asrt-20220509
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): May 9, 2022
 
ASSERTIO HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware 01-39294 85-0598378
(State or Other Jurisdiction of
Incorporation)		 (Commission File Number) (IRS Employer Identification No.)
 
100 S. Saunders Road, Suite 300, Lake Forest, IL 60045
(Address of Principal Executive Offices; Zip Code)
 
(224) 419-7106
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

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 ASRTThe Nasdaq Stock Market LLC
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
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.  ☐


Item 2.02Results of Operations and Financial Condition.

On May 9, 2022, Assertio Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2022.  The press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
 
The information in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. The information contained herein shall not be incorporated by reference into any filing with the Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 5.07
Submission of Matters to a Vote of Security Holders.

The Company held its 2022 Annual Meeting on May 4, 2022 to consider and vote on the following proposals: (i) the election of five directors to hold office until the 2023 Annual Meeting of Stockholders (Proposal 1); (ii) to approve an amendment and restatement of the Company’s Amended and Restated 2014 Omnibus Incentive Plan, including an increase in the number of shares available for issuance thereunder (Proposal 2); (iii) to approve, on an advisory basis, the compensation of the Company’s named executive officers (Proposal 3); and (iv) to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022 (Proposal 4).

A summary of the final voting results for each of the four matters voted upon by the stockholders at the 2022 Annual Meeting is set forth below.

Proposal 1: The stockholders of the Company elected each of the five nominees to serve on the Board of Directors for a term to expire at the 2023 Annual Meeting of Stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. The votes on Proposal 1 were as follows:

Shares Voted ForShares Voted AgainstAbstentionsBroker Non-Votes
Heather L. Mason12,305,568467,304138,61212,164,804
William T. McKee12,227,770535,589148,12512,164,804
Daniel A. Peisert12,500,124269,884141,47612,164,804
Peter D. Staple12,444,964324,803141,71712,164,804
James L. Tyree12,447,349322,837141,29812,164,804

Proposal 2: The stockholders of the Company approved an amendment and restatement of the Company’s Amended and Restated 2014 Omnibus Incentive Plan, including an increase in the number of shares available for issuance thereunder. The votes on Proposal 2 were as follows:

Votes For9,461,540
Votes Against3,348,722
Abstentions101,222
Broker Non-Votes12,164,804

Proposal 3: The stockholders of the Company approved, on an advisory basis, the compensation of the Company’s named executive officers. The votes on Proposal 3 were as follows:

Votes For11,920,778
Votes Against862,998
Abstentions127,708
Broker Non-Votes12,164,804



Proposal 4: The stockholders of the Company ratified the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022. The votes on Proposal 4 were as follows:

Votes For24,623,634
Votes Against117,912
Abstentions334,742

Item 9.01Financial Statements and Exhibits.
(d)Exhibits
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
 


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 ASSERTIO HOLDINGS, INC.
   
Date: May 9, 2021By:/s/ Daniel A. Peisert
  Daniel A. Peisert
  President and Chief Executive Officer


Exhibit 99.1
 
Assertio Reports First Quarter 2022 Financial Results

Reaffirms Full Year Net Product Sales and Raises Full Year Non-GAAP Adjusted EBITDA Guidance

Net Product Sales Up 37% and Non-GAAP Adjusted EBITDA Up 52% Compared to Prior Year Quarter

Quarterly Net Cash Flows from Operating Activities of $27.4 Million

LAKE FOREST, IL. – May 9, 2022 – 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)20222021
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 GuidanceCurrent 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.
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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 Nemmers
Head, Investor Relations and Administration
[email protected]

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.

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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.




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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended March 31,
20222021
Revenues:
Product sales, net$35,546 $26,027 
Royalties and milestones992 434 
Other revenue— 378 
Total revenues36,538 26,839 
Costs and expenses:
Cost of sales4,195 3,966 
Selling, general and administrative expenses10,638 8,324 
Fair value of contingent consideration1,645 (594)
Amortization of intangible assets8,501 6,547 
Restructuring charges— 1,089 
Total costs and expenses24,979 19,332 
Income from operations11,559 7,507 
Other (expense) income:
Interest expense(2,327)(2,684)
Other gain545 269 
Total other expense(1,782)(2,415)
Net income before income taxes9,777 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 share45,204 37,824 
Shares used in computing diluted net income per share46,127 38,480 
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CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
March 31, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$61,389 $36,810 
Accounts receivable, net48,923 44,361 
Inventories, net9,480 7,489 
Prepaid and other current assets5,323 14,838 
Total current assets125,115 103,498 
Property and equipment, net1,329 1,527 
Intangible assets, net207,554 216,054 
Other long-term assets5,137 5,468 
Total assets$339,135 $326,547 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$8,523 $6,685 
Accrued rebates, returns and discounts55,588 52,662 
Accrued liabilities15,386 14,699 
Long-term debt, current portion12,271 12,174 
Contingent consideration, current portion14,600 14,500 
Other current liabilities32,159 34,299 
Total current liabilities138,527 135,019 
Long-term debt61,250 61,319 
Contingent consideration22,859 23,159 
Other long-term liabilities4,637 4,636 
Total liabilities227,273 224,133 
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 capital532,020531,636 
Accumulated deficit(420,162)(429,226)
Total shareholders’ equity111,862 102,414 
Total liabilities and shareholders' equity$339,135 $326,547 
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended March 31,
20222021
Operating Activities
Net income$9,064 $4,544 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization8,699 6,812 
Amortization of debt discount, debt issuance costs and royalty rights28 70 
Recurring fair value measurement of assets and liabilities1,645 (593)
Stock-based compensation982 772 
Provision for inventory and other assets31 151 
Changes in assets and liabilities, net of acquisition:
Accounts receivable(4,561)5,109 
Inventories(2,022)2,631 
Prepaid and other assets9,845 3,395 
Accounts payable and other accrued liabilities(1,511)(16,749)
Accrued rebates, returns and discounts2,926 (12,978)
Interest payable2,300 2,610 
Net cash provided by (used in) operating activities27,426 (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 equivalents24,579 40,247 
Cash and cash equivalents at beginning of year36,810 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)$— 
Cash paid for interest$— $— 
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RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA and ADJUSTED EBITDA
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021Financial Statement Classification
GAAP Net Income$9,064 $4,544 
Interest expense2,327 2,684 Interest expense
Income tax expense713 548 Income tax expense
Depreciation expense197 265 Selling, general and administrative expenses
Amortization of intangible assets8,501 6,547 Amortization of intangible assets
EBITDA (Non-GAAP)$20,802 $14,588 
Adjustments:
Legacy products revenue reserves (1)
— (378)Other revenue
Stock-based compensation982 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 

(1)Represents removal of the impact of revenue adjustment estimates related to previously divested products.
(2)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.
(3)Other represents amortization of inventory step-up recognized in Cost of sales related acquired inventories sold.

7

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, 2022Three Months Ended March 31, 2021
AmountDiluted EPSAmountDiluted EPS
Net income (GAAP)$9,064 $0.20 $4,544 $0.12 
Adjustments
Amortization of intangible assets8,501 0.18 6,547 0.17 
Legacy products revenue reserves— — (378)(0.01)
Stock-based compensation982 0.02 772 0.02 
Contingent consideration fair value change1,645 0.04 (594)(0.02)
Restructuring charges— — 1,089 0.03 
Other434 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 


(1)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.
(2)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.
(3)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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