Assertio Therapeutics Announces Strong Second-Quarter 2019 Results

-- Reports Total Company GAAP Net Sales of $57.2 million, Total Company Non-GAAP Net Sales of $59.3 million, including Commercialization Agreement Revenues of $31.0 million --

-- Drives Continued Improvement in Operating Efficiencies as the Company Executes on its Ongoing Transformation --

-- Confirms 2019 Earnings Guidance Range and Adjusts Neurology Franchise Net Sales Guidance --

-- Continues to Reduce Senior Secured Debt --

LAKE FOREST, Ill., Aug. 07, 2019 (GLOBE NEWSWIRE) -- Assertio Therapeutics, Inc. ASRT today reported financial results for the quarter ended June 30, 2019 and provided an update on its business performance and strategic initiatives.

Second-Quarter Financial Highlights:

(unaudited)

  Second Quarter 2019
(in millions, except earnings per share)GAAPNon-GAAP(1)
Total Revenues$57.2$59.3
Net Income/(Loss)$(13.6)$18.5
Earnings/(Loss) Per Share$(0.21)$0.25
Adjusted EBITDA-$36.7



(1)All non-GAAP measures included in this earnings release are reconciled to the corresponding GAAP measures in the schedules attached.

"We continue to make steady progress toward building a leading diversified biopharmaceutical business as we deliver strong results and de-lever our balance sheet," said Arthur Higgins, President and CEO of Assertio. "We remain focused on improving our financial position as we pursue business development opportunities across a range of new therapeutic areas."

 Second Quarter Business Highlights:

  • Neurology Franchise Net Sales: Gralise net sales in the second quarter were $17.8 million, primarily due to favorable year-over-year gross to net reflecting payor mix. In August, the Company executed an agreement that provides expanded access for Gralise through new coverage with one of the top three Medicare Part-D insurers, representing more than 6 million lives. Obtaining expanded Medicare Part-D access is important for Gralise as a majority of patients with postherpetic neuralgia are more than 65 years old. In the second quarter, Zipsor net sales were $1.5 million, adversely impacted by short-dated product sales returns; however, underlying prescription demand for Zipsor continues to grow double digits year-over-year. CAMBIA net sales in the second quarter were $6.8 million, primarily due to unfavorable year-over-year gross to net reflecting payor mix. Underlying prescription demand for CAMBIA increased mid single digits year-over-year.

     
  • Debt Reduction and Cash Position: As of August 7, 2019, the Company has made scheduled principal repayments of $100.0 million in 2019, reducing the Company's senior secured debt to $182.5 million. The Company will make an additional $20 million principal payment before year end, reducing senior secured debt to $162.5 million. As of June 30, 2019, the Company had cash and cash equivalents and short-term investments of $75.5 million.

     
  • One-Year Anniversary of Headquarters Relocation, Reincorporation and Name Change to Assertio Therapeutics, Inc.: Approximately one year ago, the Company completed its reincorporation from California to Delaware and changed its name from "Depomed, Inc." to "Assertio Therapeutics, Inc." In connection with the reincorporation and name change, the Company's common stock began trading under a new ticker symbol "ASRT." The Company also completed the relocation of its corporate headquarters from Newark, CA, to Lake Forest, IL.
 
Revenue Summary:
(in thousands, unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Product sales, net       
Gralise$17,800  $13,815  $31,078  $28,642 
CAMBIA6,758  8,089  15,566  14,505 
Zipsor1,524  3,988  5,755  8,734 
Total neurology product sales, net26,082  25,892  52,399  51,881 
        
NUCYNTA products(163) 626  (101) 18,771 
Lazanda18  320  89  540 
Total product sales, net25,937  26,838  52,387  71,192 
        
Commercialization agreement:       
Commercialization rights and facilitation services31,003  31,179  61,859  59,274 
Revenue from transfer of inventory      55,705 
Royalties and Milestone Revenue263  5,257  886  5,507 
        
Total revenues$57,203  $63,274  $115,132  $191,678 

2019 Financial Guidance:

The Company is confirming its previous 2019 earnings guidance range and adjusting its Neurology Franchise net sales guidance to low-single digits, reflecting the adverse impact of Zipsor short-dated product sales returns.

