Q1 2025 Assertio Holdings Inc Earnings Call
Please stand by.
Speaker Change: Well, good day, ladies and gentlemen. Welcome to the Assertio Holdings First Quarter 2025 Results Conference Call. Just a reminder that today's call has been recorded. I would now like to hand things over to Mr. Matt Kreps. Please go ahead, sir.
Speaker Change: Thank you and good afternoon. Thank you all for joining us today to discuss and start she has first quarter 2025 financials.
Speaker Change: The news release covering our results for this period is now available on the investor page of our website at investor.assertio.x.com I would encourage you to review the release and tables in conjunction with today's discussion.
Speaker Change: With me, today are Brendan OGrady, Chief Executive Officer, and Ajay Patel, Chief Financial Officer. Brendan will open remarks and provide an overview of the business, including an update on Assertio's long-term business strategy. After Brendan, Ajay will cover our financial results and guidance.
Speaker Change: Brennan will then provide some closing comments before we take questions from our covering research analysts.
Speaker Change: Please note that during this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in this afternoon's press release, as well as Sergio Spalens with the FCC.
Speaker Change: These and other risk factors are more fully described in the risk factor section and other sections for any report on form 10k, and in our form 10k you violence. Our actual results may differ materially from those projected in the forward looking statements.
Speaker Change: Starshios specifically disclaims any intent or obligation to update these forward-looking statements except as required by law, and with that I will now turn the call over to Brendan, please go ahead.
Brendan OGrady: Thank you, Matt. And thank you to everyone who has joined today's call. I'll begin today with a quick overview of our first quarter financial results, which are in line with the full year 2025 net product sales and adjusted EBITDA expectations that were set forth.
during the March Earnings call.
Brendan OGrady: In the first quarter, net product sales came in slightly head of plan at 26 million, and we are tracking to our full-year net product sales in adjusted EBITDA outlook.
Brendan OGrady: As I signaled in March, Rolvidon results in the first quarter were impacted by self-due of fourth quarter initial stocking activity to support a customer and volume expansion which we expect to benefit us from Q2 onward.
Brendan OGrady: In addition, we are continuing to add new customers and have strengthened our payer coverage that started in February with signal and expect to further expand our payer coverage going into the second half of this year.
Brendan OGrady: Overall, Rovedon demand remains strong and combined with our focused execution, we foresee net sales to continue increasing throughout the year.
Brendan OGrady: Lastly, Indicent Remain Stable in the first quarter, achieving our expectation for nut sales and contribution.
Speaker Change: These results, along with expected performance throughout 2025, are influenced by the substantial progress Assertio has achieved to date, implementing the long-term business strategy that I put into place last year.
Brendan OGrady: As I approach my one year anniversary with Assertio, I think it's important to recognize the team's progress and address our expectations moving forward.
Brendan OGrady: As previously stated, our strategy includes three phases characterized as stabilization, transformation, and growth.
Brendan OGrady: Stabilization was successfully completed in 2024 and has adapted our organization to the changing operating environment.
Brendan OGrady: We strengthened our balance sheet, repositioned our portfolio to focus on Rolvedon and Symposant as core growth drivers, and rebalanced our talent and promotional resources.
Brendan OGrady: The significant achievements pave the way for us to begin implementing our current phase transformation.
Brendan OGrady: This phase is occurring throughout 2025 as re-implement actions intended to catalyze a shift in future growth potential. I will cover this in more detail in just a minute.
Brendan OGrady: Finally, the girl phase of our strategy is expected to start in 2026, during which time will we intend to become a leading commercially focused, specialty pharma company that creates top to your value over the long term.
Brendan OGrady: Now, coming back to the transformation phase of our strategy, we set forth the following priorities for 2025.
1st, Reduce Legal Exposure
Second, simplify our corporate structure and processes
Third, Prioritize Investment in Growth Assets
Brendan OGrady: Fourth, divest non-core assets, and fifth, use the strength of our balance sheet to close the strategic transaction.
Brendan OGrady: These five transformation priorities are well underway with the goal of completing each by the end of this year, and I'm encouraged by our progress in just the first four months.
Brendan OGrady: I'll address several notable achievements and we'll start with reducing our legal exposure.
Brendan OGrady: Assertio has settled multiple prior legal matters, including the previously disclosed 2017 Department of Justice False Claims Act, Q-Tam Lawsuit.
Brendan OGrady: The last remaining Guumetza antitrust action, and Spectrum's Legacy Luau Securities Class Action.
