Assertio Holdings Inc.
03/16/2026 | Press release | Distributed by Public on 03/16/2026 15:07
Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and the related notes thereto included in this Annual Report on Form 10-K. In addition to historical information, some of the information contained in this discussion and analysis or set forth under Part I, Item 1, "Business" and elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part I, Item 1A "Risk Factors" section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis or elsewhere in this Annual Report on Form 10-K. For a discussion and analysis of our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
Unless otherwise noted or required by context, use of "Assertio," the "Company," "we," "our" and "us" refer to Assertio Holdings and/or its applicable subsidiary or subsidiaries. Reference to "Assertio Specialty" refers to Assertio Specialty Pharmaceuticals, LLC, and "Spectrum" refers to Spectrum Pharmaceuticals, Inc. and/or its applicable subsidiary or subsidiaries. Both Assertio Specialty and Spectrum are wholly-owned subsidiaries of the Company. Additionally, the use of "Assertio Therapeutics" refers to Assertio Therapeutics, Inc., and/or its applicable subsidiary or subsidiaries. Assertio Therapeutics was divested on May 9, 2025.
We are a pharmaceutical company with comprehensive commercial capabilities offering differentiated products designed to address patients' needs. Our focus is on supporting patients by marketing products primarily in the oncology market. Our primary marketed products are:
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ROLVEDONTM(eflapegrastim-xnst) injection for subcutaneous use
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A long-acting granulocyte colony-stimulating factor ("G-CSF") with a novel formulation that is indicated to decrease the incidence of infection, as manifested by febrile neutropenia, in adult patients with nonmyeloid malignancies receiving myelosuppressive anti-cancer drugs associated with clinically significant incidence of febrile neutropenia.
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| Sympazan® (clobazam) oral film | A benzodiazepine indicated for the adjunctive treatment of seizures associated with Lennox-Gastaut Syndrome ("LGS") in patients aged two years of age or older. Sympazan is the only product to offer clobazam in a convenient film with PharmFilm® technology. Sympazan is taken without water or liquid, adheres to the tongue, and dissolves to deliver clobazam. | ||||
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INDOCIN®(indomethacin) Suppositories
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A suppository and oral solution of indomethacin used both in hospitals and out-patient settings. Both products are nonsteroidal anti-inflammatory drugs ("NSAIDs"), indicated for: | ||||
| • Moderate to severe rheumatoid arthritis including acute flares of chronic disease | |||||
| • Moderate to severe ankylosing spondylitis | |||||
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INDOCIN®(indomethacin) Oral Suspension
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• Moderate to severe osteoarthritis | ||||
| • Acute painful shoulder (bursitis and/or tendinitis) | |||||
| • Acute gouty arthritis | |||||
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SPRIX® (ketorolac tromethamine) Nasal Spray
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A prescription NSAID indicated in adult patients for the short-term (up to five days) management of moderate to moderately severe pain that requires analgesia at an opioid level. SPRIX is a non-narcotic nasal spray that provides patients with moderate to moderately severe short-term pain relief through a form of ketorolac that is absorbed rapidly but does not require an injection administered by a healthcare provider. | ||||
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CAMBIA®(diclofenac potassium for oral solution)
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A prescription NSAID indicated for the acute treatment of migraine attacks with or without aura in adults 18 years of age or older. CAMBIA can help patients with migraine pain, nausea, photophobia (sensitivity to light), and phonophobia (sensitivity to sound). CAMBIA is not a pill; it is a powder, and combining CAMBIA with water activates the medicine in a unique way. | ||||
2025 Transactions
On May 9, 2025, we transferred all the equity interests in Assertio Therapeutics to an established purchaser of legacy litigation matters, resulting in Assertio Therapeutics being owned by the purchaser's related company, ATIH Industries, LLC (the "Therapeutics Transaction"). At the closing of the Therapeutics Transaction, Assertio Therapeutics held approximately $8.2 million in cash, insurance and retained a single-digit royalty based on net income derived from INDOCIN. In addition, Assertio Therapeutics retained certain legal liabilities, including those related to opioid litigation. As a result of the Therapeutics Transaction, we are not defendants in any opioid-related litigation.
As part of our ongoing commercial portfolio assessment, we ceased commercialization of Otrexup in July 2025.
In the third quarter of 2025, we advanced key integration efforts to consolidate operations and align our products, including ROLVEDON, under a single subsidiary, Assertio Specialty. Sales of ROLVEDON in 2025 reflected normal demand through the first nine months of 2025, as well as large purchases by several national distributors to help ensure consistent supply of ROLVEDON during the fourth quarter of 2025 and first quarter of 2026 as we complete the integration of ROLVEDON into Assertio Specialty. We did not record material net product sales of ROLVEDON during the fourth quarter of 2025 and do not anticipate material net product sales in the first quarter of 2026. Sales of the newly labeled ROLVEDON are expected to commence at a normal volume in the second quarter of 2026.