 Prior 2019 GuidanceCurrent 2019 Guidance
Neurology Franchise

Net Sales
Low to Mid-Single Digit GrowthLow-Single Digit Growth
GAAP Net Loss(1)($68) to ($58) million($68) to ($58) million
Non-GAAP

Adjusted EBITDA(1)(2)
$118 to $128 million$118 to $128 million



(1)Guidance includes $2.8 million of non-cash Collegium warrant related income and excludes any future warrant mark-to-market adjustments, which cannot be estimated.
(2)Guidance excludes any Collegium warrant mark-to-market adjustments.

Conference Call and Webcast:

Assertio will host a conference call today, Wednesday, August 7, 2019 beginning at 4:30 p.m. ET to discuss its results. This event can be accessed in three ways:

  • From the Assertio website: http://investor.assertiotx.com. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.



  • By telephone: Participants can access the call by dialing (877) 550-3745 (United States) or (281) 973-6277 (International) referencing Conference ID 7769879.



  • By replay: A replay of the webcast will be located under the Investor Relations section of Assertio's website approximately two hours after the conclusion of the live call.

About Assertio Therapeutics, Inc.

Assertio Therapeutics is committed to providing responsible solutions to advance patient care in the Company's core areas of neurology, orphan and specialty medicines. Assertio currently markets three FDA-approved products and continues to identify, license and develop new products that offer enhanced options for patients that may be under served by existing therapies. To learn more about Assertio, visit www.assertiotx.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This news release contains forward-looking statements. These statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to regulatory approval and clinical development of long-acting cosyntropin, expectations regarding royalties to be received based on sales of NUCYNTA and NUCYNTA ER, expectations regarding potential business opportunities and other risks outlined in the Company's public filings with the Securities and Exchange Commission, including the Company's most recent annual report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. All information provided in this news release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

Investor and Media Contact:

John B. Thomas

Senior Vice President, Investor Relations and Corporate Communications

jthomas@assertiotx.com

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 revenue, non-GAAP adjusted earnings, non-GAAP adjusted diluted earnings per share, non-GAAP adjusted EBITDA and other non-GAAP financial measures 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.

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, including the related tax effect. Specified items include non-cash adjustment to Collegium agreement revenue and cost of sales, release of NUCYNTA and Lazanda sales reserves for products the Company is no longer selling, interest income, interest expense, amortization, acquired in-process research and development and non-cash adjustments related to product acquisitions, stock-based compensation expense, non-cash interest expense related to debt, depreciation, taxes, transaction costs, CEO transition, restructuring costs, adjustments to net sales related to reserves recorded prior to the Company's exit of opioid commercialization activities, 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, and to adjust for the tax effect related to each of the non-GAAP adjustments.

 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Revenues:       
Product sales, net$25,937  $26,838  $52,387  $71,192 
Commercialization agreement, net31,003  31,179  61,859  114,979 
Royalties and milestones263  5,257  886  5,507 
Total revenues57,203  63,274  115,132  191,678 
Costs and expenses:       
Cost of sales (excluding amortization of intangible assets)2,124  2,753  4,699  14,797 
Research and development expenses1,263  2,180  3,056  3,708 
Selling, general and administrative expenses24,755  31,308  49,800  60,341 
Amortization of intangible assets25,443  25,444  50,887  50,888 
Restructuring charges  5,814    14,831 
Total costs and expenses53,585  67,499  108,442  144,565 
Income (loss) from operations3,618  (4,225) 6,690  47,113 
Other (expense) income:       
Interest expense(14,842) (17,010) (31,396) (35,078)
Other (expense) income, net(1,240) 67  (1,849) 296 
Total other expense(16,082) (16,943) (33,245) (34,782)
Net (loss) income before income taxes(12,464) (21,168) (26,555) 12,331 
Income taxes (expense) benefit(1,141) 120  (1,351) 445 
Net (loss) income$(13,605) $(21,048) $(27,906) $12,776 
Basic net (loss) income per share(0.21) (0.33) (0.43) 0.20 
Diluted net (loss) income per share(0.21) (0.33) (0.43) 0.20 
Shares used in computing basic net (loss) income per share64,480  63,719  64,405  63,611 
Shares used in computing diluted net (loss) income per share64,480  63,719  64,405  64,107 



