Delivering Value To Those We Serve

Assertio Therapeutics Announces Strong Second-Quarter 2019 Results

August 7, 2019 at 4:02 PM EDT

-- Reports Total Company GAAP Net Sales of $57.2 million, Total Company Non-GAAP Net Sales of $59.3 million, including Commercialization Agreement Revenues of $31.0 million --

-- Drives Continued Improvement in Operating Efficiencies as the Company Executes on its Ongoing Transformation --

-- Confirms 2019 Earnings Guidance Range and Adjusts Neurology Franchise Net Sales Guidance --

-- Continues to Reduce Senior Secured Debt --

LAKE FOREST, Ill., Aug. 07, 2019 (GLOBE NEWSWIRE) -- Assertio Therapeutics, Inc. (NASDAQ: ASRT) today reported financial results for the quarter ended June 30, 2019 and provided an update on its business performance and strategic initiatives.

Second-Quarter Financial Highlights:
(unaudited)

   Second Quarter 2019
(in millions, except earnings per share) GAAP Non-GAAP(1)
Total Revenues $57.2 $59.3
Net Income/(Loss) $(13.6) $18.5
Earnings/(Loss) Per Share $(0.21) $0.25
Adjusted EBITDA - $36.7


(1) All non-GAAP measures included in this earnings release are reconciled to the corresponding GAAP measures in the schedules attached.

“We continue to make steady progress toward building a leading diversified biopharmaceutical business as we deliver strong results and de-lever our balance sheet,” said Arthur Higgins, President and CEO of Assertio. “We remain focused on improving our financial position as we pursue business development opportunities across a range of new therapeutic areas.”

 Second Quarter Business Highlights:

  • Neurology Franchise Net Sales: Gralise net sales in the second quarter were $17.8 million, primarily due to favorable year-over-year gross to net reflecting payor mix. In August, the Company executed an agreement that provides expanded access for Gralise through new coverage with one of the top three Medicare Part-D insurers, representing more than 6 million lives. Obtaining expanded Medicare Part-D access is important for Gralise as a majority of patients with postherpetic neuralgia are more than 65 years old. In the second quarter, Zipsor net sales were $1.5 million, adversely impacted by short-dated product sales returns; however, underlying prescription demand for Zipsor continues to grow double digits year-over-year. CAMBIA net sales in the second quarter were $6.8 million, primarily due to unfavorable year-over-year gross to net reflecting payor mix. Underlying prescription demand for CAMBIA increased mid single digits year-over-year.
     
  • Debt Reduction and Cash Position: As of August 7, 2019, the Company has made scheduled principal repayments of $100.0 million in 2019, reducing the Company’s senior secured debt to $182.5 million. The Company will make an additional $20 million principal payment before year end, reducing senior secured debt to $162.5 million. As of June 30, 2019, the Company had cash and cash equivalents and short-term investments of $75.5 million.
     
  • One-Year Anniversary of Headquarters Relocation, Reincorporation and Name Change to Assertio Therapeutics, Inc.: Approximately one year ago, the Company completed its reincorporation from California to Delaware and changed its name from “Depomed, Inc.” to “Assertio Therapeutics, Inc.” In connection with the reincorporation and name change, the Company’s common stock began trading under a new ticker symbol “ASRT.” The Company also completed the relocation of its corporate headquarters from Newark, CA, to Lake Forest, IL.
 
Revenue Summary:
(in thousands, unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Product sales, net              
Gralise $ 17,800     $ 13,815     $ 31,078     $ 28,642  
CAMBIA 6,758     8,089     15,566     14,505  
Zipsor 1,524     3,988     5,755     8,734  
Total neurology product sales, net 26,082     25,892     52,399     51,881  
               
NUCYNTA products (163 )   626     (101 )   18,771  
Lazanda 18     320     89     540  
Total product sales, net 25,937     26,838     52,387     71,192  
               
Commercialization agreement:              
Commercialization rights and facilitation services 31,003     31,179     61,859     59,274  
Revenue from transfer of inventory             55,705  
Royalties and Milestone Revenue 263     5,257     886     5,507  
               
Total revenues $ 57,203     $ 63,274     $ 115,132     $ 191,678  

2019 Financial Guidance:
The Company is confirming its previous 2019 earnings guidance range and adjusting its Neurology Franchise net sales guidance to low-single digits, reflecting the adverse impact of Zipsor short-dated product sales returns.