To facilitate the large purchases of ROLVEDON by several national distributors in the third quarter of 2025, we provided our customers with higher-than-historical levels of discounts and extended payment terms. These factors unfavorably impacted our net selling price and gross profit in the third quarter of 2025. The extended payment terms provided as part of these sales also led to reduced cash collections and a decline in our cash and short-term investments balance in the fourth quarter of 2025. We anticipate that the extended payment terms will lead to further reduced cash collections and a decline in our cash and short-term investments balances for the first quarter of 2026, but we expect that cash collections and our cash and short-term investments balances will increase in the second quarter of 2026. These factors will further lead to variability in our working capital balances during these periods.
On October 7, 2025, we entered into an amendment and restatement of the Manufacturing and Supply Agreement (the "Hanmi Agreement," as amended, the "Amendment") with Hanmi Pharmaceutical Co. Ltd. ("Hanmi"). The Amendment fixes the price that we pay for the remaining term of our license agreement with Hanmi and amends the payment timing for certain product royalties due to Hanmi, which have been fully accrued and resulted in an immaterial reclassification between Other current liabilities and Other long-term liabilities in our Consolidated Balance Sheet during the third quarter of 2025.
On December 26, 2025, we effected a 1-for-15 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, our stockholders received one share of the Company's common stock for every 15 shares held immediately prior to the effective time of the Reverse Stock Split. The Reverse Stock Split affected all our issued and outstanding shares of common stock equally. Any fractional shares remaining as a result of the Reverse Stock Split were paid to the shareholder in cash. The par value and number of authorized shares of our common stock were not adjusted as a result of the Reverse Stock Split. The Reverse Stock Split also affected our outstanding stock-based awards and convertible senior notes due 2027 and resulted in the shares underlying such instruments being reduced and the exercise price or conversion price being increased proportionately.
RESULTS OF OPERATIONS
The following table reflects our results of operations for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenues: | |||||||||||
| Product sales, net | $ | 117,100 | $ | 120,849 | |||||||
| Royalty revenue | 1,613 | 2,012 | |||||||||
| Other revenue | - | 2,100 | |||||||||
| Total revenues | 118,713 | 124,961 | |||||||||
| Costs and expenses: | |||||||||||
| Cost of sales | 35,383 | 39,227 | |||||||||
| Research and development expenses | 1,690 | 3,822 | |||||||||
| Selling, general and administrative expenses | 69,000 | 75,051 | |||||||||
| Change in fair value of contingent consideration | (276) | (244) | |||||||||
| Amortization of intangible assets | 29,863 | 25,644 | |||||||||
| Impairment of intangible assets | 1,700 | 5,217 | |||||||||
| Restructuring charges | 2,889 | 720 | |||||||||
| Total costs and expenses | 140,249 | 149,437 | |||||||||
| Loss from operations | (21,536) | (24,476) | |||||||||
| Other (expense) income: | |||||||||||
| Loss on Assertio Therapeutics divestiture | (8,174) | - | |||||||||
| Interest expense | (3,075) | (3,039) | |||||||||
| Interest income | 2,665 | 3,221 | |||||||||
| Other gain, net | 180 | 2,765 | |||||||||
| Total other (expense) income | (8,404) | 2,947 | |||||||||
| Net loss before income taxes | (29,940) | (21,529) | |||||||||
| Income tax expense | (435) | (52) | |||||||||
| Net loss and comprehensive loss | $ | (30,375) | $ | (21,581) | |||||||
Revenues
The following table reflects total revenues, net for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Product sales, net: | ||||||||||||||
| ROLVEDON | $ | 68,225 | $ | 60,090 | ||||||||||
| INDOCIN products | 18,905 | 26,761 | ||||||||||||
| Sympazan | 11,349 | 10,457 | ||||||||||||
| SPRIX | 7,952 | 7,624 | ||||||||||||
| Other products | 10,669 | 15,917 | ||||||||||||
| Total product sales, net | 117,100 | 120,849 | ||||||||||||
| Royalty revenue | 1,613 | 2,012 | ||||||||||||
| Other revenue | - | 2,100 | ||||||||||||
| Total revenues | $ | 118,713 | $ | 124,961 | ||||||||||
Product sales, net
ROLVEDON net product sales increased $8.1 million from $60.1 million for the year ended December 31, 2024 to $68.2 million for the year ended December 31, 2025, primarily due to higher volume, the adjustment of a prior period returns reserve of $5.4 million established in connection with our merger with Spectrum (the "Spectrum Merger"), partially offset by lower net pricing. The higher volume reflects large purchases by several national distributors during the third quarter of 2025 to help ensure consistent supply of ROLVEDON in the fourth quarter of 2025 and the first quarter of 2026 as we complete the integration into Assertio Specialty, as noted above. We did not record material net product sales of ROLVEDON during the fourth quarter of 2025 and do not anticipate material net product sales in the first quarter of 2026. Sales of the newly labeled ROLVEDON are expected to commence at a normal volume in the second quarter of 2026.
INDOCIN net product sales decreased $7.9 million from $26.8 million for the year ended December 31, 2024 to $18.9 million for the year ended December 31, 2025, primarily due to lower volume from previously announced generic competition. In 2026, we expect INDOCIN net product sales to continue to decline as a result of continued competition from existing generic entrants, as well as new and expected future generic entrants.