Brendan OGrady: It is important to note that we admit to no wrong doing in any of these cases, but decided to settle rather than continue to litigate and incurring the cost to defend, as well as the distraction to our business.
Brendan OGrady: In addition, we have tainted dismissal of the company's Edward Securities Class Action pending court approval.
Brendan OGrady: Our overall progress in reducing our legal exposure improves our ability to optimize operating expenses by reducing legal costs and refocusing those resources back to the business.
Brendan OGrady: As noted in our earnings release, we have also begun simplifying our corporate holding structure by transferring all of our assets in our Sertio Therapeutic subsidiary to ATIH Industries LLC.
Brendan OGrady: At the closing of this transaction, Assertio Therapeutics held approximately 8.2 million in cash.
Brendan OGrady: a single-digit royalty in Anderson and certain legal liabilities, including those related to opioid litigation, which ATIH has assumed responsibility for managing and defending.
Brendan OGrady: As a result of this transaction, neither 30 holdings nor any of its current subsidiaries remain named offenders in any opioid-related litigation.
Brendan OGrady: As we move throughout the year, we will also progress our strategy to develop some non-core assets which will further improve our ability to reallocate corporate resources to focus on growth and bolster our balance sheet to acquire or in license new growth assets. Thank you very much.
Brendan OGrady: Already, we have added new marketing support for Rolvidon and rebalanced promotional efforts for Sypazan by augmenting our omnichannel activities with select in-person support for the largest markets and key high-deserved prescribers.
Brendan OGrady: As a result, we are seeing improved efficiency and sales performance as previously mentioned.
Brendan OGrady: The actions I have just touched on allow a studio to optimize operating expenses so that we can better invest in the future and advance our strategic activities as we move through the transformation and into the growth phase.
Brendan OGrady: I want to conclude my remarks by stating that Assertio's underlying business is strong and will be most successful by pivoting to a more sustained operating model.
Brendan OGrady: Driven by not only cash flow assets, but by growth assets.
Brendan OGrady: To be clear, our strategy is to focus on specialty pharma assets with the potential to grow over sustained period of time within a commercially focused operating model.
Brendan OGrady: That is why we are implementing a long-term business strategy that we are confident can create sustained near-term growth and increase long-term value.
Brendan OGrady: I look forward to providing you with continued updates on our progress as we head through 2025.
Speaker Change: I will now hand over to our CFO , Ajay Patel, who will walk us through the details of our first quarter performance.
Ajay Patel: Thanks, Brendan. Today, I'll walk through our financial results for the first quarter of 2025.
Speaker Change: My commentary will resume the use of the year-over-year comparisons, as we have now completed the stabilization phase that Brendan discussed regarding the 2023 Spectrum acquisition and indices generic competition, which made year-over-year comparisons difficult in 2024.
Speaker Change: Loved on sales were 13.1 million dollars, a decrease from 14.5 million dollars in the prior year first quarter driven by lower pricing partially offset by higher volume.
Speaker Change: As Brendan mentioned, the current year first quarter was impacted by fourth quarter stocking.
Speaker Change: Indicent net product sales were $5.5 million down from $8.7 million in the prior year quarter due to the impacts of generic competition. The prior year first quarter was still in the early stages of the generic impact.
Speaker Change: Symposan sales were $2.2 million compared to $2.6 million in the prior year period impacted slightly by pricing and volume.
Speaker Change: Reported gross margin increased to 70% from 65% a year ago. The prior year reported gross margin included role-ved-on inventory step-up ammarization.
Speaker Change: Excluding the impact of the inventory step up, prior year gross margin was 78%. The year over year gross margin decline was driven by the impact of higher rubodon volumes on cost of sales.
Speaker Change: The $18 $5 million in the prior year quarter, primarily driven by higher legal charges, including a net settlement charge of $2 $8 million for the <unk> shareholder matter.
Speaker Change: R&D expense was zero point $4 million down from zero point $7 million a year ago due to the completion of the same day dosing trial at the end of 2024.
Speaker Change: Adjusted operating expenses, which excludes stock compensation, DNA and nonrecurring restructuring and legal settlement charges were $18 5 million compared to $17 $3 million in the prior year period due to higher external litigation costs.
Speaker Change: GAAP net income for the first quarter was a loss of $13 5 million compared to a loss of $4 $5 million in the prior year in.
Speaker Change: In addition to the impacts just discussed GAAP net income was affected by higher intangible amortization expense due to a change in useful life at the end of 2024.
Speaker Change: Adjusted EBITDA for the first quarter was zero point $2 million compared to seven $4 million in the prior year quarter, primarily reflecting the impact of lower net sales and gross margin as discussed.
