Assertio Reports Second Quarter 2020 Financial Results
--Completed all merger and integration activities in Q2--
--Zyla products partially contributed to Q2 net product sales of
--Combined second quarter 2020 net product sales of
“Even in what has been an unprecedented time with patient volume and elective surgeries down due to COVID-19, we completed our merger and achieved second quarter 2020 pro forma net product sales of
Pro Forma Projections for 2020
Assertiois projecting mid-to-high-single digit pro forma net product sales growth for 2020 from the 2019 pro forma net product sales of $126.3 million.
- The Company is projecting pro forma non-GAAP adjusted EBITDA margin of greater than 25 percent for the full year 2020.
- The Company is on track to recognize
$40.0 millionannually in projected synergies from the merger with Zyla.
2020 Second Quarter and Recent Financial Highlights
- Payments received.
Assertionegotiated with Golf Acquiror LLC, an affiliate to Alvogen, Inc.to advance its payment of all remaining royalties owed to Assertiofor the sale of Gralise® (gabapentin), accelerating the collection of $38.8 million, net of discount, in the second quarter. Additionally in May 2020, the Company sold its Collegium warrants for $6.0 million.
- Debt reductions.
Assertiopaid down $76.7 millionof its convertible debt upon the close of the merger with Zyla, and $13.0 millionof Zyla’s debt was extinguished. In addition, the Company repaid $10.0 millionof the Senior Secured Notes in July.
- Net product sales. The Company achieved
$27.7 millionin second quarter 2020 pro forma net product sales which was slightly above the first quarter 2020 pro forma net product sales. Zyla net product sales only partially contributed to second quarter net product sales of $20.2 millionsince the merger closed on May 20, 2020.
- Cash position. The Company ended the second quarter with
$59.4 millionin cash and cash equivalents, a 40 plus percent increase over year-end 2019.
2020 Second Quarter Business Highlights
- The Company closed its merger with Zyla on
May 20, 2020and effectively completed the integration of the two companies in the second quarter.
- Zyla and
Assertiomerged the two sales forces into one, educated its representatives on the combined product portfolio, provided new healthcare provider targets to the representatives and began promotion to healthcare providers.
- The Company launched a Neurology sales team focused on promotion of Cambia® (diclofenac potassium) for Oral solution and SPRIX® (ketorolac tromethamine) Nasal Spray to key prescribers who treat migraines and pain associated with headaches.
- The Company established a medical science liaison team to support the further development and education of INDOCIN® (indomethacin) Oral Suspension and Suppositories.
Assertiolaunched a new distribution approach for SPRIX that was designed to decrease the amount of time needed to fill prescriptions and reduce costs.
Earnings Conference Call Information
Assertio’s management will host a conference call to discuss the second quarter 2020 financial results today:
|Webcast (live and archive):||assertiotx.com (Events & Webcasts, Investor page)|
|Dial-in numbers:||1-877-870-4263 (domestic)|
|Replay numbers:||1-877-344-7529 (domestic)|
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 to access the webcast. Individuals also may participate in the call by dialing 1-888-346-2615 (domestic) or 1-412-902-4253 (international) and asking for the "
Forward Looking Statements
Statements in this communication that are not historical facts are forward-looking statements that reflect
Media and Investor Contact
Non-GAAP Financial Measures
To supplement the Company’s financial results presented on a
This release also includes estimated non-GAAP adjusted EBITDA margin information, which the Company believes not only provides the Company's management with comparable financial data for internal financial analysis but also provides meaningful supplemental information to investors. Non-GAAP adjusted EBITDA margin information 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 margin is provided in this release because some of the excluded information is not yet ascertainable or accessible and the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable efforts.
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 non-cash adjustments to Collegium agreement revenue and cost of sales, adjustments to sales reserves for products the Company is no longer selling, interest income, interest expense, amortization expense, stock-based compensation expense, depreciation expense, income taxes, transaction-related costs, CEO transition and restructuring 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, certain types of legal settlements, disputes, fees and costs, gains or losses resulting from debt refinancing or extinguishment, gains or losses from non-cash adjustments to long-lived assets and assets not part of current operations, and amortization of fair value inventory step-up as result of purchase accounting.
