Third Quarter 2023 and Recent Selected Highlights:
- Record revenues of $34.3 million, an increase of 50% over $22.8
million in the prior-year quarter and an increase of 2% over $33.5
million in the sequential quarter.
- GAAP net loss of $(4.4 million).
- Adjusted EBITDA of $9.2 million, an increase of 270% over $2.5
million in the prior‑year quarter.
- GAAP gross margin was flat at 71%, year-over-year.
- Core gross margin improved to 78% over the prior year’s
72%.
- Cash and cash equivalents of $65.6 million as of September 30,
2023.
- Harrow Completes Transfer of NDAs and Launches FLAREX®,
NATACYN®, TOBRADEX® ST, VERKAZIA®, and ZERVIATE® in the U.S.
Harrow (Nasdaq: HROW), a leading U.S. eyecare pharmaceutical
company, announced results for the third quarter and nine months
ended September 30, 2023. The Company also posted its third quarter
Letter to Stockholders and corporate presentation to the
“Investors” section of its website, harrow.com. The Company
encourages all Harrow stockholders to review these documents, which
provide additional details concerning the historical quarterly
period as well as the future expectations for the business.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20231113816178/en/
Commenting on Harrow’s third quarter results, Mark L. Baum, CEO
of Harrow, said, “During the third quarter, we produced record
revenues, a 50% increase over prior‑year revenues. However,
operationally, the third quarter was a mixed bag, with some areas
performing exceptionally well, like our launch of IHEEZO, and some
areas underperforming, such as our Fab Five products and our
compounding business.
“The 50% year-over-year increase in revenues was primarily a
result of increases in branded pharmaceutical products (BPPS),
buoyed by performance from IHEEZO® that exceeded our internal
expectations. Strategic amendments to the IHEEZO launch led to a
substantial ramp in unit demand in September, a trend that
continued into the fourth quarter. We are hearing from eyecare
professionals that they are very happy with IHEEZO’s clinical
benefits, and we are seeing sizable orders and re-orders from
high-volume users as well as many new accounts. While it’s still
early in the launch and we have a lot of additional work to do, we
are bullish about what we see for IHEEZO in 2024 and beyond.
“During the third quarter, we strategically focused our
commercial team’s efforts on IHEEZO, delaying implementation of
marketing and sales detailing efforts for four of the “Fab Five”
products we had acquired earlier in the year and for which the New
Drug Applications (NDAs) had recently transferred. We have now
implemented those strategies and initial prescription data is
encouraging. We estimate that we are approximately three months
behind our revenue forecasts for these products.
“Our compounding business underperformed during the period as we
made investments in compliance and operations. We are confident
that the solutions already implemented or planned for our
compounding business will prove effective and restore the business
to its historical growth trajectory during the first quarter of
2024.
“Because we are a few months behind our internal targets – for
the aggregate business – we are adjusting our previously issued
2023 financial guidance to revenues of $129 million to $136 million
and Adjusted EBITDA of $36 million to $41 million. In addition, we
are outlining our expectations for 2024, which include revenues of
more than $180 million, excluding contributions from TRIESENCE. In
summary, 2023, to date, has been a transformational year – and we
believe that, because of the strategic actions that we have taken
in 2023, we are positioned well for another record-breaking year in
2024.”
Third quarter 2023 figures of merit:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Net revenues
$
34,265,000
$
22,823,000
$
93,838,000
$
68,266,000
Gross margin
71
%
71
%
70
%
72
%
Core gross margin(1)
78
%
72
%
77
%
73
%
Net loss
(4,391,000
)
(6,464,000
)
(15,263,000
)
(15,141,000
)
Core net loss(1)
(2,960,000
)
(1,531,000
)
(4,519,000
)
(564,000
)
Adjusted EBITDA(1)
9,209,000
2,483,000
25,556,000
11,928,000
Basic and diluted net loss per share
(0.13
)
(0.24
)
(0.48
)
(0.55
)
Core diluted net loss per share(1)
(0.09
)
(0.06
)
(0.14
)
(0.02
)
(1)
Core gross margin, core net loss, core
diluted net loss per share (collectively, “Core Results”), and
Adjusted EBITDA are non‑GAAP measures. For additional information,
including a reconciliation of such Core Results and Adjusted EBITDA
to the most directly comparable measures presented in accordance
with GAAP, see the explanation of non-GAAP measures and
reconciliation tables in the financial tables section.
