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Harrow Health, Inc. (NASDAQ:HROW) Q1 2023 Earnings Call Transcript

Harrow Health, Inc. (NASDAQ:HROW) Q1 2023 Earnings Call Transcript May 11, 2023

Harrow Health, Inc. beats earnings expectations. Reported EPS is $-0.22, expectations were $-0.9132.

Operator: Good afternoon, and welcome to Harrow's First Quarter 2023 Earnings Conference Call. My name is Joe, and I will be your operator for today's call. [Operator Instructions] And as a reminder, this conference is being recorded today. I would now like to turn the call over to Jamie Webb, Director of Communications and Investor Relations for Harrow. Please go ahead.

Jamie Webb: Thank you, operator. Good afternoon, and welcome to Harrow's First Quarter 2023 Earnings Conference Call. Before we begin today, let me remind you that the company's remarks may include forward-looking statements within the meaning of federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow's control, including risks and uncertainties described from time to time in its SEC filings, such as the risks and uncertainties related to the company's ability to make commercially available its FDA approved products and compounded formulations and technologies, and FDA approval of certain drug candidates in a timely manner or at all. For a list and description of those risks and uncertainties, please see the Risk Factors section of the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.

Harrow's results may differ materially from those projected. Harrow disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Additionally, Harrow will refer to non-GAAP financial metrics, specifically adjusted EBITDA and/or adjusted earnings as well as core results such as core gross margin, core net income and core diluted net income per share. A reconciliation of any non-GAAP measures with the most directly comparable GAAP measures is included in the company's earnings release and letter to stockholders, both of which are available on the website.

By now, you should have received a copy of the earnings press release. If you have not received a copy, please go to the Investor Relations page of the company's website, www.harrow.com. Joining me on today's call are Harrow's Chief Executive Officer, Mark L. Baum; and Harrow's Chief Financial Officer, Andrew Boll. With that, I'll turn the call over to Mark to go over some prepared remarks prior to the question-and-answer session.

Surgery, Medicine, Health
Surgery, Medicine, Health

Photo by Online Marketing on Unsplash

Mark Baum: Thanks, Jamie, and thanks to everyone for joining us on today's call. Consistent with our usual practice, our first quarter 2023 earnings release, corporate presentation and letter to stockholders have all been posted to the Investor Relations section of our website. Please consider reviewing these documents for a better understanding of the company's results. In particular, our stockholder letter should be required reading if you want to track where we've been and where we're heading as we execute our most recent 5-year plan. On past quarterly calls, either I or Andrew have read out the financial numbers for the quarter. However, all of these figures are in black and white on not only our Form 10-Q, but they're also summarized in our press release and, of course, they're also available in the stockholder letter, which includes additional commentary.

Please forgive me for not covering, what you have so many access points to see with your own eyes. With that said, I want to reaffirm 2023 guidance of $135 million to $143 million in net revenues and $44 million to $50 million in adjusted EBITDA. These figures approximate the revenues, we believe, we can achieve in connection with the first year of the aforementioned 5-year plan, keeping in mind that we started a new 5-year planning cycle this past January. I realize these days that only a select few public company stockholders have an overflowing loyalty to a business or their stockholdings. Of course, it has never been easier to buy or sell a share of stock and thus, a share of the businesses that they own. Please know that my day-to-day focus is on achieving the goals of this 5-year plan.

In this regard, I realize that a 5-year plan is made up of a series of 1-year plans. Part of my job is to monitor our progress in real time. And these occasions, our quarterly calls, are an opportunity to report on our progress on the 5-year plan, not the last quarter plan, the last month plan or the last week plan. Of course, if something we thought was achievable is no longer likely to happen, count on me to do my best, identify those shortcomings on these calls. So what is that 5-year objective? Well, put simply, I believe at the end of this 5-year planning cycle, Harrow has the opportunity to be one of the largest, if not the largest, pure-play ophthalmic pharmaceutical company in the United States. This is what our 5-year plan calls for.