  Prior 2019 Guidance Current 2019 Guidance
Neurology Franchise
Net Sales
Low to Mid-Single Digit Growth Low-Single Digit Growth
GAAP Net Loss(1) ($68) to ($58) million ($68) to ($58) million
Non-GAAP
Adjusted EBITDA(1)(2)
$118 to $128 million $118 to $128 million


(1) Guidance includes $2.8 million of non-cash Collegium warrant related income and excludes any future warrant mark-to-market adjustments, which cannot be estimated.
(2) Guidance excludes any Collegium warrant mark-to-market adjustments.

Conference Call and Webcast:
Assertio will host a conference call today, Wednesday, August 7, 2019 beginning at 4:30 p.m. ET to discuss its results. This event can be accessed in three ways:

  • From the Assertio website: http://investor.assertiotx.com. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.

  • By telephone: Participants can access the call by dialing (877) 550-3745 (United States) or (281) 973-6277 (International) referencing Conference ID 7769879.

  • By replay: A replay of the webcast will be located under the Investor Relations section of Assertio’s website approximately two hours after the conclusion of the live call.

About Assertio Therapeutics, Inc.
Assertio Therapeutics is committed to providing responsible solutions to advance patient care in the Company’s core areas of neurology, orphan and specialty medicines. Assertio currently markets three FDA-approved products and continues to identify, license and develop new products that offer enhanced options for patients that may be under served by existing therapies. To learn more about Assertio, visit www.assertiotx.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
This news release contains forward-looking statements. These statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to regulatory approval and clinical development of long-acting cosyntropin, expectations regarding royalties to be received based on sales of NUCYNTA and NUCYNTA ER, expectations regarding potential business opportunities and other risks outlined in the Company’s public filings with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. All information provided in this news release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

Investor and Media Contact:
John B. Thomas
Senior Vice President, Investor Relations and Corporate Communications
jthomas@assertiotx.com

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 revenue, non-GAAP adjusted earnings, non-GAAP adjusted diluted earnings per share, non-GAAP adjusted EBITDA and other non-GAAP financial measures 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.

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, including the related tax effect. Specified items include non-cash adjustment to Collegium agreement revenue and cost of sales, release of NUCYNTA and Lazanda sales reserves for products the Company is no longer selling, interest income, interest expense, amortization, acquired in-process research and development and non-cash adjustments related to product acquisitions, stock-based compensation expense, non-cash interest expense related to debt, depreciation, taxes, transaction costs, CEO transition, restructuring costs, adjustments to net sales related to reserves recorded prior to the Company’s exit of opioid commercialization activities, legal costs and expenses incurred in connection with opioid-related litigation, investigations and regulations pertaining to the company’s historical commercialization of opioid products, certain types of legal settlements, disputes, fees and costs, and to adjust for the tax effect related to each of the non-GAAP adjustments.

 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Revenues:              
Product sales, net $ 25,937     $ 26,838     $ 52,387     $ 71,192  
Commercialization agreement, net 31,003     31,179     61,859     114,979  
Royalties and milestones 263     5,257     886     5,507  
Total revenues 57,203     63,274     115,132     191,678  
Costs and expenses:              
Cost of sales (excluding amortization of intangible assets) 2,124     2,753     4,699     14,797  
Research and development expenses 1,263     2,180     3,056     3,708  
Selling, general and administrative expenses 24,755     31,308     49,800     60,341  
Amortization of intangible assets 25,443     25,444     50,887     50,888  
Restructuring charges     5,814         14,831  
Total costs and expenses 53,585     67,499     108,442     144,565  
Income (loss) from operations 3,618     (4,225 )   6,690     47,113  
Other (expense) income:              
Interest expense (14,842 )   (17,010 )   (31,396 )   (35,078 )
Other (expense) income, net (1,240 )   67     (1,849 )   296  
Total other expense (16,082 )   (16,943 )   (33,245 )   (34,782 )
Net (loss) income before income taxes (12,464 )   (21,168 )   (26,555 )   12,331  
Income taxes (expense) benefit (1,141 )   120     (1,351 )   445  
Net (loss) income $ (13,605 )   $ (21,048 )   $ (27,906 )   $ 12,776  
Basic net (loss) income per share (0.21 )   (0.33 )   (0.43 )   0.20  
Diluted net (loss) income per share (0.21 )   (0.33 )   (0.43 )   0.20  
Shares used in computing basic net (loss) income per share 64,480     63,719     64,405     63,611  
Shares used in computing diluted net (loss) income per share 64,480     63,719     64,405     64,107  


