Full Press Release Details
Announces Third Quarter 2022 Financial Results
| FDA approval of IHEEZO for ocular surface anesthesia | ||
| Launch of Fortisite , fortified antibiotics | ||
| Launch of atropine.com compounded atropine portal | ||
| Revenues of $22.8 million, up 22% over $18.7 million for the prior-year quarter | ||
| Nearly $1 million firm order revenue backlog at September 30, 2022 | ||
| Product units shipped of 703,000, up 21% from prior-year quarter | ||
| Cash and cash equivalents of $45.0 million as of September 30, 2022 |
Tenn., November 14, 2022 - Harrow (NASDAQ: HROW), an eyecare pharmaceutical company exclusively focused on the discovery, development,
and commercialization of innovative ophthalmic therapies, today announced results for the third quarter ended September 30, 2022. The
Company also posted its third quarter Letter to Stockholders and corporate presentation to the "Investors"
section of its website, harrowinc.com.
second half of 2022 is on track to be a true inflection point for Harrow," said Mark L. Baum, CEO of Harrow. "During the
third quarter, in the face of a return to seasonal/summer demand fluctuations, supply chain issues, and increased operating costs due
to inflation, the Harrow team made great progress in advancing our Five-Year Strategic Plan, including receiving approval on September
27th from the U.S. Food and Drug Administration (FDA) for IHEEZO (formerly known as AMP-100) for ocular surface anesthesia.
A few days later, we launched a new suite of compounded products - Fortisite, a patent-pending family of high-concentration refrigeration-stable
fortified antibiotics. Just after the close of the third quarter, we sold our non-ophthalmology compounded product line, which will enhance
our balance sheet in the fourth quarter and, importantly, marked the achievement of a strategic imperative - to be a pure-play
company that is 100% focused on the U.S. ophthalmic pharmaceutical market. And our momentum is continuing with the launch of atropine.com
to market a family of patent-pending compounded atropine formulations to address a significant unmet need.
believe each of these events represents a significant achievement for Harrow; however, taken as a whole, along with the progress we made
in some of the acquisition opportunities we've been pursuing, we are executing a transformation of our company with a line
of sight towards achieving our strategic objective - taking advantage of what we believe is a once-in-a-generation opportunity
to build a small company like Harrow into a leading U.S. ophthalmic pharmaceutical company."
quarter figures of merit:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net revenues | $ | 22,823,000 | $ | 18,711,000 | $ | 68,266,000 | $ | 52,288,000 | ||||||||
| Gross margin | 71 | % | 74 | % | 72 | % | 75 | % | ||||||||
| Core gross margin (1) | 72 | % | 74 | % | 73 | % | 75 | % | ||||||||
| Net loss | (6,464,000 | ) | (8,328,000 | ) | (15,141,000 | ) | (11,061,000 | ) | ||||||||
| Core net loss (1) | (1,531,000 | ) | (5,359,000 | ) | (564,000 | ) | (828,000 | ) | ||||||||
| Adjusted EBITDA (1)(2) | 2,483,000 | (78,000 | ) | 11,928,000 | 9,896,000 | |||||||||||
| Diluted net loss per share | (0.24 | ) | (0.31 | ) | (0.55 | ) | (0.42 | ) | ||||||||
| Core diluted net loss per share (1) | (0.06 | ) | (0.20 | ) | (0.02 | ) | (0.03 | ) |
| (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 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. |
| HROW Announces Third Quarter 2022 Financial Results |
| Page 2 |
| November 14, 2022 |
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
results and provide a business update. To participate in the call, see details below:
| Conference Call Details: | ||
| Date: | Monday, November 14, 2022 | |
| 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 7735845): (telephonic replay through November 21, 2022) | 1-877-344-7529 (U.S.) 1-412-317-0088 (International) | |
| Webcast: (online replay through February 14, 2023) | harrowinc.com |
(Nasdaq: HROW) is an eyecare pharmaceutical company exclusively focused on the discovery, development, and commercialization of innovative
ophthalmic prescription therapies that are accessible and affordable. For more information about Harrow, please visit the Investors section
of the corporate website, harrowinc.com.
