Full Press Release Details
Announces Fourth Quarter and Year-End 2022 Financial Results
and Recent Highlights:
| Full-year 2022 revenues of $88.6 million, up 22% over full-year 2021 revenues of $72.5 million | ||
| Sold all non-ophthalmology assets, making Harrow a pure-play ophthalmic pharmaceutical company | ||
| FDA approval of IHEEZO topical ocular anesthetic | ||
| CMS issuance of Permanent J-Code (J2403) and Pass-Through Reimbursement Status for IHEEZO | ||
| Acquired U.S. commercial rights to ILEVRO , NEVANAC , VIGAMOX , MAXIDEX , and TRIESENCE | ||
| Launched Fortisite fortified antibiotic compounded formulations | ||
| Launched preservative-free and boric-acid free compounded atropine.com formulations |
Tenn., March 23, 2023 - Harrow (NASDAQ: HROW), a leading U.S. eyecare pharmaceutical company, today announced results for the fourth
quarter and year ended December 31, 2022. The Company also posted its fourth quarter and year-end Letter to Stockholders and corporate
presentation to the "Investors" section of its website, harrow.com.
was truly a transformational year for Harrow," said Mark L. Baum, CEO of Harrow. "Our IHEEZO journey has been remarkable
- with its FDA approval in September 2022, and recently, in 2023, its issuance of a permanent J-Code (J2403) and Transitional Pass-Through
Reimbursement payment status. We believe that the J-Code and Pass-Through designations will enable a more efficient reimbursement
process for ophthalmologists, optometrists, and retina specialists and create greater accessibility to the many clinical benefits
that IHEEZO provides. We are confident that the infrastructure investments we made throughout 2022 to strengthen our people, platform,
and performance will greatly contribute to a successful launch of IHEEZO in May 2023.
also were successful in 2022 in significantly expanding our product portfolio in terms of both branded pharmaceutical products (BPPs)
and compounded pharmaceutical products (CPPs). We transitioned NDAs for BPPs, such as IOPIDINE and MAXITROL ,
and we rounded out the year by announcing the acquisition of U.S. commercial rights to ILEVRO , NEVANAC ,
VIGAMOX , MAXIDEX , and TRIESENCE , which are currently in various stages of preparedness
for revitalization and relaunch once their NDAs are transferred to Harrow. We also launched several new compounded pharmaceutical products,
including Fortisite , and launched Atropine.com for easier distribution of Atropine, including our next-generation compounded
Atropine formulations that do not contain either preservatives or boric acid. Lastly, in 2022, we realized our goal of becoming a "pure-play
ophthalmic pharmaceutical company" with the divestiture of our non-ophthalmic-related assets.
believe that Harrow is well positioned as one of the leading U.S. eyecare pharmaceutical companies, meeting the needs of our customers
and patients where they are and providing them accessible and affordable pharmaceutical medicines and formulations that fill unmet
needs in ophthalmology. I speak for the entire Harrow Family when I say that we are very excited - and prepared -
for what 2023 (and beyond) has in store for us."
Announces Fourth Quarter and Year-End 2022 Financial Results
quarter and year-end 2022 figures of merit:
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net revenues | $ | 20,329,000 | $ | 20,188,000 | $ | 88,595,000 | $ | 72,476,000 | ||||||||
| Gross margin | 71 | % | 75 | % | 71 | % | 75 | % | ||||||||
| Core gross margin (1) | 71 | % | 75 | % | 73 | % | 75 | % | ||||||||
| Net income (loss) | 1,055,000 | (7,418,000 | ) | (14,086,000 | ) | (18,479,000 | ) | |||||||||
| Core net income (loss) (1) | 2,104,000 | (3,525,000 | ) | 1,540,000 | (4,353,000 | ) | ||||||||||
| Adjusted EBITDA (1)(2) | 1,089,000 | (1,482,000 | ) | 13,017,000 | 11,378,000 | |||||||||||
| Basic and diluted net income (loss) per share | 0.04 | (0.27 | ) | (0.51 | ) | (0.69 | ) | |||||||||
| Core net income (loss) per share (1): | ||||||||||||||||
| Basic | 0.08 | (0.13 | ) | 0.05 | (0.16 | ) | ||||||||||
| Diluted | 0.07 | (0.13 | ) | 0.05 | (0.16 | ) |
| (1) | Core gross margin, core net income (loss), core basic and diluted net income (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 at the end of this release. |
