Assertio Reports Fourth Quarter and Full Year 2020 Financial Results
Full Year Net Product Sales of
Post Year-end Raised
Announces Promotion of Chief Financial and Accounting Officers and Management Team
|(in millions)||Fourth-Quarter 2020||Full-Year 2020|
|Net Product Sales (GAAP)||$||29.8||$||93.5|
|Pro-Forma Net Product Sales (Non-GAAP)(1)||$||30.1||$||119.2|
|Net Loss (GAAP)||$||(24.4||)||$||(28.1||)|
|Adjusted EBITDA (Non-GAAP)(1)||$||9.4||$||22.4|
(1) All non-GAAP measures included in this earnings release are reconciled to the corresponding GAAP measures in the schedules attached
“As we close the chapter on 2020, we reflect on several strategic shifts, including a move toward digital marketing, enhanced patient services, an increasing shift to our hub model, and a leaner operational profile with increased cash. These changes position us to be at the forefront of reinventing specialty pharma through engagement that physicians and patients find convenient and can access during their own time,” said
“COVID-19 has rapidly accelerated the trend toward virtual engagement. We look forward to sharing more about how we are refining our commercial platform in the near future. We are also actively seeking additional assets that will address unmet needs for patients, be synergistic with our new commercial platform, and bring value to Assertio.”
Full Year 2020 and Subsequent Highlights:
$45.3 Millionin Cash, Net of Expenses, on Closing of Registered Direct Offerings: On February 9and February 12, 2021, the Company announced the closing of registered direct offerings that resulted in Assertioreceiving $45.3 millionin cash, net of expenses. The proceeds from these offerings enhance the Company’s liquidity, accelerate its transformational business plan, and open up new avenues for mergers and acquisitions.
$40.0 Millionin Annual Cost Savings in 2020, Poised to Realize Additional $45.0 Millionof Annualized Cost Savings After One-time Restructuring Costs: Assertiohas achieved its stated target of $40.0 millionof annual cost savings in 2020 after the closing of its merger with Zyla. The Company also reiterates its confidence in the ability to realize an additional $45.0 millionof annualized cost savings, after the effect of one-time restructuring costs.
- Restructuring: On
December 15, 2020, the Company announced a comprehensive restructuring plan designed to further reduce its cost base and right size the organization. The Company realized restructuring charges of $11.2 million in the fourth quarter of 2020 for this plan and expects up to $12.0 millionin total, which accounts for additional non-cash charges relating to the write-off of certain office lease and furniture assets.
$505.2 Millionin Strategic Asset Sales and Repaid $450.2 Millionin Debt: In 2020, the Company completed several transactions that monetized its assets and paid down its debt. $505.2 Millionin Strategic Asset Sales
- NUCYNTA® Franchise for
$369.0Million: On February 13, 2020, The Company completed the sale of the NUCYNTA franchise to Collegium for a total value of $369.0 million, including inventory and less royalties paid to Assertioin 2020.
- Sale of Gralise® for
$130.3Million: On January 10, 2020, the Company completed the sale of Gralise to Alvogen for a total value of $130.3 million, including inventory.
- Sale of Collegium Warrants for
$6.0 Million: On May 20, 2020, the Company completed the sale of its Collegium warrants. $450.2 Millionin Debt Repayments and Prepayments:
- Senior Secured Debt of
$162.5Million: On February 13, 2020, the Company announced that it repaid in full its previous senior secured debt obligations of $162.5 million.
- Convertible Debt of
$264.7 Million: With two separate transactions on February 19, 2020and April 9, 2020, the Company retired substantially all of its $265.0 millionoutstanding Convertible Notes via privately negotiated purchase agreement and a tender.
- Zyla Debt of
$13.0Million: Upon close of the Zyla merger on May 20, 2020, $13.0 millionof Zyla’s debt was extinguished.
- Prepayment of
$10.0 Millionof Current Senior Secured Debt: The Company prepaid $10.0 millionof debt principal in July.
- Efficient Merger Integration: The Company closed its merger with Zyla on
May 20, 2020and completed the integration of the two companies within a timeline of less than 12 weeks.
- Continued Transition to
Hub Modelfrom Traditional Retail: Throughout 2020, the Company has increased the momentum in the transition of its business to a Hub Modelfrom a traditional retail focus, resulting in increased profit per prescription.
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
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
Today the Company announced the promotion of
Additional promotions to the executive team include:
Jack Hoblitzell, Senior Vice President, Technical Operations Sam Schlessinger, Vice President, Legal Max Nemmers, Head, Investor Relations and Administration
“I am excited to announce the promotions to our executive team. All are extremely skilled and capable leaders with industry and M&A experience, expertise in improving margins and cash flows and are a perfect fit as we execute our strategy and aim to diversify our portfolio to position us for the future,” said
To view the full executive team biographies, please visit https://www.assertiotx.com/about/management/.