 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
  June 30, 2019   December 31, 2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 68,348     $ 110,949  
Short-term investments 7,114      
Accounts receivable, net 34,311     37,211  
Inventories, net 3,005     3,396  
Prepaid and other current assets 26,231     56,551  
Total current assets 139,009     208,107  
Property and equipment, net 13,050     13,064  
Intangible assets, net 641,212     692,099  
Investments 8,589     11,784  
Other long-term assets 11,014     7,812  
Total assets $ 812,874     $ 932,866  
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 2,188     $ 6,138  
Accrued rebates, returns and discounts 63,808     75,759  
Accrued liabilities 19,648     31,361  
Current portion of Senior Notes 80,000     120,000  
Interest payable 9,194     11,645  
Other current liabilities 2,100     1,133  
Total current liabilities 176,938     246,036  
Contingent consideration liability 953     1,038  
Senior Notes 117,527     158,309  
Convertible Notes 297,550     287,798  
Other long-term liabilities 22,467     19,350  
Total liabilities 615,435     712,531  
Commitments and contingencies      
Shareholders’ equity:      
Common stock 6     6  
Additional paid-in capital 407,944     402,934  
Accumulated deficit (210,506 )   (182,600 )
Accumulated other comprehensive loss (5 )   (5 )
Total shareholders’ equity 197,439     220,335  
Total liabilities and shareholders' equity $ 812,874     $ 932,866  


 
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
GAAP net (loss)/income $ (13,605 )   $ (21,048 )   $ (27,906 )   $ 12,776  
Commercialization agreement revenues (1) 1,933     3,198     3,863     (49,288 )
Commercialization agreement cost of sales (2)             6,200  
NUCYNTA sales reserve (3)             (10,711 )
NUCYNTA and Lazanda revenue reserves (4) 145     (946 )   12     (1,166 )
Expenses for opioid-related litigation, investigations and regulations (5) 2,350     2,220     4,850     3,047  
Intangible amortization related to product acquisitions 25,443     25,444     50,887     50,888  
Contingent consideration related to product acquisitions (142 )   (260 )   (142 )   (462 )
Stock-based compensation 2,634     2,970     5,336     4,946  
Interest and other income (172 )   (70 )   (673 )   (164 )
Interest expense 14,842     17,010     31,396     35,078  
Depreciation 279     1,454     616     2,929  
Income taxes (expense) benefit 1,141     (120 )   1,351     (445 )
Restructuring and related costs  (6)     6,974         15,299  
Other costs     (31 )       178  
Fair value for warrants 1,848         3,477      
Non-GAAP adjusted EBITDA $ 36,696     $ 36,795     $ 73,067     $ 69,105  
 

(1) For the period from January 8, 2018 through November 8, 2018, the adjustment relates to the non-cash value assigned to inventory transferred to Collegium.  As of the date of the Commercialization Amendment, on November 8, 2018, the Company ceased recognition of fixed revenues and began the recognition of variable revenues when they become due beginning in January 2019. The adjustment for the three and six months ended June 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Represents the cash received for inventory transferred to Collegium at the commencement of the Commercialization Agreement.

(3) Represents a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible, net of $1.8 million in royalties payable to a third party during the three months ended March 31, 2018.

(4) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(5) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.

(6) Restructuring and other costs represents non-recurring costs associated with the Company’s restructuring, reincorporation, headquarters relocation and CEO transition.

