Harrow Health, Inc. (NASDAQ:HROW) Q4 2023 Earnings Call Transcript March 20, 2024
Harrow Health, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning and welcome to Harrow's Fourth Quarter and Year-End 2023 Earnings Conference Call. My name is Drew, 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. [Operator Instructions]. 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 morning, and welcome to Harrow's fourth quarter and year-end 2023 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 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 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 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 will refer 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.
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 turn the call over to Mark to go over some prepared remarks prior to the question-and-answer session.
Mark L. Baum: Thanks, Jamie and thanks to everyone for joining us on today's call. I wanted to first address the change in timings for our earnings release and conference calls. We believed it was in the best interest of our analysts and investors to extend the amount of time between when we issued our earnings release and hosted our calls. We hoped this would allow more time to digest the results and read through our corporate presentation and my letter to stockholders prior to the call. We hope you have found this timing change helpful. So if you're on this call, I assume you've reviewed these materials, and I'll use this time to augment your understanding through some high-level commentary. 2023, which is now more than 75 days in the rearview mirror was a transformative year for Harrow.
It was a transformation that was four years in the making, all of which I pointed out in my letter to stockholders when I quoted what I said about four years ago in 2020, when we were hatching our plan to become a leading North American ophthalmic pharmaceutical business. Here are a few of the 2023 fruits of that plan. Number one, we achieved record revenues with 2023 revenues increasing 47% over 2022 revenues. Two, adjusted EBITDA more than doubled in 2023 from 2022. Three, the addition of numerous high-utility ophthalmic pharmaceutical products to our portfolio. Four, beginning to generate cash flow from our big three products, IHEEZO, VEVYE and Triesence, which made up our most significant short-term and long-term financial drivers. And finally, delivering $8.7 million in cash from operating activities in the fourth quarter of last year and delivering our second consecutive year of positive cash flow from operations.
A doctor wearing a surgical mask performing a routine eye treatment at a hospital.
You see we strengthened our balance sheet last year, especially our cash position, ending the year with $83 million in cash and cash equivalents, and this includes our position in pharmaceuticals. We expect our cash pile to continue to grow over the coming years. Equally important, we fortified our talent base, adding new members to the Harrow family, professionals with the experience, commercial relationships and fresh perspectives to further enhance our transformation. I have highlighted the names of a few of these folks in both the letter to stockholders and the new Harrow corporate deck. Our stockholders have been asking us for more granularity around our quarterly results. They want to know why we're so bullish on our company and the growth trajectory we see in front of us.
In this cycle, I've tried to provide more granularity. This detailed information highlights, among other things, the amazing success we've had with our VEVYE launch. Based on our success to date, I am convinced that VEVYE has the potential to dominate the large U.S. chronic dry eye disease market as the leading cyclosporine and anti-inflammatory product. The VEVYE adoption curve, driven by our small but mighty sales force speaks volumes as does the positive feedback about VEVYE from actual patients on social media. I would encourage you to think about the size of the cyclosporine market alone in the United States. It was about 8 million units last year. Without question, cyclosporine is the number one most trusted active ingredient for U.S. dry eye disease patients.
Eye care professionals trust cyclosporine. Payers, trust cyclosporine. Patients trust cyclosporine. You see the VEVYE train is rolling with all of our key performance metrics moving in the right direction. In fact, the CEO of SILAREX, our specialty pharmacy partner, recently told me that VEVYE has been one of, if not the most successful launches he has seen. Mark by word, VEVYE will significantly benefit millions of U.S. dry eye disease patients and generate substantial value for Harrow stockholders over a very long period. I also discussed our progress in manufacturing Triesence, including a production batch, which is set for next month. This is a PPQ batch, and to the extent that we're successful meeting all of the parameters would become a commercial batch.
I talk about the number of units we expect to have available for sale when Triesence is eventually reintroduced into the market. I also lay out the expected addressable market in terms of unit volume and our new pricing, which combined make clear why we believe Triesence should be a multi-9-figure revenue product, and hopefully soon. I hit on the continued uptake of IHEEZO since its May 2023 launch and news about the recent publication by CMS of the IHEEZO ASP, or average selling price in the physician’s ASP file. This is something that we had previously requested from CMS and that was not acted upon until soon after we met with them on January 9th of this year. I also talk about the return of ImprimisRx to its previous growth trajectory, fulfilling our performance promise that I made in our last stockholders' letter.
I also included quotes from actual users of our product. You see in recent conversations with fellow stockholders, I've noted the reliance on opinions of so-called key opinion leaders, or KOLs, who, upon my further investigation, it actually not used our products. I thought it was important for you to hear from ophthalmologists and optometrists who with 100% certainty have actually used our products. I also want to mention that it's never been a better time to be a Harrow stockholder. I say this because of the amazing progress we made in 2023, and because of what is right in front of us, right in front of our eyes, a clear pathway to achieving our goals, including significant revenue and profitability growth, ultimately making us a leading strategic North American ophthalmic pharmaceutical company.
Finally, as both a Harrow stockholder and a Senior Executive at this company, I continue to be perfectly fine eating my own cookie. I have never sold a share of Harrow stock, and I do not plan to do so. In fact, recently, I purchased Harrow shares. In fact, three times in the past 12 months, precisely because I believe in Harrow's long-term value and because the shares have been available at an attractive price. We are now happy to answer your questions. I will pause to have our operator poll for questions. Operator?
