asrt-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 001-39294

ASSERTIO HOLDINGS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Delaware			85-0598378
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)			(I.R.S. EMPLOYER IDENTIFICATION NUMBER)

100 South Saunders Road, Suite 300

Lake Forest, Illinois 60045

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES; ZIP CODE)

(224) 419-7106

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s):

Name of each exchange on which registered:

Common Stock, $0.0001 par value

ASRT

Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of issued and outstanding shares of the registrant’s Common Stock, $0.0001 par value, as of April 30, 2021 was 173,788,596.

ASSERTIO HOLDINGS, INC.

FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2021

TABLE OF CONTENTS




PART I — FINANCIAL INFORMATION

Item 1.						Financial Statements (unaudited)

						Condensed Consolidated Balance Sheets at March 3 1 , 202 1 and December 31, 20 20

						Condensed Consolidated Statements of Comprehensive Income for the three months ended March 3 1 , 202 1 and 20 2 0

						Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 3 1 , 202 1 and 20 20

						Condensed Consolidated Statements of Cash Flows for the three months ended March 3 1 , 202 1 and 20 20

						Notes to Condensed Consolidated Financial Statements

Item 2.						Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.						Quantitative and Qualitative Disclosures About Market Risk

Item 4.						Controls and Procedures

PART II — OTHER INFORMATION

Item 1.						Legal Proceedings

Item 1A.						Risk Factors

Item 2.						Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.						Exhibits

						Signatures

Table of Content

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASSERTIO HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	61,033	$	20,786

Accounts receivable, net	39,241		44,350
Inventories, net	8,930		11,712
Prepaid and other current assets	14,865		17,406
Total current assets	124,069		94,254
Property and equipment, net	2,172		2,437
Intangible assets, net	193,536		200,082

Other long-term assets	5,647		6,501
Total assets	$	325,424	$	303,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,609	$	14,808
Accrued rebates, returns and discounts	50,136		63,114
Accrued liabilities	19,567		31,571

Current portion of long-term debt	12,338		11,942
Contingent consideration, current portion	9,400		6,776
Interest payable	4,403		1,793
Other current liabilities	2,637		2,682
Total current liabilities	109,090		132,686
Long-term debt	71,834		72,160
Contingent consideration	28,559		31,776
Other long-term liabilities	10,638		11,138
Total liabilities	220,121		247,760
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.0001 par value, 200,000,000 shares authorized; 173,743,760 and 113,568,597 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	18		13
Additional paid-in capital	528,686		483,446
Accumulated deficit	(423,401)		(427,945)

Total shareholders’ equity	105,303		55,514
Total liabilities and shareholders' equity	$	325,424	$	303,274

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

ASSERTIO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
		2021		2020
Revenues:
Product sales, net		$	26,405	$	9,252
Commercialization agreement, net		—		11,258
Royalties and milestones		434		407
Total revenues		26,839		20,917
Costs and expenses:
Cost of sales		3,966		1,399
Research and development expenses		—		1,041
Selling, general and administrative expenses		7,730		27,314
Amortization of intangible assets		6,547		7,795
Restructuring charges		1,089		—
Total costs and expenses		19,332		37,549
Income (Loss) from operations		7,507		(16,632)
Other (expense) income :
Interest expense		(2,684)		(8,674)
Other gain (loss)		269		(3,325)
Gain on sale of Gralise		—		127,505
Loss on sale of NUCYNTA		—		(15,755)
Loss on debt extinguishment		—		(39,841)

Total other (expense) income		(2,415)		59,910
Net income before income taxes		5,092		43,278
Income tax expense		(548)		(2,048)
Net income and Comprehensive income		$	4,544	$	41,230




Basic net income per share		$	0.03	$	0.51
Diluted net income per share		$	0.03	$	0.51
Shares used in computing basic net income per share		151,296		81,111
Shares used in computing diluted net income per share		153,918		81,222

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

ASSERTIO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Earnings (Deficit)		Shareholders’ Equity
	Shares	Amount
Balances at December 31, 2020	113,569	$	13	$	483,446	$	(427,945)	$	55,514
Issuance of common stock upon exercise of options	291	—		—		—		—
Issuance of common stock in conjunction with vesting of restricted stock units	844	—		—		—		—
Issuance of common stock in conjunction with vesting of performance stock units	52	—		—		—		—
Issuance of common stock in connection with stock offerings	57,600	5		44,856				44,861
Issuance of common stock upon exercise of warrant	1,388	—		—		—		—
Stock-based compensation	—	—		772		—		772
Shares withheld for payment of employee's withholding tax liability	—	—		(388)		—		(388)
Net income	—	—		—		4,544		4,544
Balances at March 31, 2021	173,744	$	18	$	528,686	$	(423,401)	$	105,303


