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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): August 7, 2024
HARROW,
INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-35814 |
|
45-0567010 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
102
Woodmont Blvd., Suite 610 |
|
|
Nashville,
Tennessee |
|
37205 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (615) 733-4730
|
Not
Applicable |
|
|
(Former
Name or Former Address, if Changed Since Last Report) |
|
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
on exchange on which registered |
Common
Stock, $0.001 par value per share |
|
HROW |
|
The
Nasdaq Stock Market LLC |
8.625%
Senior Notes due 2026 |
|
HROWL |
|
The
Nasdaq Stock Market LLC |
11.875%
Senior Notes due 2027 |
|
HROWM |
|
The
Nasdaq Stock Market LLC |
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2
of the Securities Act of 1934: Emerging growth company ☐
If
any emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
2.02 Results of Operations and Financial Condition.
On
August 7, 2024, Harrow, Inc. (the “Company”) issued a press release and a letter to stockholders announcing its financial
results for the period ended June 30, 2024 and an update on recent corporate events. The press release and letter to stockholders are
being furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K.
The
information furnished under this Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed
to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to the liabilities of that Section. The information in this Item 2.02, including Exhibits 99.1 and 99.2, shall not
be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the
extent it is specifically incorporated by reference but regardless of any general incorporation language in such filing.
The
information furnished under this Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed
to constitute an admission that such information or exhibit is required to be furnished pursuant to Regulation FD or that such information
or exhibit contains material information that is not otherwise publicly available. In addition, the Company does not assume any obligation
to update such information or exhibit in the future.
Item
9.01. Financial Statements and Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
HARROW,
INC. |
|
|
|
Dated:
August 7, 2024 |
By: |
/s/
Andrew R. Boll |
|
Name: |
Andrew
R. Boll |
|
Title: |
Chief
Financial Officer |
EXHIBIT
99.1
Harrow
Announces Second Quarter 2024 Financial Results
Second
Quarter 2024 and Recent Selected Highlights:
|
● |
Record
revenues of $48.9 million |
|
● |
GAAP
net loss of $(6.5) million |
|
● |
Adjusted
EBITDA of $8.8 million |
|
● |
Cash
and cash equivalents of $71.0 million as of June 30, 2024 |
|
● |
IHEEZO®
customer unit demand volume increased by 98% from the first quarter of 2024 |
|
● |
IHEEZO
supply agreements total 24 agreements to date in 2024, including a recent win with the largest and highest volume U.S. retina practice
group |
|
● |
VEVYE®
total prescriptions increased by 212% from the first quarter of 2024 |
|
● |
Anterior
Segment revenues up over 40% from the first quarter of 2024 |
|
● |
Record
quarterly revenues from Harrow’s ImprimisRx subsidiary |
NASHVILLE,
Tenn., August 7, 2024 – Harrow (Nasdaq: HROW), a leading North American eyecare pharmaceutical company, announced results for the
second quarter and six months ended June 30, 2024. The Company also posted its second 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 and future expectations for the
business.
“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.
Our team also continues to advance the relaunch of TRIESENCE® during 2024, with initial analytical test results for the
second process performance qualification (PPQ) batch demonstrating in-specification results and the third PPQ batch scheduled to be manufactured
in a matter of days. This outstanding quarterly report is a testament to the dedication of the entire Harrow Family, which is being continuously
strengthened by the addition of experienced and motivated high-impact individuals. 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.”
Second
quarter 2024 figures of merit:
| |
For
the Three Months Ended
June 30, | | |
For
the Six Months Ended June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
Total revenues | |
$ | 48,939,000 | | |
$ | 33,470,000 | | |
$ | 83,526,000 | | |
$ | 59,573,000 | |
Gross margin | |
| 74 | % | |
| 70 | % | |
| 72 | % | |
| 69 | % |
Core gross margin(1) | |
| 79 | % | |
| 78 | % | |
| 77 | % | |
| 77 | % |
Net loss | |
| (6,473,000 | ) | |
| (4,229,000 | ) | |
| (20,038,000 | ) | |
| (10,872,000 | ) |
Core net loss(1) | |
| (2,047,000 | ) | |
| (494,000 | ) | |
| (11,836,000 | ) | |
| (1,536,000 | ) |
Adjusted EBITDA(1) | |
| 8,803,000 | | |
| 11,005,000 | | |
| 9,030,000 | | |
| 16,347,000 | |
Basic and diluted net loss per share | |
| (0.18 | ) | |
| (0.14 | ) | |
| (0.56 | ) | |
| (0.36 | ) |
Core basic and diluted
net loss per share(1) | |
| (0.06 | ) | |
| (0.02 | ) | |
| (0.33 | ) | |
| (0.05 | ) |
(1) | Core
gross margin, core net loss, core basic and 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. |
-MORE-
Harrow
Announces Second Quarter 2024 Financial Results
Page
2
August
7, 2024
Conference
Call and Webcast
The
Company’s management team will host a conference call and live webcast tomorrow morning, Thursday, August 8, 2024, at 8:00 a.m.
Eastern time to discuss the second quarter 2024 results and provide a business update. Participants can access the live conference call
via webcast on the “Investors” page of Harrow’s website. To participate via telephone, please register in advance using
this link. Upon registration, all telephone participants will receive a confirmation email with detailed instructions, including
a unique dial-in number and PIN, for accessing the call. A replay of the conference call webcast will be archived on the Company’s
website for one year.
About
Harrow
Harrow,
Inc. (Nasdaq: HROW) is a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative
ophthalmic pharmaceutical products for the North American market. Harrow helps 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 patients
each year. For more information about Harrow, please visit harrow.com.
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, 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 (SEC),
including its Annual Report on Form 10-K for the year ended December 31, 2023, subsequent Quarterly Reports on Form 10-Q, and other filings
with the SEC. 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.
