Assertio Holdings, Inc. (“Assertio” or the “Company”) (Nasdaq:
ASRT), a specialty pharmaceutical company offering differentiated
products to patients, today reported financial results for the
first quarter ended March 31, 2022.
Financial Highlights
(unaudited):
|
Three Months Ended March 31, |
(in millions, except per share amounts) |
2022 |
|
|
2021 |
Net Product Sales (GAAP) |
$ |
35.5 |
|
$ |
26.0 |
Net Income (GAAP) |
$ |
9.1 |
|
$ |
4.5 |
Earnings Per Share (GAAP) |
$ |
0.20 |
|
$ |
0.12 |
Adjusted EBITDA (Non-GAAP)1 |
$ |
23.9 |
|
$ |
15.7 |
Adjusted Earnings Per Share
(Non-GAAP)1 |
$ |
0.38 |
|
$ |
0.27 |
- The first quarter net product sales of
$35.5 million were $9.5 million or 37% higher than the prior year
quarter. The increase was primarily driven by higher net pricing on
Indocin and the addition of Otrexup.
- Gross profit margin2 in the first
quarter was 88% or 344 basis points higher than the prior year
quarter due to the impact of change in product mix and improved
margins on Indocin.
- Selling, general and administrative
expenses in the first quarter of 2022 were $10.6 million or $2.3
million higher than the prior year quarter, primarily due to the
$5.0 million insurance settlement benefit that was reflected
in the prior year quarter. Absent the insurance settlement,
SG&A expenses in the first quarter of 2022 were $2.7 million
lower than the prior year quarter due to the benefit of completed
cost savings initiatives despite adding a new product to the
portfolio.
- The first quarter net income of
$9.1 million was $4.5 million or 99% higher than the
prior year quarter primarily due to higher net product sales and
gross profit margins and benefit from prior year restructuring
charges not repeating, partially offset by higher SG&A
expenses.
“The first quarter is in many ways representative
of the new Assertio and one that shows the promise of our operating
model and our ability to quickly integrate new assets like Otrexup
into our platform,” said Dan Peisert, President and Chief Executive
Officer of Assertio. “Due to the strength of our results to date
and the confidence we have in the outlook of our business, we are
raising the full year non-GAAP adjusted EBITDA guidance. We
remain committed to our business development goal, which now after
the completion of Otrexup is to add an additional $40 million of
gross profit by 2024. By doing so we should be able to continue to
build upon the momentum we’ve been gathering since our
restructuring and continue to grow our business.”
2022 Financial Guidance
|
Prior Guidance |
Current Guidance |
Net Product Sales (GAAP) |
$126.0 Million to $136.0 Million |
$126.0 Million to $136.0 Million |
Adjusted EBITDA (Non-GAAP)3 |
$64.0 Million to $72.0 Million |
$66.0 Million to $74.0 Million |
|
|
|
___________________1 Non-GAAP measures are
reconciled to the corresponding GAAP measures in the schedules
attached. 2 Gross profit margin represents the ratio of net
products sales less cost of sales to net product sales.3 See
“Non-GAAP Financial Measures” below for information about
reconciling our Adjusted EBITDA guidance to Net Income.
Conference Call and Investor Presentation
Information
Assertio’s management will host a conference call
to discuss its first quarter 2022 financial results today:
Date: |
Monday, May 9, 2022 |
Time: |
4:30 p.m. Eastern Time |
Webcast (live and archive): |
http://investor.assertiotx.com/overview/default.aspx (Events &
Webcasts, Investor Page) |
Dial-in numbers: |
1-844-200-6205 (domestic) |
|
1-929-526-1599 (international) |
Conference number: |
725095 |
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 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,
including our ability to realize the benefits from our operating
model, successfully integrate new assets and explore new business
development initiatives. 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, adjusted EBITDA, adjusted earnings, and adjusted
earnings per share 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 full-year
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, 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.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME(in thousands, except per
share amounts)(unaudited)
