Welcome to the First Quarter 2021 Financial Results Assertio Holdings, Inc. Earnings Conference Call. My name is Hilda and I will be your operator for today. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Max Nemmers, Head, Investor Relations and Administration. Mr. Nemmers, you may begin.

Thank you. Good afternoon and thank you all for joining us today to discuss Assertio’s first quarter 2021 financial results. The news release covering our earnings for this period is now available on the Investor page of our website at investor.assertiotx.com. I would encourage you to review the release as it’s important to today’s discussion. With me today are Dan Peisert, President and Chief Executive Officer; and Paul Schwichtenberg, Senior Vice President and Chief Financial Officer. Dan will open the remarks and provide an overview of the business, followed by Paul, who will review our financials. After that, we will open the call for your questions. 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 Assertio’s filings with the SEC. These and other risks are more fully described in the Risk Factors section and other sections of our annual report on Form 10-K. Our actual results may differ materially from these projected in the forward-looking statements. And Assertio specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. With that, I will now turn the call over to Dan. Dan?

Thank you, Max, and thank you, everyone for joining us this afternoon. We’re approaching the one-year anniversary of the Zyla acquisition and with the changes we’ve made to our business at the start of this year, we’re now seeing the benefits from the combination of Assertio and Zyla, the diversification of the top line revenue and healthy adjusted EBITDA margins. Last quarter, I laid out my goals and priorities for Assertio. And as a reminder, our priorities for 2021 are as follows: build a strong and committed team with a culture of teamwork, inclusion and results; delivering on our $45 million of restructuring synergies; ensuring the company generates strong operating cash flow; ensuring our debt never becomes a constraint in running the business; mitigate our legacy legal uncertainties; and develop a sustainable business model that reflects a changing environment. Since the beginning of this year, we’ve made tremendous progress towards each of these priorities. We’re continuing to strengthen our team and we hired new Head of Commercial, who will start later this month. He will help us continue to build out our new commercial platform. We’re also starting to make plans to open our offices as soon and return to working in-person. We like others have found a way to be productive with remote work during the pandemic. It is important that we continue to ensure our employees and their families are safe, but we’re excited to get back to seeing everyone in-person and the benefits that it can bring. In regard to the second priority of our synergies, as we said last quarter, we ultimately expect to realize $45 million in annual cost savings relative to our run rate from the second half of 2020. As you can see from our results this quarter, we’re well on our way…

Thank you, Dan. This afternoon, I will review the financial highlights from our first quarter of 2021. As with the case in the last few quarters, our year-over-year comparisons were challenging due to the many changes in our business. For clarity, any references to the pro forma results represent product sales as if the Zyla merger had been completed as of January 1, 2020. Net product sales were $26.4 million for the three months ended March 31, 2021 compared to pro forma net product sales of $28.3 million in the prior year quarter and $30.1 million last quarter. As Dan noted in his comments, the first quarter has historically been the most seasonally affected quarter due to patient co-pay and deductible resets on January 1. Increase in net sales reflect the highest quarterly result in at least the past two years and 23% growth over the prior year quarter, which did reflect some volume declined due to COVID. Combined CAMBIA and Zipsor net sales were slightly ahead of the current year quarter. SPRIX volume continues to be impacted by prior year commercial coverage change and COVID resulting in a 70% decline versus the prior quarter, despite the lower SPRIX performance, the portfolio net sales were only down 6% versus Q1 2020 net sales, excluding revenue adjustments from developed products due to the positive performance of the other brands. Please refer to our 10-Q for specific product net sales information. Cost of sales in the first quarter of 2021 was $4 million versus $1.4 million in the first quarter of 2020. The increase is primarily due to Zyla related product cost of sales upon the Zyla merger on May 20, 2020, all set by lower cost of sales due to Gralise divestiture in the first quarter of 2020. The three months…

Thank you, Paul. Can we open up the call for Q&A please?

Thank you. [Operator Instructions] We have a question from Scott Henry from ROTH Capital.

Hi, and good afternoon. Just a couple of questions, I guess first on the revenue line, for 2Q just doing the simple math, if you reduce inventory by 10 days, should we think about – I guess about one-ninth of the revenues for the quarter will be pulled out of Q2 and is that INDOCIN only?

Yes, it would be INDOCIN only. And it's – yes, I would think about that as two weeks. A full two weeks.

Okay. Thank you. That's helpful. And then, so factoring that in and if I look at, what you did this quarter plus your guidance for the rest of the year, there's still a couple products that are going to come down from first quarter levels, one, I would expect to be that other category, anything else? I mean, do you think SPRIX is kind of nearing a base or does that have some more downside or perhaps INDOCIN maybe, it's not going to be sustained at these levels, absent inventory adjustments, just trying to get a sense of how you think the levers are moving, going forward for 2021?

Yes, I think, you're absolutely right, Scott. That other category will – we've been winding down, SOLUMATRIX. There's just a little bit of inventory left to bleed out. So that's essentially planned to be zero for the rest of the year. SPRIX, we are expecting that it will be this kind of – this level in the future. But we expect in this – the change we're making in INDOCIN is a distribution change and that should be just a one quarter phenomenon.

Okay. So perhaps there's a difference after that other is just normal contraction, there's less marketing there. Shifting gears, did the insurance settlement, when was that taken again and where was that line item? I heard it briefly, but I couldn't locate it in the release.

The insurance settlement was received in February and the way it was reflected in the financials was on the SG&A line as a benefit. So the reduction of our SG&A expenses.

And that was approximately $5 million.

$5 million, yes.

Okay. So you’re kind of organic SG&A would have been closer to $12.7 million. And I guess, would you expect that to be declining still?

Yes. We’d expect that to continue to decline over the next couple of quarters.

Okay, great. And then I guess, the final question. Given your relatively low multiple of EBITDA, as far as the valuation of the company, would that motivate you as you’re looking for product acquisitions to be more likely to use debt and/or cash to acquire, as opposed to your stock currency, you probably don’t want to use that at this point in time? But I just want to get your thoughts.

Yes. I think you’re right, Scott. The ideal situation on a BD transaction is also the ability to refinance the existing debt. So that’s something that we’ve been exploring. And if the transaction is large enough it needs additional debt, so just cash up the balance sheet, then it could be ideal for that situation.

Okay, great. And one final question, just to get a sense of. Going forward, do you expect to really just be giving a reported EPS number and then you’ll do an adjusted EBITDA? Is that how we should think about it? Or will you still be – will you be doing an adjusted EPS? It sounds like it’ll just be reported and then you’ll break things down when you get to the EBITDA level. Is that correct?

That’s correct.

Okay. All right. Great. Thank you for taking the questions.

Thank you, Scott.

Okay. Looks, like we don’t have any more questions in the queue, so at this point in time, I will turn the call back over to Dan for closing comments.

We’re pleased with the progress we’ve made in just a few short months, rest assured that we’re just getting started. We worked with the majority of restructuring with a talented team in place, and we’re focused on continuing the momentum we’ve created to fully execute against our six priorities. Our results could not have been possible without the great work of our team. And I want to thank them for their work and know that they share my enthusiasm for the future of our company. The best is yet to for Assertio. We remain committed to creating value for all of our stakeholders and look forward to updating you on our progress towards our priorities in future quarters. Thank you for joining us this afternoon and have a great evening.

Thank you. Ladies and gentlemen, this concludes today’s conference. We thank you for participating. You may now disconnect.