Pro forma Items
The Company is providing pro forma net product sales to show the net product sales as if the Zyla Merger had been completed as of
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|Three Months Ended
||Six Months Ended
|Product sales, net||$||20,165||$||25,937||$||29,417||$||52,387|
|Commercialization agreement, net||—||31,003||11,258||61,859|
|Royalties and milestones||452||263||859||886|
|Costs and expenses:|
|Cost of sales (excluding amortization of intangible assets)||5,238||2,124||6,637||4,699|
|Research and development expenses||1,626||1,263||2,667||3,056|
|Selling, general and administrative expenses||28,131||24,755||55,445||49,800|
|Amortization of intangible assets||4,855||25,443||12,650||50,887|
|Total costs and expenses||46,369||53,585||83,918||108,442|
|(Loss) income from operations||(25,752||)||3,618||(42,384||)||6,690|
|Other income (expense):|
|(Loss) Gain on sale of Gralise||(850||)||—||126,655||—|
|Loss on extinguishment of convertible notes||(16,272||)||—||(47,880||)||—|
|Gain (Loss) on sale of NUCYNTA||1,006||—||(14,749||)||0|
|Loss on prepayment of Senior Notes||—||—||(8,233||)||—|
|Total other (expense) income||(18,219||)||(16,082||)||41,691||(33,245||)|
|Net loss before income taxes||(43,971||)||(12,464||)||(693||)||(26,555||)|
|Income tax benefit (expense)||9,472||(1,141||)||7,424||(1,351||)|
|Net (loss) income and Comprehensive (loss) income||$||(34,499||)||$||(13,605||)||$||6,731||$||(27,906||)|
|Basic net (loss) income per share||$||(0.35||)||$||(0.21||)||$||0.07||$||(0.43||)|
|Diluted net (loss) income per share||$||(0.35||)||$||(0.21||)||$||0.07||$||(0.43||)|
|Shares used in computing basic net (loss) income per share||98,558||64,480||89,835||64,405|
|Shares used in computing diluted net (loss) income per share||98,558||64,480||90,236||64,405|
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||59,403||$||42,107|
|Accounts receivable, net||34,753||42,744|
|Consideration receivable from sale of Gralise||—||—|
|Prepaid and other current assets||15,909||15,688|
|Total current assets||135,463||103,951|
|Property and equipment, net||7,349||3,497|
|Intangible assets, net||179,716||400,535|
|Other long-term assets||7,470||6,123|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Accrued rebates, returns and discounts||52,440||58,943|
|Current portion of long-term debt||7,374||80,000|
|Contingent consideration, current portion||8,700||—|
|Other current liabilities||3,005||2,094|
|Total current liabilities||134,372||184,553|
|Other long-term liabilities||13,681||13,233|
|Commitments and contingencies|
|Additional paid-in capital||478,037||457,751|
|Total shareholders’ equity||84,978||57,958|
|Total liabilities and shareholders' equity||$||345,724||$||527,170|
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA and ADJUSTED EBITDA
|Three Months Ended
||Six Months Ended
|2020||2019||2020||2019||Financial Statement Classification|
|Net (loss) income (GAAP)||$||(34,499||)||$||(13,605||)||$||6,731||$||(27,906||)|
|Interest expense||1,604||14,842||10,278||31,396||Interest expense|
|Income tax (benefit) expense||(9,472||)||1,141||(7,424||)||1,351||Income tax benefit (expense)|
|Depreciation expense||396||279||669||616||Selling, general and administrative expenses|
|Amortization of intangible assets||4,855||25,443||12,650||50,887||Amortization of intangible assets|
|NUCYNTA, Lazanda and Gralise revenue reserves (1)||(462||)||145||(1,108||)||12||Product sales, net|
|Commercialization agreement revenues (2)||—||1,933||1,846||3,863||Commercialization agreement, net|
|Inventory Step-up (3)||2,422||—||2,422||—||Cost of sales|
|Transaction-related costs (4)||8,377||—||16,071||—||Selling, general and administrative expenses|
|Expenses for opioid-related litigation, investigations and regulations (5)||1,097||2,350||3,225||4,850||Selling, general and administrative expenses|
|Contingent consideration related to product acquisitions (6)||—||(142||)||—||(142||)||Selling, general and administrative expenses|
|Loss on debt extinguishment, net (7)||16,272||56,113||—||Multiple|
|Stock-based compensation (8)||3,593||2,634||5,527||5,336||Multiple|
|(Gain) loss on sale of NUCYNTA (10)||(1,006||)||—||14,749||—||Gain (Loss) on sale of NUCYNTA|
|Change in fair value of warrants (11)||484||1,848||3,629||3,477||Other loss|
|Restructuring cost - related to merger (12)||5,520||—||5,520||—||Restructuring charges|
|Loss (gain) on sale of Gralise (13)||$||850||$||—||$||(126,655||)||$||—||(Loss) Gain on sale of Gralise|
|Adjusted EBITDA (Non-GAAP)||31||36,696||6,097||73,067|
Refer to the next page for table footnotes
(1) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.
(2) Adjustments relate to non-cash expense for third-party royalties, which have no net impact for the full year period, as well as the amortization of the contract asset.
(3) Fair value of inventories acquired with the Zyla Merger included an inventory step-up in the value of product inventories acquired. The three and six months ended
(4) Represents one-time transaction-related costs related to legal and consulting for the disposition of Gralise and NUCYNTA, and the merger with Zyla, including CEO transition related expense.
(5) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company’s historical commercialization of opioid products.
(6) Represents the change in fair value of the Company’s contingent consideration related to product acquisitions.
(7) Represents the loss on debt extinguishment associated with the settlement of all but
(8) Stock based compensation for the three months ended
(9) Represents a credit loss reserve recognized in the first quarter of 2020 related the Company’s
(10) During the three months ended
(11) Represents the change in fair value of the Company’s Collegium warrant which was sold during the first quarter of 2020.
(12) During the three months ended
PRO FORMA PRODUCT SALES
The following pro forma product sales, net is presented to illustrate the effects of the Zyla Merger as if the transaction had occurred on
The unaudited pro forma product sales, net for the three and six months ended
|Three Months Ended
||Six Months Ended
|GAAP product sales, net||$||20,165||$||25,937||$||29,417||$||52,387|
|Zyla product sales prior to Merger (1)||8,036||22,142||27,102||39,492|
|Product sales for divested products (2)||(462||)||(17,655||)||(1,109||)||(31,066||)|
|Pro forma product sales, net||27,739||30,424||55,410||60,813|
(1) Zyla product sales prior to the Merger on
(2) Product sales of Gralise, NUCYNTA, and Lazanda, which we are no longer commercializing.
Source: Assertio Therapeutics, Inc.
Minimum 15 minutes delayed.