Contact:
Jamie
Webb, Director of Communications and Investor Relations
jwebb@harrowinc.com
615-733-4737
-MORE-
Harrow
Announces Second Quarter 2024 Financial Results
Page
3
August
7, 2024
HARROW,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
June
30, 2024 | | |
December
31,
2023 | |
| |
(unaudited) | |
ASSETS | |
| | | |
| | |
Cash and cash equivalents | |
$ | 70,968,000 | | |
$ | 74,085,000 | |
All other current assets | |
| 68,422,000 | | |
| 65,397,000 | |
Total
current assets | |
| 139,390,000 | | |
| 139,482,000 | |
All other assets | |
| 167,240,000 | | |
| 172,682,000 | |
TOTAL
ASSETS | |
$ | 306,630,000 | | |
$ | 312,164,000 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’
EQUITY | |
| | | |
| | |
Current liabilities | |
$ | 53,551,000 | | |
$ | 49,344,000 | |
Loans payable, net of unamortized debt discount | |
| 185,023,000 | | |
| 183,172,000 | |
All other liabilities | |
| 9,879,000 | | |
| 9,237,000 | |
TOTAL
LIABILITIES | |
| 248,453,000 | | |
| 241,753,000 | |
TOTAL
STOCKHOLDERS’ EQUITY | |
| 58,177,000 | | |
| 70,411,000 | |
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
$ | 306,630,000 | | |
$ | 312,164,000 | |
HARROW,
INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| |
For
the Three Months Ended
June 30, | | |
For
the Six Months Ended June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
Total revenues | |
$ | 48,939,000 | | |
$ | 33,470,000 | | |
$ | 83,526,000 | | |
$ | 59,573,000 | |
Cost of sales | |
| 12,539,000 | | |
| 10,000,000 | | |
| 23,092,000 | | |
| 18,271,000 | |
Gross
profit | |
| 36,400,000 | | |
| 23,470,000 | | |
| 60,434,000 | | |
| 41,302,000 | |
Selling, general and administrative | |
| 31,817,000 | | |
| 19,957,000 | | |
| 60,630,000 | | |
| 35,845,000 | |
Research and development | |
| 3,053,000 | | |
| 1,161,000 | | |
| 5,202,000 | | |
| 1,895,000 | |
Total
operating expenses | |
| 34,870,000 | | |
| 21,118,000 | | |
| 65,832,000 | | |
| 37,740,000 | |
Income
(loss) from operations | |
| 1,530,000 | | |
| 2,352,000 | | |
| (5,398,000 | ) | |
| 3,562,000 | |
Total other expense, net | |
| (7,348,000 | ) | |
| (6,596,000 | ) | |
| (13,985,000 | ) | |
| (14,737,000 | ) |
Income
tax (expense) benefit | |
| (655,000 | ) | |
| 15,000 | | |
| (655,000 | ) | |
| 303,000 | |
Net
loss attributable to Harrow, Inc. | |
$ | (6,473,000 | ) | |
$ | (4,229,000 | ) | |
$ | (20,038,000 | ) | |
$ | (10,872,000 | ) |
Net
loss per share of common stock, basic and diluted | |
$ | (0.18 | ) | |
$ | (0.14 | ) | |
$ | (0.56 | ) | |
$ | (0.36 | ) |
HARROW,
INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| |
For
the Six Months Ended June
30, | |
| |
2024 | | |
2023 | |
Net cash (used in) provided by: | |
| | | |
| | |
Operating activities | |
$ | (7,374,000 | ) | |
$ | (3,648,000 | ) |
Investing activities | |
| 4,993,000 | | |
| (132,219,000 | ) |
Financing
activities | |
| (736,000 | ) | |
| 62,351,000 | |
Net change in cash and cash equivalents | |
| (3,117,000 | ) | |
| (73,516,000 | ) |
Cash and cash equivalents
at beginning of the period | |
| 74,085,000 | | |
| 96,270,000 | |
Cash and cash equivalents
at end of the period | |
$ | 70,968,000 | | |
$ | 22,754,000 | |
-MORE-
Harrow
Announces Second Quarter 2024 Financial Results
Page
4
August
7, 2024
Non-GAAP
Financial Measures
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 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.
Adjusted
EBITDA
The
Company defines Adjusted EBITDA as net loss, excluding the effects of stock-based compensation and expenses, interest, taxes, depreciation,
amortization, investment loss (income), 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 (used in)
provided by 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
and six months ended June 30, 2024 and for the same periods in 2023:
HARROW,
INC. RECONCILIATION
OF NET LOSS TO ADJUSTED EBITDA |
| |
For
the Three Months Ended
June
30, | | |
For
the Six Months Ended June 30, | |
| |
2024 | | |
2023 | | |
2024
| | |
2023 | |
GAAP net loss | |
$ | (6,473,000 | ) | |
$ | (4,229,000 | ) | |
$ | (20,038,000 | ) | |
$ | (10,872,000 | ) |
Stock-based compensation and expenses | |
| 4,271,000 | | |
| 5,412,000 | | |
| 8,440,000 | | |
| 7,045,000 | |
Interest expense, net | |
| 5,471,000 | | |
| 5,704,000 | | |
| 10,886,000 | | |
| 10,451,000 | |
Income taxes | |
| 655,000 | | |
| (15,000 | ) | |
| 655,000 | | |
| (303,000 | ) |
Depreciation | |
| 453,000 | | |
| 398,000 | | |
| 885,000 | | |
| 690,000 | |
Amortization of intangible assets | |
| 2,549,000 | | |
| 2,843,000 | | |
| 5,103,000 | | |
| 5,050,000 | |
Investment loss (income), net | |
| 1,923,000 | | |
| 714,000 | | |
| 3,171,000 | | |
| (1,328,000 | ) |
Other (income) expense,
net | |
| (46,000 | ) | |
| 178,000 | | |
| (72,000 | ) | |
| 5,614,000 | (1) |
Adjusted EBITDA | |
$ | 8,803,000 | | |
$ | 11,005,000 | | |
$ | 9,030,000 | | |
$ | 16,347,000 | |
(1) | Includes
$5,465,000 for the loss on extinguishment of debt. |
-MORE-
Harrow
Announces Second Quarter 2024 Financial Results
Page
5
August
7, 2024
Core
Results
Harrow
Core Results, including core gross margin, core net loss, and core basic and diluted loss per share 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.
