Revenues Increase for Eighth Consecutive
Quarter
Highlights for Second Quarter 2022:
- Record revenues of $23.3 million, up 29% over $18.1 million for
the prior‑year quarter
- Record gross profit of $16.8 million, up 22% over $13.7 million
for the prior‑year quarter
- A record 718,000 product units shipped, up 4% from the
prior-year quarter
- Cash and cash equivalents of $46.4 million as of June 30,
2022
Harrow Health, Inc. (NASDAQ: HROW), an eyecare pharmaceutical
company focused on the development, production, sale, and
distribution of innovative ophthalmic prescription medicines, today
announced results for the second quarter ended June 30, 2022. The
Company also posted its second quarter Letter to Stockholders and
corporate presentation to the “Investors” section of its website,
harrowinc.com.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20220809005923/en/
“We are pleased with both our financial and operational
performance during the second quarter of 2022,” said Mark L. Baum,
CEO of Harrow Health. “The second quarter was our eighth
consecutive quarter of record results in many of the financial
metrics that we track, including total revenues, revenue per
shipping day, and total number of product units distributed. From
an operational perspective, during the quarter, we continued to
focus on ensuring that the Harrow eyecare platform has the
infrastructure, systems, resources, and talent needed to execute on
the growth that we expect in our compounded pharmaceutical business
and new and even more dramatic growth we expect from the continued
integration of FDA-approved branded pharmaceutical products into
the Harrow platform.
“Our business remains strong, and we believe the second half of
2022 will be a very consequential period for Harrow. We expect
several milestone events during the second half, including the
PDUFA target action date for AMP-100, a patented ocular surface
anesthetic drug candidate, as well as several product launches of
compounded formulations. In addition, we continue to be hard at
work trying to close transactions, which are at various stages of
completion, that we strongly believe will add value to our company
in several important ways.”
Second quarter figures of merit:
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2022
2021
2022
2021
Net revenues
$
23,323,000
$
18,134,000
$
45,443,000
$
33,577,000
Gross margin
72
%
76
%
73
%
76
%
Core gross margin(1)
73
%
76
%
74
%
76
%
Net loss
(6,239,000
)
(2,950,000
)
(8,677,000
)
(2,733,000
)
Core net income(1)
254,000
2,087,000
967,000
4,531,000
Adjusted EBITDA(1)
4,505,000
5,698,000
9,445,000
9,974,000
Diluted net loss per share
(0.23
)
(0.11
)
(0.32
)
(0.10
)
Core diluted net income per share(1)
0.01
0.07
0.04
0.16
(1)
Core gross margin, core net income, core
diluted net income 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.
Conference Call and Webcast
The Company’s management team will host a conference call and
live webcast today at 4:45 p.m. Eastern Time to discuss the second
quarter results and provide a business update. To participate in
the call, see details below:
Conference Call Details:
Date:
Tuesday, August 9, 2022
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 8466369):
(telephonic replay through August 16, 2022)
1-877-344-7529 (U.S.) 1-412-317-0088
(International)
Webcast: (online replay through
November 9, 2022)
harrowinc.com
About Harrow Health
Harrow Health, Inc. (Nasdaq: HROW) is an eyecare pharmaceutical
company focused on the development, production, sale, and
distribution of innovative ophthalmic prescription medications that
are accessible and affordable. For more information about Harrow
Health, please visit the Investors section of the corporate
website, harrowinc.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 the continued impact of the COVID-19 pandemic and
any future health epidemics on our financial condition, liquidity
and results of operations; our ability to make commercially
available our FDA-approved products and compounded formulations and
technologies in a timely manner or at all; market acceptance of the
Company’s products and challenges related to the marketing of the
Company’s products; risks related to our 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 products;
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 products; 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.
