Assertio Holdings, Inc. - 10-K filing on 2022-03-10

RESTRUCTURING CHARGES

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

The Company continually evaluates its operations to identify opportunities to streamline operations and optimize operating efficiencies as an anticipation to changes in the business environment.

On December 15, 2020, the Company announced the December 2020 Plan which was designed to substantially reduce the Company’s operating footprint through the reduction of its workforce. The reorganization plan included a reduction of staff at our headquarters office and remote sales force. As a result, $9.6 million of severance and benefits costs and $1.6 million of other exit costs, including $0.9 million related to the write off of fixed assets no longer in use and $0.7 million related to the early termination of fleet leases, were recognized as restructuring charges, related to the December 2020 Plan, during the year ended December 31, 2020. The Company completed the workforce reduction in 2021 and recognized $0.9 million of severance and benefits costs and $0.2 million of other exit costs during the year ended December 31, 2021

In May 2020, the Company began implementing reorganization plans of its workforce and other restructuring activities to realize the synergies of the Zyla Merger and to re-align resources to strategic areas and drive growth (Zyla Merger Reorganization). The Company completed the restructuring activities in 2020 and incurred $5.6 million of severance and benefits costs, which includes $1.0 million of stock-based compensation expense associated with equity modifications for certain executives, and $0.2 million of other exit costs were incurred during the year ended December 31, 2020. The Company did not incur significant costs related to the Zyla Merger Reorganization in 2021.

In April 2020, the Company executed a limited reduction to its sales force due to the impact of COVID-19 on its ability to see in-person providers who prescribe our products. As a result, $0.3 million of severance and benefits costs and $0.3 million of other costs were recognized as restructuring charges during the year ended December 31, 2020. This initiative was completed during 2020.

In November 2019, the Company announced an acceleration of cost-saving initiatives that included a decision to discontinue its relationship with its contract sales organization, a reduction in the use of certain outside vendors and consultants, and the reorganization of certain functions resulting in a reduction of staff at its headquarters office and remote positions during the fourth quarter of 2019 (the 2019 Plan). As a result, $0.2 million of severance and benefits costs for the reduction of staff were recognized as restructuring charges, related to the 2019 Plan, during the year ended December 31, 2020. The 2019 cost-saving initiative was completed in 2020.

The following table reflects total expenses related to restructuring activities recognized within the Consolidated Statement of Comprehensive Income as restructuring costs (in thousands):


	Year ended December 31,
	2021		2020
Employee compensation costs	$	876	$	15,705
Other exit costs	213		2,101
Total restructuring charges	$	1,089	$	17,806

The following table reflects cash activity relating to the Company’s accrued restructuring cost as of December 31, 2021 and 2020 (in thousands):


	Employee compensation costs		Other exit costs		Total
Balance as of December 31, 2019	$	3,763	$	—	$	3,763
Accruals	15,705		2,101		17,806
Adjustment to previous accrual estimate	(594)		—		(594)
Write off of fixed assets, leases and other adjustments	—		(1,888)		(1,888)
Cash paid	(10,130)		(213)		(10,343)
Balance as of December 31, 2020	$	8,744	$	—	$	8,744
Restructuring charges	876		213		1,089
Cash paid	(8,792)		(213)		(9,005)
Balance as of December 31, 2021	$	828	$	—	$	828

As of December 31, 2021, the accrued restructuring balance of $0.8 million was related to the December 2020 Plan. As of December 31, 2020, the accrued restructuring balance of $8.7 million was comprised of $7.2 million related to the December 2020 Plan, $0.8 million related to the 2019 Plan, and $0.7 million related to Zyla Merger restructuring activities and was classified as accrued liabilities in the Consolidated Balance Sheet. Non-cash charges during the year ended December 31, 2020 primarily related to the write off of fixed assets no longer in use and the early termination of fleet leases in connection with the December 2020 plan.