Sympazannet product sales increased $0.9 million from $10.5 million for the year ended December 31, 2024 to $11.3 million for the year ended December 31, 2025, primarily due to higher volume, partially offset by unfavorable payor mix.
SPRIX net product sales increased $0.3 million from $7.6 million for the year ended December 31, 2024 to $8.0 million for the year ended December 31, 2025, primarily due to favorable payor mix, partially offset by lower volume.
Other net product sales for the year ended December 31, 2025 and December 31, 2024 included net product sales of Otrexup of $4.5 million and $8.8 million, respectively, net product sales of CAMBIA of $5.7 million and $5.6 million, respectively, and net product sales of Zipsor of $0.5 million and $1.5 million, respectively. The year-over-year decrease in other net product sales was primarily due to lower Otrexup net product sales as a result of ceasing commercialization of Otrexup in July 2025.
For the year ended December 31, 2025, the amount recognized for gross-to-net sales allowances on product sales increased by $50.8 million compared to the year ended December 31, 2024, primarily due to higher ROLVEDON sales volumes and a continued shift in product mix toward ROLVEDON, which carries a higher contractual rebate rate than our other products. Refer to the Critical Accounting Policies and Significant Estimatessection within this Item 7 and Schedule IIto the accompanying Consolidated Financial Statements for additional information about amounts charged as a reduction to revenue for product sales allowances, product return allowances, discounts, chargebacks, and rebates. Our products operate in competitive markets and the impact of competition on net pricing could have an unfavorable impact on the amount of gross-to-net sales allowances recognized.
Royalty Revenue
In November 2010, we entered into a license agreement granting Tribune Pharmaceuticals Canada Ltd. (later known as Aralez Pharmaceuticals, Miravo Healthcare, and Searchlight Pharma, or "Searchlight," now owned by Apotex Inc.) the rights to commercially market CAMBIA in Canada. The counterparty to the license agreement independently contracts with manufacturers to produce a specific CAMBIA formulation in Canada. We recognized royalty revenue related to the CAMBIA licensing agreement of $1.6 million and $2.0 million for the years ended December 31, 2025 and 2024, respectively.
The patents underlying the license agreement that we have with Searchlight expire in June 2026, and we anticipate that there will be generic competition in Canada after the patents expire, or the earlier negotiated launch of generics in connection with the settlement of patent litigation, resulting in increased competition with CAMBIA upon patent expiration. As a result, we anticipate the amount of royalty revenue earned under the license agreement could be reduced to zero beginning in the third quarter of 2026.
Other revenue
Other revenue consists of sales adjustments for previously divested products, which includes adjustments to reserves for product sales allowances (gross-to-net sales allowances) and can result in a reduction to or an increase to total revenue in the period of recognition. There was no other revenue for the year ended December 31, 2025. Sales adjustments for reserves recorded in prior periods for previously divested products resulted in an increase to total revenue of $2.1 million for the year ended December 31, 2024.
Cost of Sales
Cost of sales consists of costs of the active pharmaceutical ingredient, contract manufacturing and packaging costs, royalties payable to third parties, inventory write-downs and scrap, product quality testing, distribution costs, and shipping costs related to our product sales. Cost of sales excludes the amortization of intangible assets. Fair value of inventories acquired through business combinations or asset acquisitions include an inventory step-up within the value of inventories. The inventory step-up value is amortized as the related inventory is sold, and included in cost of sales.
Cost of sales decreased $3.8 million from $39.2 million for the year ended December 31, 2024 to $35.4 million for the year ended December 31, 2025, primarily due to (i) a $6.6 million decrease in inventory write-downs, primarily for INDOCIN due to lower demand for INDOCIN products, (ii) a $4.6 million of ROLVEDON inventory step-up amortization included in the year ended December 31, 2024, which did not recur in the year ended December 31, 2025, (iii) a $1.9 million decrease in Otrexup cost of sales primarily due to ceasing commercialization of Otrexup in July 2025, (iv) a $0.9 million decline in INDOCIN cost of sales due to lower INDOCIN sales volume, and (v) a $0.2 million decrease in other cost of sales. The decrease was partially offset by a $7.9 million increase from the impact of higher ROLVEDON volumes on cost of sales driven by the sales of ROLVEDON inventory during the third quarter of 2025 noted above, and $2.5 million of one-time costs related to ceasing commercialization of Otrexup in July 2025.
Cost of sales are impacted by both product volume and mix, changes in which will have an impact on Cost of sales recognized by us in future periods.
Research and Development Expenses
Research and development expenses include salaries, costs for clinical trials, consultant fees, supplies, and allocations of corporate costs. Research and development expenses were $1.7 million and $3.8 million for the years ended December 31, 2025 and 2024, respectively, primarily representing costs directly associated with ongoing clinical activity for the ROLVEDON pediatric safety trial in 2025 and 2024, as well as the same-day dosing trial in 2024.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of personnel, contract personnel, marketing and promotion expenses, personnel expenses to support our administrative and operating activities, facility costs, and professional expenses, such as legal and accounting fees.
