Harrow Health, Inc. (NASDAQ: HROW) today reported results for the
fourth quarter 2018.
Fourth Quarter 2018 and Other Recent
Notable Highlights:
- Revenues increased 55% year-over-year to a new record of $11.4
million
- Gross Ophthalmology revenue increased 72% year-over-year to a
new record of $10 million
- Gross Margins hit a new record at 64%
- $18.1 million in Net Income (GAAP)
- ImprimisRx customers ordering chronic care ophthalmic medicines
with refills expected to hit 1,000 by the end of Q1 2019
- ImprimisRx products to be featured in a new company record
number of presentations at the upcoming American Society of
Cataract and Refractive Surgery (ASCRS) meeting on May 3-7, 2019 in
San Diego, CA
- Total Balance Sheet assets at year-end totaled $49.5
million
- Eton Pharmaceuticals, a former Harrow subsidiary, completed an
initial public offering in November 2018 and is listed on
NASDAQ
- Melt Pharmaceuticals subsidiary completed Series A financing, a
deconsolidating transaction, in January 2019
Mark L. Baum, CEO of Harrow Health, commented,
“We closed our most successful year in business with continued
strong revenue growth, achieving record high gross margins, and
record net income for the quarter and the year. Our
market-leading ophthalmology business, ImprimisRx, has now
generated a 187% revenue CAGR from 2014 through 2018 and we see
growth continuing in 2019, with line of sight to reaching our 2021
revenue goals. Our first Project 15 business, Eton
Pharmaceuticals, completed its IPO on NASDAQ during the fourth
quarter of 2018. And our other two deconsolidated businesses
– Surface and Melt – are set to have potential value inflection
events occur in 2020. With the announcement in February of
the completion of the Melt Pharmaceuticals Series A financing, we
now own significant equity stakes and royalty rights in three
funded and well-managed pharmaceutical businesses. Over the
coming months, we intend to reveal more about our plans for
Mayfield and Radley, and additional projects we are expecting to
discuss later in the year. Finally, during the fourth
quarter, we implemented a strategy to aggressively and immediately
reduce our future exposure to legal expenses, dismissing a civil
case we were plaintiff in, settled a multi-year long civil case we
were defending, and are working closely with state regulatory
agencies to reach amicable resolutions to other pending
matters. Ultimately, Harrow is being positioned to continue
to unlock value related to the growth in and profits from our
commercial stage business, the growing value of our stakes in
Project 15 businesses, and potential future royalty streams.”
Conference Call and Webcast
The company’s management team will host a
conference call and audio-only webcast today at 4:30 p.m. EDT (1:30
p.m. PDT) to discuss the financial results and other recent
developments. To participate in the call, please dial (844)
369-8770 for domestic callers or (862) 298-0840 for international
callers. To listen to the webcast, please click here or visit
the investor relations section of the Harrow Health website by
clicking here. A dial in replay of the call will be available
until April 12, 2019. To access the replay, dial (877)
481-4010 domestically or (919) 882-2331 internationally and
reference Replay ID: 44882. The webcast replay will be
available until June 12, 2019.