 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 June 30, 2019 December 31, 2018
ASSETS   
Current assets:   
Cash and cash equivalents$68,348  $110,949 
Short-term investments7,114   
Accounts receivable, net34,311  37,211 
Inventories, net3,005  3,396 
Prepaid and other current assets26,231  56,551 
Total current assets139,009  208,107 
Property and equipment, net13,050  13,064 
Intangible assets, net641,212  692,099 
Investments8,589  11,784 
Other long-term assets11,014  7,812 
Total assets$812,874  $932,866 
LIABILITIES AND SHAREHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$2,188  $6,138 
Accrued rebates, returns and discounts63,808  75,759 
Accrued liabilities19,648  31,361 
Current portion of Senior Notes80,000  120,000 
Interest payable9,194  11,645 
Other current liabilities2,100  1,133 
Total current liabilities176,938  246,036 
Contingent consideration liability953  1,038 
Senior Notes117,527  158,309 
Convertible Notes297,550  287,798 
Other long-term liabilities22,467  19,350 
Total liabilities615,435  712,531 
Commitments and contingencies   
Shareholders' equity:   
Common stock6  6 
Additional paid-in capital407,944  402,934 
Accumulated deficit(210,506) (182,600)
Accumulated other comprehensive loss(5) (5)
Total shareholders' equity197,439  220,335 
Total liabilities and shareholders' equity$812,874  $932,866 



 
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
GAAP net (loss)/income$(13,605) $(21,048) $(27,906) $12,776 
Commercialization agreement revenues (1)1,933  3,198  3,863  (49,288)
Commercialization agreement cost of sales (2)      6,200 
NUCYNTA sales reserve (3)      (10,711)
NUCYNTA and Lazanda revenue reserves (4)145  (946) 12  (1,166)
Expenses for opioid-related litigation, investigations and regulations (5)2,350  2,220  4,850  3,047 
Intangible amortization related to product acquisitions25,443  25,444  50,887  50,888 
Contingent consideration related to product acquisitions(142) (260) (142) (462)
Stock-based compensation2,634  2,970  5,336  4,946 
Interest and other income(172) (70) (673) (164)
Interest expense14,842  17,010  31,396  35,078 
Depreciation279  1,454  616  2,929 
Income taxes (expense) benefit1,141  (120) 1,351  (445)
Restructuring and related costs  (6)  6,974    15,299 
Other costs  (31)   178 
Fair value for warrants1,848    3,477   
Non-GAAP adjusted EBITDA$36,696  $36,795  $73,067  $69,105 
 

(1) For the period from January 8, 2018 through November 8, 2018, the adjustment relates to the non-cash value assigned to inventory transferred to Collegium.  As of the date of the Commercialization Amendment, on November 8, 2018, the Company ceased recognition of fixed revenues and began the recognition of variable revenues when they become due beginning in January 2019. The adjustment for the three and six months ended June 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Represents the cash received for inventory transferred to Collegium at the commencement of the Commercialization Agreement.

(3) Represents a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible, net of $1.8 million in royalties payable to a third party during the three months ended March 31, 2018.

(4) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(5) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company's historical commercialization of opioid products.

(6) Restructuring and other costs represents non-recurring costs associated with the Company's restructuring, reincorporation, headquarters relocation and CEO transition.