The
following is a reconciliation of Core Results, non-GAAP measures, to the most comparable GAAP measures for the three months and six months
ended June 30, 2024 and for the same periods in 2023:
For
the Three Months Ended June 30, 2024 |
| |
GAAP Results | | |
Amortization
of Certain Intangible Assets | | |
Investment Gains | | |
Other
Items | | |
Core Results | |
Gross profit | |
$ | 36,400,000 | | |
$ | 2,140,000 | | |
$ | - | | |
$ | - | | |
$ | 38,540,000 | |
Gross margin | |
| 74 | % | |
| | | |
| | | |
| | | |
| 79 | % |
Operating income | |
| 1,530,000 | | |
| 2,549,000 | | |
| - | | |
| - | | |
| 4,079,000 | |
(Loss) income before taxes | |
| (5,818,000 | ) | |
| 2,549,000 | | |
| 1,923,000 | | |
| (46,000 | ) | |
| (1,392,000 | ) |
Taxes | |
| (655,000 | ) | |
| - | | |
| - | | |
| - | | |
| (655,000 | ) |
Net (loss) income | |
| (6,473,000 | ) | |
| 2,549,000 | | |
| 1,923,000 | | |
| (46,000 | ) | |
| (2,047,000 | ) |
Basic
and diluted loss per
share ($)(1) | |
| (0.18 | ) | |
| | | |
| | | |
| | | |
| (0.06 | ) |
Weighted average number of shares of common
stock outstanding, basic and diluted | |
| 35,618,977 | | |
| | | |
| | | |
| | | |
| 35,618,977 | |
For
the Six Months Ended June 30, 2024 |
| |
GAAP Results | | |
Amortization
of Certain Intangible Assets | | |
Investment Gains | | |
Other
Items | | |
Core Results | |
Gross profit | |
$ | 60,434,000 | | |
$ | 4,280,000 | | |
$ | - | | |
$ | - | | |
$ | 64,714,000 | |
Gross margin | |
| 72 | % | |
| | | |
| | | |
| | | |
| 77 | % |
Operating loss | |
| (5,398,000 | ) | |
| 5,103,000 | | |
| - | | |
| - | | |
| (295,000 | ) |
(Loss) income before taxes | |
| (19,383,000 | ) | |
| 5,103,000 | | |
| 3,171,000 | | |
| (72,000 | ) | |
| (11,181,000 | ) |
Taxes | |
| (655,000 | ) | |
| - | | |
| - | | |
| - | | |
| (655,000 | ) |
Net (loss) income | |
| (20,038,000 | ) | |
| 5,103,000 | | |
| 3,171,000 | | |
| (72,000 | ) | |
| (11,836,000 | ) |
Basic and diluted loss
per share ($)(1) | |
| (0.56 | ) | |
| | | |
| | | |
| | | |
| (0.33 | ) |
Weighted average number of shares of common
stock outstanding, basic and diluted | |
| 35,544,312 | | |
| | | |
| | | |
| | | |
| 35,544,312 | |
-MORE-
Harrow
Announces Second Quarter 2024 Financial Results
Page
6
August
7, 2024
For
the Three Months Ended June 30, 2023 |
| |
| | |
Amortization
of Certain Intangible Assets | | |
| | |
| | |
| |
Gross profit | |
$ | 23,470,000 | | |
$ | 2,649,000 | | |
$ | - | | |
$ | - | | |
$ | 26,119,000 | |
Gross margin | |
| 70 | % | |
| | | |
| | | |
| | | |
| 78 | % |
Operating income | |
| 2,352,000 | | |
| 2,843,000 | | |
| - | | |
| - | | |
| 5,195,000 | |
(Loss) income before taxes | |
| (4,244,000 | ) | |
| 2,843,000 | | |
| 714,000 | | |
| 178,000 | | |
| (509,000 | ) |
Taxes | |
| 15,000 | | |
| - | | |
| - | | |
| - | | |
| 15,000 | |
Net (loss) income | |
| (4,229,000 | ) | |
| 2,843,000 | | |
| 714,000 | | |
| 178,000 | | |
| (494,000 | ) |
Basic
and diluted loss per
share ($)(1) | |
| (0.14 | ) | |
| | | |
| | | |
| | | |
| (0.02 | ) |
Weighted average number of shares of common
stock outstanding, basic and diluted | |
| 30,458,677 | | |
| | | |
| | | |
| | | |
| 30,458,677 | |
For
the Six Months Ended June 30, 2023 |
| |
| | |
Amortization
of Certain Intangible Assets | | |
| | |
| | |
| |
Gross profit | |
$ | 41,302,000 | | |
$ | 4,694,000 | | |
$ | - | | |
$ | - | | |
$ | 45,996,000 | |
Gross margin | |
| 69 | % | |
| | | |
| | | |
| | | |
| 77 | % |
Operating income | |
| 3,562,000 | | |
| 5,050,000 | | |
| - | | |
| - | | |
| 8,612,000 | |
(Loss) income before taxes | |
| (11,175,000 | ) | |
| 5,050,000 | | |
| (1,328,000 | ) | |
| 5,614,000 | | |
| (1,839,000 | ) |
Taxes | |
| 303,000 | | |
| - | | |
| - | | |
| - | | |
| 303,000 | |
Net (loss) income | |
| (10,872,000 | ) | |
| 5,050,000 | | |
| (1,328,000 | ) | |
| 5,614,000 | | |
| (1,536,000 | ) |
Basic and diluted loss
per share ($)(1) | |
| (0.36 | ) | |
| | | |
| | | |
| | | |
| (0.05 | ) |
Weighted average number of shares of common
stock outstanding, basic and diluted | |
| 30,379,354 | | |
| | | |
| | | |
| | | |
| 30,379,354 | |
(1) | Core
basic and diluted loss per share is calculated using the weighted-average number of shares
of common stock outstanding during the period. Core basic and diluted loss per share also
contemplates dilutive shares associated with equity-based awards as described in Note 2 and
elsewhere in the Condensed Consolidated Financial Statements included in the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. |
-END-
EXHIBIT
99.2
Letter
to Stockholders
August
7, 2024
Dear
Harrow Stockholders:
My
last Letter to Stockholders outlined three of Harrow’s key operational initiatives from our Five-Year Strategic Plan (see page
2 of my March 23, 2023 Letter to Stockholders): (1) building a formidable dry eye disease franchise, including successfully launching
VEVYE®; (2) continuing to lay the foundation for Harrow’s retina franchise with IHEEZO® and TRIESENCE®;
and (3) stabilizing ImprimisRx® and our recently acquired Anterior Segment Products and returning them to a growth trajectory.