Conference Call and Webcast
The Company’s management team will host a conference call and
live webcast today at 4:45 p.m. Eastern Time to discuss the third
quarter 2023 results and provide a business update. To participate
in the call, see details below:
Conference Call Details:
Date:
Monday, November 13, 2023
Time:
4:45 p.m. Eastern time
Participant Dial-in:
1-833-953-2434 (U.S.) 1-412-317-5763
(International)
Replay Dial-in (Passcode
7225453):
(telephonic replay through November 20,
2023)
1-877-344-7529 (U.S.) 1-412-317-0088
(International)
Webcast: (online replay through
November 13, 2024)
harrow.com
About Harrow
Harrow, Inc. (Nasdaq: HROW) is a leading eyecare pharmaceutical
company engaged in the discovery, development, and
commercialization of innovative ophthalmic pharmaceutical products
for the U.S. market. Harrow helps U.S. eyecare professionals
preserve the gift of sight by making its comprehensive portfolio of
prescription and non-prescription pharmaceutical products
accessible and affordable to millions of Americans each year. For
more information about Harrow, please visit harrow.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Any statements in this release that are not historical facts
may be considered such “forward-looking statements.”
Forward-looking statements are based on management's current
expectations and are subject to risks and uncertainties which may
cause results to differ materially and adversely from the
statements contained herein. Some of the potential risks and
uncertainties that could cause actual results to differ from those
predicted include, among others, risks related to: liquidity or
results of operations; our ability to successfully implement our
business plan, develop and commercialize our products, product
candidates and proprietary formulations in a timely manner or at
all, identify and acquire additional products, manage our pharmacy
operations, service our debt, obtain financing necessary to operate
our business, recruit and retain qualified personnel, manage any
growth we may experience and successfully realize the benefits of
our previous acquisitions and any other acquisitions and
collaborative arrangements we may pursue; competition from
pharmaceutical companies, outsourcing facilities and pharmacies;
general economic and business conditions, including inflation and
supply chain challenges; regulatory and legal risks and
uncertainties related to our pharmacy operations and the pharmacy
and pharmaceutical business in general; physician interest in and
market acceptance of our current and any future formulations and
compounding pharmacies generally. These and additional risks and
uncertainties are more fully described in Harrow’s filings with the
Securities and Exchange Commission, including its Annual Report on
Form 10-K and its Quarterly Reports on Form 10-Q. Such documents
may be read free of charge on the SEC's web site at sec.gov. Undue
reliance should not be placed on forward-looking statements, which
speak only as of the date they are made. Except as required by law,
Harrow undertakes no obligation to update any forward-looking
statements to reflect new information, events, or circumstances
after the date they are made, or to reflect the occurrence of
unanticipated events.
HARROW, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
September 30,
2023
December 31, 2022
(unaudited)
ASSETS
Cash and cash equivalents
$
65,610,000
$
96,270,000
All other current assets
44,668,000
21,990,000
Total current assets
110,278,000
118,260,000
All other assets
175,787,000
39,118,000
TOTAL ASSETS
$
286,065,000
$
157,378,000
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
$
19,029,000
$
18,632,000
Loans payable, net of unamortized debt
discount
182,186,000
104,174,000
All other liabilities
9,448,000
7,332,000
TOTAL LIABILITIES
210,663,000
130,138,000
TOTAL STOCKHOLDERS' EQUITY
75,402,000
27,240,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
286,065,000
$
157,378,000
HARROW, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Net revenues
$
34,265,000
$
22,823,000
$
93,838,000
$
68,266,000
Cost of sales
10,067,000
6,721,000
28,338,000
19,218,000
Gross profit
24,198,000
16,102,000
65,500,000
49,048,000
Selling, general and administrative
21,033,000
15,421,000
56,878,000
43,004,000
Research and development
1,421,000
775,000
3,316,000
2,347,000
Total operating expenses
22,454,000
16,196,000
60,194,000
45,351,000
Income (loss) from operations
1,744,000
(94,000
)
5,306,000
3,697,000
Total other expense, net
4,596,000
6,335,000
19,333,000
18,763,000
Income tax expense
1,539,000
35,000
1,236,000
75,000
Net loss attributable to Harrow,
Inc.
