Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Harrow Inc (HROW, Financial) reported record revenue of $49.3 million for the third quarter, marking a 44% increase over the prior year.
- The company's Crown Jewel Dry Eye Asset, VVI, launched in January, exceeded expectations with a 55% increase in prescription volume from the second to the third quarter.
- Harrow Inc (HROW) successfully managed to recover from a temporary inventory shortage of VVI by adjusting inventory levels, ensuring no future shortages.
- The company has seen a significant improvement in insurance formulary access for VVI, enhancing its market potential.
- Harrow Inc (HROW) implemented a strategic 'retina pivot' for its product Ihio, which is already showing positive results in the fourth quarter.
Negative Points
- Harrow Inc (HROW) faced a temporary inventory shortage of VVI in mid-September, which capped its revenue potential for the third quarter.
- The strategic 'retina pivot' for Ihio resulted in subdued demand during the third quarter as the sales team focused on new sales processes.
- Summer seasonality typically limits results in the third quarter due to reduced surgical scheduling.
- The company acknowledged challenges with Ihio's launch, including initial lack of reimbursement clarity.
- Harrow Inc (HROW) is still completing work on net pricing for its relaunched product Tri Essence, indicating potential uncertainty in revenue projections.
Q & A Highlights
Q: How should investors think about the performance of Tri Essence in Q4, considering its relaunch and inventory levels?
A: Mark Baum, CEO, stated that all regional MACs are reimbursing for Tri Essence, which is positive news. The commercial team is actively working to push inventory through the system to realize as much revenue as possible in Q4. CFO Andrew Boll added that while it's early to give precise guidance, the initial response has been great, and they are focused on ensuring a stable supply chain for the future.
Q: Can you quantify the impact of the VBI inventory disruption in late Q3 and provide more details on the initial Part D coverage?
A: Mark Baum explained that the disruption resulted in several million dollars of lost revenue, which would have allowed them to meet external revenue guidance. However, they are recapturing this revenue in Q4. Regarding Part D coverage, they have secured a preferred brand position with a major provider, which is a significant achievement, and they expect additional coverage arrangements soon.
Q: Could you provide more color on summer seasonality and its impact on Q3 results?
A: Mark Baum noted that summer months are typically the weakest due to reduced surgical scheduling, as patients, doctors, and staff often take vacations. This seasonality affects not only Harrow but also other companies in the industry.
Q: Are there any concerns or unexpected challenges with the launches of VBI, Ihio, and Tri Essence?
A: Mark Baum acknowledged that while there are always challenges, the team has positioned the products well for future success. Ihio is on track to become a nine-figure revenue product, VBI is seeing strong refill rates, and Tri Essence has a promising lifecycle management strategy. They have contingency plans to address any issues that arise.
Q: How is the commercial team structured for selling Ihio and Tri Essence, and what are the plans for operating expenses?
A: Mark Baum clarified that the same team sells both Ihio and Tri Essence, supported by strategic accounts and new GPO relationships. Andrew Boll added that operating expenses will focus on commercial activities tied to revenue growth, ensuring profitability while expanding sales and marketing efforts as market access improves.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