The Harrow team made significant progress on each objective during the second quarter, delivering record financial results and positioning
the business to accelerate financial growth and relevance in the coming years.
Revenues
for the second quarter of 2024 surged to a record of $48.9 million, a 46% increase over the prior year’s second quarter revenues
of $33.5 million and a 42% sequential increase over the first quarter of 2024 revenues of $34.6 million. Despite investing in growing
the VEVYE commercial team to capitalize on the product’s new prescription and refill momentum, our GAAP net loss for the second
quarter of 2024 was $(6.5) million, and Adjusted EBITDA (a non-GAAP measure1) was $8.8 million. GAAP gross margins were
74% for the second quarter of 2024 compared to 70% in the same period in 2023, with core gross margins (a non-GAAP measure) floating
up to 79% in the second quarter of 2024 from 78% in the same period in 2023. Two final points related to our second quarter results that
illustrate that our promises are being kept and our plans are paying off: (1) our ImprimisRx compounding subsidiary achieved the highest
quarterly revenue in its history, and (2) the second quarter of 2024 marked the first quarter in which revenues from our branded products
meaningfully exceeded those from ImprimisRx – a trend we believe should accelerate.
We
expect that revenue in the back half of 2024 should substantially outperform revenue in the first half of this year, especially if TRIESENCE
is relaunched. 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 it’s really a question of how much “greater than” $180 million
it will be.
Harrow’s
Dry Eye Disease Franchise
Our
presence in the Dry Eye Disease (DED) market, a multi-billion-dollar annual opportunity, is anchored by VEVYE, a patented formulation
of 0.1% cyclosporine delivered in a semifluorinated alkane vehicle, which is indicated for the treatment of the signs and symptoms of
dry eye disease. The prescribing momentum for VEVYE is intensifying as total prescription volumes for the second quarter increased 212%
from the first quarter of 2024.
For
patients suffering from DED – whether they are newly diagnosed or have failed many of the other not-so-great prescription choices
– VEVYE works quickly, has strong data demonstrating efficacy as far out as 56 weeks, only requires twice daily (or BID) dosing,
and is extraordinarily tolerable relative to nearly all other product choices. Harrow provides DED patients and their prescribers with
a generous access program – to ensure that DED patients who are prescribed VEVYE can get their prescriptions filled. There is more
work to do, but we believe we are building a powerful DED franchise and that over time, VEVYE’s market share will continue to grow,
giving it a chance to become a category leading prescription DED product.
More
good news as we continue to achieve VEVYE Market Access wins, including New York Medicaid and in California, MediCal. MediCal
patients now receive VEVYE without a co-pay! Other notable successes include adding Michigan Medicaid (2.2 million lives), which began
August 1st, and Texas Medicaid (3.4 million lives), which will begin August 8th. We anticipate having 100% Medicaid
access by the time we report results for the third quarter. In addition, VEVYE access to commercial payers has now increased to 58%.
1
A reconciliation of all non-GAAP measures can be found starting on page 8 of this letter.
Since
VEVYE’s launch in January 2024, despite having a small (but mighty) sales force, a growing number of eyecare professionals
have prescribed VEVYE, allowing it to gain market traction quickly. The U.S. DED market is among the largest market opportunities in
eyecare, and despite our progress to date, VEVYE’s share is only a tiny percentage of the overall DED prescription market –
we’ve barely scratched the surface of what this product can achieve! That said, because of the Harrow team’s outstanding
work executing the VEVYE launch (see slide #8 of our updated corporate presentation), positive ongoing prescribing and refilling trends,
and market access wins, we opened additional VEVYE territories, expanding our field force to drive growth. This investment is a strategic
bet – supported by evidence that the odds of success are heavily in our favor – that VEVYE has a long way to go and will
be a major driver of cash flow and stockholder value for many years.
Serving
the Retina Market
Harrow
remains committed to building and growing a presence in the U.S. retina market. Currently, our portfolio is led by (1) IHEEZO, a novel
topical anesthetic gel indicated for ocular surface anesthesia and utilized by retina specialists for anesthetizing the eye during office-based
procedures such as intravitreal injections, and (2) TRIESENCE, the only product indicated for visualization of the vitreous during vitrectomy
and the treatment of posterior uveitis and other posterior segment conditions.
I
recently attended the 2024 American Society of Retina Specialists (ASRS) Annual Meeting, which took place in Stockholm, Sweden. While
at the conference, I and other members of Harrow’s management team met with more than a dozen leading U.S. retina specialists.