HARROW HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30, 2022
December 31, 2021
(unaudited)
ASSETS
Cash and cash equivalents
$
46,438,000
$
42,167,000
All other current assets
18,265,000
18,495,000
Total current assets
64,703,000
60,662,000
All other assets
33,359,000
37,667,000
TOTAL ASSETS
$
98,062,000
$
98,329,000
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
$
12,922,000
$
9,722,000
Senior April 2026 Notes, net of
discount
72,042,000
71,654,000
All other liabilities
7,704,000
6,022,000
TOTAL LIABILITIES
92,668,000
87,398,000
TOTAL STOCKHOLDERS' EQUITY
5,394,000
10,931,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
98,062,000
$
98,329,000
HARROW HEALTH, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2022
2021
2022
2021
Total revenues
$
23,323,000
$
18,134,000
$
45,443,000
$
33,577,000
Cost of sales
6,534,000
4,417,000
12,497,000
8,187,000
Gross profit
16,789,000
13,717,000
32,946,000
25,390,000
Selling, general and administrative
14,185,000
9,123,000
27,583,000
17,287,000
Research and development
914,000
425,000
1,572,000
1,017,000
Total operating expenses
15,099,000
9,548,000
29,155,000
18,304,000
Income from operations
1,690,000
4,169,000
3,791,000
7,086,000
Total other expense, net
7,889,000
6,647,000
12,428,000
9,347,000
Income taxes
40,000
-
40,000
-
Net loss attributable to Harrow Health,
Inc.
(6,239,000
)
(2,478,000
)
(8,677,000
)
(2,261,000
)
Preferred dividends and accretion of
preferred stock discount
-
(472,000
)
-
(472,000
)
Net loss attributable to Harrow Health,
Inc. common stockholders
$
(6,239,000
)
$
(2,950,000
)
$
(8,677,000
)
$
(2,733,000
)
Net loss per share of common stock,
basic and diluted
$
(0.23
)
$
(0.11
)
$
(0.32
)
$
(0.10
)
HARROW HEALTH, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Six Months Ended
June 30,
2022
2021
Net cash provided by (used in):
Operating activities
$
5,827,000
$
8,648,000
Investing activities
(669,000
)
8,445,000
Financing activities
(887,000
)
51,457,000
Net change in cash and cash
equivalents
4,271,000
68,550,000
Cash, cash equivalents and restricted cash
at beginning of the period
42,167,000
4,301,000
Cash, cash equivalents and restricted cash
at end of the year
$
46,438,000
$
72,851,000
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) income
attributable to Harrow Health, Inc., excluding the effects of
stock‑based compensation and expenses, interest, taxes,
depreciation, amortization, investment loss, net, gain or
forgiveness of debt, 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) income attributable to Harrow Health, Inc. Adjusted
EBITDA has limitations and should not be considered as an
alternative to gross profit or net (loss) income 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) income,
for the three months ended June 30, 2022, and for the same period
in 2021:
HARROW HEALTH, INC.
RECONCILIATION OF NET (LOSS)
INCOME TO ADJUSTED EBITDA
For the Three Months Ended
June 30,
2022
2021
GAAP net (loss) income
$
(6,239,000
)
$
(2,478,000
)
Stock-based compensation and expenses
1,993,000
1,078,000
Interest expense, net
1,794,000
1,314,000
Income taxes
40,000
-
Depreciation and amortization
424,000
412,000
Amortization of intangible assets
398,000
39,000
Investment loss, net
6,095,000
4,526,000
Other expense, net
-
807,000
(1)
Adjusted EBITDA
$
4,505,000
$
5,698,000
(1)
Includes $756,000 for early extinguishment
of loan.