Selling, general, and administrative expenses decreased $6.1 million from $75.1 million for the year ended December 31, 2024 to $69.0 million for the year ended December 31, 2025, primarily due to (i) a $4.7 million net decrease in legal charges and settlements of certain litigation items, (ii) $2.4 million of income recognized during the year ended December 31,
2025 related to the lapsing of the statute of limitations for employee retention tax credits, of which there was none in 2024, (iii) a $1.6 million decrease in stock-based compensation expense, primarily driven by forfeitures related to our 2025 restructuring actions, and (iv) a $0.2 million decrease in other general operating expenses. The decrease was partially offset by $1.7 million of one-time costs related to ceasing commercialization of Otrexup and $1.1 million of costs related to the Therapeutics Transaction recognized in the year ended December 31, 2025.
Change in Fair Value of Contingent Consideration
In connection with the Spectrum Merger, we issued contingent value rights ("CVRs") that represent a contingent consideration obligation that is measured at fair value. In connection with the merger with Zyla Life Sciences ("Zyla") in May 2020 (the "Zyla Merger"), we assumed a contingent consideration obligation for future royalties on annual INDOCIN product net sales that is measured at fair value. Change in fair value of contingent consideration represents the change in fair value, if any, of our contingent consideration obligations which are remeasured each reporting period.
We recognized a benefit of $0.3 million and $0.2 million during the years ended December 31, 2025 and December 31, 2024, respectively, for the change in fair value of contingent consideration incurred in the Zyla Merger. We recognized no expense or benefit for the change in fair value of the CVR contingent consideration obligation during the years ended December 31, 2025 or December 31, 2024, as the milestones triggering payment of the obligation were not met.
We do not expect to recognize a contingent consideration obligation in future periods nor make any contingent consideration payments related to the above in 2026 or beyond.
Amortization of Intangible Assets
The following table reflects amortization of intangible assets for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Amortization of intangible assets-ROLVEDON | $ | 17,356 | $ | 6,066 | ||||||||||
| Amortization of intangible assets-Sympazan | 1,213 | 1,212 | ||||||||||||
| Amortization of intangible assets-SPRIX | 4,017 | 3,808 | ||||||||||||
| Amortization of intangible assets-INDOCIN | 7,277 | 13,514 | ||||||||||||
| Amortization of intangible assets-Otrexup | - | 1,044 | ||||||||||||
| Total amortization of intangible assets | $ | 29,863 | $ | 25,644 | ||||||||||
Amortization expense increased $4.2 million from $25.6 million for the year ended December 31, 2024 to $29.9 million for the year ended December 31, 2025, primarily due to an increase of $11.3 million related to a change in the remaining estimated useful life of the ROLVEDON product rights intangible assets effective December 31, 2024, as well as a $0.2 million increase related to a change in the remaining estimated useful life of the SPRIX product rights intangible assets effective October 1, 2025. This was partially offset by a net decrease of $6.2 million due to the full amortization of the remaining value of the INDOCIN intangible assets in the second quarter of 2025 and a $1.0 million decrease resulting from the full impairment of the Otrexup intangible asset group in the fourth quarter of 2024.
Impairment of Intangible Assets
During each quarter of 2025 and 2024, our market capitalization was below the book value of our equity, which management determined represented an indicator of impairment with respect to our long-lived assets. For the three months ended September 30, 2025, we also recognized an additional indicator of impairment in our SPRIX asset group related to a change in the expected timing of cash flows from SPRIX net product sales. Applying the relevant accounting guidance, we first assessed the recoverability of our long-lived assets at the product level at each date.
For the assessment performed for the three months ended September 30, 2025, we determined that the undiscounted cash flows and the fair value of the SPRIX asset group were less than its carrying value and recognized an impairment for this asset group of $1.7 million during the third quarter of 2025, reducing its carrying value to $4.6 million. Additionally, effective October 1, 2025, we revised the remaining estimated useful life of the SPRIX product rights intangible assets to one year, which we believe better reflects the realization of the economic benefit of the intangible asset.
For the assessment performed for the three months ended December 31, 2024, we determined that the estimated undiscounted cash flows and fair value of the Otrexup asset group were less than its carrying value and recognized an impairment for this asset group of $5.2 million during the fourth quarter of 2024, reducing its carrying value to zero.
For all the assessments for our other asset groups performed during each quarter in 2025 and 2024, we determined that the estimated undiscounted cash flows were in excess of the carrying amounts for all our long-lived asset groups at each impairment testing date. Accordingly, we concluded that the long-lived asset groups were fully recoverable and no adjustment to their carrying values was required.
Although the SPRIX asset group was written down to its fair value as of September 30, 2025, the sum of the undiscounted cash flows could continue to decrease in the event of significant unfavorable changes in their estimated undiscounted future cash flows due to increased competition. Any significant unfavorable changes in the estimated undiscounted future cash flows may also impact the related assets, such as inventory, leading to potential charges in addition to a potential impairment. Any future impairment of our long-lived assets may result in material charges that could have a material adverse effect on our business and financial results.
Restructuring Charges
We regularly evaluate our operations to identify opportunities to streamline operations and optimize operating efficiencies in anticipation of changes in the business environment. As such, Company management may approve, from time to time, plans to reduce costs and improve efficiencies, which may result in incurring costs associated with those restructuring efforts.