Our objective was to begin to create Harrow’s persona in the U.S. retina market. The retina community is highly concentrated in
terms of the number of retina-focused pharmaceutical companies, the retina specialists themselves, and the private equity groups that
control large swaths of this attractive market. During our meetings, we introduced Harrow and shared our story, discussed the many benefits
of IHEEZO, updated potential customers about when they might expect to be able to order TRIESENCE again, and discussed other retina programs
we have been considering. (Yes, we remain on the hunt for reasonably priced assets and businesses with wonderful economics that will
further Harrow’s long-term value and reputation). It was a terrific meeting; and we made a lot of headway beginning to introduce
Harrow to this tremendously exciting segment of the ophthalmic market.
IHEEZO
Update
On
March 12, 2024, the Centers for Medicare & Medicaid Services (CMS) confirmed separate reimbursement of IHEEZO in the physician’s
office. In a separate communication that same day, CMS confirmed IHEEZO payment for both unilateral and bilateral same-day procedures,
which began July 1, 2024, and is retroactive to January 1, 2024. On April 12, 2024, the American Academy of Ophthalmology (AAO) published
a recognition that IHEEZO was payable in the office setting of care.
IHEEZO
sales have begun to ramp up. Specifically, quarterly customer unit demand volumes nearly doubled – up 98%, from 15,176 units
in the first quarter of 2024 to 30,016 units in the second quarter of 2024. This surge helped push IHEEZO revenue to $11.3 million during
the second quarter of 2024. (Keep in mind that customer unit demand and product-specific revenue, although somewhat correlated, are not
one and the same, and we recognize revenue based on distributor purchases – not sales to an end user/customer.) These strong numbers
are a nice tailwind, but we have a lot more work to do. For example, our team is making significant progress in increasing the overall
number of IHEEZO accounts and the number of procedures IHEEZO is used for within the practice. Remember, like VEVYE, we have barely scratched
the surface of what IHEEZO can achieve, given its unique properties and performance characteristics.
We’ve
made great strides in signing new IHEEZO agreements with strategic accounts, which will fuel the IHEEZO growth we expect in the back
half of 2024 and for years to come. As of the close of the second calendar quarter, we had signed 17 supply contracts for IHEEZO, including
10 new ones in the second quarter alone. Furthermore, without preempting the third quarter results announcement in November, since the
close of the second quarter, we’ve signed seven additional strategic account supply agreements, including a recent agreement with
the largest and highest volume U.S. retina practice group. Like the other IHEEZO agreements we’ve signed, we expect this agreement
will be phased in, beginning in the third quarter and kicking in with higher volumes in the fourth quarter of this year and, to a greater
extent, during 2025. These agreements, and especially the last agreement I referenced, are phenomenal achievements and are an early indication
of the impact that Greg DiPasquale is having as he begins to lead our commercial organization!
TRIESENCE
Update
I
am also pleased to confirm that the second commercial-scale process performance qualification (PPQ) batch of TRIESENCE (Batch 2) was
produced during the week of July 8. Thus far, Batch 2 has passed initial analytical tests. However, before we declare victory for this
batch, we must pass a few remaining critical tests, and we expect to have the final data set very shortly. That said, the Batch 2 analytical
data, thus far, evidences that it was closer to the optimal specifications than PPQ Batch 1 – providing us with confidence that
our proprietary process is robust and repeatable. Assuming Batch 2 remains in specification, with one more successful PPQ batch and the
filing of some paperwork needed before the commercial relaunch of TRIESENCE, the third and hopefully final TRIESENCE PPQ batch (Batch
3) is now scheduled for manufacture this month. More work is left to be done, but we remain upbeat about a potential
2024 TRIESENCE relaunch.
I
also want to highlight that after my meetings with leading retina specialists at ASRS, I remain confident about the market need and interest
in TRIESENCE and our ability to monetize the units we produce – in the near and medium term.
Harrow’s
Anterior Segment Franchise and ImprimisRx
Harrow’s
anterior segment business continues to perform, providing our customers with a broad portfolio of high-value, accessible, and affordable
products to choose from. It is worth noting that Anterior Segment revenue in the second quarter of 2024 grew by over 40% from the first
quarter of 2024. Not bad! While we expect to experience quarter-to-quarter revenue variability, the overall revenue trend for this part
of our business is improving.
ImprimisRx,
Harrow’s compounding business, as promised, has stabilized and is now firmly back in a growth mode, producing record quarterly
revenues during the second quarter of 2024.
From
a financial perspective, these two parts of our business are now generating stable streams of cash for Harrow stockholders.
Opening
Additional Markets For Harrow Products
Recently,
Harrow announced that it had entered into an agreement with Apexus™ to make IHEEZO and other key Harrow products available
through its 340B Prime Vendor Program (PVP). This agreement provides Harrow access to the hospital setting of care and an opportunity
to sell its products to Apexus PVP participants, which include 44% of all U.S. hospitals. Through this agreement, PVP hospital participants
and their patients, especially vulnerable patient populations, will now have access to high-quality products, such as IHEEZO, at discounted
prices. Apexus handles all marketing, promotional activities, support services, and training for PVP participants. It is also important
to note that, under the 340B PVP program terms, units sold are excluded from a company’s Average Sales Price (ASP) calculation.
In
addition, we are constantly reviewing new technologies and relationships in order to advance customer access and decrease our cost structures
(e.g., distribution and other “middle-man” costs). This is an active process, and our team is in advanced discussions with
several potential vendor partners who may be able to reduce commercial friction and improve our share of what we keep in the transactions
for our products that our team facilitates.
Hiring
All-Star Talent to Fuel Our Success
We
are working to attract talent with the experience to turn the promise of our Five-Year Strategic Plan into reality. Given our humble
beginnings, it’s more than exciting to meet some of the highly respected and well-connected people who have recently been interested
in or who have joined the Harrow Family. Over the coming quarters, I expect additional big-impact executives to join Harrow – attracted
to the growing recognition of the Harrow brand in ophthalmology and phenomenal opportunities for career growth, incentive-based financial
rewards, and the ability to truly be the CEO of one’s position. The bottom line is that Harrow continues to add high-performance,
disciplined, and highly successful individuals – who can fit into our unique entrepreneurial culture. Harrow is evolving to build
an even more extraordinary team to drive growth and long-term value to you, our stockholders.
