Full Press Release Details
Announces Third Quarter 2023 Financial Results
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. |
Tenn., November 13, 2023 - 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
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.
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
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.
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.
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."
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 | ) |
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 |
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.
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.
Webb, Director of Communications and Investor Relations
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2023 | 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 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | 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 | ) |
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 |
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, 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.
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:
OF NET LOSS TO ADJUSTED EBITDA
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | 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 |
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.
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 | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| of Certain | ||||||||||||||||||||
| GAAP | Intangible | Investment | Other | Results | ||||||||||||||||
| Results | Assets | Gains | Items | Core | ||||||||||||||||
| 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 | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| of Certain | ||||||||||||||||||||
| GAAP | Intangible | Investment | Other | Core | ||||||||||||||||
| Results | Assets | Gains | Items | 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 | ||||||||||||||||
| Amortization | ||||||||||||||||
| of Certain | ||||||||||||||||
| GAAP | Intangible | Investment | Core | |||||||||||||
| Results | Assets | Losses | 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 | ||||||||||||||||
| Amortization | ||||||||||||||||
| of Certain | ||||||||||||||||
| GAAP | Intangible | Investment | Core | |||||||||||||
| Results | Assets | Losses | 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 |