NASHVILLE, Tenn.—Harrow (Nasdaq: HROW), a leading U.S. eyecare pharmaceutical company, announced results for the third quarter and nine months ended Sept. 30, 2023. The company reported record revenues of $34.3 million, an increase of 50 percent over $22.8 million in the prior-year quarter and an increase of 2 percent over $33.5 million in the sequential quarter. Despite the revenue growth, it also reported a net loss of $4.4 million for the third quarter and lowered its 2023 financial guidance.

Harrow achieved a gross margin of 71 percent year-over-year, consistent with the previous year, while the core gross margin improved from 72 percent to 78 percent. The company's cash and cash equivalents stood at $65.6 million as of Sept. 30, 2023. Adjusted EBITDA for the quarter was higher at $9.2 million, a 270 percent increase from $2.5 million in the prior-year quarter.

Commenting on Harrow’s third quarter results, Mark L. Baum, CEO of Harrow, said, “During the third quarter, we produced record revenues, a 50 percent increase over prior‑year revenues. However, operationally, the third quarter was a mixed bag, with some areas performing exceptionally well, like our launch of Iheezo, and some areas underperforming, such as our Fab Five products and our compounding business.

“The 50 percent year-over-year increase in revenues was primarily a result of increases in branded pharmaceutical products (BPPS), buoyed by performance from Iheezo that exceeded our internal expectations. Strategic amendments to the Iheezo launch led to a substantial ramp in unit demand in September, a trend that continued into the fourth quarter.

"We are hearing from eyecare professionals that they are very happy with Iheezo’s clinical benefits, and we are seeing sizable orders and reorders from high-volume users as well as many new accounts. While it’s still early in the launch and we have a lot of additional work to do, we are bullish about what we see for Iheezo in 2024 and beyond.”

Baum continued, “During the third quarter, we strategically focused our commercial team’s efforts on Iheezo, delaying implementation of marketing and sales detailing efforts for four of the ‘Fab Five’ products we had acquired earlier in the year and for which the New Drug Applications (NDAs) had recently transferred. We have now implemented those strategies and initial prescription data is encouraging.

"We estimate that we are approximately three months behind our revenue forecasts for these products. Our compounding business underperformed during the period as we made investments in compliance and operations. We are confident that the solutions already implemented or planned for our compounding business will prove effective and restore the business to its historical growth trajectory during the first quarter of 2024.”

Baum pointed out that these factors have forced Harrow to adjust its 2023 financial guidance.

“Because we are a few months behind our internal targets—for the aggregate business—we are adjusting our previously issued 2023 financial guidance to revenues of $129 million to $136 million and adjusted EBITDA of $36 million to $41 million. In addition, we are outlining our expectations for 2024, which include revenues of more than $180 million, excluding contributions from Triesence.

In summary, 2023, to date, has been a transformational year—and we believe that, because of the strategic actions that we have taken in 2023, we are positioned well for another record-breaking year in 2024.”