Harrow Health, Inc. (NASDAQ:HROW) Q4 2022 Earnings Call Transcript March 23, 2023
Operator: Good afternoon. And welcome to Harrow’s Q4 2022 Earnings Conference Call. My name is MJ, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Jamie Webb, Director of Communications and Investor Relations for Harrow.
Jamie Webb: Thank you, Operator. Good afternoon. And welcome to Harrow’s fourth quarter and year end 2022 earnings conference call. Before we begin today, let me remind you that the company’s remarks may include forward-looking statements within the meaning of federal securities law. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow’s control, including risks and uncertainties described from time-to-time in its SEC filings, such as the risks and uncertainties related to the company’s ability to make commercially available its FDA approved products and compounded formulations and technology and FDA approval of certain drug candidates in a timely manner or at all. For a list and description of those risks and uncertainties, please see the Risk Factors section of the company’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
Harrow’s results may differ materially from those projected. Harrow disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Additionally, Harrow referred to non-GAAP financial metrics, specifically adjusted EBITDA and/or adjusted earnings, as well as core results, such as, core gross margin, core net income and core diluted net income per share. A reconciliation of any non-GAAP measures with the most directly comparable GAAP measures is included in the company’s earnings release and Letter to Stockholders, both of which are available on the website.
Photo by National Cancer Institute on Unsplash
By now, you should have received a copy of the earnings press release. If you have not received a copy, please go to the Investor Relations page of the company’s website, www.harrow.com. Joining me on today’s call are Harrow’s Chief Executive Officer, Mark L. Baum; and Harrow’s Chief Financial Officer, Andrew Boll. With that, I’d like to turn the call over to Mark to go over some prepared remarks prior to the question-and-answer session.
Mark Baum: Thanks, Jamie, and thanks to everyone for joining us on today’s call. Our fourth quarter 2022 earnings release, corporate presentation and Letter to Stockholders have all been posted to the Investor Relations section of our website. I want to encourage you to review these documents for a better understanding of the company’s results. In particular, consider reviewing our Stockholder Letters, which I believe will help you track where we have been and where we are heading as we execute our strategy to become a leading U.S. ophthalmic pharmaceutical company. Many of you know that I am a follower and admirer of the great American businessmen, capitalists and philosophers, Warren Buffett and Charlie Munger. Our Stockholder Letters are inspired by Mr. Buffett’s similar annual letters for Berkshire Hathaway.
This latest Stockholder Letter stands out, because it describes a bit of the history of our company, which is important to know as we enter our third five-years planning cycle, and for those stockholders who want to know more about our tortuous history, there is an entire section of our Investor Relations section of our website dedicated to this subject. When I read it, I remind myself of the challenges we have had breaking gravity, if you will, building our business from scratch. In any case, given the recent banking debacle, it has never been more important to really know what you own and I hope these Stockholder Letters provide greater transparency to you as fellow owners of Harrow. On this call, I want to make a few comments about the Harrow business and we will jump right into our Q&A.
As a result of the diligence, tenacity and creativity of the Harrow family, as I promised in prior Stockholder Letters, 2022 was a transformational year in a positive sense and 2023 is continuing that momentum. Here are a few examples of what I mean. This January, we completed our Fab Five transaction and we are currently working to transfer all the new drug applications connected to those products as quickly as possible, which will allow Harrow to begin the process of reviving marketing and sales detailing for ILEVRO, NEVANAC, VIGAMOX, MAXIDEX and TRIESENCE, products which in the aggregate in recent years provided north of $200 million in revenue for their former owner. In February, we received a permanent J-Code for IHEEZO, and just weeks ago, we received temporary pass-through reimbursement status, making IHEEZO the only topical ocular anesthetic in the U.S. eligible for reimbursement.
Combined with the excellent success we have had with our market access strategy to-date, these Codes should greatly enhance our launch of IHEEZO this May as they will allow increased patient access in every traditional site of ophthalmic care, including the eye care professional’s office, the ambulatory surgery center and the hospital and outpatient departments. I want to add that we are not stopping our momentum. In fact, we are currently working on several M&A transactions that are in various phases of closure, including some which are at an advanced stage. We believe closing any one of these deals could add rocket fuel, if you will, to our growth trajectory for this year and for many years to come. And while I can’t guarantee that any of these transactions will be consummated, I think, our recent record for executing complementary M&A transactions speaks for itself.
Feel free to review our Q4 numbers, which are available in both our press release and our Stockholder Letter. But beginning with the Fab Five acquisition closing and subsequent market access wins for IHEEZO and while our core ImprimisRx business is improving and we expect it will only continue to grow, as stockholders you need to know that the Harrow of Q4 2022 has a different business and financial prospect than the Harrow of Q1 2023. With that said, we are all hands on deck for the launch of IHEEZO in the coming weeks, and as we get deeper into this year, we expect continued momentum as we see the Fab Five NDAs transfer, we begin to execute our strategy with VIGAMOX, TRIESENCE comes back into stock, and hopefully, we are able to close some of these acquisitions.
The bottomline for us is that by leveraging the resources and infrastructure that we have put into place, 2023 should be a breakout year and I believe that we have positioned Harrow to be the largest pure-play ophthalmic pharmaceutical company in the United States, uniquely providing both branded pharmaceutical products and high quality compounded pharmaceutical products that meet the needs of our more than 11,000 institutional customers and the millions of Americans they serve. We are now happy to take your questions. I will pause to have our operator poll for questions. Operator?
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