Assertio Reports Fourth Quarter and Full Year 2021 Financial Results

$32.2 Million Fourth Quarter Net Product Sales, a 7% Increase from Fourth Quarter 2020 and $109.4 Million Full Year Net Product Sales

$17.8 Million Fourth Quarter Non-GAAP Adjusted EBITDA, a 118% Increase from Fourth Quarter 2020 and $48.8 Million Full Year Non-GAAP Adjusted EBITDA

Provides 2022 Net Product Sales Guidance Range of $126.0 Million to $136.0 Million and 2022 Non-GAAP Adjusted EBITDA Guidance Range of $64.0 Million to $72.0 Million

Completed Acquisition of Otrexup^® (methotrexate)

LAKE FOREST, Ill., March 09, 2022 (GLOBE NEWSWIRE) — Assertio Holdings, Inc. (“Assertio” or the “Company”) (Nasdaq: ASRT), a specialty pharmaceutical company offering differentiated products to patients, today reported financial results for the fourth quarter and full year ended December 31, 2021 and provided a corporate update.

Fourth Quarter and Full Year 2021 Commentary and Financial Highlights (unaudited):

^{(1) See “Non-GAAP Financial Measures” below for additional information on all non-GAAP measures included in this earnings release.}

• The fourth quarter net product sales of $32.2 million were $6.2 million or 24% higher than the third quarter, which reflected another quarter of consistent volume across the portfolio, with net price favorability for Indocin, Cambia and Zipsor.
• Net product sales for the fourth quarter increased by $2.0 million or 7% compared to the prior year due to Cambia and Indocin price favorability, partially offset by a decline in Sprix volume and the discontinuation of a product line.
• Non-GAAP adjusted EBITDA for the fourth quarter of $17.8 million represents growth of 13% versus the third quarter and 118% versus the prior year. The results for the quarter were positively impacted by net pricing for Cambia and Zipsor, as well as a one-time royalty milestone.

2022 Full Year Financial Guidance:

• Due to high inventory levels in the channel at acquisition on December 15, 2021, sales of Otrexup began in late January 2022.
• The Company’s 2022 guidance accounts for addition of Otrexup, offset by the expected loss of exclusivity for Zipsor at the end of the first quarter of 2022.

“2021 represented the first year of our newly transformed Company, one in which we took major steps to transition to our new operating model, made significant strides and investments into our digital platform, right-sized our infrastructure to generate positive operating cash flow and improve our margins, and acquired a new product for the first time since 2015,” said Dan Peisert, President and Chief Executive Officer of Assertio.

“Assertio is at the forefront of the shift to a more digital, connected pharmaceutical landscape and we are excited about leveraging our platform to grow our portfolio and incorporate new, acquired assets in 2022 that will benefit patients and increase shareholder value.”

Fourth Quarter and Full Year 2021 and Subsequent Highlights:

After the Company’s announced restructuring on December 15, 2020, management established six key priorities for 2021 to put the Company on a path to return to growth, increase margins, and acquire new assets. Highlights of the year track closely with these priorities:

1. Build a Strong and Committed Team with a Culture of Teamwork, Inclusion and Results: The Company hired or promoted an experienced and talented management team with a track record of success in growing businesses and executing mergers and acquisitions, including Senior Vice Presidents of Commercial and Operations, and Vice President of Business Development, to accelerate our strategy.
2. Delivering on Our $45.0 Million of Restructuring Synergies: The Company completed its restructuring early in the third quarter and exceeded its target to deliver $45.0 million in annualized synergies in 2022 and beyond.
3. Ensuring the Company Generates Strong Operating Cash Flow: For full year 2021, the Company generated $5.5 million of operating cash flow, with $8.8 million generated post restructuring in the second half of 2021 (despite cash outflows of nearly $10.0 million for one-time legal settlements and the extension of the Indocin supply agreement).
   • The Company generated $4.1 million of operating cash flow in the fourth quarter, representing the third consecutive quarter of positive cash flows.

