Harrow Health, Inc. (HROW) - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on January 20, 2023, by Harrow Health, Inc. (Harrow). The filing details the completion of a strategic acquisition of exclusive commercial rights to five ophthalmic products from Novartis Technology, LLC and Novartis Innovative Therapies AG.
Key Financial Metrics and Transaction Details
- Acquisition Consideration: Harrow made a one-time closing payment of $130,000,000. An additional milestone payment of up to $45,000,000 is contingent upon the commercial availability of the product Triesence.
- Acquired Assets: ILEVRO, NEVANAC, VIGAMOX, MAXIDEX, and TRIESENCE.
- Financing Structure: The $130 million closing payment was funded through:
- $59,750,000 from a new Senior Secured Loan with B. Riley Commercial Capital, LLC.
- Proceeds from recent sales of common stock.
- Proceeds from the sale of 11.875% senior unsecured notes due 2027.
- Available cash on hand.
- Operational Transition: Novartis will continue to sell the products on Harrow's behalf for approximately six months, transferring net profits to Harrow until New Drug Applications (NDAs) are transferred.
Material Changes and Pro Forma Adjustments
The filing includes an Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2022, reflecting the following material changes:
- Cash received from the divestment of non-ophthalmology related compounding revenue lines and related intangible assets.
- Net proceeds from equity and debt offerings (common stock and 11.875% notes).
- Net proceeds from the Senior Secured Loan.
- Cash outflows associated with the $130 million acquisition closing and related expenses.
Outlook, Risks, and Management Commentary
Management expects a transition period of approximately six months where Novartis manages sales while Harrow receives net profits. Novartis has agreed to supply products post-transfer and assist in transitioning manufacturing to third-party manufacturers if necessary. The filing does not provide specific forward-looking revenue guidance or margin projections for the acquired assets beyond the transaction terms.
Key Facts for Investor Verification
- Verify the exact terms and covenants of the $59.75 million Senior Secured Loan with B. Riley Commercial Capital, LLC.
- Confirm the specific conditions required to trigger the $45 million milestone payment for Triesence.
- Review the Unaudited Pro Forma Balance Sheet (Exhibit 99.2) to assess the immediate impact on liquidity and debt levels.
- Monitor the timeline for the transfer of NDAs and the subsequent handover of manufacturing and sales operations from Novartis.