Outlook for 2021
In light of the Company’s restructuring, management changes, and increased financial flexibility as a result of its recent direct offerings, as well as to better understand the impact of COVID-19, the Company intends to provide its full year 2021 guidance during its first quarter 2021 earnings call in
Earnings Conference Call Information
Assertio’s management will host a conference call to discuss the fourth quarter and full year 2020 financial results today:
|Dial-in numbers:||1-877-550-3745 (domestic)|
|Replay numbers:||1-855-859-2056 (domestic)|
The live webcast and replay may be accessed at https://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 to access the webcast. The replay will be available approximately two hours after the call on the
Head, Investor Relations and Administration
Forward Looking Statements
Statements in this communication that are not historical facts are forward-looking statements that reflect
Non-GAAP Financial Measures
To supplement the Company’s financial results presented on a
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: interest expense; income tax expense (benefit); depreciation expense; amortization expense; adjustments to sales reserves for products the Company is no longer selling; non-cash adjustments to Collegium agreement revenue and cost of sales; amortization of fair value inventory step-up as result of purchase accounting; transaction-related costs; legal costs and expenses incurred in connection with opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products; non-cash gains or losses from adjustments to long-lived assets, intangible assets, goodwill and assets not part of current operations; gains or losses resulting from debt refinancing or extinguishment; stock-based compensation expense; restructuring and related costs; fair value adjustments to contingent consideration and investments; and gains or losses from sale of assets.
Pro forma Items
The 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|Three Months Ended
||Twelve Months Ended
|Product sales, net||$||29,815||$||28,917||$||93,498||$||108,806|
|Commercialization agreement, net||—||29,451||11,258||118,614|
|Royalties and milestones||361||858||1,519||2,084|
|Costs and expenses:|
|Cost of sales (excluding amortization of intangible assets)||6,773||2,563||19,872||9,505|
|Research and development expenses||230||5,575||4,213||10,106|
|Selling, general and administrative expenses||21,272||22,949||104,324||108,866|
|Amortization of intangible assets||6,546||25,443||24,783||101,774|
|Loss on impairment of goodwill and intangible assets||17,432||189,790||17,432||189,790|
|Total costs and expenses||63,272||250,211||188,430||423,932|
|Loss from operations||(33,096||)||(190,985||)||(82,155||)||(194,428||)|
|Other income (expense):|
|Gain on sale of Gralise||—||—||126,655||—|
|(Loss) Gain on debt extinguishment||—||—||(56,113||)||26,385|
|Loss on sale of NUCYNTA||—||—||(14,749||)||—|
|Other (loss) gain||346||6,561||(3,225||)||3,948|
|Total other income (expense)||(2,252||)||(6,560||)||36,642||(28,056||)|
|Net loss before income taxes||(35,348||)||(197,545||)||(45,513||)||(222,484||)|
|Income tax benefit||10,995||4,919||17,369||5,283|
|Net loss and Comprehensive loss||$||(24,353||)||$||(192,626||)||$||(28,144||)||$||(217,201||)|
|Basic net loss per share||$||(0.20||)||$||(2.39||)||$||(0.27||)||$||(3.07||)|
|Diluted net loss per share||(0.20||)||(2.39||)||(0.27||)||(3.07||)|
|Shares used in computing basic net loss per share||119,741||80,758||104,835||70,716|
|Shares used in computing diluted net loss per share||119,741||80,758||104,835||70,716|
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||20,786||$||42,107|
|Accounts receivable, net||44,350||42,744|
|Prepaid and other current assets||17,406||15,688|
|Total current assets||94,254||103,951|
|Property and equipment, net||2,437||3,497|
|Intangible assets, net||200,082||400,535|
|Other long-term assets||4,922||6,123|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Accrued rebates, returns and discounts||63,114||58,943|
|Current portion of long-term debt||11,942||80,000|
|Contingent consideration, current portion||6,776||—|
|Other current liabilities||2,682||2,094|
|Total current liabilities||132,686||184,553|
|Other long-term liabilities||11,138||13,233|
|Commitments and contingencies|
|Additional paid-in capital||483,446||457,751|
|Total shareholders’ equity||55,514||57,958|
|Total liabilities and shareholders' equity||$||303,274||$||527,170|
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA and ADJUSTED EBITDA
|Three Months Ended
||Twelve Months Ended
||Financial Statement Classification|
