Assertio Holdings, Inc.ASRT
Assertio Holdings, Inc. Fair Value Disclosure
FAIR VALUE
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
•Level 1: Quoted prices in active markets for identical assets or liabilities.
•Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following tables reflect the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | Financial Statement Classification | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | Cash and cash equivalents | $ | — | $ | 2,399 | $ | — | $ | 2,399 | |||||||||||||||||||||||
| Money market funds | Cash and cash equivalents | 6,810 | — | — | 6,810 | |||||||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | Short-term investments | — | 53,176 | — | 53,176 | |||||||||||||||||||||||||||
| Total | $ | 6,810 | $ | 55,575 | $ | — | $ | 62,385 | ||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Derivative liability | Long-term debt | $ | — | $ | — | $ | 4 | $ | 4 | |||||||||||||||||||||||
| Total | $ | — | $ | — | $ | 4 | $ | 4 | ||||||||||||||||||||||||
| December 31, 2024 | Financial Statement Classification | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | Cash and cash equivalents | $ | — | $ | 3,897 | $ | — | $ | 3,897 | |||||||||||||||||||||||
| Money Market funds | Cash and cash equivalents | 46,163 | — | — | 46,163 | |||||||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | Short-term investments | — | 49,466 | — | 49,466 | |||||||||||||||||||||||||||
| Total | $ | 46,163 | $ | 53,363 | $ | — | $ | 99,526 | ||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Short-term contingent consideration | Contingent consideration, current portion | $ | — | $ | — | $ | 726 | $ | 726 | |||||||||||||||||||||||
| Derivative liability | Long-term debt | — | — | 168 | 168 | |||||||||||||||||||||||||||
| Total | $ | — | $ | — | $ | 894 | $ | 894 | ||||||||||||||||||||||||
Cash and Cash Equivalents
The Company classified money market funds as Level 1, due to their short-term maturity, and measured the fair value based on quoted prices in active markets for identical assets. The Company classified U.S. Treasury and government agency securities as Level 2, as the inputs used to value these instruments are directly observable or can be corroborated by observable market data for substantially the full term of the assets.
Short-Term Investments
The Company’s short-term investments are recorded at fair value using Level 2 inputs, as the inputs used to value these instruments are directly observable or can be corroborated by observable market data for substantially the full term of the assets. Unrealized gains and losses from short-term investments classified as trading securities recognized by the Company for the year ended December 31, 2025 and 2024 were immaterial.
Contingent Consideration Obligation
Spectrum Merger Contingent Value Rights
In connection with the Spectrum Merger, the Company issued CVRs that represent a contingent consideration obligation that is measured at fair value using a Level 3 valuation, due to the lack of relevant observable inputs and market activity. As of both December 31, 2025 and 2024, the fair value of the Company’s CVR contingent consideration obligation
was determined by the Company to be zero. The Company recognized no expense or benefit for the change in fair value of the CVR contingent consideration during the years ended December 31, 2025 or 2024.
The fair value of the CVR contingent consideration is determined using a Monte Carlo simulation model under the income approach based on the probability of achievement of ROLVEDON net sales milestones using projections of 2025 and 2024 net sales and discounted to present value. The significant assumptions used in the calculation of the fair value as of December 31, 2024 included actual and projected 2025 future ROLVEDON net product sales, while the calculation of the fair value as of December 31, 2025 utilized actual ROLVEDON product net sales. For both December 31, 2025 and 2024, the threshold for recognition for the CVRs were not met.
Zyla Merger Contingent Consideration Obligation
In connection with the Zyla Merger, the Company assumed a contingent consideration obligation to make contingent consideration payments for future royalties to an affiliate of CR Group L.P. based upon annual INDOCIN product net sales over $20.0 million at a 20% royalty through January 2029. The Company classified the acquisition-related contingent consideration obligations to be settled in cash as Level 3, due to the lack of relevant observable inputs and market activity. As of December 31, 2025 and December 31, 2024, the fair value of the INDOCIN product contingent consideration obligation was determined to be zero and $0.7 million, respectively, and has been classified as Contingent consideration, current in the Company’s Consolidated Balance Sheets.
The Company 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, which was recognized in Change in fair value of contingent consideration in the Company’s Consolidated Statements of Comprehensive Loss.
The fair value of the contingent consideration incurred in the Zyla Merger is determined using an option pricing model under the income approach based on estimated INDOCIN product net sales through January 2029 and discounted to present value. The significant assumptions used in the calculation of the fair value as of December 31, 2025 and 2024 included updated projections of future INDOCIN product net sales.
The following table summarizes changes in fair value of the Company’s contingent consideration obligations that is measured on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2025 and 2024 (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Fair value, beginning of the period | $ | 726 | $ | 2,700 | |||||||
| (276) | (244) | ||||||||||
| Cash payment related to contingent consideration | (450) | (1,730) | |||||||||
| Fair value, end of the period | $ | — | $ | 726 | |||||||
Derivative Liability
The Company determined that an embedded conversion feature included in the 2027 Convertible Notes required bifurcation from the host contract and to be recognized as a separate derivative liability carried at fair value. The estimated fair value of the derivative liability, which represents a Level 3 valuation, was determined using a binomial lattice model using certain assumptions and consideration of an increased conversion ratio on the underlying convertible notes that could result from the occurrence of certain events. The significant assumption used in the binomial lattice model is a credit spread of 9.0%.
The following table summarizes the change in fair value of the derivative liability for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Fair value, beginning of the period | $ | 168 | $ | 308 | |||||||
| (164) | (140) | ||||||||||
| Fair value, end of the period | $ | 4 | $ | 168 | |||||||
Financial Instruments Not Required to be Remeasured at Fair Value
The Company’s other financial assets and liabilities are not remeasured to fair value, as the historical cost of each approximates its fair value. As of December 31, 2025, the estimated fair value of the 2027 Convertible Notes, excluding the bifurcated embedded conversion feature, was approximately $36.8 million, compared to a par value of $40.0 million. As of December 31, 2024, the estimated fair value of the 2027 Convertible Notes, excluding the bifurcated embedded conversion option, was approximately $34.8 million, compared to a par value of $40.0 million. The Company estimated the fair value of its 2027 Convertible Notes as of December 31, 2025 and December 31, 2024 based on a market approach, which represents a Level 2 valuation.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company has certain assets and liabilities that are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on a recurring basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment, when there is allocation of purchase price in an acquisition, or when a new liability is being established that requires fair value measurement. These assets and liabilities include long-lived assets and certain liabilities. The fair value measurements for these items rely primarily on Company-specific inputs. Since certain of the Company’s assumptions would involve inputs that are not observable, these fair values would represent a Level 3 valuation.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 8, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.