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Revenues: |
|
|
|
Product sales, net |
$ |
35,546 |
|
|
$ |
26,027 |
|
Royalties and milestones |
|
992 |
|
|
|
434 |
|
Other revenue |
|
— |
|
|
|
378 |
|
Total revenues |
|
36,538 |
|
|
|
26,839 |
|
Costs and expenses: |
|
|
|
Cost of sales |
|
4,195 |
|
|
|
3,966 |
|
Selling, general and administrative expenses |
|
10,638 |
|
|
|
8,324 |
|
Fair value of contingent consideration |
|
1,645 |
|
|
|
(594 |
) |
Amortization of intangible assets |
|
8,501 |
|
|
|
6,547 |
|
Restructuring charges |
|
— |
|
|
|
1,089 |
|
Total costs and expenses |
|
24,979 |
|
|
|
19,332 |
|
Income from operations |
|
11,559 |
|
|
|
7,507 |
|
Other (expense) income: |
|
|
|
Interest expense |
|
(2,327 |
) |
|
|
(2,684 |
) |
Other gain |
|
545 |
|
|
|
269 |
|
Total other expense |
|
(1,782 |
) |
|
|
(2,415 |
) |
Net income before income taxes |
|
9,777 |
|
|
|
5,092 |
|
Income tax expense |
|
(713 |
) |
|
|
(548 |
) |
Net income and Comprehensive income |
$ |
9,064 |
|
|
$ |
4,544 |
|
|
|
|
|
Basic net income per share |
$ |
0.20 |
|
|
$ |
0.12 |
|
Diluted net income per share |
$ |
0.20 |
|
|
$ |
0.12 |
|
Shares used in computing basic net income per share |
|
45,204 |
|
|
|
37,824 |
|
Shares used in computing diluted net income per share |
|
46,127 |
|
|
|
38,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS(in
thousands)(unaudited)
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
61,389 |
|
|
$ |
36,810 |
|
Accounts receivable, net |
|
48,923 |
|
|
|
44,361 |
|
Inventories, net |
|
9,480 |
|
|
|
7,489 |
|
Prepaid and other current assets |
|
5,323 |
|
|
|
14,838 |
|
Total current assets |
|
125,115 |
|
|
|
103,498 |
|
Property and equipment, net |
|
1,329 |
|
|
|
1,527 |
|
Intangible assets, net |
|
207,554 |
|
|
|
216,054 |
|
Other long-term assets |
|
5,137 |
|
|
|
5,468 |
|
Total assets |
$ |
339,135 |
|
|
$ |
326,547 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
8,523 |
|
|
$ |
6,685 |
|
Accrued rebates, returns and discounts |
|
55,588 |
|
|
|
52,662 |
|
Accrued liabilities |
|
15,386 |
|
|
|
14,699 |
|
Long-term debt, current portion |
|
12,271 |
|
|
|
12,174 |
|
Contingent consideration, current portion |
|
14,600 |
|
|
|
14,500 |
|
Other current liabilities |
|
32,159 |
|
|
|
34,299 |
|
Total current liabilities |
|
138,527 |
|
|
|
135,019 |
|
Long-term debt |
|
61,250 |
|
|
|
61,319 |
|
Contingent consideration |
|
22,859 |
|
|
|
23,159 |
|
Other long-term liabilities |
|
4,637 |
|
|
|
4,636 |
|
Total liabilities |
|
227,273 |
|
|
|
224,133 |
|
Commitments and contingencies |
|
|
|
Shareholders’ equity: |
|
|
|
Common stock, $0.0001 par value, 200,000,000 shares authorized;
45,335,426 and 44,640,444 shares issued and outstanding as of March
31, 2022 and December 31, 2021, respectively |
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
532,020 |
|
|
|
531,636 |
|
Accumulated deficit |
|
(420,162 |
) |
|
|
(429,226 |
) |
Total shareholders’ equity |
|
111,862 |
|
|
|
102,414 |
|
Total liabilities and shareholders' equity |
$ |
339,135 |
|
|
$ |
326,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in
thousands)(unaudited)
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Operating Activities |
|
|
|
Net income |
$ |
9,064 |
|
|
$ |
4,544 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
Depreciation and amortization |
|
8,699 |
|
|
|
6,812 |
|
Amortization of debt discount, debt issuance costs and royalty
rights |
|
28 |
|
|
|
70 |
|
Recurring fair value measurement of assets and liabilities |
|
1,645 |
|
|
|
(593 |
) |
Stock-based compensation |
|
982 |
|
|
|
772 |
|
Provision for inventory and other assets |
|
31 |
|
|
|
151 |
|
Changes in assets and liabilities, net of acquisition: |
|
|
|
Accounts receivable |
|
(4,561 |
) |
|
|
5,109 |
|
Inventories |
|
(2,022 |
) |
|
|
2,631 |
|
Prepaid and other assets |
|
9,845 |
|
|
|
3,395 |
|
Accounts payable and other accrued liabilities |
|
(1,511 |
) |
|
|
(16,749 |
) |
Accrued rebates, returns and discounts |
|
2,926 |
|
|
|
(12,978 |
) |
Interest payable |
|
2,300 |
|
|
|
2,610 |
|
Net cash provided by (used in) operating activities |
|
27,426 |
|
|
|
(4,226 |
) |
Investing Activities |
|
|
|
Purchase of Otrexup |
|
(404 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(404 |
) |
|
|
— |
|