| (2) | The Company recently made a change to its methodology for reporting of Adjusted EBITDA to include acquired in-process R&D ("IPR&D") charges. During the 2021 reporting periods, similar IPR&D transactions were excluded from Adjusted EBITDA for reporting purposes. This change is the result of the U.S. Securities and Exchange Commission's recent industry correspondence on this matter. |
Company's management team will host a conference call and live webcast today at 4:45 p.m. Eastern Time to discuss the fourth quarter
and year-end 2022 results and provide a business update. To participate in the call, see details below:
| Conference Call Details: | |
| Date: | Thursday, March 23, 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 2628819): (telephonic replay through March 30, 2023) | 1-877-344-7529 (U.S.) 1-412-317-0088 (International) |
| Webcast: (online replay through March 23, 2024) | harrow.com |
(Nasdaq: HROW) is a leading U.S. eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative
ophthalmic prescription therapies that are accessible and affordable. Harrow owns U.S. commercial rights to ten FDA-approved ophthalmic
pharmaceutical products. Harrow also owns and operates ImprimisRx, the leading U.S. ophthalmic-focused pharmaceutical compounding business,
which also serves as a mail-order pharmacy licensed to ship prescription medications in all 50 states. Harrow has non-controlling equity
positions in Surface Ophthalmics, Inc. and Melt Pharmaceuticals, Inc., companies that began as subsidiaries of Harrow.
Harrow also owns royalty rights in four late-stage drug candidates being developed by Surface and Melt.
Announces Fourth Quarter and Year-End 2022 Financial Results
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 the continued impact of the COVID-19 pandemic and any future health
epidemics on our financial condition, liquidity and results of operations; our ability to make commercially available our FDA-approved
products and compounded formulations and technologies in a timely manner or at all; market acceptance of the Company's products
and challenges related to the marketing of the Company's products; risks related to our pharmacy operations; our ability to enter
into other strategic alliances, including arrangements with pharmacies, physicians and healthcare organizations for the development and
distribution of our products; our ability to obtain intellectual property protection for our assets; our ability to accurately estimate
our expenses and cash burn, and raise additional funds when necessary; risks related to research and development activities; the projected
size of the potential market for our technologies and products; unexpected new data, safety and technical issues; regulatory and market
developments impacting compounding pharmacies, outsourcing facilities and the pharmaceutical industry; competition; and market conditions.
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 www.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.
Webb, Director of Communications and Investor Relations
Announces Fourth Quarter and Year-End 2022 Financial Results
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 96,270,000 | $ | 42,167,000 | ||||
| All other current assets | 21,990,000 | 18,495,000 | ||||||
| Total current assets | 118,260,000 | 60,662,000 | ||||||
| All other assets | 37,168,000 | 37,667,000 | ||||||
| TOTAL ASSETS | $ | 157,378,000 | $ | 98,329,000 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | $ | 18,632,000 | $ | 9,722,000 | ||||
| Loans payable, net of current portion and unamortized debt discount | 104,174,000 | 71,654,000 | ||||||
| All other liabilities | 7,332,000 | 6,022,000 | ||||||
| TOTAL LIABILITIES | 130,138,000 | 87,398,000 | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 27,240,000 | 10,931,000 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 157,378,000 | $ | 98,329,000 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Total revenues | $ | 20,329,000 | $ | 20,188,000 | $ | 88,595,000 | $ | 72,476,000 | ||||||||
| Cost of sales | 6,165,000 | 5,080,000 | 25,383,000 | 18,214,000 | ||||||||||||
| Gross profit | 14,164,000 | 15,108,000 | 63,212,000 | 54,262,000 | ||||||||||||
| Selling, general and administrative | 15,239,000 | 12,672,000 | 58,243,000 | 41,315,000 | ||||||||||||
| Research and development | 703,000 | 3,942,000 | 3,050,000 | 11,084,000 | ||||||||||||
| Impairment of intangible assets | - | 249,000 | - | 249,000 | ||||||||||||