 
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EARNINGS
(in thousands, except per share amounts)
(unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
GAAP net (loss)/income$(13,605) $(21,048) $(27,906) $12,776 
Commercialization agreement revenues (1)1,933  3,198  3,863  (49,288)
Commercialization agreement cost of sales (2)      6,200 
Nucynta sales reserve (3)      (10,711)
Non-cash interest expense on debt6,056  5,390  12,220  10,808 
Nucynta and Lazanda revenue reserves (4)145  (946) 12  (1,166)
Expenses for opioid-related litigation, investigations and regulations (5)2,350  2,220  4,850  3,047 
Intangible amortization related to product acquisitions25,443  25,444  50,887  50,888 
Contingent consideration related to product acquisitions(142) (260) (142) (462)
Stock-based compensation2,634  2,970  5,336  4,946 
Restructuring and related costs (6)  6,974    15,304 
Other costs  (31) (332) 178 
Fair value for warrants1,848    3,477   
Income tax effect of non-GAAP adjustments (7)(8,124) (9,067) (16,163) (5,623)
Non-GAAP adjusted earnings$18,538  $14,844  $36,102  $36,897 
Add interest expense of convertible debt, net of tax (8)1,703  1,703  3,406  3,406 
Numerator$20,241  $16,547  $39,508  $40,303 
Shares used in calculation (8)82,411  82,201  82,336  82,039 
Non-GAAP adjusted diluted earnings per share$0.25  $0.20  $0.48  $0.49 

(1) For the period from January 8, 2018 through November 8, 2018, the adjustment relates to the non-cash value assigned to inventory transferred to Collegium.  As of the date of the Commercialization Amendment, on November 8, 2018, the Company ceased recognition of fixed revenues and will begin recognition of variable revenues when they become due beginning in January 2019. The adjustment for the three and six months ended June 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Represents the cash received for inventory transferred to Collegium at the commencement of the Commercialization Agreement.

(3) Represents a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible, net of $1.8 million in royalties payable to a third party during the three months ended March 31, 2018.

(4) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(5) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company's historical commercialization of opioid products.

(6) Restructuring and other costs represents non-recurring costs associated with the Company's restructuring, reincorporation, headquarters relocation and CEO transition.

(7) Calculated by taking the pre-tax non-GAAP adjustments and applying the statutory tax rate.

(8) The Company uses the if-converted method to compute diluted earnings per share with respect to its convertible debt.

 
RECONCILIATION OF GAAP NET INCOME (LOSS) PER SHARE TO
NON-GAAP ADJUSTED EARNINGS PER SHARE
(unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
        
GAAP net (loss)/income per share$(0.21) $(0.33) $(0.43) $0.20 
Conversion from basic shares to diluted shares0.05  0.07  0.09  (0.05)
Commercialization agreement revenues0.02  0.04  0.05  (0.60)
Commercialization agreement cost of sales      0.08 
NUCYNTA sales reserve      (0.13)
Non-cash interest expense on debt0.07  0.06  0.15  0.14 
NUCYNTA and Lazanda revenue reserves  (0.01)   (0.01)
Expenses for opioid-related litigation, investigations and regulations0.03  0.03  0.06  0.04 
Intangible amortization related to product acquisitions0.31  0.31  0.62  0.62 
Contingent consideration related to product acquisitions      (0.01)
Stock based compensation0.03  0.04  0.06  0.06 
Restructuring and related costs  0.08    0.18 
Change in fair value of warrants0.02    0.04   
Income tax effect of non-GAAP adjustments(0.10) (0.11) (0.20) (0.07)
Add interest expense of convertible debt, net of tax0.03  0.02  0.04  0.04 
Non-GAAP adjusted diluted earnings per share$0.25  $0.20  $0.48  $0.49 



 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the three months ended June 30, 2019
(in thousands)
(unaudited)
 
 Commercialization

agreement

revenues
 Product

Sales
 Royalties

and

milestones
 Cost of

sales
 Research

and

development

expense
 Selling,

general and

administrative

expense
 Amortization of intangible assets Interest expense Other

(Expense)

Income, Net
 Income

taxes

(expense)

benefit
GAAP as reported$31,003  $25,937  $263  $2,124  $1,263  $24,755  $25,443  $(14,842) $(1,240) $(1,141)
Commercialization agreement revenues and cost of sales1,933                   
NUCYNTA sales reserve                   
Non-cash interest expense on debt              6,056     
NUCYNTA and Lazanda revenue reserves  145                 
Expenses for opioid-related litigation, investigations and regulations          (2,350)        
Intangible amortization related to product acquisitions            (25,443)      
Contingent consideration related to product acquisitions          142         
Stock based compensation      (50) (76) (2,508)        
Change in fair value of warrants                1,848   
Other costs                   
Income tax effect of non-GAAP adjustments                  (8,124)
Non-GAAP adjusted$32,936  $26,082  $263  $2,074  $1,187  $20,039  $  $(8,786) $608  $(9,265)