Financial Summary
Selected highlights regarding operating results
for the three months and year ended December 31, 2018 and for the
same periods in 2017 are as follows (in thousands, except per share
data):
|
For the three months ended December 31,
2018 |
For the three months ended December 31,
2017 |
Total Revenues |
$11,384 |
|
$7,337 |
|
Cost of Sales |
|
(4,102 |
) |
|
(3,457 |
) |
Gross Profit |
|
7,282 |
|
|
3,880 |
|
Selling, General & Administrative Expenses |
|
(9,012 |
) |
|
(5,942 |
) |
Research & Development Expenses |
|
(433 |
) |
|
(89 |
) |
Operating Loss |
|
(2,163 |
) |
|
(2,151 |
) |
Other Income (Expense), net |
|
20,293 |
|
|
(620 |
) |
Net Income (Loss) |
$ 18,130 |
|
$
(2,771 |
) |
|
For the year ended December 31,
2018 |
For the year ended December 31,
2017 |
Total Revenues |
$41,372 |
|
$26,774 |
|
Cost of Sales |
|
(16,521 |
) |
|
(13,505 |
) |
Gross Profit |
|
24,851 |
|
|
13,269 |
|
Selling, General & Administrative Expenses |
|
(29,243 |
) |
|
(25,019 |
) |
Research & Development Expenses |
|
(825 |
) |
|
(413 |
) |
Operating Loss |
|
(5,217 |
) |
|
(12,163 |
) |
Other Income (Expense), net |
|
19,842 |
|
|
(757 |
) |
Net Income (Loss) |
$ 14,625 |
|
$
(11,985 |
) |
Net Income (Loss) per Common Share, Basic |
$ 0.67 |
|
$ (0.60 |
) |
Net Income (Loss) per Common Share, Diluted |
$ 0.61 |
|
$ (0.60 |
) |
Adjusted E(L)BITDA
In 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, an unaudited
financial measure that is not calculated in accordance with GAAP,
to evaluate the company's financial results and performance and to
plan and forecast future periods. Adjusted EBITDA is considered a
"non-GAAP" financial measure within the meaning of Regulation G
promulgated by the SEC. Management believes that this
non-GAAP financial measure reflects an additional way of viewing
aspects of the company's operations that, when viewed with GAAP
results, provides a more complete understanding of the company's
results of operations and the factors and trends affecting its
business. Management believes adjusted EBITDA provides
meaningful supplemental information regarding the company's
performance because (i) it allows for greater transparency
with respect to key metrics used by management in its financial and
operational decision-making; (ii) it excludes 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) it is used by institutional investors
and the analyst community to help analyze the company's
results. However, adjusted EBITDA 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 manner in which 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.
The company defines adjusted EBITDA as net
income (loss) excluding the effects of interest, taxes,
depreciation, amortization, stock-based compensation, other income
(expense) and, if any and when specified, other non-recurring
income or expense items. The company 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.
The following is a reconciliation of adjusted
EBITDA, a non-GAAP measure to the most comparable GAAP measure, net
loss, for the three months ended December 31, 2018 and for the same
period in 2017 (in thousands):
|
For the three months ended
December 31, 2018 |
For the three months ended
December 31, 2017 |
GAAP Net Income
(Loss) |
$
18,130 |
|
$
(2,771 |
) |
Stock-based
compensation and payments |
|
536 |
|
|
678 |
|
Interest expense, net |
|
689 |
|
|
678 |
|
Taxes |
|
- |
|
|
(851 |
) |
Depreciation |
|
385 |
|
|
360 |
|
Amortization of intangible assets |
|
59 |
|
|
92 |
|
Other expenses/loss |
|
35 |
|
|
28 |
|
Investment gains/loss from Eton and Surface, net |
|
(21,017 |
) |
|
765 |
|
Non-recurring expenses, net(1) |
|
918 |
|
|
227 |
|
Adjusted E(L)BITDA |
$(264 |
) |
$ (794 |
) |
(1) Non-recurring expenses includes costs
accrued in connection with litigation settlements, income from
settlements associated with accrued expenses and trade payable
disputes, and costs Melt incurred during the period presented that
were consolidated in the Company’s financial statements, that will
be reimbursed to the Company following the deconsolidation of Melt
in the first quarter of 2019.
About Harrow Health
Harrow Health, Inc. (NASDAQ: HROW) owns a
portfolio of healthcare businesses, including the nation’s leading
ophthalmology pharmaceutical compounding business,
ImprimisRx. The company holds large equity positions in Eton
Pharmaceuticals, Surface Pharmaceuticals, Melt Pharmaceuticals,
Mayfield Pharmaceuticals and Radley Pharmaceuticals, all companies
founded as subsidiaries of Harrow Health. The Company also
owns royalty rights in certain 505(b)(2) drug candidates being
developed by Eton, Surface, Melt, Mayfield and Radley. Harrow
intends to create, invest in and grow paradigm shifting health care
businesses that put patients first. For more information
about Harrow Health, please visit the Investor Relations section of
the corporate website by clicking here.
Forward-Looking Statements
This 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 our ability to make commercially available our
compounded formulations and technologies in a timely manner or at
all; physician interest in prescribing our formulations; risks
related to our compounding 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 formulations; 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 formulations; 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 Health’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 Health
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.
Investor Contact:Jon
Pattonjpatton@harrowinc.com858-704-4587
Media Contact:Deb HollidayHolliday
Communications, Inc.deb@hollidaycommunications.net412.877.4519
Source: Harrow Health, Inc.
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