| Total operating expenses | 15,942,000 | 16,863,000 | 61,293,000 | 52,648,000 | ||||||||||||
| (Loss) income from operations | (1,778,000 | ) | (1,755,000 | ) | 1,919,000 | 1,614,000 | ||||||||||
| Total other income (expense), net | 2,833,000 | (5,530,000 | ) | (15,930,000 | ) | (19,488,000 | ) | |||||||||
| Income taxes | - | 133,000 | 75,000 | 133,000 | ||||||||||||
| Net income (loss) attributable to Harrow Health, Inc. | 1,055,000 | (7,418,000 | ) | (14,086,000 | ) | (18,007,000 | ) | |||||||||
| Preferred dividends and accretion of preferred stock discount | - | - | - | (472,000 | ) | |||||||||||
| Net income (loss) attributable to Harrow Health, Inc. common stockholders | $ | 1,055,000 | $ | (7,418,000 | ) | $ | (14,086,000 | ) | $ | (18,479,000 | ) | |||||
| Net income (loss) per share of common stock, basic and diluted | $ | 0.04 | $ | (0.27 | ) | $ | (0.51 | ) | $ | (0.69 | ) |
Announces Fourth Quarter and Year-End 2022 Financial Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | 1,705,000 | $ | 5,081,000 | ||||
| Investing activities | (1,743,000 | ) | (18,685,000 | ) | ||||
| Financing activities | 54,141,000 | 51,470,000 | ||||||
| Net change in cash and cash equivalents | 54,103,000 | 37,866,000 | ||||||
| Cash and cash equivalents at beginning of the period | 42,167,000 | 4,301,000 | ||||||
| Cash and cash equivalents at end of the year | $ | 96,270,000 | $ | 42,167,000 |
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.
Announces Fourth Quarter and Year-End 2022 Financial Results
Company defines Adjusted EBITDA as net income (loss) attributable to Harrow Health, Inc., excluding the effects of stock-based
compensation and expenses, interest, taxes, depreciation, amortization, investment loss, net, gain on forgiveness of debt, 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 income (loss) attributable to Harrow Health, Inc. 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.
in Adjusted EBITDA for 2021 is an in-process R&D (IPR&D) charge of $8.1 million associated with an upfront payment related
to the execution of a licensing and supply arrangement with Sintetica, S.A. for IHEEZO. This $8.1 million charge was previously
excluded in the prior year reporting periods from Adjusted EBITDA and has been adjusted to account for a change in the Company's
methodology to now include similar IPR&D transactions for Adjusted EBITDA, non-GAAP disclosure and reporting purposes. This change
is the result of the U.S. Securities and Exchange Commission's recent industry correspondence on this matter.
following is a reconciliation of Adjusted EBITDA, a non-GAAP measure, to the most comparable GAAP measure, net income (loss), for the
three months and year ended December 31, 2022, and for the same periods in 2021:
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| GAAP net income (loss) | $ | 1,055,000 | $ | (7,418,000 | ) | $ | (14,086,000 | ) | $ | (18,007,000 | ) | |||||
| Stock-based compensation and expenses | 2,033,000 | 2,115,000 | 7,974,000 | 5,745,000 | ||||||||||||
| Interest expense, net | 1,858,000 | 1,924,000 | 7,244,000 | 5,436,000 | ||||||||||||
| Taxes | - | 133,000 | 75,000 | 133,000 | ||||||||||||
| Depreciation | 387,000 | 442,000 | 1,477,000 | 1,717,000 | ||||||||||||
| Amortization of intangible assets | 378,000 | 39,000 | 1,578,000 | 161,000 | ||||||||||||
| Impairment of intangible assets | - | 249,000 | - | 249,000 | ||||||||||||
| Investment loss, net | 670,000 | 3,854,000 | 14,047,000 | 15,460,000 | ||||||||||||
| Loss on disposal of equipment | 69,000 | 41,000 | 69,000 | 41,000 | ||||||||||||
| Non-recurring expenses | - | 351,000 | - | 1,851,000 | ||||||||||||
| Gain on sale of non-ophthalmology assets | (5,259,000 | ) | - | (5,259,000 | ) | - | ||||||||||
| Other income, net | (102,000 | ) | (248,000 | ) | (102,000 | ) | (1,408,000 | ) (1) | ||||||||
| Adjusted EBITDA | $ | 1,089,000 | $ | 1,482,000 | $ | 13,017,000 | $ | 11,378,000 |
Announces Fourth Quarter and Year-End 2022 Financial Results
Core Results, including core gross margin, core net income (loss), core operating income (loss), core basic and diluted income
(loss) per share, and core operating margin, exclude all amortization and impairment charges of intangible assets, excluding
software development costs, net gains and losses on investments and equity securities, including equity method gains and losses and