 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the six months ended June 30, 2019
(in thousands)
(unaudited)
 
 Commercialization agreement

revenues
 Product

Sales
 Royalties

and

milestones
 Cost of

sales
 Research

and

development

expense
 Selling,

general

and administrative

expense
 Amortization of intangible assets Interest expense Other

(Expense)

Income,

Net
 Income

taxes

(expense)

benefit
GAAP as reported$61,859  $52,387  $886  $4,699  $3,056  $49,800  $50,887  $(31,396) $(1,849) $(1,351)
Commercialization agreement revenues and cost of sales3,863                   
Non-cash interest expense on debt              12,220     
NUCYNTA and Lazanda revenue reserves  12                 
Expenses for opioid-related litigation, investigations and regulations          (4,850)        
Intangible amortization related to product acquisitions            (50,887)      
Contingent consideration related to product acquisitions          142         
Stock based compensation      (50) (349) (4,937)        
Change in fair value of warrants                3,477   
Other costs                (332)  
Income tax effect of non-GAAP adjustments                  (16,163)
Non-GAAP adjusted$65,722  $52,399  $886  $4,649  $2,707  $40,155  $  $(19,176) $1,296  $(17,514)



 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the three months ended June 30, 2018
(in thousands)
(unaudited)
 
 Commercialization

agreement

revenues
 Product

Sales
 Royalties

and

milestones
 Cost of

sales
 Research

and

development

expense
 Selling,

general

and

administrative

expense
 Restructuring

Charges
 Amortization

of

intangible

assets
 Interest expense Other (Expense) Income, Net Income taxes (expense) benefit
GAAP as reported$31,179  $26,838  $5,257  $2,753  $2,180  $31,308  $5,814  $25,444  $(17,010) $67  $120 
Commercialization agreement revenues and cost of sales3,198                     
Non-cash interest expense on debt                5,390     
NUCYNTA and Lazanda revenue reserves  (946)                  
Expenses for opioid-related litigation, investigations and regulations          (2,220)          
Intangible amortization related to product acquisitions              (25,444)      
Contingent consideration related to product acquisitions          260           
Stock based compensation      (16) (14) (2,940)          
Restructuring and other costs          31  (6,974)        
Income tax effect of non-GAAP adjustments                    (9,067)
Non-GAAP adjusted$34,377  $25,892  $5,257  $2,737  $2,166  $26,439  $(1,160) $  $(11,620) $67  $(8,947)



 
RECONCILATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
For the six months ended June 30, 2018
(in thousands)
(unaudited)
 
 Commercialization

agreement

revenues
 Product

Sales
 Royalties

and

milestones
 Cost of

sales
 Research

and

development

expense
 Selling,

general

and

administrative

expense
 Restructuring

Charges
 Amortization

of

intangible

assets
 Interest

expense
 Other

(Expense)

Income,

Net
 Income

taxes

(expense)

benefit
GAAP as reported114,979  71,192  5,507  14,797  3,708  60,341  14,831  50,888  (35,078) 296  445 
Commercialization agreement revenues and cost of sales(49,288)     (6,200)              
NUCYNTA sales reserve  (10,711)                  
Non-cash interest expense on debt                10,808     
NUCYNTA and Lazanda revenue reserves  (1,166)                  
Expenses for opioid-related litigation, investigations and regulations          (3,047)          
Intangible amortization related to product acquisitions              (50,888)      
Contingent consideration related to product acquisitions          462           
Stock based compensation      (30) (67) (4,849)          
Restructuring and other costs          (178) (15,304)        
Income tax effect of non-GAAP adjustments                    (5,623)
Non-GAAP adjusted65,691  59,315  5,507  8,567  3,641  52,729  (473)   (24,270) 296  (5,178)



