Harrow Health, Inc. (HROW) - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Harrow Health, Inc. on July 26, 2019. The filing discloses a material definitive agreement entered into by Park Compounding, Inc., a wholly-owned subsidiary of Harrow Health, Inc.
Key Financial Metrics and Transaction Details
The Company agreed to sell substantially all assets of its non-ophthalmology pharmaceutical compounding business for a total purchase price of $8,000,000. The filing does not provide current revenue, profit, cash flow, or margin data for the reporting period.
- Total Purchase Price: $8,000,000
- Payment Structure: Seller-financed note (Sellers Note) equal to the purchase price.
- Interest Rate: 9.5% per annum.
- Term: 96 monthly payments over eight years.
- Payment Schedule:
- First 24 months: Interest-only payments of $63,333 per month.
- September 15, 2021: Principal payment of $2,000,000 due.
- Beginning October 15, 2021: Monthly payments of $119,287 including interest and principal amortization.
- Equity Component: Warrant exercisable in five years for 20% of the ownership interests of the Buyers (Noice Rx, LLC).
Material Changes and Transaction Status
The transaction represents a divestiture of the Company's non-ophthalmology compounding assets, including trademarks, inventory, equipment, customer lists, and the lease obligation for its Irvine, California pharmacy. The closing is contingent upon the California State Board of Pharmacy issuing a temporary pharmacy and sterile license permit to the Buyers. If approved, closing is expected on or before August 27, 2019.
Outlook, Risks, and Contingencies
Management highlights several risks that could cause actual results to differ from expectations:
- Closing Contingency: The transaction may be delayed or fail to close if the required state pharmacy licenses are not issued.
- Integration and Realization: Risks regarding the integration process and the realization of expected benefits.
- Regulatory Environment: General regulatory developments impacting compounding pharmacies and the pharmaceutical industry.
The filing contains forward-looking statements and disclaims any duty to update them after the filing date.
Key Facts for Investor Verification
- Verify the issuance of the temporary pharmacy and sterile license permit by the California State Board of Pharmacy to Noice Rx, LLC.
- Confirm the closing date of the transaction, currently expected by August 27, 2019.
- Review the impact of the divestiture on the Company's future revenue streams and operational focus.
- Monitor the valuation and exercisability terms of the 20% warrant granted to the Buyers.