Specialty Pharma’s Q2/21 Results ‘Fundamentally Ahead of Expectations’

Source: Streetwise Reports   08/23/2021

A ROTH Capital Partners report noted that Assertio Therapeutics’ business model is starting to gain traction.

In an Aug. 20 research note, ROTH Capital Partners analyst Scott Henry reported Assertio Therapeutics Inc.’s (ASRT:NASDAQ) Q2/21 results.

“Fundamentally, we found the quarter at the high end of expectations based largely on revenues,” Henry wrote.

The pharma’s total Q2/21 revenue was $25.4 million ($25.4M) compared to ROTH’s estimate of $20.4M. The beat was due to sales of four products. Indocin generated $13.1M versus ROTH’s $10.5M forecast; Zipsor, $2.6 versus $2M; Cambia, $6.1M versus $6M; and Sprix, $2.9M versus $1.5M.

Spending during Q2/21 amounted to $30.2M, nearly double ROTH’s $15.7M projection but was due to payment of a one-time litigation cost of $11.3M.

Assertio’s Q2/21 earnings per share (EPS) was a loss of $0.32, which was adjusted to account for the reverse stock split the company executed earlier in the year. The EPS was much higher than ROTH’s estimated loss of $0.08. Henry pointed that the EPS loss would have been about $0.06 had it not been for the $11.3 legal payment.

In light of its strong Q2/21 earnings, Assertio raised its full year 2021 net sales guidance to $91–96M from $85–92M. It also revised its EBITDA guidance to $34–37M from $34–40M.

“We viewed this tightening of the [EBITDA] range as a notable positive given that the prior guidance did not factor in the $11.3M legal charge taken in Q2/21,” Henry wrote.

About the quarter overall, the analyst commented, “We view Q2/21, combined with strong guidance, as a sign that the business model is starting to gain traction.”

To further gain momentum, Henry noted, Assertio should focus on two areas. One is acquisitions, of companies and/or products, the latter of which will likely be the “key upside lever for shares going forward,” he wrote.

The second is capitalizing on the company’s “hub model,” Henry added, in which prescriptions get funneled through a central location. This allows for better control of the entire pharmacy process, ultimately resulting in more prescriptions filled and reimbursement captured more easily.

ROTH has a Buy rating and a $1.55 per share target price on Assertio Therapeutics, which compares to its current share price of about $0.89.

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