Melt
Pharmaceuticals
Melt
Pharmaceuticals, Inc. (Melt), founded as a subsidiary of Harrow before being deconsolidated, separately funded, and separately managed
in 2018, is a clinical-stage pharmaceutical company focused on developing non-opioid, non-IV, sedation therapeutics for medical procedures
in the hospital, outpatient, and in-office settings. Melt intends to seek regulatory approval through the U.S. Food and Drug Administration’s
(FDA) 505(b)(2) regulatory pathway for its patented small-molecule product candidates. Melt’s core intellectual property is the
subject of multiple granted patents in North America, Europe, Asia, and the Middle East. Using funding from its recent $24 million Series
B Preferred Stock financing, Melt is conducting its pivotal Phase 3 program for its lead drug candidate, MELT-300, and expects to announce
its topline readout in the fourth quarter of 2024. Harrow owns approximately 46% of Melt’s equity interests and a 5% royalty interest
in MELT-300.
The
promise of Melt to a patient needing sedation for a procedure is a needle-free experience without the use of opioid-based medications.
For many millions of annual procedures in the U.S. alone, a sublingual non-opioid form of sedation can do the trick! Imagine a world
where a small wafer “melts” under your tongue and provides a sufficient level of sedation to complete a procedure –
say, for example, a cataract surgery – without the use of opioids. We have high hopes that MELT-300 can eventually be used for
numerous other procedures in eyecare and beyond. It’s a very exciting opportunity and something I am proud to have been a part
of – especially as Melt approaches generating pivotal data on its lead MELT-300 program.
According
to Melt, as of the publication of this Letter to Stockholders, enrollment in its MELT-300 Phase 3 study, which began in late May, is
going exceptionally well. Over 300 patients of the expected 528 patients have completed the study. Because of the rapid enrollment to
date, I expect Melt may receive a topline readout before I write my next Letter to Stockholders.
Some
Harrow stockholders have asked how positive MELT-300 Phase 3 data or an FDA-approval would affect Harrow. To be clear, upon approval
of MELT-300, ImprimisRx would lose revenue from the compounded MKO Melt formulation. However, in return, Harrow expects to realize an
increase in the value of our Melt equity and, depending on the pricing for MELT-300, a royalty that should far exceed the profits we
earn selling MKO Melt. From a commercial perspective, in 2024, with a forecast of selling over 150,000 MKO Melt units to approximately
700 accounts, if there is an FDA-approved alternative to MKO Melt, overall commercial interest should increase markedly, creating a near
“no-brainer” product launch opportunity.
In
summary, from my perspective, Melt is a wonderful (and potentially large) upside-only option for Harrow stockholders.
Conclusion
While
even greater accomplishments await us, our growing success is undeniable. This Letter to Stockholders underscores the strong foundation
we have built, positioning us to grow into a leadership role in our industry.
Harrow
is led by Harrow stockholders and is managed for the benefit of Harrow stockholders. Every member of the Harrow Family is vested in the
sustainable value of Harrow’s stock. Our commitment to aligning stockholders’ and customers’ interests is central to
how we’ve built our business and will continue to drive our unwavering commitment to providing innovative solutions to help eyecare
professionals safeguard the precious gift of sight.
Finally,
as excited as I am to report on the second quarter, 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.
Thank
you for your continued trust and investment in our journey.
Sincerely,
Mark
L. Baum
Founder,
Chairman of the Board, and Chief Executive Officer
Nashville,
Tennessee
Index
to Previous Letters to Stockholders
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
|
4Q
2023 |
|
4Q
2022 |
|
4Q
2021 |
|
4Q
2020 |
|
4Q
2019 |
|
|
3Q
2023 |
|
3Q
2022 |
|
3Q
2021 |
|
3Q
2020 |
|
3Q
2019
|
|
|
2Q
2023 |
|
2Q
2022 |
|
2Q
2021 |
|
2Q
2020 |
|
|
1Q
2024 |
|
1Q
2023 |
|
1Q
2022 |
|
1Q
2021 |
|
1Q
2020 |
|
|
Second
Quarter 2024 Financial Overview
GAAP
Operating Results
Selected
financial highlights regarding GAAP operating results for the three months and six months ended June 30, 2024 and for the same periods
in 2023 are as follows:
| |
For the Three Months Ended
June 30, | | |
For the Six Months Ended
June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
Total revenues | |
$ | 48,939,000 | | |
$ | 33,470,000 | | |
$ | 83,526,000 | | |
$ | 59,573,000 | |
Cost of sales | |
| 12,539,000 | | |
| 10,000,000 | | |
| 23,092,000 | | |
| 18,271,000 | |
Gross profit | |
| 36,400,000 | | |
| 23,470,000 | | |
| 60,434,000 | | |
| 41,302,000 | |
Selling, general and administrative | |
| 31,817,000 | | |
| 19,957,000 | | |
| 60,630,000 | | |
| 35,845,000 | |
Research and development | |
| 3,053,000 | | |
| 1,161,000 | | |