Restructuring charges related to employee compensation costs were $2.9 million and $0.7 million for the years ended December 31, 2025 and December 31, 2024, respectively. Cash payments during the years ended December 31, 2025 and December 31, 2024 related to our various restructuring efforts were $1.7 million and $3.9 million, respectively.
During the fourth quarter of 2025, we recognized $1.2 million in restructuring costs associated with a reduction in our workforce. We may incur additional restructuring charges related to this restructuring effort. All related cash payments are expected to be completed by the fourth quarter of 2026.
Effective as of October 27, 2025, we separated from the service of our former Chief Executive Officer. Pursuant to his then existing Management Continuity Agreement with the Company, he was entitled to severance compensation and benefits of approximately $1.4 million, which were recognized as Restructuring charges during the year ended December 31, 2025.All related cash payments are expected to be completed by the second quarter of 2027. We do not expect to recognize any additional restructuring charges related to his separation from us.
During the first quarter of 2025, we recognized $0.3 million in restructuring costs associated with improving efficiencies within our sales and marketing organization. We donot expect to recognize any additional restructuring charges related to this restructuring effort, and all related cash payments were completed by the third quarter of 2025.
Other (Expense) Income
The following table reflects Other (expense) income for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Loss on Assertio Therapeutics divestiture | $ | (8,174) | $ | - | ||||||||||
| Interest expense | (3,075) | (3,039) | ||||||||||||
| Interest income | 2,665 | 3,221 | ||||||||||||
| Other gain, net | 180 | 2,765 | ||||||||||||
| Total other (expense) income | $ | (8,404) | $ | 2,947 | ||||||||||
Total other (expense) income changed by $11.4 million from income of $2.9 million for the year ended December 31, 2024 to expense of $8.4 million for the year ended December 31, 2025, primarily due to an $8.2 million loss on the divestiture of Assertio Therapeutics recognized during the second quarter of 2025, as described in "Item 8. Financial Statements and
Supplementary Data - Note 2. Divestitures and Strategic Transactions," and the favorable impact of a $2.6 million customer reimbursement recognized in the year ended December 31, 2024 that did not repeat in 2025.
The following table reflects interest expense for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Interest on 2027 Convertible Notes | $ | 2,600 | $ | 2,600 | ||||||||||
| Amortization of debt issuance costs on 2027 Convertible Notes | 475 | 439 | ||||||||||||
| Total interest expense | $ | 3,075 | $ | 3,039 | ||||||||||
Income Tax Provision
We recorded income tax expense of $0.4 million and $0.1 million for the years ended December 31, 2025 and December 31, 2024, respectively. The difference between the income tax expense and the tax at the federal statutory rate of 21.0% in each period was primarily due to changes in the valuation allowance due to our net loss, partially offset by state tax expense and the loss recorded on sale of Assertio Therapeutics. As of December 31, 2025 and December 31, 2024, we concluded that it is not more likely than not that the net deferred tax asset recorded as of those dates will be realized. As a result, we recorded a full valuation allowance against our net deferred tax asset as of both December 31, 2025 and December 31, 2024.
On July 4, 2025, the President of the United States signed House Resolution 1 ("H.R. 1"), which made a number of changes to tax law in the Internal Revenue Code, including the reinstatement of immediate expensing for domestic research and development expenditures and modifications to the business interest expense limitation. The changes to tax law promulgated under H.R. 1 did not have a material impact on our income tax expense or income tax account balances for the year ended December 31, 2025.
LIQUIDITY AND CAPITAL RESOURCES
We have financed, and continue to finance, our operations and business development efforts primarily from product sales, the proceeds of secured borrowings, and public sales of equity securities, including convertible debt securities.
We believe that our existing cash, cash equivalents and short-term investments, which totaled $63.4 million at December 31, 2025, will be sufficient to fund our operations and make the required payments under our debt agreements due for the next 12 months from the date of this filing. We base this expectation on our current operating plan, which may change as a result of many factors.
Our cash needs may vary materially from our current expectations because of numerous factors, including:
•reductions in net product sales and gross margin in the first quarter of 2026 due to the transition of ROLVEDON from Spectrum to Assertio Specialty;
•changes in our working capital needs, including the timing of purchases and manufacturing of our inventories, the timing of payment of our accounts payable and accrued rebates, returns and discounts, and the timing of accounts receivable collections, due to the large purchases of ROLVEDON inventory by several national distributors in the third quarter of 2025 noted above;
•interest and principal payments on our current and future indebtedness;
•our level of expenditures related to the commercialization of our products, including our efforts to manage supply costs and enhance the long-term prospects of ROLVEDON product sales;
•the timing of our purchases of inventory pursuant to our supply agreements, including those that may be required under the Amendment to the Hanmi Agreement, and the impact this may have on our inventory purchases in future periods;
•declines in sales of our marketed products, including those resulting from the entry and sales of generics and/or other products competitive with any of our products;
•potential additional expenses relating to any litigation matters, as discussed in "Item 8. Financial Statements and Supplementary Data - Note 8. Commitments and Contingencies;"
•potential payments required as a result of ceasing commercialization of Otrexup in July 2025;
•potential payments for income and other taxes to the extent that they cannot be offset against our net operating loss ("NOL") carryforwards;
•acquisitions or licenses of complementary businesses, products, technologies or companies;
•financial terms of definitive license agreements or other commercial agreements we may enter into;
•milestone and royalty revenue we receive under our collaborative development arrangements;
•changes in the focus and direction of our business strategy and/or research and development programs;
•potential expenses, including termination expenses if a decision is made to cease development of Spectrum's de-prioritized development asset poziotinib; and
•expenditures related to future clinical trial costs.
