8-K: Harrow Inc. Announces Record Second Quarter Revenue and Strategic Growth Initiatives

Harrow Inc. reported record second-quarter revenue of $48.9 million, driven by strong performance across all business segments, particularly IHEEZO and VEVYE.

Summary

• Harrow Inc. announced its financial results for the second quarter of 2024, highlighting record revenues of $48.9 million, a 46% increase compared to the same quarter last year and a 42% increase over the previous quarter.
• The company reported a GAAP net loss of $(6.5) million, but an adjusted EBITDA of $8.8 million.
• Cash and cash equivalents stood at $71.0 million as of June 30, 2024.
• IHEEZO customer unit demand volume increased by 98% from the first quarter of 2024, and VEVYE total prescriptions increased by 212% from the first quarter of 2024.
• Anterior Segment revenues were up over 40% from the first quarter of 2024.
• The ImprimisRx subsidiary also achieved record quarterly revenues.
• Harrow expects 2024 revenue to exceed $180 million, excluding any contribution from TRIESENCE.
• The company is working towards a potential 2024 relaunch of TRIESENCE, with the third process performance qualification batch scheduled for manufacture this month.

Sentiment

Score: 8

Explanation: The document conveys a highly positive sentiment due to the record revenue, strong growth in key products, and strategic initiatives. While there is a net loss, the adjusted EBITDA and future outlook are promising, suggesting a positive trajectory for the company.

Positives

• The company experienced significant revenue growth across all business segments.
• VEVYE is gaining market traction with a 212% increase in prescriptions from the previous quarter.
• IHEEZO is showing strong growth with a 98% increase in customer unit demand.
• Harrow is expanding market access for VEVYE, including Medicaid coverage in multiple states.
• The company is making progress on the relaunch of TRIESENCE.
• Harrow is actively seeking new technologies and relationships to improve customer access and reduce costs.
• The company is attracting high-caliber talent to support its growth initiatives.
• Harrow has a 46% equity interest in Melt Pharmaceuticals, which is progressing with its Phase 3 program for MELT-300.

Negatives

• The company reported a GAAP net loss of $(6.5) million for the second quarter of 2024.
• The company's cash and cash equivalents decreased slightly from $74.1 million at the end of 2023 to $71.0 million as of June 30, 2024.
• The company is still reliant on non-GAAP measures such as Adjusted EBITDA and Core Results to present a more positive financial picture.

Risks

• The company faces risks related to its ability to successfully implement its business plan and commercialize its products.
• There is competition from other pharmaceutical companies, outsourcing facilities, and pharmacies.
• The company is subject to general economic and business conditions, including inflation and supply chain challenges.
• Regulatory and legal risks and uncertainties related to pharmacy operations and the pharmaceutical business in general exist.
• There is a risk of physician interest and market acceptance of current and future formulations.
• The company's future results may differ materially from forward-looking statements due to various risks and uncertainties.

Future Outlook

Harrow expects revenue in the second half of 2024 to substantially outperform the first half, especially if TRIESENCE is relaunched, and anticipates 2024 revenue to exceed $180 million, excluding any TRIESENCE contribution.

Management Comments

• The second quarter of 2024 marked a financial and operational turning point for Harrow, with revenues surging 46% compared to the same quarter last year and 42% over the previous quarter, said Mark L. Baum, Chief Executive Officer of Harrow.
• This remarkable growth, which was years in the making, was driven by exceptional performance across all Harrow business segments, most notably IHEEZO and VEVYE.
• We are excited about where we are today, confident that we are poised for, and expect to achieve, further revenue and profitability expansion in the coming quarters and years.
• I remain confident that our 2024 revenue will be greater than $180 million (excluding any TRIESENCE contribution), and given our progress and momentum, I believe that its really a question of how much greater than $180 million it will be.
• We believe we are building a powerful DED franchise and that over time, VEVYEs market share will continue to grow, giving it a chance to become a category leading prescription DED product.
• We have barely scratched the surface of what IHEEZO can achieve, given its unique properties and performance characteristics.
• The third quarter has started just as strongly, and we are well positioned to meet all our targets for the second half of the year.

Industry Context

Harrow is operating in the competitive eyecare pharmaceutical market, focusing on innovative ophthalmic products. The company's growth in the dry eye disease and retina markets aligns with the increasing demand for advanced treatments in these areas. The company is also expanding its reach through strategic partnerships and market access initiatives.

Comparison to Industry Standards

• Harrow's 46% year-over-year revenue growth in Q2 2024 significantly outpaces the average growth rate of many established pharmaceutical companies, which typically see single-digit or low double-digit growth.
• The 212% increase in VEVYE prescriptions quarter-over-quarter is exceptional, suggesting a strong market reception compared to other dry eye treatments, such as those from companies like AbbVie (Allergan) with Restasis and Novartis with Xiidra, which have seen more modest growth.
• The 98% increase in IHEEZO customer unit demand indicates a rapid adoption rate, which is notable compared to the more gradual uptake of other ophthalmic anesthetics.
• Harrow's focus on both branded products and compounding through ImprimisRx provides a diversified revenue stream, which is different from companies that focus solely on branded or generic pharmaceuticals.
• The company's strategic approach to market access, particularly with Medicaid wins, is a key differentiator, as many smaller pharmaceutical companies struggle to achieve broad payer coverage.
• The potential relaunch of TRIESENCE positions Harrow to compete with established players in the retina market, such as Regeneron and Roche, though it will need to demonstrate consistent supply and market penetration.

Stakeholder Impact

• Shareholders are likely to be positively impacted by the strong revenue growth and strategic initiatives.
• Employees may benefit from the company's growth and the addition of high-caliber talent.
• Customers, including eyecare professionals and patients, will have access to a broader range of innovative ophthalmic products.
• Suppliers may see increased demand for their products and services.
• Creditors may view the company's financial performance as a positive sign of its ability to meet its obligations.

Next Steps

• The company will continue to focus on the commercialization of VEVYE and IHEEZO.
• Harrow will work towards the potential relaunch of TRIESENCE in 2024.
• The company will continue to expand market access for its products.
• Harrow will continue to seek new technologies and relationships to improve customer access and reduce costs.
• The company will continue to attract high-caliber talent to support its growth initiatives.
• Melt Pharmaceuticals will announce its topline readout for MELT-300 in the fourth quarter of 2024.

Key Dates

Keywords

Harrow, Ophthalmology, Pharmaceuticals, Eyecare, IHEEZO, VEVYE, TRIESENCE, ImprimisRx, Dry Eye Disease, Retina, Anterior Segment, EBITDA, Revenue, Medicaid, Market Access