| 5,202,000 | | |
| 1,895,000 | |
Total operating expenses | |
| 34,870,000 | | |
| 21,118,000 | | |
| 65,832,000 | | |
| 37,740,000 | |
Income (loss) from operations | |
| 1,530,000 | | |
| 2,352,000 | | |
| (5,398,000 | ) | |
| 3,562,000 | |
Total other expense, net | |
| 7,348,000 | | |
| 6,596,000 | | |
| 13,985,000 | | |
| 14,737,000 | |
Income tax (expense) benefit | |
| (655,000 | ) | |
| 15,000 | | |
| (655,000 | ) | |
| 303,000 | |
Net loss attributable to Harrow, Inc. | |
$ | (6,473,000 | ) | |
$ | (4,229,000 | ) | |
$ | (20,038,000 | ) | |
$ | (10,872,000 | ) |
Net
loss per share of common stock, basic and diluted | |
$ | (0.18 | ) | |
$ | (0.14 | ) | |
$ | (0.56 | ) | |
$ | (0.36 | ) |
Core
Results (Non-GAAP Measures)
Core
Results (non-GAAP measures), which we define as the after-tax earnings and other operational and financial metrics generated from our
principal business, for the three months and six months ended June 30, 2024 and for the same periods in 2023 are as follows:
| |
For the Three Months Ended
June 30, | | |
For the Six Months Ended
June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
Total revenues | |
$ | 48,939,000 | | |
$ | 33,470,000 | | |
$ | 83,526,000 | | |
$ | 59,573,000 | |
Gross margin | |
| 74 | % | |
| 70 | % | |
| 72 | % | |
| 69 | % |
Core gross margin(1) | |
| 79 | % | |
| 78 | % | |
| 77 | % | |
| 77 | % |
Net loss | |
| (6,473,000 | ) | |
| (4,229,000 | ) | |
| (20,038,000 | ) | |
| (10,872,000 | ) |
Core net loss(1) | |
| (2,047,000 | ) | |
| (494,000 | ) | |
| (11,836,000 | ) | |
| (1,536,000 | ) |
Adjusted EBITDA(1) | |
| 8,803,000 | | |
| 11,005,000 | | |
| 9,030,000 | | |
| 16,347,000 | |
Basic and diluted net loss per share | |
| (0.18 | ) | |
| (0.14 | ) | |
| (0.56 | ) | |
| (0.36 | ) |
Core basic and diluted net loss per share(1) | |
| (0.06 | ) | |
| (0.02 | ) | |
| (0.33 | ) | |
| (0.05 | ) |
(1) | Core
gross margin, core net loss, core basic and 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 Letter to Stockholders. |
FORWARD-LOOKING
STATEMENTS
Management’s
remarks in this stockholder letter 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 Securities and Exchange (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 Annual
Report on Form 10-K for the year ended December 31, 2023, subsequent Quarterly Reports on Form 10-Q, and other filings with the SEC.
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 stockholder letter contains time-sensitive
information and is accurate only as of today.
Additionally,
Harrow refers to non-GAAP financial measures, specifically Adjusted EBITDA, adjusted earnings, core gross margin, core net income (loss),
and core basic and diluted net income (loss) per share. A reconciliation of non-GAAP measures with the most directly comparable GAAP
measures is included in this letter.
No
compounded formulation is FDA-approved. All compounded formulations are customizable. Other than drugs compounded at a registered outsourcing
facility, all compounded formulations require a prescription for an individually identified patient consistent with federal and state
laws.
All
trademarks, service marks, and trade names included or referenced in this publication are the property of their respective owners.
Non-GAAP
Financial Measures
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 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.
Adjusted
EBITDA
The
Company defines Adjusted EBITDA as net loss, excluding the effects of stock-based compensation and expenses, interest, taxes, depreciation,
amortization, investment loss (income), 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 (used in)
provided by 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
and six months ended June 30, 2024 and for the same periods in 2023:
| |
For the Three Months Ended
June 30, | | |
For the Six Months Ended June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
GAAP net loss | |
$ | (6,473,000 | ) | |
$ | (4,229,000 | ) | |
$ | (20,038,000 | ) | |
$ | (10,872,000 | ) |
Stock-based compensation and expenses | |
| 4,271,000 | | |
| 5,412,000 | | |
| 8,440,000 | | |
| 7,045,000 | |
Interest expense, net | |
| 5,471,000 | | |
| 5,704,000 | | |
| 10,886,000 | | |
| 10,451,000 | |
Income taxes | |
| 655,000 | | |
| (15,000 | ) | |
| 655,000 | | |
| (303,000 | ) |
Depreciation | |
| 453,000 | | |
| 398,000 | | |
| 885,000 | | |
| 690,000 | |
Amortization of intangible assets | |
| 2,549,000 | | |
| 2,843,000 | | |
| 5,103,000 | | |
| 5,050,000 | |
Investment loss (income), net | |
| 1,923,000 | | |
| 714,000 | | |
| 3,171,000 | | |
| (1,328,000 | ) |
Other (income) expense, net | |
| (46,000 | ) | |
| 178,000 | | |
| (72,000 | ) | |
| 5,614,000 (1) | |
Adjusted EBITDA | |
$ | 8,803,000 | | |
$ | 11,005,000 | | |
$ | 9,030,000 | | |
$ | 16,347,000 | |
(1) | Includes
$5,465,000 for the loss on extinguishment of debt. |
Core
Results
Harrow
Core Results, including core gross margin, core net loss, and core basic and diluted loss per share 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.