 
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EARNINGS
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
GAAP net (loss)/income $ (13,605 )   $ (21,048 )   $ (27,906 )   $ 12,776  
Commercialization agreement revenues (1) 1,933     3,198     3,863     (49,288 )
Commercialization agreement cost of sales (2)             6,200  
Nucynta sales reserve (3)             (10,711 )
Non-cash interest expense on debt 6,056     5,390     12,220     10,808  
Nucynta and Lazanda revenue reserves (4) 145     (946 )   12     (1,166 )
Expenses for opioid-related litigation, investigations and regulations (5) 2,350     2,220     4,850     3,047  
Intangible amortization related to product acquisitions 25,443     25,444     50,887     50,888  
Contingent consideration related to product acquisitions (142 )   (260 )   (142 )   (462 )
Stock-based compensation 2,634     2,970     5,336     4,946  
Restructuring and related costs (6)     6,974         15,304  
Other costs     (31 )   (332 )   178  
Fair value for warrants 1,848         3,477      
Income tax effect of non-GAAP adjustments (7) (8,124 )   (9,067 )   (16,163 )   (5,623 )
Non-GAAP adjusted earnings $ 18,538     $ 14,844     $ 36,102     $ 36,897  
Add interest expense of convertible debt, net of tax (8) 1,703     1,703     3,406     3,406  
Numerator $ 20,241     $ 16,547     $ 39,508     $ 40,303  
Shares used in calculation (8) 82,411     82,201     82,336     82,039  
Non-GAAP adjusted diluted earnings per share $ 0.25     $ 0.20     $ 0.48     $ 0.49  

(1) For the period from January 8, 2018 through November 8, 2018, the adjustment relates to the non-cash value assigned to inventory transferred to Collegium.  As of the date of the Commercialization Amendment, on November 8, 2018, the Company ceased recognition of fixed revenues and will begin recognition of variable revenues when they become due beginning in January 2019. The adjustment for the three and six months ended June 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Represents the cash received for inventory transferred to Collegium at the commencement of the Commercialization Agreement.

(3) Represents a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible, net of $1.8 million in royalties payable to a third party during the three months ended March 31, 2018.

(4) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(5) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.

(6) Restructuring and other costs represents non-recurring costs associated with the Company’s restructuring, reincorporation, headquarters relocation and CEO transition.

(7) Calculated by taking the pre-tax non-GAAP adjustments and applying the statutory tax rate.

(8) The Company uses the if-converted method to compute diluted earnings per share with respect to its convertible debt.

 
RECONCILIATION OF GAAP NET INCOME (LOSS) PER SHARE TO
NON-GAAP ADJUSTED EARNINGS PER SHARE
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
               
GAAP net (loss)/income per share $ (0.21 )   $ (0.33 )   $ (0.43 )   $ 0.20  
Conversion from basic shares to diluted shares 0.05     0.07     0.09     (0.05 )
Commercialization agreement revenues 0.02     0.04     0.05     (0.60 )
Commercialization agreement cost of sales             0.08  
NUCYNTA sales reserve             (0.13 )
Non-cash interest expense on debt 0.07     0.06     0.15     0.14  
NUCYNTA and Lazanda revenue reserves     (0.01 )       (0.01 )
Expenses for opioid-related litigation, investigations and regulations 0.03     0.03     0.06     0.04  
Intangible amortization related to product acquisitions 0.31     0.31     0.62     0.62  
Contingent consideration related to product acquisitions             (0.01 )
Stock based compensation 0.03     0.04     0.06     0.06  
Restructuring and related costs     0.08         0.18  
Change in fair value of warrants 0.02         0.04      
Income tax effect of non-GAAP adjustments (0.10 )   (0.11 )   (0.20 )   (0.07 )
Add interest expense of convertible debt, net of tax 0.03     0.02     0.04     0.04  
Non-GAAP adjusted diluted earnings per share $ 0.25     $ 0.20     $ 0.48     $ 0.49  


 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the three months ended June 30, 2019
(in thousands)
(unaudited)
 
  Commercialization
agreement
revenues
  Product
Sales
  Royalties
and
milestones
  Cost of
sales
  Research
and
development
expense
  Selling,
general and
administrative
expense
  Amortization of intangible assets   Interest expense   Other
(Expense)
Income, Net
  Income
taxes
(expense)
benefit
GAAP as reported $ 31,003     $ 25,937     $ 263     $ 2,124     $ 1,263     $ 24,755     $ 25,443     $ (14,842 )   $ (1,240 )   $ (1,141 )
Commercialization agreement revenues and cost of sales 1,933                                      
NUCYNTA sales reserve                                      
Non-cash interest expense on debt                             6,056          
NUCYNTA and Lazanda revenue reserves     145                                  
Expenses for opioid-related litigation, investigations and regulations                     (2,350 )                
Intangible amortization related to product acquisitions                         (25,443 )            
Contingent consideration related to product acquisitions                     142                  
Stock based compensation             (50 )   (76 )   (2,508 )                
Change in fair value of warrants                                 1,848      
Other costs                                      
Income tax effect of non-GAAP adjustments                                     (8,124 )
Non-GAAP adjusted $ 32,936     $ 26,082     $ 263     $ 2,074     $ 1,187     $ 20,039     $     $ (8,786 )   $ 608     $ (9,265 )