We expect our cash needs will be met by our existing cash, cash equivalents, and short-term investments, including funding our future operations, payments due under our debt agreement, ongoing legal expenses and settlement payments, or product acquisitions and strategic transactions that we may pursue. We expect that ongoing legal expenses will, and any settlements that we are able to negotiate may, continue to be a significant usage of cash in 2026. We may be required to raise additional capital if our cash needs increase significantly from current expectations.
On August 22, 2022, we issued $70.0 million aggregate principal amount of convertible senior notes which mature on September 1, 2027 and bear interest at a rate of 6.5% per annum, payable semi-annually in arrears on March 1 and September 1 of each year (the "2027 Convertible Notes"). On February 27, 2023, we completed a privately negotiated exchange of $30.0 million principal amount of the 2027 Convertible Notes.
The terms of the 2027 Convertible Notes are governed by an indenture dated August 25, 2022 (the "2027 Convertible Note Indenture"). Pursuant to the terms of the 2027 Convertible Note Indenture, we and our restricted subsidiaries must comply with certain covenants, including mergers, consolidations, and divestitures; guarantees of debt by subsidiaries; issuance of preferred and/or disqualified stock; and liens on our properties or assets. We were in compliance with our covenants with respect to the 2027 Convertible Notes as of December 31, 2025.
The following table reflects summarized cash flow activities for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Net cash (used in) provided by operating activities | $ | (28,182) | $ | 26,408 | ||||||||||
| Net cash used in investing activities | (11,988) | (48,911) | ||||||||||||
| Net cash used in financing activities | (189) | (350) | ||||||||||||
| Net decrease in cash and cash equivalents | (40,359) | (22,853) | ||||||||||||
| Cash and cash equivalents at beginning of year | 50,588 | 73,441 | ||||||||||||
| Cash and cash equivalents at end of year | $ | 10,229 | $ | 50,588 | ||||||||||
Cash Flows from Operating Activities
Cash used in operating activities was $28.2 million for the year ended December 31, 2025 compared to cash provided by operating activities of $26.4 million for the year ended December 31, 2024. The change was primarily due to higher net working capital needs and lower net product sales.
Operating assets and liabilities resulted in a net cash use of $45.3 million for the year ended December 31, 2025 compared to net cash provided of $5.2 million for the year ended December 31, 2024. The change was primarily due to a $59.5 million increase in accounts receivable primarily associated with the large purchases of ROLVEDON by several national distributors in the third quarter of 2025, which included extended payment terms provided to ROLVEDON customers as further discussed above in "COMPANY OVERVIEW," as well as higher settlements of accrued liabilities, particularly accrued legal costs, and accounts payable due to timing. This was partially offset by lower inventory purchases, particularly for the ROLVEDON active pharmaceutical ingredient, and higher accruals from the timing of settlements of accrued rebates, returns and discounts related to the sale of ROLVEDON inventory at the end of the third quarter of 2025.
Cash flows from operating activities are impacted by, among other things, product revenue, operating profit and changes in working capital. Fluctuations in any of these will impact our cash flows from operating activities recognized in future periods. Due to the large purchases of ROLVEDON by several national distributors in the third quarter of 2025, the timing of related cash collections and payments is expected to reduce cash flows from operating activities in the first quarter of 2026, with cash flows from operating activities expected to increase in the second quarter of 2026.
Cash Flows from Investing Activities
Cash used in investing activities was $12.0 million for the year ended December 31, 2025, which consisted of $119.2 million of purchases of short-term investments and an $8.2 million investing outflow from cash transferred in the Therapeutics Transaction, offset by $115.4 million of proceeds from maturities of short-term investments. Refer to Note 2. Divestitures and Strategic Transactions included in "Item 8. Financial Statements and Supplemental Data for details regarding the Therapeutics Transaction.
Cash used in investing activities was $48.9 million for the year ended December 31, 2024, which consisted of $98.6 million of purchases of short-term investments, partially offset by $49.7 million of proceeds from maturities of short-term investments. Beginning in the second quarter of 2024, we began purchasing and holding highly liquid marketable securities with maturities dates at purchase of more than three months and less than one year.
Cash Flows from Financing Activities
Cash used in financing activities for the year ended December 31, 2025 and December 31, 2024 was $0.2 million and $0.4 million, respectively, and consisted entirely of cash used from employees' withholding tax liability upon the vesting of employee stock awards.