$
(4,391,000
)
$
(6,464,000
)
$
(15,263,000
)
$
(15,141,000
)
Net loss per share of common stock,
basic and diluted
$
(0.13
)
$
(0.24
)
$
(0.48
)
$
(0.55
)
HARROW, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
2023
2022
Net cash (used in) provided by:
Operating activities
$
(4,856,000
)
$
5,417,000
Investing activities
(152,350,000
)
(1,738,000
)
Financing activities
126,546,000
(887,000
)
Net change in cash and cash
equivalents
(30,660,000
)
2,792,000
Cash and cash equivalents at beginning of
the period
96,270,000
42,167,000
Cash and cash equivalents at end of the
period
$
65,610,000
$
44,959,000
Non-GAAP Financial Measures
In addition to the Company’s results of operations determined in
accordance with U.S. generally accepted accounting principles
(GAAP), which are presented and discussed above, management also
utilizes Adjusted EBITDA and Core Results, unaudited financial
measures that are not calculated in accordance with GAAP, to
evaluate the Company’s financial results and performance and to
plan and forecast future periods. Adjusted EBITDA and Core Results
are considered “non‑GAAP” financial measures within the meaning of
Regulation G promulgated by the SEC. Management believes that these
non-GAAP financial measures reflect an additional way of viewing
aspects of the Company’s operations that, when viewed with GAAP
results, provide a more complete understanding of the Company’s
results of operations and the factors and trends affecting its
business. Management believes Adjusted EBITDA and Core Results
provide meaningful supplemental information regarding the Company’s
performance because (i) they allow for greater transparency with
respect to key metrics used by management in its financial and
operational decision-making; (ii) they exclude the impact of
non-cash or, when specified, non-recurring items that are not
directly attributable to the Company’s core operating performance
and that may obscure trends in the Company’s core operating
performance; and (iii) they are used by institutional investors and
the analyst community to help analyze the Company’s results.
However, Adjusted EBITDA, Core Results, and any other non-GAAP
financial measures should be considered as a supplement to, and not
as a substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP. Further, non‑GAAP financial
measures used by the Company and the way they are calculated may
differ from the non-GAAP financial measures or the calculations of
the same non‑GAAP financial measures used by other companies,
including the Company’s competitors.
Adjusted EBITDA
The Company defines Adjusted EBITDA as net loss, excluding the
effects of stock‑based compensation and expenses, interest, taxes,
depreciation, amortization, investment (income) loss, net, and, if
any and when specified, other non-recurring income or expense
items. Management believes that the most directly comparable GAAP
financial measure to Adjusted EBITDA is net loss. Adjusted EBITDA
has limitations and should not be considered as an alternative to
gross profit or net loss as a measure of operating performance or
to net cash provided by (used in) operating, investing, or
financing activities as a measure of ability to meet cash
needs.
The following is a reconciliation of Adjusted EBITDA, a non-GAAP
measure, to the most comparable GAAP measure, net loss, for the
three and nine months ended September 30, 2023, and for the same
periods in 2022:
HARROW, INC.
RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP net loss
$
(4,391,000
)
$
(6,464,000
)
$
(15,263,000
)
$
(15,141,000
)
Stock-based compensation and expenses
4,476,000
1,932,000
11,521,000
5,941,000
Interest expense, net
5,749,000
1,800,000
16,200,000
5,386,000
Income tax expense
1,539,000
35,000
1,236,000
75,000
Depreciation
405,000
247,000
1,095,000
1,090,000
Amortization of intangible assets
2,584,000
398,000
7,634,000
1,200,000
Investment (income) loss, net
(1,348,000
)
4,535,000
(2,676,000
)
13,377,000
Other expense, net
195,000
-
5,809,000
(1)
-
Adjusted EBITDA
$
9,209,000
$
2,483,000
$
25,556,000
$
11,928,000
(1)
Includes $5,465,000 for the loss on
extinguishment of debt.