The
following is a reconciliation of Core Results, non-GAAP measures, to the most comparable GAAP measures for the three months and six months
ended June 30, 2024 and for the same periods in 2023:
For the Three Months Ended June 30, 2024 |
| |
| | |
Amortization of Certain Intangible Assets | | |
| | |
| | |
| |
Gross profit | |
$ | 36,400,000 | | |
$ | 2,140,000 | | |
$ | - | | |
$ | - | | |
$ | 38,540,000 | |
Gross margin | |
| 74 | % | |
| | | |
| | | |
| | | |
| 79 | % |
Operating income | |
| 1,530,000 | | |
| 2,549,000 | | |
| - | | |
| - | | |
| 4,079,000 | |
(Loss) income before taxes | |
| (5,818,000 | ) | |
| 2,549,000 | | |
| 1,923,000 | | |
| (46,000 | ) | |
| (1,392,000 | ) |
Taxes | |
| (655,000 | ) | |
| - | | |
| - | | |
| - | | |
| (655,000 | ) |
Net (loss) income | |
| (6,473,000 | ) | |
| 2,549,000 | | |
| 1,923,000 | | |
| (46,000 | ) | |
| (2,047,000 | ) |
Basic and diluted loss per share ($)(1) | |
| (0.18 | ) | |
| | | |
| | | |
| | | |
| (0.06 | ) |
Weighted average number of shares of common stock outstanding, basic and diluted | |
| 35,618,977 | | |
| | | |
| | | |
| | | |
| 35,618,977 | |
For the Six Months Ended June 30, 2024 |
| |
| | |
Amortization of Certain Intangible Assets | | |
| | |
| | |
| |
Gross profit | |
$ | 60,434,000 | | |
$ | 4,280,000 | | |
$ | - | | |
$ | - | | |
$ | 64,714,000 | |
Gross margin | |
| 72 | % | |
| | | |
| | | |
| | | |
| 77 | % |
Operating loss | |
| (5,398,000 | ) | |
| 5,103,000 | | |
| - | | |
| - | | |
| (295,000 | ) |
(Loss) income before taxes | |
| (19,383,000 | ) | |
| 5,103,000 | | |
| 3,171,000 | | |
| (72,000 | ) | |
| (11,181,000 | ) |
Taxes | |
| (655,000 | ) | |
| - | | |
| - | | |
| - | | |
| (655,000 | ) |
Net (loss) income | |
| (20,038,000 | ) | |
| 5,103,000 | | |
| 3,171,000 | | |
| (72,000 | ) | |
| (11,836,000 | ) |
Basic and diluted loss per share ($)(1) | |
| (0.56 | ) | |
| | | |
| | | |
| | | |
| (0.33 | ) |
Weighted average number of shares of common stock outstanding, basic and diluted | |
| 35,544,312 | | |
| | | |
| | | |
| | | |
| 35,544,312 | |
For the Three Months Ended June 30, 2023 |
| |
| | |
Amortization of Certain Intangible Assets | | |
| | |
| | |
| |
Gross profit | |
$ | 23,470,000 | | |
$ | 2,649,000 | | |
$ | - | | |
$ | - | | |
$ | 26,119,000 | |
Gross margin | |
| 70 | % | |
| | | |
| | | |
| | | |
| 78 | % |
Operating income | |
| 2,352,000 | | |
| 2,843,000 | | |
| - | | |
| - | | |
| 5,195,000 | |
(Loss) income before taxes | |
| (4,244,000 | ) | |
| 2,843,000 | | |
| 714,000 | | |
| 178,000 | | |
| (509,000 | ) |
Taxes | |
| 15,000 | | |
| - | | |
| - | | |
| - | | |
| 15,000 | |
Net (loss) income | |
| (4,229,000 | ) | |
| 2,843,000 | | |
| 714,000 | | |
| 178,000 | | |
| (494,000 | ) |
Basic and diluted loss per share ($)(1) | |
| (0.14 | ) | |
| | | |
| | | |
| | | |
| (0.02 | ) |
Weighted average number of shares of common stock outstanding, basic and diluted | |
| 30,458,677 | | |
| | | |
| | | |
| | | |
| 30,458,677 | |
For the Six Months Ended June 30, 2023 |
| |
| | |
Amortization of Certain Intangible Assets | | |
| | |
| | |
| |
Gross profit | |
$ | 41,302,000 | | |
$ | 4,694,000 | | |
$ | - | | |
$ | - | | |
$ | 45,996,000 | |
Gross margin | |
| 69 | % | |
| | | |
| | | |
| | | |
| 77 | % |
Operating income | |
| 3,562,000 | | |
| 5,050,000 | | |
| - | | |
| - | | |
| 8,612,000 | |
(Loss) income before taxes | |
| (11,175,000 | ) | |
| 5,050,000 | | |
| (1,328,000 | ) | |
| 5,614,000 | | |
| (1,839,000 | ) |
Taxes | |
| 303,000 | | |
| - | | |
| - | | |
| - | | |
| 303,000 | |
Net (loss) income | |
| (10,872,000 | ) | |
| 5,050,000 | | |
| (1,328,000 | ) | |
| 5,614,000 | | |
| (1,536,000 | ) |
Basic and diluted loss per share ($)(1) | |
| (0.36 | ) | |
| | | |
| | | |
| | | |
| (0.05 | ) |
Weighted average number of shares of common stock outstanding, basic and diluted | |
| 30,379,354 | | |
| | | |
| | | |
| | | |
| 30,379,354 | |
(1) | Core
basic and diluted loss per share is calculated using the weighted-average number of shares
of common stock outstanding during the period. Core basic and diluted loss per share also
contemplates dilutive shares associated with equity-based awards as described in Note 2 and
elsewhere in the Condensed Consolidated Financial Statements included in the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. |
v3.24.2.u1
Cover
|
Aug. 07, 2024 |
Document Type |
8-K
|
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false
|
Document Period End Date |
Aug. 07, 2024
|
Entity File Number |
001-35814
|
Entity Registrant Name |
HARROW,
INC.
|
Entity Central Index Key |
0001360214
|
Entity Tax Identification Number |
45-0567010
|
Entity Incorporation, State or Country Code |
DE
|
Entity Address, Address Line One |
102
Woodmont Blvd.
|
Entity Address, Address Line Two |
Suite 610
|
Entity Address, City or Town |
Nashville
|
Entity Address, State or Province |
TN
|
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37205
|
City Area Code |
(615)
|
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733-4730
|
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false
|
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|
Common Stock, $0.001 par value per share |
|
Title of 12(b) Security |
Common
Stock, $0.001 par value per share
|
Trading Symbol |
HROW
|
Security Exchange Name |
NASDAQ
|
8.625% Senior Notes due 2026 |
|
Title of 12(b) Security |
8.625%
Senior Notes due 2026
|
Trading Symbol |
HROWL
|
Security Exchange Name |
NASDAQ
|
11.875% Senior Notes due 2027 |
|
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HROWM
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