Contractual Obligations
Our principal material cash requirements consist of obligations related to our payments for rebates, returns and discounts, payments for debt, non-cancelable leases for our office space, non-cancelable contractual obligations for our purchase commitments, and cash payments for our restructuring activities. Refer to "Item 8. Financial Statements and Supplemental Data - Note 1,Note 6, Note 7, Note 8and Note 16," respectively. We generally expect to satisfy these requirements and commitments with cash on hand and cash provided by operating activities.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and SEC regulations for annual reporting. Our management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements. The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements.
A more detailed discussion of our significant accounting policies may be found in "Note 1. Organization and Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, and the impact and risks associated with our accounting policies are discussed throughout this Annual Report on Form 10-K and in the Notes to the Consolidated Financial Statements.
Revenue Recognition
Product sales revenue is recognized when the customer has control of the product, which is when title has transferred to the customer and the customer has assumed the risks and rewards of ownership. These conditions typically occur upon delivery to the customer. Our performance obligation is to deliver product to the customer, and the performance obligation is typically completed upon delivery. The transaction price consists of a fixed invoice price and variable product sales allowances, which include rebates, discounts and returns. Product sales revenues are recorded net of applicable sales tax and reserves for these product sales allowances (also referred to as gross-to-net sales allowances).
Product sales allowances consist primarily of provisions for product returns, managed care rebates, commercial rebates, and government rebates (managed care rebates, commercial rebates and government rebates are collectively referred to as "rebates"), wholesaler and pharmacy discounts, prompt pay discounts, patient discount programs, and chargebacks. We
consider product sales allowances to be variable consideration and estimate and recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized. Product sales allowances are based on actual or estimated amounts owed on the related sales. These estimates take into consideration the terms of our agreements with customers, historical returns, rebates or discounts taken by product, estimated levels of inventory in the distribution channel, the shelf life of the product, and specific known market events, such as competitive pricing and new product introductions. We use the most likely method in estimating product sales allowances. If actual future results vary from our estimates, we may need to adjust the estimates, which could affect product sales and earnings in the period of adjustment.
Our estimates related to gross-to-net sales adjustments for product return allowances and rebates are judgmental and are subject to change based on our historical experience and certain quantitative and qualitative factors. We believe that our estimates related to gross-to-net sales adjustments for wholesaler and pharmacy discounts, prompt payment discounts, patient discount programs and chargebacks do not have a high degree of estimation complexity or uncertainty, as the related amounts are settled within a relatively short period of time. The timing of ultimate settlement of returns- and chargebacks-related allowances can be prolonged by our process to validate such adjustments before settlement is finalized.
Product Returns - We allow customers to return product for credit with respect to that product generally within six months before and 12 months after the product expiration date. We estimate product returns based on historical return trends by product or by return trends of similar products, taking into consideration the shelf life of the product at the time of shipment, shipment and prescription trends, estimated distribution channel inventory levels and consideration of the introduction of competitive products. We do not assume financial responsibility for returns of any of our currently marketed products acquired through product rights acquisitions if those returns relate to sales of that product prior to or after the period of our ownership of the respective product, which are identified by specific lot numbers.
Shelf lives for our products, from the respective manufacture dates, range from 24 months to 48 months. Because of the shelf life of our products and our return policy of issuing credits with respect to product that is returned within six months before and 12 months after our product expiration date, there may be a significant period of time between when the product is shipped and when we issue credit on a returned product. Accordingly, we may have to adjust these estimates, which could affect product sales and earnings in the period of adjustments.
Managed Care Rebates - We offer discounts under contracts with certain managed care providers. We generally pay managed care rebates one to three months after prescriptions subject to the rebate are filled.
Commercial Rebates - We offer certain group purchasing organization ("GPO") rebates for end-user purchases made under contractual rebate percentage tier programs. Commercial rebates are based on (i) our estimates of end-user purchases through a GPO, (ii) the corresponding contractual rebate percentage tier we expect each GPO to achieve, and (iii) our estimates of the impact of any prospective rebate program changes made by us. We generally pay commercial rebates two to 12 months after qualifying purchases are made.
Government Rebates - We offer discounted pricing or rebates on purchases of pharmaceutical products under various federal and state healthcare programs, including Centers for Medicare & Medicaid Services' Medicaid Drug Rebate Program, Medicare Part B Program and Medicare Part D Coverage Gap Discount Programs. We generally pay government rebates three to 12 months after prescriptions subject to the rebate are filled. These rebates are subject to our active participation in the respective programs.
The following table reflects activity relating to the Company's provision for product sales allowances as of December 31, 2025 and 2024 (in thousands):
| Product Returns |
Rebates (1)
|
Other Sales Allowances(2)
|
Total(5)
|
||||||||||||||||||||
| Balance as of December 31, 2023 | $ | 29,789 | $ | 14,503 | $ | 14,754 | $ | 59,046 | |||||||||||||||
|
Provisions made in current period to Product Sales, net (3)
|
5,796 | 59,107 | 105,998 | 170,901 | |||||||||||||||||||
|
Provisions made in current period to Other revenue (4)
|
(2,100) | - | - | (2,100) | |||||||||||||||||||
| Payments and credits made in current period | (11,130) | (52,696) | (86,553) | (150,379) | |||||||||||||||||||
| Balance as of December 31, 2024 | $ | 22,355 | $ | 20,914 | $ | 34,199 | $ | 77,468 | |||||||||||||||
|
Provisions made in current period to Product Sales, net (3)
|
(1,644) | 80,267 | 143,077 | 221,700 | |||||||||||||||||||
| Payments and credits made in current period | (4,165) | (79,560) | (113,095) | (196,820) | |||||||||||||||||||
| Balance as of December 31, 2025 | $ | 16,546 | $ | 21,621 | $ | 64,181 | $ | 102,348 | |||||||||||||||
(1)Rebates consist of managed care rebates, commercial rebates and government rebates.