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
| HROW Announces Third Quarter 2022 Financial Results |
| Page 3 |
| November 14, 2022 |
CONSOLIDATED BALANCE SHEETS
| September 30, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 44,959,000 | $ | 42,167,000 | ||||
| All other current assets | 19,115,000 | 18,495,000 | ||||||
| Total current assets | 64,074,000 | 60,662,000 | ||||||
| All other assets | 34,918,000 | 37,667,000 | ||||||
| TOTAL ASSETS | $ | 98,992,000 | $ | 98,329,000 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | $ | 18,371,000 | $ | 9,722,000 | ||||
| Senior April 2026 Notes, net of discount | 72,239,000 | 71,654,000 | ||||||
| All other liabilities | 7,520,000 | 6,022,000 | ||||||
| TOTAL LIABILITIES | 98,130,000 | 87,398,000 | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 862,000 | 10,931,000 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 98,992,000 | $ | 98,329,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Total revenues | $ | 22,823,000 | $ | 18,711,000 | $ | 68,266,000 | $ | 52,288,000 | ||||||||
| Cost of sales | 6,721,000 | 4,947,000 | 19,218,000 | 13,134,000 | ||||||||||||
| Gross profit | 16,102,000 | 13,764,000 | 49,048,000 | 39,154,000 | ||||||||||||
| Selling, general and administrative | 15,421,000 | 11,356,000 | 43,004,000 | 28,643,000 | ||||||||||||
| Research and development | 775,000 | 6,125,000 | 2,347,000 | 7,142,000 | ||||||||||||
| Total operating expenses | 16,196,000 | 17,481,000 | 45,351,000 | 35,785,000 | ||||||||||||
| (Loss) income from operations | (94,000 | ) | (3,717,000 | ) | 3,697,000 | 3,369,000 | ||||||||||
| Total other expenses, net | (6,335,000 | ) | (4,611,000 | ) | (18,763,000 | ) | (13,958,000 | ) | ||||||||
| Income taxes | 35,000 | - | 75,000 | - | ||||||||||||
| Net loss attributable to Harrow Health, Inc. | (6,464,000 | ) | (8,328,000 | ) | (15,141,000 | ) | (10,589,000 | ) | ||||||||
| Preferred dividends and accretion of preferred stock discount | - | - | - | (472,000 | ) | |||||||||||
| Net loss attributable to Harrow Health, Inc. common stockholders | $ | (6,464,000 | ) | $ | (8,328,000 | ) | $ | (15,141,000 | ) | $ | (11,061,000 | ) | ||||
| Net loss per share of common stock, basic and diluted | $ | (0.24 | ) | $ | (0.31 | ) | $ | (0.55 | ) | $ | (0.42 | ) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
| For the Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | 5,606,000 | $ | 6,572,000 | ||||
| Investing activities | (1,928,000 | ) | (4,489,000 | ) | ||||
| Financing activities | (886,000 | ) | 51,472,000 | |||||
| Net change in cash and cash equivalents | 2,792,000 | 53,555,000 | ||||||
| Cash, cash equivalents and restricted cash at beginning of the period | 42,167,000 | 4,301,000 | ||||||
| Cash, cash equivalents and restricted cash at end of the year | $ | 44,959,000 | $ | 58,856,000 |
| HROW Announces Third Quarter 2022 Financial Results |
| Page 4 |
| November 14, 2022 |
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.
Company defines Adjusted EBITDA as net 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 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 the third quarter of 2021 is an in-process R&D (IPR&D) charge of $5.0 million associated with an upfront
payment related to the execution of a licensing and supply arrangement with Sintetica, S.A. for IHEEZO. This $5.0 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 loss, for the three and
nine months ended September 30, 2022, and for the same periods in 2021:
OF NET (LOSS) INCOME TO ADJUSTED EBITDA
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| GAAP net loss | $ | (6,464,000 | ) | $ | (8,328,000 | ) | $ | (15,141,000 | ) | $ | (10,589,000 | ) | ||||
| Stock-based compensation and expenses | 1,932,000 | 1,697,000 | 5,941,000 | 3,630,000 | ||||||||||||
| Interest expense, net | 1,800,000 | 1,685,000 | 5,386,000 | 3,512,000 | ||||||||||||
| Taxes | 35,000 | - | 75,000 | - | ||||||||||||
| Depreciation | 247,000 | 399,000 | 1,090,000 | 1,275,000 | ||||||||||||
| Amortization of intangible assets | 398,000 | 43,000 | 1,200,000 | 122,000 | ||||||||||||
| Investment loss, net | 4,535,000 | 2,926,000 | 13,377,000 | 11,606,000 | ||||||||||||
| Other expenses, net | - | 1,500,000 | (1) | - | 340,000 | (2) | ||||||||||
| Adjusted EBITDA | $ | 2,483,000 | $ | (78,000 | ) | $ | 11,928,000 | $ | 9,896,000 |
| (1) | Includes $1,500,000 of litigation settlement expenses. |
| (2) | Includes $756,000 for early extinguishment of loan, $1,500,000 of litigation settlement expenses and a gain on forgiveness of debt of $1,976,000. |
| HROW Announces Third Quarter 2022 Financial Results |
| Page 5 |
| November 14, 2022 |
Health Core Results, including core gross margin, core net (loss) income, core operating (loss) income, core basic and diluted 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 equity valued at fair
value through profit and loss ("FVPL"), preferred stock dividends, and 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, the integration and divestment related income and expenses,
divestment gains and losses, 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.
following is a reconciliation of Core Results, a non-GAAP measure, to the most comparable GAAP measure for the three and nine months
ended September 30, 2022, and for the same periods in 2021:
| 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 | ) | ||||||||||
| Taxes | (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 |