Financing Activities |
|
|
|
Payment of contingent consideration |
|
(1,845 |
) |
|
|
— |
|
Proceeds from issuance of common stock |
|
— |
|
|
|
44,861 |
|
Shares withheld for payment of employee's withholding tax
liability |
|
(598 |
) |
|
|
(388 |
) |
Net cash (used in) provided by financing activities |
|
(2,443 |
) |
|
|
44,473 |
|
Net increase in cash and cash equivalents |
|
24,579 |
|
|
|
40,247 |
|
Cash and cash equivalents at beginning of year |
|
36,810 |
|
|
|
20,786 |
|
Cash and cash equivalents at end of period |
$ |
61,389 |
|
|
$ |
61,033 |
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information |
|
|
|
Net cash paid (refunded) for income taxes |
$ |
(8,360 |
) |
|
$ |
— |
|
Cash paid for interest |
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP EBITDA and ADJUSTED EBITDA (in
thousands)(unaudited)
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
Financial Statement Classification |
GAAP Net Income |
$ |
9,064 |
|
$ |
4,544 |
|
|
|
Interest expense |
|
2,327 |
|
|
2,684 |
|
|
Interest expense |
Income tax expense |
|
713 |
|
|
548 |
|
|
Income tax expense |
Depreciation expense |
|
197 |
|
|
265 |
|
|
Selling, general and administrative expenses |
Amortization of intangible assets |
|
8,501 |
|
|
6,547 |
|
|
Amortization of intangible assets |
EBITDA (Non-GAAP) |
$ |
20,802 |
|
$ |
14,588 |
|
|
|
Adjustments: |
|
|
|
|
|
Legacy products revenue reserves (1) |
|
— |
|
|
(378 |
) |
|
Other revenue |
Stock-based compensation |
|
982 |
|
|
772 |
|
|
Selling, general and administrative expenses |
Contingent consideration fair value change (2) |
|
1,645 |
|
|
(594 |
) |
|
Fair value of contingent consideration |
Restructuring charges |
|
— |
|
|
1,089 |
|
|
Restructuring charges |
Other (3) |
|
434 |
|
|
235 |
|
|
Multiple |
Adjusted EBITDA (Non-GAAP) |
$ |
23,863 |
|
$ |
15,712 |
|
|
|
|
|
|
|
|
|
|
|
|
- Represents removal of the impact of revenue adjustment
estimates related to previously divested products.
- 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 as
operating expenses until the contingent consideration arrangement
is settled.
- Other represents amortization of inventory step-up recognized
in Cost of sales related acquired inventories sold.
RECONCILIATION OF GAAP NET INCOME and
GAAP NET INCOME PER SHARE TO NON-GAAP ADJUSTED
EARNINGS and ADJUSTED EARNINGS PER SHARE
(1)(in thousands, except per share
amounts)(unaudited)
|
Three Months Ended March 31, 2022 |
|
Three Months Ended March 31, 2021 |
|
Amount |
|
Diluted EPS |
|
Amount |
|
Diluted EPS |
Net income (GAAP) |
$ |
9,064 |
|
|
$ |
0.20 |
|
|
$ |
4,544 |
|
|
$ |
0.12 |
|
Adjustments |
|
|
|
|
|
|
|
Amortization of intangible assets |
|
8,501 |
|
|
|
0.18 |
|
|
|
6,547 |
|
|
|
0.17 |
|
Legacy products revenue reserves |
|
— |
|
|
|
— |
|
|
|
(378 |
) |
|
|
(0.01 |
) |
Stock-based compensation |
|
982 |
|
|
|
0.02 |
|
|
|
772 |
|
|
|
0.02 |
|
Contingent consideration fair value change |
|
1,645 |
|
|
|
0.04 |
|
|
|
(594 |
) |
|
|
(0.02 |
) |
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
1,089 |
|
|
|
0.03 |
|
Other |
|
434 |
|
|
|
0.01 |
|
|
|
235 |
|
|
|
0.01 |
|
Contingent consideration accrued payable(2) |
|
(271 |
) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
— |
|
Income taxes expense, as adjusted(3) |
|
(2,823 |
) |
|
|
(0.06 |
) |
|
|
(1,918 |
) |
|
|
(0.05 |
) |
Adjusted earnings (Non-GAAP) |
$ |
17,532 |
|
|
|
0.38 |
|
|
$ |
10,297 |
|
|
|
0.27 |
|
|
|
|
|
|
|
|
|
Diluted shares used in calculation |
|
|
|
46,127 |
|
|
|
|
|
38,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Represents per share calculations of adjustments reflected in
the Company’s reconciliation of GAAP net income to non-GAAP
adjusted EBITDA and therefore should be read in conjunction with
that reconciliation and respective footnotes.
- Represents the accrued cash payable of the INDOCIN contingent
consideration for the respective period based on 20% royalty for
annual INDOCIN net sales over $20.0 million.
- Represents the Company’s income tax expense adjusted for the
tax effect of pre-tax adjustments excluded from adjusted earnings.
The tax effect of pre-tax adjustments excluded from adjusted
earnings is computed at the blended statutory rate of 25%.
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