Speaker Change: Turning to our balance sheet and cash flow statements as of March 31, 2025, cash and investments totaled $87 $3 million compared to $100 $1 million as of December 31, 2024.
Speaker Change: Cash flow from operations during the first quarter was impacted by the timing of approximately $12 million of accounts receivable collected in early April.
Speaker Change: At the end of April 2025, cash and investments stood at approximately $96 $7 million.
Speaker Change: Debt at March 31, 2025 remains unchanged at $40 million comprised of the company's 6.5% convertible notes with no maturities until September 2027.
Brendan OGrady: With that I will turn the call back to Brendan.
Brendan OGrady: Thanks, a J in the first quarter. The <unk> team delivered strong financial performance on track to the expectations that we set for 2025, we also demonstrated outstanding execution on the transformation phase of our business strategy with notable achievements that keep us on a path to realizing our goal of <unk>.
Brendan OGrady: Creating sustainable near term growth and increase long term value I.
Brendan OGrady: I am confident that the strength of our underlying financials ongoing business performance and business strategy will enable our success with that let's go ahead and open the call for questions from our analysts.
Speaker Change: Thank you, Sir and everyone. If you would like to ask a question. Please press star one on your telephone keypad. Our first question today comes from Thomas Flaten Lake Street.
Thomas Flaten: Hey, good afternoon, guys. Thanks for taking the questions Brendan Congrats on Offloading, the opioid litigation matters, where they're just out of curiosity on that was their value in either direction on that did you guys pay them to take it.
Speaker Change: <unk> accepted was there any value there.
Speaker Change: Yeah, and just nominal value they paid us Thomas.
Speaker Change: Okay.
Speaker Change: And a quick one for AJ AJ you guys have some.
Speaker Change: Relative to the beginning of last year Youre accrued rebates returns accrued liabilities are up how.
Speaker Change: How should we think about you guys using.
Speaker Change: Using cash to bring those bring those balances back down again will that occur pretty evenly over the course of the year or how should we think about that.
Speaker Change: Yeah Thomas Thanks for the question, Yeah, I would think about that relatively evenly as you know.
Speaker Change: The primary factor of that is Rover Don.
Speaker Change: With its E S P based pricing.
Speaker Change: Whereas the rebates increase for that the payments typically occur in the subsequent quarter.
Speaker Change: Got it understood.
Speaker Change: Just a final one from me if I might any any more thoughts on same day dosing.
Speaker Change: Progress was within CCM any update on that.
Thomas Flaten: Yeah Thomas so.
Thomas Flaten: As we've discussed or said before we are it's kind of a 12 month strategy as far as the N. C. C. N. So we've presented the results of the same day dosing trial twice once in December once in I think March.
Thomas Flaten: We've approached a peer reviewed journal for publication that we hope will be mid summer and once that's done then we will approach N C. C N about inclusion in the guidelines for 2026 so.
Thomas Flaten: Yeah everything is moving according to plan ultimately, we don't control, whether we get in the N CCN for the guidelines or not but we are executing the plan to get there.
Speaker Change: Excellent I'll hop back in the queue. Thank you.
Thomas Flaten: Sure.
Speaker Change: We'll take the next question from Nads Raman Maxim Group.
Nads Raman: Alright, thanks for taking my questions.
Nads Raman: Congrats on the progress just a question on woven arc home I believe you spoke about extending into the hospital setting away from the community setting could you kind of provide some comments and details about how that progressing thus far in 2025 and sort of where you start wherever you would expect to see an inflection point there.
Speaker Change: Yeah, Hi, Thanks for the question I think if you think about role but on.
Speaker Change: Today, most of our business is in the community oncology Medicare part B space.
Speaker Change: To be successful in.
Speaker Change: In the hospital space, we really need to grow our commercial payer side that will unlock a couple of things for us so to unlock more of the commercial channel for us.
Speaker Change: And then we'll unlock hospitals as well so the next step in the strategy is really to build our payer coverage, which we have done with Cigna as I mentioned in my opening comments and hope to expand.
Speaker Change: In the second half of this year and then further expanded 2026 as we do that we will be able to get more of the commercial Linux based business is well as that'll enable us to to impact or penetrate hospitals to a greater degree.
Speaker Change: Got it thank you.
Speaker Change: Last question is just on guidance so based on once you're on the adjusted EBITDA guidance of $10 million to $19 million.
Speaker Change: Why not just the ban.
Speaker Change: Or do you still think it's possible and what levers could you do.
