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ACQUISITIONS | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS | ACQUISITIONS Spectrum Pharmaceuticals On the Effective Date, the Company completed the Spectrum Merger pursuant to an Agreement and Plan of Merger (“the Merger Agreement”), dated as of April 24, 2023, with Spectrum surviving the Merger as a wholly-owned subsidiary of the Company. The Company accounted for the Spectrum Merger using the acquisition method of accounting under Accounting Standards Codification (“ASC”) 805 and is considered the accounting acquirer. Pursuant to the Merger Agreement, each issued and outstanding share of Spectrum common stock as of the Effective Date was converted into the right to receive (i) 0.1783 shares of the Company’s common stock and (ii) one contingent value right (“CVR”) representing a contractual right to receive future conditional payments worth up to an aggregate maximum amount of $0.20, settleable in cash, additional shares of Assertio common stock or a combination of cash and additional shares of Assertio common stock at the Company’s sole discretion, upon the achievement of certain sales milestones related to Spectrum’s product ROLVEDON. Subject to adjustments, each CVR represents the right to receive up to $0.10 payable upon ROLVEDON net sales (less certain deductions) achieving $175 million during the calendar year ending December 31, 2024, and up to $0.10 payable upon ROLVEDON net sales (less certain deductions) achieving $225 million during the calendar year ending December 31, 2025. In addition, upon consummation of the Spectrum Merger, Spectrum’s outstanding employee stock awards and other warrants that were outstanding immediately as of the Effective Date automatically vested (if unvested) and/or cancelled, as applicable, which generally resulted in the issuance of shares of the Company’s common stock and/or CVRs to the holders of such stock awards or other warrants, in each case as dictated by the terms of the Merger Agreement. These shares and CVRs issued are considered part of the consideration transferred, and no compensation expense was recognized because the settlement was a condition of the Merger Agreement and other existing individual agreements, no future performance is required by the holders, and the fair value of the shares and CVRs is equivalent to the fair value of the existing employee stock awards and other warrants. The following table reflects the components of the consideration transferred in the Spectrum Merger (in thousands, except exchange ratio and per share data):
Assertio shares issued |  | 38,013 |
Assertio closing price per share as of the Effective Date |  | $ | 5.69 |
Fair value of Assertio shares issued |  | $ | 216,294 |
Repayment of Spectrum's long-term debt (1) |  | 32,647 |
CVRs(2) |  | 3,932 |
Total fair value of consideration transferred |  | $ | 252,873 |
(1)Represents settlement of Spectrum’s existing long-term debt in connection with the close of the transaction. The Company concluded it did not assume the debt, therefore the amount paid to settle the debt has been accounted for and disclosed as part of the consideration transferred. (2)Represents the fair value of 223,397 CVRs at $0.0176 per CVR issued to holders of Spectrum common stock, employee stock awards and warrants as of the Effective Date. The CVRs represent a contingent consideration obligation measured at fair value and classified as liabilities on the Company’s Condensed Consolidated Balance Sheets. The fair value of the CVR contingent consideration is determined using a Monte Carlo simulation model under the income approach and is based on Level 3 inputs. Refer to Note 17, Fair Value, for additional information. Fair value is based on the probability of achievement of 2024 and 2025 annual ROLVEDON net sales milestones. Significant assumptions include the discount rate and the probability assigned to the achievement of the net sales milestones. Achievement of both the 2024 and 2025 annual ROLVEDON net sales milestones would obligate the Company to transfer a maximum of approximately $44.7 million of additional consideration. No additional consideration would be paid by the Company if neither the 2024 nor 2025 annual ROLVEDON net sales milestones are achieved. The following table reflects the preliminary fair value of the assets acquired and liabilities assumed at the Effective Date (in thousands). Goodwill is primarily attributable to expected synergies between the Company and Spectrum and is not expected to be deductible for tax purposes. The Company continues to assess the fair value of the assets acquired and liabilities assumed at the Effective Date, including any which may be impacted by Spectrum’s pending legal proceedings. Accordingly, the provisional fair value estimates of net assets acquired could potentially change, and the Company expects to finalize these values as soon as practical and no later than one year from the Effective Date.
Consideration transferred |  |  |  | $ | 252,873 |
Assets: |  |  |  |
Cash and cash equivalents |  | $ | 34,600 |  |  |
Marketable securities |  | 2,194 |  |  |
Accounts receivable |  | 50,975 |  |  |
Inventories |  | 22,244 |  |  |
Prepaid and other current assets |  | 1,287 |  |  |
Property and equipment |  | 100 |  |  |
Intangible assets |  | 234,000 |  |  |
Other long-term assets |  | 1,396 |  |  |
Total |  | $ | 346,796 |  |  |
Liabilities: |  |  |  |
Accounts payable |  | $ | 10,108 |  |  |
Accrued rebates, returns and discounts |  | 21,025 |  |  |
Accrued liabilities |  | 36,509 |  |  |
Other current liabilities |  | 784 |  |  |
Deferred taxes |  | 34,250 |  |  |
Other long-term liabilities |  | 11,103 |  |  |
Total |  | $ | 113,779 |  |  |
Total Spectrum net assets acquired (1) |  |  |  | $ | 233,017 |
Goodwill |  |  |  | $ | 19,856 |
(1)Application of the acquisition method required the Company to adjust Spectrum assets and liabilities as of the Effective Date, including certain liabilities for variable consideration associated with ROLVEDON, to reflect conformity of Spectrum’s accounting policies to those of Assertio. Liabilities assumed include certain bonuses owed to former Spectrum executives under the terms of existing employment agreements triggered by the consummation of the Spectrum Merger. The income approach was primarily used to value the acquired intangible assets, representing rights to Spectrum’s product ROLVEDON. Significant assumptions include the amount and timing of projected future cash flows; the discount rate selected to measure the inherent risk of future cash flows; and the assessment of the product’s life cycle and the competitive trends impacting the product. The ROLVEDON product rights will be amortized on a straight-line basis over its estimated useful life of 10 years. Acquisition costs related to the Spectrum Merger were approximately $2.7 million and $8.5 million for the three and nine months ended September 30, 2023, respectively. These costs are included within Selling, general and administrative expenses in the Condensed Consolidated Statement of Comprehensive (Loss) Income. The following unaudited pro forma information represents the Company’s results of operations as if the Spectrum Merger had been completed as of January 1, 2022 (in thousands) and includes nonrecurring adjustments for additional costs of sales from the fair value step-up of inventories and transaction costs. The disclosure of pro forma net sales and net loss does not purport to indicate the results that would actually have been obtained had the Spectrum Merger been completed on the assumed date for the periods presented, or which may be realized in the future. The unaudited pro forma information does not reflect any operating efficiencies or cost savings that may be realized from the integration of the acquisition.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Net sales | $ | 35,629 |  | $ | 34,212 |  |  | $ | 159,528 |  | $ | 42,466 |
Net loss | (285,658) |  | (22,073) |  |  | (326,769) |  | (98,616) |
See Note 3, Revenue, for net sales of ROLVEDON from the Effective Date to September 30, 2023.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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