	Common Stock			Additional Paid-In Capital		Accumulated Earnings (Deficit)		Shareholders’ Equity
	Shares	Amount
Balances at December 31, 2019	80,888	$	8	$	457,751	$	(399,801)	$	57,958
Issuance of common stock in conjunction with vesting of restricted stock units	434	—		—		—		—
Reacquisition of equity component of 2021 Notes and 2024 Notes	—	—		(16,814)		—		(16,814)
Stock-based compensation	—	—		1,934		—		1,934
Shares withheld for payment of employee's withholding tax liability	—	—		(271)		—		(271)
Net loss	—	—		—		41,230		41,230
Balances at March 31, 2020	81,322	$	8	$	442,600	$	(358,571)	$	84,037

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

ASSERTIO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2021		2020
Operating Activities
Net income	$	4,544	$	41,230
Adjustments to reconcile net income to net cash used in operating activities:
Gain on sale of Gralise	—		(127,500)

Loss on sale of NUCYNTA	—		15,755
Loss on extinguishment of Convertible Notes	—		31,608
Loss on prepayment of Senior Notes	—		8,233
Depreciation and amortization	6,812		8,068

Amortization of debt discount, debt issuance costs and royalty rights	70		5,387
Recurring fair value measurement of assets and liabilities	(593)		3,147

Stock-based compensation	772		1,934
Provision for inventory and other assets	151		1,554
Other	—		(14)
Changes in assets and liabilities:
Accounts receivable	5,109		29,792
Inventories	2,631		(2,381)
Prepaid and other assets	3,395		3,289
Accounts payable and other accrued liabilities	(16,749)		(10,510)
Accrued rebates, returns and discounts	(12,978)		(26,584)
Interest payable	2,610		(8,071)
Net cash used in operating activities	(4,226)		(25,063)
Investing Activities
Purchases of property and equipment	—		(9)

Proceeds from sale of NUCYNTA	—		367,958
Proceeds from sale of Gralise	—		81,087




Net cash provided by investing activities	—		449,036
Financing Activities

Payments in connection with convertible notes extinguishment	—		(188,060)
Payments in connection with Senior Notes settlement	—		(171,775)






Proceeds from issuance of common stock	44,861		—
Shares withheld for payment of employee's withholding tax liability	(388)		(272)
Net cash provided by (used in) financing activities	44,473		(360,107)
Net increase in cash and cash equivalents	40,247		63,866
Cash and cash equivalents at beginning of year	20,786		42,107
Cash and cash equivalents at end of period	$	61,033	$	105,973

Supplemental Disclosure of Cash Flow Information
Net cash paid for income taxes	$	—	$	100
Cash paid for interest	$	—	$	10,842

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

ASSERTIO HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements of Assertio Holdings, Inc. (the Company or Assertio) and its subsidiaries and the related footnote information of the Company have been prepared pursuant to the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information that are normally required by U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair presentation of the information for the periods presented. The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the entire year ending December 31, 2021 or future operating periods.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020 included in Assertio Holdings, Inc.’s Annual Report on Form 10-K filed with the SEC on March 12, 2021 (the 2020 Form 10-K). The Condensed Consolidated Balance Sheet as of December 31, 2020 has been derived from the audited financial statements at that date, as filed in the Company’s 2020 Form 10-K. The Company’s significant one-time 2020 transactions such as the sale of the NUCYNTA franchise, sale of Gralise, repayment of its debt obligations, and merger with Zyla Life Sciences are discussed in the 2020 Form 10-K and have not been duplicated in the accompanying unaudited condensed consolidated financial statements and related financial information.

The weighted average common shares and warrants outstanding for the three months ended March 31, 2020 have been appropriately revised to increase the number of shares by 10.2 million to properly reflect the computation of such amount. Basic and diluted net income per share for the same period has been reduced by $0.07 as a result of this revision.

Impact of COVID-19 on our Business

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 March 2020, the Company initiated remote working arrangements and maintained flexible work arrangements for individuals, which continued through the remainder of 2020 and into 2021. In addition to the health and safety of its employees, the Company is focused on ensuring that it continues making its products accessible to the patients who need them. Because COVID-19 impacted the Company’s ability to see in-person providers who prescribe its products, the Company adapted its approach during 2020 and increased its virtual visits. Additionally, due to the limitations on elective surgeries, the Company has experienced a decline in prescriptions associated with those elective procedures. The extent to which the Company’s operations may continue to be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak, actions by government authorities to contain the outbreak or treat its impact, and the distribution, efficacy and public acceptance of COVID-19 vaccines.

NOTE 2. REVENUE

Disaggregated Revenue

The following table reflects summary revenue, net for the three months ended March 31, 2021 and 2020 (in thousands):

Table of Content


	Three Months Ended March 31,
		2021	2020
Product sales, net:
INDOCIN products (1)

SEC Form 10-Q filed by Assertio Holdings, Inc.