If you, as a stockholder, believe that we, as a management team, can accomplish this, then please accept my thanks in advance for your patience and my appreciation for your trust today and hopefully, for many years to come. Now let's discuss the recent ASCRS meeting which the Harrow team just returned from where we formally launched FDA-approved IHEEZO, the first branded ocular anesthetic approved for the U.S. ophthalmic market in nearly 14 years. We had the opportunity to talk with eye care professionals from all over the United States to answer questions about IHEEZO, our Fab Five products and our expanding portfolio of innovative compounded formulations such as Fortisite and those available on atropine.com. As usual, amazing things happen when you speak to your customers.

They tell you how well you're doing and what you can do better or differently to serve their needs. Working the booth and speaking to customers is one of my favorite things to do. And it's one of the most productive things I get to do each year. Frankly, talking to customers is how we've built our company over the past 9 years. It's our not-so-secret sauce, helping us to get us to this point in our development. Regarding IHEEZO, I had an opportunity to talk with early adopters about their experience to date. Overall, customers are getting the exact experience from IHEEZO that we had hoped and there is more commentary on IHEEZO in our latest stockholder letter. We also had the opportunity to talk with customers about our Fab Five products. Generally, ophthalmologists were excited to see us again commit to support these important products and to revitalize them under the Harrow name.

And of course, we talked with many customers, who are excited about ongoing product innovation within our compounded pharmaceutical products or CPP business, especially Fortisite and our proprietary compounded atropine formulations, which are available, as I said earlier, at atropine.com. Related to our ImprimisRx CPP business, I'm happy to share the good news about a recent agreement with a large U.S. healthcare insurer, which includes one of the nation's largest vision care networks. Under this agreement, which kicks off on June 1 of this year, ImprimisRx will provide its next-generation preservative-free and boric acid free compounded atropine formulations and its innovative Total Tears, ophthalmic formulations, such as Klarity-C to the over 9 million members of their vision care network, which includes approximately 36,000 private practice eye care professionals, local optical stores and national retail stores, including well-known national brand names.

We are looking forward to building our relationship with this new partner and making this new agreement a great success for everyone for many years to come. My summary observation from ASCRS is that there is a growing leadership vacuum in the ophthalmic pharmaceuticals market in the United States. That's aside from certain segments of the retina market such as wet AMD, or age-related macular degeneration or dry AMD, those markets. I believe Harrow, though, is in a pole position to help fill this void to provide leadership and serve ophthalmologists and optometrists as a market leader dedicated to serving the needs of their practices and their patients. Our team must continue to execute, though, and that is what we intend to do. A few more comments on a few items we are focused on: One, the Harrow family, all of us, are all hands on deck for the continued rollout of IHEEZO.

Two, we are now beginning commercial activities for three of the Fab Five products. In other words, those products whose NDAs were recently transferred. Three, we expect the NDA for VIGAMOX to transfer towards the middle to latter part of the summer. Four, we continue to expect that TRIESENCE will be back in stock later this year and that soon thereafter, the NDA for TRIESENCE will transfer to Harrow. Five, in a matter of a few days, actually, next Tuesday at 3:00 p.m. Central to be exact, Melt Pharmaceuticals is scheduled to meet with FDA regarding the proposed Phase III program for its MELT-300 program. Once again, there's more information about the MELT-300 program and that opportunity in our stockholder letter. Sixth, beginning June 1, we're working on pull-through for our new agreement with this large national healthcare insurance provider related to sales and dispensing of our atropine formulations as well as our Total Tears formulations, specifically Klarity-C.

And seven, we continue to be on the hunt for accretive deals at attractive prices that will enhance our ability to serve our customers and in turn, create value for our stockholders. 2023 has started out strong and we intend to continue to dig deeper and capitalize on the momentum that we have created. While there are absolutely no guarantees and a considerable amount of work lies ahead, we truly believe that Harrow is well positioned to meet our 5-year strategic plan objectives, to be one of the largest, if not the largest, pure-play ophthalmic pharmaceutical company in the United States, uniquely providing both branded pharmaceutical products and compounded pharmaceutical products that meet the needs of our growing customer base and, of course, millions and millions of their patients.

We are now happy to take your questions. I will pause to have our operator poll for questions. Operator?

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