 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the six months ended June 30, 2019
(in thousands)
(unaudited)
 
  Commercialization agreement
revenues
  Product
Sales
  Royalties
and
milestones
  Cost of
sales
  Research
and
development
expense
  Selling,
general
and administrative
expense
  Amortization of intangible assets   Interest expense   Other
(Expense)
Income,
Net
  Income
taxes
(expense)
benefit
GAAP as reported $ 61,859     $ 52,387     $ 886     $ 4,699     $ 3,056     $ 49,800     $ 50,887     $ (31,396 )   $ (1,849 )   $ (1,351 )
Commercialization agreement revenues and cost of sales 3,863                                      
Non-cash interest expense on debt                             12,220          
NUCYNTA and Lazanda revenue reserves     12                                  
Expenses for opioid-related litigation, investigations and regulations                     (4,850 )                
Intangible amortization related to product acquisitions                         (50,887 )            
Contingent consideration related to product acquisitions                     142                  
Stock based compensation             (50 )   (349 )   (4,937 )                
Change in fair value of warrants                                 3,477      
Other costs                                 (332 )    
Income tax effect of non-GAAP adjustments                                     (16,163 )
Non-GAAP adjusted $ 65,722     $ 52,399     $ 886     $ 4,649     $ 2,707     $ 40,155     $     $ (19,176 )   $ 1,296     $ (17,514 )


 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the three months ended June 30, 2018
(in thousands)
(unaudited)
 
  Commercialization
agreement
revenues
  Product
Sales
  Royalties
and
milestones
  Cost of
sales
  Research
and
development
expense
  Selling,
general
and
administrative
expense
  Restructuring
Charges
  Amortization
of
intangible
assets
  Interest expense   Other (Expense) Income, Net   Income taxes (expense) benefit
GAAP as reported $ 31,179     $ 26,838     $ 5,257     $ 2,753     $ 2,180     $ 31,308     $ 5,814     $ 25,444     $ (17,010 )   $ 67     $ 120  
Commercialization agreement revenues and cost of sales 3,198                                          
Non-cash interest expense on debt                                 5,390          
NUCYNTA and Lazanda revenue reserves     (946 )                                    
Expenses for opioid-related litigation, investigations and regulations                     (2,220 )                    
Intangible amortization related to product acquisitions                             (25,444 )            
Contingent consideration related to product acquisitions                     260                      
Stock based compensation             (16 )   (14 )   (2,940 )                    
Restructuring and other costs                     31     (6,974 )                
Income tax effect of non-GAAP adjustments                                         (9,067 )
Non-GAAP adjusted $ 34,377     $ 25,892     $ 5,257     $ 2,737     $ 2,166     $ 26,439     $ (1,160 )   $     $ (11,620 )   $ 67     $ (8,947 )


 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the six months ended June 30, 2018
(in thousands)
(unaudited)
 
  Commercialization
agreement
revenues
  Product
Sales
  Royalties
and
milestones
  Cost of
sales
  Research
and
development
expense
  Selling,
general
and
administrative
expense
  Restructuring
Charges
  Amortization
of
intangible
assets
  Interest
expense
  Other
(Expense)
Income,
Net
  Income
taxes
(expense)
benefit
GAAP as reported 114,979     71,192     5,507     14,797     3,708     60,341     14,831     50,888     (35,078 )   296     445  
Commercialization agreement revenues and cost of sales (49,288 )           (6,200 )                            
NUCYNTA sales reserve     (10,711 )                                    
Non-cash interest expense on debt                                 10,808          
NUCYNTA and Lazanda revenue reserves     (1,166 )                                    
Expenses for opioid-related litigation, investigations and regulations                     (3,047 )                    
Intangible amortization related to product acquisitions                             (50,888 )            
Contingent consideration related to product acquisitions                     462                      
Stock based compensation             (30 )   (67 )   (4,849 )                    
Restructuring and other costs                     (178 )   (15,304 )                
Income tax effect of non-GAAP adjustments                                         (5,623 )
Non-GAAP adjusted 65,691     59,315     5,507     8,567     3,641     52,729     (473 )       (24,270 )   296     (5,178 )