|Net loss (GAAP)||$||(24,353||)||$||(192,626||)||$||(28,144||)||$||(217,201||)|
|Interest expense||2,598||13,121||15,926||58,389||Interest expense|
|Income tax benefit||(10,995||)||(4,919||)||(17,369||)||(5,283||)||Income tax benefit|
|Depreciation expense||417||278||1,648||1,172||Selling, general and administrative expenses|
|Amortization of intangible assets||6,546||25,443||24,783||101,774||Amortization of intangible assets|
|NUCYNTA, Lazanda and Gralise revenue reserves (1)||301||421||(1,408||)||(731||)||Product sales, net|
|Commercialization agreement revenues (2)||—||(4,071||)||1,846||3,596||Commercialization agreement, net|
|Inventory Step-up (3)||1,151||—||4,091||—||Cost of sales (excluding amortization of intangible assets)|
|Transaction-related costs (4)||524||—||18,555||—||Selling, general and administrative expenses|
|Expenses for opioid-related litigation, investigations and regulations (5)||1,182||2,112||6,132||9,136||Selling, general and administrative expenses|
|Loss on disposal of equipment||—||—||—||10,076||Selling, general and administrative expenses|
|Gralise divestiture-related cost||—||2,227||—||2,227||Selling, general and administrative expenses|
|Changes in fair value of contingent consideration (13)||(356||)||(841||)||1,500||(983||)||Selling, general and administrative expenses|
|Loss (Gain) on debt extinguishment, net (6)||—||—||56,113||(25,968||)||Multiple|
|Stock-based compensation (7)||3,886||2,256||9,925||10,596||Multiple|
|Loss on sale of NUCYNTA (9)||—||—||14,749||—||Loss on sale of NUCYNTA|
|Loss on goodwill and intangible assets impairment (10)||17,432||189,790||17,432||189,790||Loss on impairment of goodwill and intangible assets|
|Restructuring and related costs (11)||11,019||3,891||17,806||3,891||Restructuring charges|
|Gain on sale of Gralise (12)||—||—||(126,655||)||—||Gain on sale of Gralise|
|Change in fair value of Collegium warrants||—||(5,745||)||3,629||(845||)||Other (expense) income, net|
|Adjusted EBITDA (Non-GAAP)||$||9,352||$||31,010||$||22,413||$||138,394|
Refer to the next page for table footnotes
(1) Removal of the impact of revenue adjustment estimates related to products that the Company is no longer commercializing.
(2) Adjustments relate to non-cash expense related to Collegium agreement for third-party royalties, which have no net impact for the full year period, as well as the amortization of the Collegium contract asset.
(3) Fair value of inventories acquired with the Zyla Merger included an inventory step-up in the value of product inventories acquired. The three and twelve months ended
(4) Represents one-time transaction-related costs primarily related to legal and consulting fees for the disposition of Gralise and NUCYNTA, and the merger with Zyla, including CEO transition related expense.
(5) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.
(6) Loss on debt extinguishment for the year ended
(7) Stock based compensation for the three months ended
(8) Other for the year ended
(9) Represents the loss recognized on the sale of the remaining rights, title and interest in and to the NUCYNTA franchise of products to Collegium in the first quarter of 2020.
(11) Restructuring and related costs represents non-recurring costs associated with the Company’s announced restructuring plans.
(12) Represents the gain recognized on the sale of Gralise to Alvogen in the first quarter of 2020.
(13) Pursuant to the Zyla Merger, the Company assumed a contingent consideration obligation which is measured at fair value. 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 are recognized in operating expenses until the contingent consideration arrangement is settled.
PRO FORMA NET PRODUCT SALES (NON-GAAP)
Supplemental unaudited proforma information is based upon accounting estimates and judgments that the Company believes are reasonable. This supplemental unaudited 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. The following pro forma net product sales is presented to illustrate the effects of the Zyla Merger as if the transaction had occurred on
The unaudited pro forma net product sales for the three and twelve months ended
|Three Months Ended
||Twelve Months Ended
|GAAP product sales, net||$||29,815||$||28,917||$||93,498||$||108,806|
|Zyla product sales prior to Merger (1)||—||19,306||27,102||81,302|
|Product sales for divested products (2)||301||(17,094||)||(1,408||)||(64,431||)|
|Pro forma product sales, net (Non-GAAP)||$||30,116||$||31,129||$||119,192||$||125,677|
(1) Zyla product sales prior to the Merger on
(2) Product sales of Gralise, NUCYNTA, Lazanda, and TIVORBEX which the Company no longer commercializes.
Source: Assertio Holdings, Inc.
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