(2)Other Sales Allowances consist of wholesaler and pharmacy discounts, prompt pay discounts, patient discount programs, and chargebacks.
(3)Includes adjustments to revenue recognized as a result of changes in estimates for the Company's gross-to-net sales allowances for products sold in previous periods, which were approximately 7% and 3% for the years ended December 31, 2025 and 2024, respectively. In addition, ROLVEDON net product sales for the year ended December 31, 2025 included the adjustment of a prior period returns reserve of $5.4 million established in connection with the Spectrum Merger.
(4)Consists of sales adjustments for previously divested products recognized in Other revenue in the Consolidated Statements of Comprehensive Loss.
(5)Balance includes allowances for cash discounts for prompt payment of $3.0 million and $1.2 million as of December 31, 2025 and 2024, respectively, which are recognized in Account receivable, net in the Company's Consolidated Balance Sheets. The remaining balance of $99.4 million and $76.3 million as of December 31, 2025 and 2024, respectively, is recognized in Accrued rebates, returns and discounts in the Company's Consolidated Balance Sheets.
Impairment of Long-lived Assets
We evaluate long-lived assets, including property and equipment and acquired intangible assets consisting of product rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment would be recognized when the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. The impairment is calculated as the excess of the carrying amount over the fair value. Estimating future cash flows and fair value related to an intangible asset involves significant estimates and assumptions. If our assumptions are not correct, there could be an impairment or, in the case of a change in the estimated useful life of the asset, a change in amortization expense. Refer to "Results of Operations - Impairment of Intangible Assets" within this Item 7 and "Item 8. Financial Statements and Supplemental Data - Note 5. Intangible Assets" for a discussion of the results of our 2025 and 2024 assessments of the recoverability and impairment of our long-lived assets.
Income Taxes
We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in our accompanying consolidated balance sheets, as well as operating loss and tax credit carryforwards. We follow the guidelines set forth in the applicable accounting guidance regarding the recoverability of any tax assets recorded on the consolidated balance sheet and provide any necessary allowances as required. Determining necessary allowances requires us to make assessments about the timing of future events, including the probability of expected future taxable income and available tax planning opportunities. When we determine that it is more-likely-than-not that some portion or all the deferred tax assets will not be realized in the future, the deferred tax assets are reduced by a valuation allowance. The valuation allowance is sufficient to reduce the deferred tax assets to the amount that we determine is more-likely-than-not to be realized.
We are subject to examination of our income tax returns by various tax authorities on a periodic basis. We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes. We have applied the provisions of the applicable accounting guidance on accounting for uncertainty in income taxes, which requires application of a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. If the recognition threshold is met, the applicable accounting guidance permits us to recognize a tax benefit measured at the largest amount of tax benefit that, in our judgment, is more than 50% likely to be realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the period of such change.
As of December 31, 2025, we have recorded a full valuation allowance against our net deferred tax assets. In evaluating our ability to realize our deferred tax assets, we consider available positive and negative evidence, including past operating results and forecasts of future taxable income, and the potential Internal Revenue Code section 382 limitation on NOL carryforwards due to a change in control. In determining future taxable income, we make assumptions to forecast U.S. federal and state operating income, the reversal of temporary differences, and the implementation of any feasible and prudent tax planning strategies.
These assumptions require significant judgment regarding the forecasts of the future taxable income in each tax jurisdiction and are consistent with the forecasts used to manage our business. We have generated a top-line and as-adjusted cumulative loss for the three year period ended December 31, 2025. All our deferred tax assets ("DTA") are recorded by our U.S. operations, and the U.S. does not permit carryback of losses. As such, we can only rely on the reversal of existing taxable temporary differences to be considered as positive evidence in analyzing future use of existing DTAs. We analyzed the existing taxable temporary differences, but determined they were insufficient for generating future taxable income to permit full use of the existing DTAs. Additionally, we did not identify any tax planning strategies or tax planning actions which would allow for the use of the net domestic DTAs recorded as of December 31, 2025.
We recognize tax liabilities in accordance with Accounting Standards Codification Topic 740, Income Taxes, and we adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences are reflected as increases or decreases to income tax expense in the period in which they are determined.
See "Item 8. Financial Statements and Supplemental Data - Note 14. Income Taxes" for additional information.
RECENT ACCOUNTING PRONOUNCEMENTS
See "Item 8. Financial Statements and Supplemental Data - Note 1. Organization and Summary of Significant Accounting Policies" for additional information on recent accounting pronouncements.
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