net income per share |
153,918 |
|
|
81,222 |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS(in
thousands)(unaudited)
|
March 31, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
61,033 |
|
|
$ |
20,786 |
|
Accounts receivable, net |
39,241 |
|
|
44,350 |
|
Inventories, net |
8,930 |
|
|
11,712 |
|
Prepaid and other current assets |
14,865 |
|
|
17,406 |
|
Total current assets |
124,069 |
|
|
94,254 |
|
Property and equipment, net |
2,172 |
|
|
2,437 |
|
Intangible assets, net |
193,536 |
|
|
200,082 |
|
Other long-term assets |
5,647 |
|
|
6,501 |
|
Total assets |
$ |
325,424 |
|
|
$ |
303,274 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
10,609 |
|
|
$ |
14,808 |
|
Accrued rebates, returns and discounts |
50,136 |
|
|
63,114 |
|
Accrued liabilities |
19,567 |
|
|
31,571 |
|
Current portion of long-term debt |
12,338 |
|
|
11,942 |
|
Contingent consideration, current portion |
9,400 |
|
|
6,776 |
|
Interest payable |
4,403 |
|
|
1,793 |
|
Other current liabilities |
2,637 |
|
|
2,682 |
|
Total current liabilities |
109,090 |
|
|
132,686 |
|
Long-term debt |
71,834 |
|
|
72,160 |
|
Contingent consideration |
28,559 |
|
|
31,776 |
|
Other long-term liabilities |
10,638 |
|
|
11,138 |
|
Total liabilities |
220,121 |
|
|
247,760 |
|
Commitments and contingencies |
|
|
|
Shareholders’ equity: |
|
|
|
Common stock, $0.0001 par value, 200,000,000 shares authorized;
173,743,760 and 113,568,597 shares issued and outstanding as of
March 31, 2021 and 2020, respectively |
18 |
|
|
13 |
|
Additional paid-in capital |
528,686 |
|
|
483,446 |
|
Accumulated deficit |
(423,401 |
) |
|
(427,945 |
) |
Total shareholders’ equity |
105,303 |
|
|
55,514 |
|
Total liabilities and shareholders' equity |
$ |
325,424 |
|
|
$ |
303,274 |
|
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP EBITDA and ADJUSTED EBITDA (in
thousands)(unaudited)
|
|
Three months ended March |
|
|
|
|
2021 |
|
2020 |
|
Financial Statement Classification |
|
Net income (GAAP) |
$ |
4,544 |
|
|
$ |
41,230 |
|
|
|
|
Interest expense |
2,684 |
|
|
8,674 |
|
|
Interest expense |
|
Income tax expense |
548 |
|
|
2,048 |
|
|
Income tax expense |
|
Depreciation expense |
265 |
|
|
273 |
|
|
Selling, general and administrative expenses |
|
Amortization of intangible assets |
6,547 |
|
|
7,795 |
|
|
Amortization of intangible assets |
|
EBITDA (Non-GAAP) |
$ |
14,588 |
|
|
$ |
60,020 |
|
|
|
|
Adjustments: |
|
|
|
|
|
|
Legacy products revenue reserves (1) |
(378 |
) |
|
(647 |
) |
|
Product sales, net |
|
Stock-based compensation (2) |
772 |
|
|
1,934 |
|
|
Multiple |
|
Contingent consideration fair value change (3) |
(594 |
) |
|
— |
|
|
Selling, general and administrative expenses |
|
Restructuring cost (4) |
1,089 |
|
|
— |
|
|
Restructuring charges |
|
Other (5) |
235 |
|
|
1,854 |
|
|
Multiple |
|
Prior year adjustments not repeating (6) |
— |
|
|
(59,223 |
) |
|
Multiple |
|
Adjusted EBITDA (Non-GAAP) |
$ |
15,712 |
|
|
$ |
3,938 |
|
|
|
|
|
|
|
|
|
|
(1) |
Removal of the
impact of revenue adjustment estimates related to products that the
Company is no longer commercializing. |
|
|
(2) |
Stock based
compensation for the three months ended March 31, 2021 included
$0.8 million in Selling, general and administrative expenses
(SG&A). Stock based compensation for the three months ended
March 31, 2020 included $0.2 million in Research and development
expenses, and $1.7 million in SG&A expenses. |
|
|
(3) |
The fair value of
the contingent consideration is remeasured each reporting period,
with changes in the fair value resulting from a change in the
underlying inputs being recognized in operating expenses until the
contingent consideration arrangement is settled. |
|
|
(4) |
Restructuring and
related costs represents non-recurring costs associated with the
Company’s announced restructuring plans. |
|
|
(5) |
For the three months
ended March 31, 2021, Other represents amortization of inventory
step-up recognized in Cost of sales related to Zyla acquired
inventories sold. For the three months ended March 31, 2020, Other
primarily represents a credit loss reserve recognized in the first
quarter of 2020 in Other gain (loss) related the Company’s
investment in a company engaged in medical research. |
|
|
(6) |
Represent the
following one-time adjustments included in three months ended March
31, 2020: |
|
- Gain on sale of Gralise ($127.5) million
- Loss on sale of NUCYNTA $15.8 million
- Loss on extinguishment of convertible notes $31.6 million
- Loss on prepayment of Senior Notes $8.2 million
- Transaction cost $7.7 million
- Change in fair value of Collegium warrants $3.1 million
- NUCYNTA Commercialization agreement revenues $1.8 million
|
PRO FORMA PRODUCT SALES
(NON-GAAP)(in
thousands)(unaudited)
The following pro forma product sales, net is
presented to illustrate the effects of the Zyla Merger as if the
transaction had occurred on January 1, 2020. This supplemental pro
forma financial information has been prepared for comparative
purposes only and is not necessarily indicative of what actual
results would have occurred, or of results that may occur in the
future. Supplemental unaudited proforma information is based upon
accounting estimates and judgments that the Company believes are
reasonable.
The unaudited pro forma product sales, net for the
three months ended March 31, 2020 are as follows:
|
|
Three monthsended March 31, |
|
|
2020 |
|
GAAP product sales, net |
$ |
9,252 |
|
|
Add: |
|
|
Zyla product sales prior to Merger (1) |
19,066 |
|
|
Pro forma product sales, net (Non-GAAP) |
$ |
28,318 |
|
|
|
|
|
|
(1) |
Zyla product sales prior to the Merger on May 20, 2020 for the
respective period. |
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