Core Results
Harrow Core Results, including core gross margin, core net
(loss) income, core operating income, core basic and diluted loss
per share, and core operating margin, exclude (1) all amortization
and impairment charges of intangible assets, excluding software
development costs, (2) net gains and losses on investments and
equity securities, including equity method gains and losses and
equity valued at fair value through profit and loss (“FVPL”), and
preferred stock dividends, and (3) gains/losses on forgiveness of
debt. In other periods, Core Results may also exclude fair value
adjustments of financial assets in the form of options to acquire a
company carried at FVPL, obligations related to product recalls,
certain acquisition‑related items, restructuring charges/releases
and associated items, related legal items, gains/losses on early
extinguishment of debt or debt modifications, impairments of
property, plant and equipment and software, as well as income and
expense items that management deems exceptional and that are or are
expected to accumulate within the year to be over a $100,000
threshold.
The following is a reconciliation of Core Results, non-GAAP
measures, to the most comparable GAAP measures for the three and
nine months ended September 30, 2023, and for the same periods in
2022:
For the Three Months Ended
September 30, 2023
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Gains
Other Items
Core Results
Gross profit
$
24,198,000
$
2,480,000
$
-
$
-
$
26,678,000
Gross margin
71
%
78
%
Operating income
1,744,000
2,584,000
-
-
4,328,000
(Loss) income before taxes
(2,852,000
)
2,584,000
(1,348,000
)
195,000
(1,421,000
)
Tax expense
(1,539,000
)
-
-
-
(1,539,000
)
Net (loss) income
(4,391,000
)
2,584,000
(1,348,000
)
195,000
(2,960,000
)
Basic and diluted loss per share
($)(1)
(0.13
)
(0.09
)
Weighted average number of shares of
common stock outstanding, basic and diluted
34,255,197
34,255,197
For the Nine Months Ended
September 30, 2023
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Gains
Other Items
Core Results
Gross profit
$
65,500,000
$
7,174,000
$
-
$
-
$
72,674,000
Gross margin
70
%
77
%
Operating income
5,306,000
7,634,000
-
-
12,940,000
(Loss) income before taxes
(14,027,000
)
7,634,000
(2,676,000
)
5,786,000
(3,283,000
)
Tax expense
(1,236,000
)
-
-
-
(1,236,000
)
Net (loss) income
(15,263,000
)
7,634,000
(2,676,000
)
5,786,000
(4,519,000
)
Basic and diluted loss per share
($)(1)
(0.48
)
(0.14
)
Weighted average number of shares of
common stock outstanding, basic and diluted
31,689,947
31,689,947
For the Three Months Ended
September 30, 2022
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Losses
Core Results
Gross profit
$
16,102,000
$
341,000
$
-
$
16,443,000
Gross margin
71
%
72
%
Operating (loss) income
(94,000
)
398,000
-
304,000
(Loss) income before taxes
(6,429,000
)
398,000
4,535,000
(1,496,000
)
Tax expense
(35,000
)
-
-
(35,000
)
Net (loss) income
(6,464,000
)
398,000
4,535,000
(1,531,000
)
Basic and diluted loss per share
($)(1)
(0.24
)
(0.06
)
Weighted average number of shares of
common stock outstanding, basic and diluted
27,349,642
27,349,642
For the Nine Months Ended
September 30, 2022
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Losses
Core Results
Gross profit
$
49,048,000
$
1,023,000
$
-
$
50,071,000
Gross margin
72
%
73
%
Operating income
3,697,000
1,200,000
-
4,897,000
(Loss) Income before taxes
(15,066,000
)
1,200,000
13,377,000
(489,000
)
Tax expense
(75,000
)
-
-
(75,000
)
Net (loss) income
(15,141,000
)
1,200,000
13,377,000
(564,000
)
Basic and diluted loss per share
($)(1)
(0.55
)
(0.02
)
Weighted average number of shares of
common stock outstanding, basic and diluted
27,293,756
27,293,756
(1)
Core basic and diluted loss per share is
calculated using the weighted-average number of shares of common
stock outstanding during the period. Core basic and diluted loss
per share also contemplates dilutive shares associated with
equity-based awards as described in Note 2 and elsewhere in the
Condensed Consolidated Financial Statements included in the
Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231113816178/en/
Jamie Webb, Director of Communications and Investor Relations
jwebb@harrowinc.com 615-733-4737
Harrow (NASDAQ:HROW)
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