Speaker Change: Do you think we will get you through towards that 19 million why not just add Dan down from 10, just something else to the wonderful results.
Speaker Change: I think that there's still too many things going on.
Speaker Change: That that would make sense for us to adjusted down we will see how our second quarter pans out and we'll talk about it again in August but at this point I think the guidance ranges, we put out there for both EBITDA and net sales I think we're we're tracking two within those guidance ranges and we'll.
Speaker Change: We'll see how things go but we'll we'll update it again in August if necessary.
Speaker Change: Alright, thanks for taking my questions.
Speaker Change: Sure.
Speaker Change: The next question will come from Ram Silverado H C Wainwright.
Speaker Change: Thanks, very much for taking my questions.
Speaker Change: And further and stuff.
Speaker Change: No additional context regarding the rollout on situation can you give us a sense of what additional.
Speaker Change: Promotional or marketing strategies, you expect to implement over the course of the remainder of this year to try to accelerate growth enrolled at Huntsville.
Ram: Sure Hi, Ram Thanks for the question.
Ram: Couple of things I mean first of all there's still more market share we can get in our primary space, which is the Medicare part b clinics, they're still some some large groups out there that are that we hope to attracted additional volume with an additional share. So that's one.
Ram: Second I mentioned that the payer piece, we've just begun to start starting to pull that business through on the commercial side. So that's too.
Ram: We hope to expand that coverage in the second half of the year, which would be the third and again that will enable us to get some penetrations of the hospital. So if we see that as kind of building throughout the year.
Ram: We expect roll, but on to continue to grow in net sales and volume as we go through this year.
Speaker Change: Can you talk about how you expect the overall generic deflation picture to evolve over the course of the remainder of 2025 with respect to in defense.
Ram: Are you expecting.
Ram: Substantial additional number of generic purveyors of Anderson between now and the end of 2025 or so approximately how many and what impact do you expect that to have even if only on a qualitative basis regarding the remaining in this revenue stream.
Speaker Change: Yeah. Another good question. Thanks Ram I think our plan assumed two more generics for Anderson this year one in the first half of the year.
Speaker Change: One in the second half of the year. There was an approval back in February we have not got any confirmation of launch yet.
Speaker Change: So I think we're still relatively tracking to plan.
Speaker Change: But you can think about if theres three out of the market you split the market by three of those four and the marquee split it by four so each time, you lose volume and you lose price. So it will decline with the with the entrance of more generics.
Speaker Change: But I think I'm optimistic right now that we're we're tracking to our plan I think we've got a pretty good a pretty good handle on it we'll optimize into send as much as we can as we go through the year.
Speaker Change: And then lastly, you had mentioned on this in a couple of previous calls.
Speaker Change: The interest of the company and doing something on the strategic front to broaden potentially the commercial portfolio can.
Speaker Change: Can you give us some additional context on that if theres been any sort of evolution in your thinking, particularly at this pertains to the broader market environment changes that youre seeing within that and also the possibility of identifying opportunities that are directly synergistic with your existing commercial assets.
Speaker Change: Yeah, I mean, we have <unk>.
Speaker Change: Numerous ongoing conversations all.
Speaker Change: Very positive conversations going in the right direction and I'm very optimistic that we will we will get something done.
Speaker Change: In 2025 that will certainly add to our business and position us for that growth phase in 2026, I, obviously cant be more specific than that but I'm very encouraged.
Speaker Change: Courage by our by the conversations that we currently have going on.
Speaker Change: So just for clarification purposes.
Speaker Change: As of right now your forecast or outlook for 2025 is not contingent upon any such business development activity being successfully concluded is that correct.
Speaker Change: That is correct. The our outlook for 2025 includes only our current portfolio.
Speaker Change: Thank you.
Speaker Change: Yep.
Speaker Change: Our next question today comes from Scott Henry Alliance Global Partners.
Scott Henry: Thank you and good afternoon.
Speaker Change: I guess first with regard to Rover Don.
Speaker Change: You do mention pricing pressure could you talk about the pricing how it is kind of year over year and sequentially and your expectation.
Speaker Change: Going forward.
Scott Henry: Yeah, Hi, Scott.
Scott Henry: I mean, it is a quarter to quarter.
Scott Henry: Type of strategy so.
A ASP does erode over time, and some quarters has a bigger impact than others. It's a very competitive market places we play in this this neulasta biosimilar a long acting G CSF space.
Scott Henry: And there could be new entrants that enter as we go through this year that they could also have an impact.
Scott Henry: I think we're doing a very good job of maintaining and managing our E. S. P. I think the way that we think about the business and the way, we execute and contract business is smart, which I think is is why our ASP is.
