Yahoo Finance Heron Therapeutics Inc (HRTX) Q1 2024 Earnings Call Transcript Highlights: Significant ...
Net Revenues: Q1 2024 net revenues were $34.6 million, up from $29.6 million in Q1 2023.
Cost of Goods Sold (COGS): Reduced to $8.4 million in Q1 2024 from $16.8 million in Q1 2023.
Net Loss: Decreased significantly to $4.8 million in Q1 2024 from $33 million in Q1 2023.
Gross Margin: Improved dramatically from 43% in Q1 2023 to 76% in Q1 2024.
Immunology Franchise Revenue: $25.6 million in Q1 2024.
Total Acute Care Revenue: Increased 45% to $5.5 million in Q1 2024 from $3.8 million in Q1 2023.
SG&A Expenses: Decreased to $26.4 million in Q1 2024 from $37 million in Q1 2023.
Research and Development Expenses: Lowered to $4.6 million in Q1 2024 from $8.8 million in Q1 2023.
2024 Revenue Guidance: Projected to be between $138 million to $158 million.
EBITDA Guidance: Expected to range from a loss of $22 million to a gain of $3 million in 2024.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Heron Therapeutics Inc (NASDAQ:HRTX) reported a significant improvement in financial efficiency, reducing spend and improving margins, projecting profitability by Q4 of 2024.
Net revenues increased from $29.6 million in Q1 2023 to $34.6 million in Q1 2024, with a substantial reduction in net loss from $33 million to $4.8 million year-over-year.
Gross margin improved dramatically from 43% to 76% due to better production scale-up and raw material qualifications.
The immunology franchise continues to exceed expectations, contributing significantly to the quarter's revenue with $25.6 million.
Successful expansion of the sales force and training programs, particularly with 216 crosslink reps trained and active, enhancing market penetration and sales effectiveness.
Negative Points
Despite overall growth, Q1 was acknowledged as relatively flat due to seasonality and extensive training activities for label expansion.
Ongoing litigations present a potential risk to financial stability and operational focus.
The need for continual investment in R&D and training to keep up with market demands and product development.
Dependency on the success of newly trained crosslink reps and the execution of strategic partnerships for future revenue growth.
While gross margins have improved, there is an acknowledgment that maintaining such high margins consistently may be challenging.
Q & A Highlights
Q: What are the new indications for Zimmer following its broad label expansion? A: Craig Collard, CEO of Heron Therapeutics, mentioned that the new indications include spine, shoulder, and soft tissue procedures. He observed initial uptake by spine surgeons and orthopedic specialists, although he anticipates a period of experimentation and adjustment as medical professionals get accustomed to the product.
Q: Can you discuss the performance of Synventive in the first quarter and if this represents a new base level for the product? A: Craig Collard responded that Synventive had a strong first quarter, with increased unit volume and stable pricing. He expressed satisfaction with the product's market performance, which is helping the company maintain market share and manage pricing effectively.
Q: Given the improving demand trends and cost reductions, is there a possibility that Heron Therapeutics might achieve profitability before the fourth quarter? A: Craig Collard acknowledged the possibility but preferred to maintain conservative guidance due to ongoing litigation and other variables that could impact financial outcomes. He highlighted efforts to manage expenses and improve gross profit margins, which might lead to earlier profitability if trends continue positively.
Q: Could you provide more details on the crosslink reps that have been trained? What states are you focusing on next? A: Craig Collard explained that Heron Therapeutics has trained over 200 crosslink reps, initially focusing on North Carolina, South Carolina, and Georgia. Kevin Warner, SVP of Medical Affairs Strategy Engagements, added that training is ongoing nationwide with plans to expand into all 50 states by the end of the year, including key states like Florida, New York, Texas, and California.
Q: What are the implications of the No-Pay Act for Zemiva, and how do you see the coverage changing when the act takes effect in 2025? A: Kevin Warner discussed that the No-Pay Act, effective from Q1 2025, will provide reimbursement outside of the surgical bundle for non-opioid treatments like Zemiva in outpatient settings. He mentioned ongoing discussions with CMS to ensure there is no gap in coverage once Zemiva's pass-through status expires, aligning with the act's implementation.
Q: What are the financial results for Q1 2024, and what is the guidance for the rest of the year? A: Ira Duarte, CFO, reported a net loss of $3.2 million for Q1 2024, a significant improvement from the previous year. The company expects revenue between $138 million to $158 million for 2024, with gross margins improving by 6% to 8%. Heron Therapeutics anticipates achieving positive EBITDA by Q4 2024 and does not plan to raise additional capital based on current projections.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