1. Ensuring our Debt Never Becomes a Constraint in Running the Business: The Company has $36.8 million of cash on hand, well above its minimum liquidity covenants, and its remaining senior secured debt is $70.8 million and is not due to mature until 2024.
2. Mitigate our Legacy Legal Uncertainties: Throughout 2021, the Company continued to focus on resolving legacy legal uncertainties and took substantial steps toward settling certain matters in a way that management believes will allow it to invest in sustainable long-term growth.
   • The Company settled its federal Glumetza antitrust litigation for $7.0 million.
   • The Company also entered into settlement agreements for its securities class action and related derivative suits, for a net cost of $0.4 million.
3. Develop Sustainable Business Model that Reflects a Changing Environment: The Company has invested into its scalable, digital, non-personal promotion Commercial model and platform.
   • The Company announced on December 15, 2021 that it acquired Otrexup (methotrexate). Assertio acquired Otrexup from Antares Pharma, Inc. in a partially seller financed transaction for a total cash purchase price of $44.0 million, inclusive of working capital investments.
     • Represents less than three times trailing 12-month revenue ending September 31, 2021.
     • Patents extend to 2031.
     • Less than 41% upfront at closing.
   • The Company has invested in the telemedicine channel and saw a 117% year-over-year total prescription growth for our portfolio of products through our partners in the fourth quarter.

Conference Call and Investor Presentation Information

Assertio’s management will host a conference call to discuss its fourth quarter and full year 2021 financial results today:

To access the live webcast, the recorded conference call replay, and other materials, please visit Assertio’s investor relations website at http://investor.assertiotx.com/overview/default.aspx. Please connect at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. The replay will be available approximately two hours after the call on Assertio’s investor website.

About Assertio

Assertio is a specialty pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. We have built and continue to build our commercial portfolio by identifying new opportunities within our existing products as well as acquisitions or licensing of additional approved products. To learn more about Assertio, visit www.assertiotx.com.

Investor Contact

Max Nemmers
Head, 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 and 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, including the risks described in Assertio’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (“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 Measures
To 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 for fiscal year 2021 used these non-GAAP measures 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 Items
Non-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 in 2021, the Company no longer adjusts 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 2021 was the appropriate time to make such an update. Prior period amounts of Adjusted EBITDA have been recast to conform to this presentation.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited) 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited) 

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA and ADJUSTED EBITDA
(in thousands)
(unaudited)

(1)  Removal of the impact of revenue adjustment related to previously divested products. During the third quarter of 2021, the Company reclassified product sales adjustments for previously divested products from Product sales, net to Other revenue. There was no change to Total revenue as a result of the reclassifications. Prior period results have been recast to conform with current period presentation. 

(2)  Stock based compensation for the three and twelve months ended December 31, 2021 and three months ended December 31, 2020 is included in Selling, general and administrative expenses. Stock based compensation for the twelve months ended December 31, 2020 included $0.1 million in in Cost of sales, $0.3 million in Research and development expense and $9.6 million in Selling, general and administrative 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 and twelve months ended December 31, 2021 and the three and twelve months ended December 31, 2020, Other represents amortization of inventory step-up recognized in Cost of sales related to Zyla acquired inventories sold. For the twelve months ended December 31, 2020, Other also includes 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)  At December 31, 2020, the Company recorded a non-cash impairment charge of $17.4 million on its goodwill.

(7)  Represent the following one-time adjustments included in three and twelve months ended December 31, 2020:

1. Gain on sale of Gralise of zero and $126.7 million, respectively
2. Loss on sale of NUCYNTA of zero and $14.7 million, respectively
3. Loss on extinguishment of convertible notes and debt of zero and $56.1 million, respectively
4. Transaction costs of $0.5 million and $18.6 million, respectively
5. Change in fair value of Collegium warrants of zero and $3.6 million, respectively
6. NUCYNTA Commercialization agreement revenues of zero and $1.8 million, respectively