 
SECOND-QUARTER RECONCILIATION OF GAAP to NON-GAAP REVENUES
(in thousands)
(unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018(1)
Total revenues (GAAP basis)$57.2  $63.3  $115.1  $191.7 
Non-cash adjustment to commercialization agreement revenues(2)2.1  2.2  3.9  (48.7)
Release of NUCYNTA sales reserves(3)      (12.5)
Total revenues (non-GAAP basis)$59.3  $65.5  $119.0  $130.5 

(1) Year-to-date 2018 total GAAP revenues include one-time items described in our quarterly report on Form 10-Q for the six months ended June 30, 2018.

(2) The adjustments for the three and six months ended June 30, 2019 relate to non-cash adjustments for third-party royalties, which were a net expense but are expected to have no net impact for the full year period, the amortization of the contract asset, and the impact of revenue adjustment estimates related to products that we are no longer commercializing. For the three months ended June 30, 2018 the adjustment relates to non-cash adjustments for third party royalties and for the six months ended June 30, 2018 the adjustment relates primarily to the non-cash value assigned to inventory transferred to Collegium.

(3) Represents a $12.5 million benefit related to the release of sales reserves for which the Company is no longer financially responsible.

 
FULL-YEAR 2019 NON-GAAP GUIDANCE RECONCILATION
(in millions)
(unaudited)
 
 Earnings (1)
 Low EndHigh End
GAAP$(68) $(58)
Specified Items(2)$186  $186 
Non-GAAP$118  $128 
        

(1) GAAP net income guidance refers to GAAP net income and non-GAAP earnings guidance refers to non-GAAP adjusted EBITDA.

(2) For purposes of this forward-looking reconciliation, a description of the categories of specified items included in this reconciliation are detailed in the tables above.

SENIOR SECURED NOTE COVENANT DISCLOSURES

The Company was in compliance with its covenants, including the Senior Secured Debt Leverage Ratio and Net Sales covenants, with respect to the Company's senior secured notes as of June 30, 2019.  Set forth below are additional disclosures that the Company is required to make in connection with the senior secured notes.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA

For the Rolling Twelve Month Period Ended June 30, 2019

(in thousands)

(unaudited)

The below reconciliation is presented to disclose the calculation of Adjusted EBITDA (as defined in our senior secured notes) on a rolling 12 month basis to support covenant compliance in connection with our senior secured notes.

 Twelve Month Period
 Ended June 30, 2019
 (unaudited)
GAAP net (loss)/income$(3,774)
Commercialization agreement revenues (1)27,987 
Nucynta and Lazanda revenue reserves (2)(384)
Expenses for opioid-related litigation, investigations and regulations (3)9,700 
Intangible amortization related to product acquisitions101,773 
Contingent consideration related to product acquisitions(195)
Stock-based compensation10,829 
Purdue Litigation(62,000)
Interest and other income(1,706)
Interest expense65,199 
Depreciation(382)
Income taxes (expense) benefit2,863 
Restructuring and related costs  (4)5,965 
Other costs(55)
Fair value for warrants3,477 
Adjusted EBITDA$159,297 

(1) The adjustment for the twelve months ended June 30, 2019 relates to non-cash expense for third-party royalties, which are expected to have no net impact for the full year period, as well as the amortization of the contract asset.

(2) Removal of the impact of revenue adjustment estimates related to products that we are no longer commercializing.

(3) Legal costs/expenses related to opioid-related litigation, investigations and regulations pertaining to the Company's historical commercialization of opioid products.

(4) Restructuring and other costs represents non-recurring costs associated with the Company's restructuring, reincorporation, headquarters relocation and CEO transition.

Additional Covenant Disclosures

Long-acting cosyntropin has not yet been launched for commercial sale and therefore no revenue in respect of this product was recognized by the Company as of June 30, 2019.

During the rolling twelve month period ended June 30, 2019, the Company collected $128.2 million in cash receipts, net of cash payments made, in connection with the Company's Commercialization Agreement with Collegium.

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