Core Results
Harrow Health Core Results, including core gross margin, core
net income, core operating income, core EPS (basic and diluted),
and core operating margin, exclude all amortization and impairment
charges of intangible assets, excluding software development costs,
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”), preferred stock dividends,
and 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, the integration and divestment related income and expenses,
divestment gains and losses, restructuring charges/releases and
related items, legal related 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, a non-GAAP
measure, to the most comparable GAAP measure for the three and six
months ended June 30, 2022, and for the same period in 2021:
For the Three Months Ended
June 30, 2022
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Losses
Core Results
Gross profit
$
16,789,000
$
341,000
$
-
$
17,130,000
Gross margin
72
%
73
%
Operating income
1,690,000
398,000
-
2,088,000
(Loss) income before taxes
(6,199,000
)
398,000
6,095,000
294,000
Taxes
(40,000
)
-
-
(40,000
)
Net (loss) income
(6,239,000
)
398,000
6,095,000
254,000
Basic (loss) earnings per share ($)(1)
(0.23
)
0.01
Diluted (loss) earnings per share
($)(1)
(0.23
)
0.01
Weighted average number of shares of
common stock outstanding, basic
27,303,458
27,303,458
Weighted average number of shares of
common stock outstanding, diluted
27,303,458
28,234,177
For the Six Months Ended June
30, 2022
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Losses
Core Results
Gross profit
$
32,946,000
$
682,000
$
-
$
33,628,000
Gross margin
73
%
74
%
Operating income
3,791,000
802,000
-
4,593,000
(Loss) Income before taxes
(8,637,000
)
802,000
8,842,000
1,007,000
Taxes
(40,000
)
-
-
(40,000
)
Net (loss) income
(8,677,000
)
802,000
8,842,000
967,000
Basic (loss) earnings per share ($)(1)
(0.32
)
0.04
Diluted (loss) earnings per share
($)(1)
(0.32
)
0.03
Weighted average number of shares of
common stock outstanding, basic
27,265,350
27,265,350
Weighted average number of shares of
common stock outstanding, diluted
27,265,350
28,270,639
For the Three Months Ended
June 30, 2021
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Losses
Other Items
Core Results
Gross profit
$
13,717,000
$
-
$
-
$
-
$
13,717,000
Gross margin
76
%
-
76
%
Operating income
4,169,000
39,000
-
-
4,208,000
(Loss) income
before taxes
(2,478,000
)
39,000
4,526,000
-
2,087,000
Taxes
-
-
-
-
-
Net (loss) income attributable to common
stockholders
(2,950,000
)
39,000
4,526,000
472,000
2,087,000
Basic (loss) earnings per share ($)(1)
(0.11
)
0.06
Diluted (loss) earnings per share
($)(1)
(0.11
)
0.07
Weighted average number of shares of
common stock outstanding, basic
26,736,970
26,736,970
Weighted average number of shares of
common stock outstanding, diluted
26,736,970
28,309,490
For the Six Months Ended June
30, 2021
GAAP Results
Amortization of Certain
Intangible Assets
Investment
Losses
Other Items
Core Results
Gross profit
$
25,390,000
$
-
$
-
$
-
$
25,390,000
Gross margin
76
%
76
%
Operating income
7,086,000
79,000
-
-
7,165,000
(Loss) Income before taxes
(2,261,000
)
79,000
6,713,000
-
4,531,000
Taxes
-
-
-
-
-
Net (loss) income attributable to common
stockholders
(2,733,000
)
79,000
6,713,000
472,000
4,531,000
Basic (loss) earnings per share ($)(1)
(0.10
)
0.15
Diluted (loss) earnings per share
($)(1)
(0.10
)
0.16
Weighted average number of shares of
common stock outstanding, basic
26,379,943
26,379,943
Weighted average number of shares of
common stock outstanding, diluted
26,379,943
27,914,254
(1)
Core basic earnings per share is
calculated using the weighted-average number of shares of common
stock outstanding during the period. Core diluted earnings per
share also contemplates dilutive shares associated with
equity-based awards and warrants as described in Note 2 and
elsewhere in the Condensed Consolidated Interim Financial
Statements filed with the Company’s Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005923/en/
Jamie Webb, Director of Communications and Investor Relations
jwebb@harrowinc.com 615-733-4737
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