Harrow, Inc. (NASDAQ: HROW)

Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic CIK: 0001360214
Market Cap 1.75 Bn
P/B 37.13
P/E -350.00
P/S 6.98
ROIC (Qtr) 9.60
Div Yield % 0.00
Rev 1y % (Qtr) 45.44
Total Debt (Qtr) 251.87 Mn
Debt/Equity (Qtr) 5.36

About

Harrow, Inc., represented by the stock symbol HROW, is a prominent player in the eyecare pharmaceutical industry, specializing in the discovery, development, and commercialization of innovative ophthalmic pharmaceutical products for the U.S. market. The company boasts ownership of commercial rights to a substantial portfolio of branded ophthalmic pharmaceutical products in North America, all of which are marketed under the Harrow name. Harrow's primary business activities revolve around the production and distribution of branded ophthalmic pharmaceutical...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 74.29M provide 86.48x coverage of short-term debt 859000, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 188.96M provide exceptional 547.70x coverage of deferred revenue 345000, showing strong service capability backing.
  • Robust free cash flow of 16.57M exceeds capital expenditure of 1.10M by 15.05x, indicating strong organic growth funding capability.
  • Operating cash flow of 17.67M provides strong 51.23x coverage of deferred revenue 345000, indicating service delivery capability.
  • Tangible assets of 188.96M provide robust 4.26x coverage of other current liabilities 44.38M, indicating strong asset backing.

Bear case

  • Operating cash flow of 17.67M barely covers its investment activities of (38.29M), with a coverage ratio of -0.46, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (38.29M) provide weak support for R&D spending of 13.97M, which is -2.74x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 74.29M provide limited coverage of acquisition spending of (42.67M), which is -1.74x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 77.60M relative to inventory of 12.83M (6.05 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • The company's operating cash flow of 17.67M shows concerning coverage of stock compensation expenses of 13.50M, with a 1.31 ratio indicating potential earnings quality issues.

Peer comparison

Companies in the Drug Manufacturers - Specialty & Generic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ZTS Zoetis Inc. 56.15 Bn 21.18 5.98 7.27 Bn
2 TAK Takeda Pharmaceutical Co Ltd 48.92 Bn 221.13 1.66 36.24 Bn
3 HLN Haleon plc 46.13 Bn 25.59 3.29 -
4 TEVA Teva Pharmaceutical Industries Ltd 35.27 Bn 49.54 2.10 17.07 Bn
5 UTHR UNITED THERAPEUTICS Corp 21.76 Bn 17.11 6.95 0.00 Bn
6 VTRS Viatris Inc 14.87 Bn -4.03 1.05 14.44 Bn
7 NBIX Neurocrine Biosciences Inc 14.08 Bn 32.91 5.25 0.43 Bn
8 ELAN Elanco Animal Health Inc 11.64 Bn 323.29 2.54 4.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.30 24.98
EV to Cash from Ops. EV/CFO 108.87 -85.40
EV to Debt EV to Debt 7.64 265.88
EV to EBIT EV/EBIT 96.85 -32.65
EV to EBITDA EV/EBITDA 40.64 -29.50
EV to Free Cash Flow [EV/FCF] EV/FCF 116.10 -32.62
EV to Market Cap EV to Market Cap 1.10 -10.98
EV to Revenue EV/Rev 7.70 -700.14
Price to Book Value [P/B] P/B 37.13 27.22
Price to Earnings [P/E] P/E -350.00 -122.96
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.34
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.81
Dividend per Basic Share Div per Share (Qtr) 0.00 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.08
Interest Coverage Int. cover (Qtr) 0.78 -38.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 10.78 -157.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 2.33 44,776.25
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 252.89 24.45
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 1,131.63 18.14
EBIT Growth (1y) % EBIT 1y % (Qtr) 269.35 37.66
EBT Growth (1y) % EBT 1y % (Qtr) 83.46 108.18
EPS Growth (1y) % EPS 1y % (Qtr) 85.26 52.88
FCF Growth (1y) % FCF 1y % (Qtr) 445.34 -54.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 51.92 25.28
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.69 0.50
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 1.14 2.10
Current Ratio Curr Ratio (Qtr) 2.72 3.92
Debt to Equity Ratio Debt/Equity (Qtr) 5.36 -1.11
Interest Cover Ratio Int Coverage (Qtr) 0.78 -38.10
Times Interest Earned Times Interest Earned (Qtr) 0.78 -38.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.80 -62,432.09
EBIT Margin % EBIT Margin % (Qtr) 7.95 -63,260.88
EBT Margin % EBT Margin % (Qtr) -2.20 -66,726.96
Gross Margin % Gross Margin % (Qtr) 74.60 8,332.72
Net Profit Margin % Net Margin % (Qtr) -2.00 -66,728.37