 
SECOND-QUARTER RECONCILIATION OF GAAP to NON-GAAP REVENUES
(in thousands)
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018(1)
Total revenues (GAAP basis) $ 57.2     $ 63.3     $ 115.1     $ 191.7  
Non-cash adjustment to commercialization agreement revenues(2) 2.1     2.2     3.9     (48.7 )
Release of NUCYNTA sales reserves(3)             (12.5 )
Total revenues (non-GAAP basis) $ 59.3     $ 65.5     $ 119.0     $ 130.5  

(1) Year-to-date 2018 total GAAP revenues include one-time items described in our quarterly report on Form 10-Q for the six months ended June 30, 2018.

(2) The adjustments for the three and six months ended June 30, 2019 relate to non-cash adjustments for third-party royalties, which were a net expense but are expected to have no net impact for the full year period, the amortization of the contract asset, and the impact of revenue adjustment estimates related to products that we are no longer commercializing. For the three months ended June 30, 2018 the adjustment relates to non-cash adjustments for third party royalties and for the six months ended June 30, 2018 the adjustment relates primarily to the non-cash value assigned to inventory transferred to Collegium.

(3) Represents a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible.

 
FULL-YEAR 2019 NON-GAAP GUIDANCE RECONCILATION
(in millions)
(unaudited)
 
  Earnings (1)
  Low End High End
GAAP $ (68 )   $ (58 )
Specified Items(2) $ 186     $ 186  
Non-GAAP $ 118     $ 128  
               

(1) GAAP net income guidance refers to GAAP net income and non-GAAP earnings guidance refers to non-GAAP adjusted EBITDA.

(2) For purposes of this forward-looking reconciliation, a description of the categories of specified items included in this reconciliation are detailed in the tables above.

SENIOR SECURED NOTE COVENANT DISCLOSURES

The Company was in compliance with its covenants, including the Senior Secured Debt Leverage Ratio and Net Sales covenants, with respect to the Company’s senior secured notes as of June 30, 2019.  Set forth below are additional disclosures that the Company is required to make in connection with the senior secured notes.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
For the Rolling Twelve Month Period Ended June 30, 2019
(in thousands)
(unaudited)

The below reconciliation is presented to disclose the calculation of Adjusted EBITDA (as defined in our senior secured notes) on a rolling 12 month basis to support covenant compliance in connection with our senior secured notes.

  Twelve Month Period
  Ended June 30, 2019
  (unaudited)
GAAP net (loss)/income $ (3,774 )
Commercialization agreement revenues (1) 27,987  
Nucynta and Lazanda revenue reserves (2) (384 )
Expenses for opioid-related litigation, investigations and regulations (3) 9,700  
Intangible amortization related to product acquisitions 101,773  
Contingent consideration related to product acquisitions (195 )
Stock-based compensation 10,829  
Purdue Litigation (62,000 )
Interest and other income (1,706 )
Interest expense 65,199  
Depreciation (382 )
Income taxes (expense) benefit 2,863  
Restructuring and related costs  (4) 5,965  
Other costs (55 )
Fair value for warrants 3,477  
Adjusted EBITDA $ 159,297  

(1) The adjustment for the twelve months ended June 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(3) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.

(4) Restructuring and other costs represents non-recurring costs associated with the Company’s restructuring, reincorporation, headquarters relocation and CEO transition.

Additional Covenant Disclosures

Long-acting cosyntropin has not yet been launched for commercial sale and therefore no revenue in respect of this product was recognized by the Company as of June 30, 2019.

During the rolling twelve month period ended June 30, 2019, the Company collected $128.2 million in cash receipts, net of cash payments made, in connection with the Company’s Commercialization Agreement with Collegium.

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Source: Assertio Therapeutics, Inc.