Scott Henry: <unk> been slower to erode maybe than others, and we continue to build volume and gain new customers and that's part of of the step down from Q4 to Q1 was.
Scott Henry: We brought in some new customers in Q4 that were going to pull through in Q1.
Scott Henry: So we wanted that inventory there and we pulled that through in Q1, so you'll start to.
Scott Henry: See that grow as we go into Q2 and beyond.
Speaker Change: Okay. Thank you for that color and then with regards to SG&A.
Scott Henry: Yeah.
Scott Henry: I believe you said the base SG&A is around $18 $5 million quarterly I guess the question is did I hear that correct.
Scott Henry: And as well you know.
Scott Henry: What would you expect for the legal wind down, particularly given that you've had this divestment should that start to be.
Scott Henry: Find materially in the coming quarters or how long should some of it is that other litigation day.
Scott Henry: Yeah no. Thanks for the question Scott you're right. So the base adjusted Opex for the first quarter was $18 5 million now.
Scott Henry: Now in the first quarter, we were burdened we typically have kind of two components of litigation exposure legacy matters and shareholder matters as Brendan kind of alluded to in his comments right. The legacy matters for the most part have been mitigated now with the divestment of <unk> Therapeutics, we are expecting kind of on an annual.
Scott Henry: Lies front that to benefit us in the neighborhood of.
Scott Henry: $2 million to $3 million annually.
Scott Henry: And then from a shareholder litigation as we continue to resolved saddle and exited those cases, the ongoing burden does decrease overtime.
Scott Henry: Okay. Thank you our final.
Speaker Change: Final question just for clarity.
Scott Henry: What is what is as it is.
Scott Henry: Exactly did you divest into the AIP H.
Scott Henry: Entity.
Scott Henry: And was there any material EBITDA impact from those asset.
Scott Henry: There is just a.
Scott Henry: A single digit royalty on into sending we divested with the with the therapeutics divestiture and a T IH as.
Scott Henry: As well as some cash.
Scott Henry: Okay, alright, so none of the other products went with it.
Scott Henry: No.
Scott Henry: Okay and.
Scott Henry: If I may and it's I guess, it's I don't want to ask you a legal question, but I think I'm going to.
Scott Henry: If you divest.
Scott Henry: Some of your legal responsibilities to this asset what is the risk that they could still come after the parent company that you can in fact completely divest that liability.
Scott Henry: Well I mean, if you think about it the way that we got the liability was through M&A.
Scott Henry: So this is no different we transferred this league.
Scott Henry: Legal entity to a third party that is going to maintain and run this business and manage.
Scott Henry: And manage it accordingly, so while there's always a risk.
Scott Henry: I think the risk is very very low.
Scott Henry: And everyone. Just a reminder that is star one if you have a question up next is Jim Sidoti Sidoti <unk> company.
Jim Sidoti: Hi, good afternoon, thanks for taking the questions.
Scott Henry: In addition to all the internal changes there.
Scott Henry: You deal with some external changes as well.
Scott Henry: Can you comment on.
Speaker Change: What impact do you think there could be from either the tariffs or the the executive order regarding drug pricing or the proposed changes to mitigate.
Scott Henry: Yeah I mean.
Speaker Change: So the tariffs.
Speaker Change: Is who knows right that's a that's a daily up and down.
Speaker Change: We've got a significant I mean, probably the thing we would be most exposed on with tariffs would be drug substance on unroll. It on but we've got a significant inventory here in the U S.
Speaker Change: So we don't expect any short term impact and by the time there is an impact hopefully that situation will be worked out.
Speaker Change: With regards to drug pricing.
Speaker Change: We do not sell any products outside of the U S. With the exception of Cambria that we sell in Canada, and and can be as probably more expensive in Canada. The fact that it's not generic <unk> generic here so.
We will see there is there needs to be a lot more details on on drug pricing.
Speaker Change: <unk>.
Speaker Change: It's going to take a while for the details to come out as to how that's actually going to play out but at least right. Now we don't we don't see any real risk on either one of those two things.
Speaker Change: Okay, and I just wanted to be clear post the divestiture.
Speaker Change: Are you maintaining your revenue guidance of $180 million to $142 million.
Speaker Change: We are.
Speaker Change: Okay. Thank you.
Speaker Change: Yep.
Speaker Change: And at this time there are no further questions everyone that does conclude todays <unk> holdings first quarter conference, we would like to thank you all for your participation you may now disconnect.
Speaker Change: [music].