Heron Therapeutics, Inc. (HRTX) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong financial performance with significant year-over-year revenue growth, improved net income, and reduced expenses. Although there are some uncertainties regarding the adoption of ZYNRELEF post-NOPAIN Act, management's strategic refocusing and partnerships seem promising. The positive financial health, coupled with optimistic future guidance, suggests a favorable stock price movement. Despite the lack of immediate impact from the NOPAIN Act, the overall sentiment is positive, driven by strong financial metrics and strategic initiatives.
Key Financial Performance
Total Net Revenues (Q2 2025) $37.2 million, reflecting strong operational and financial performance.
Total Net Revenues (H1 2025) $76.1 million, showcasing continued focus on disciplined execution and operational efficiency.
Adjusted EBITDA (H1 2025) $7.9 million, indicating disciplined execution and operational efficiency.
Combined Net Revenues from APONVIE and ZYNRELEF (Q2 2025) $10.7 million, representing a year-over-year growth of 55.5%.
Combined Net Revenues from APONVIE and ZYNRELEF (H1 2025) $20.9 million, reflecting a year-over-year growth of 70.5%.
Product Gross Profit (Q2 2025) $27.3 million or 73.5%, increased from 70.8% in Q2 2024 due to higher cost per unit sold and lower inventory reserves.
Product Gross Profit (H1 2025) $57.8 million or 75.9%, increased from 73.2% in H1 2024 due to higher cost per unit sold and lower inventory reserves.
SG&A Expenses (Q2 2025) $26 million, decreased from $27.5 million in Q2 2024 due to reduced personnel expenses and one-time stock expenses in 2024.
SG&A Expenses (H1 2025) $51.1 million, decreased from $53.9 million in H1 2024 due to reduced personnel expenses and one-time stock expenses in 2024.
Research and Development Expenses (Q2 2025) $2.9 million, decreased from $4.4 million in Q2 2024 due to fewer write-offs and reduced personnel expenses.
Research and Development Expenses (H1 2025) $5.2 million, decreased from $9 million in H1 2024 due to fewer write-offs and reduced personnel expenses.
Net Loss (Q2 2025) $2.4 million, improved from a net loss of $9.2 million in Q2 2024.
Net Income (H1 2025) $300,000, improved from a net loss of $12.4 million in H1 2024.
Cash and Short-Term Investments (June 30, 2025) $40.6 million, reflecting the company's financial position.
Adjusted EBITDA (Q2 2025) $1.8 million of operating income, improved from a loss of $1.2 million in Q2 2024.
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Operating Highlights
ZYNRELEF and APONVIE: Consistent product demand growth outpacing net revenue growth over the past 2 quarters. ZYNRELEF adoption accelerating with growth in average daily units and total ordering accounts exceeding 700 by June. APONVIE nearing 1,000 average daily units by June.
Oncology Franchise: Combined net revenues from CINVANTI and SUSTOL reached $26.5 million for Q2 and $55.1 million year-to-date, maintaining market share in a competitive environment.
J-code for ZYNRELEF: Transition from a C-code to a permanent J-code effective October 1, streamlining reimbursement processes and improving access and coverage across government and commercial payers.
Financing: Successful completion of new financing, including a $150 million credit facility, $35 million senior convertible notes, and $28 million from stock placement, strengthening financial flexibility.
Operational Adjustments: Restructured commercial platform, optimized sales force, and created dedicated teams for ZYNRELEF and APONVIE. Enhanced per unit compensation program and introduced Post-Operative Clinical Educator Team.
Strategic Initiatives: Focused on driving innovation, expanding commercial initiatives, and delivering value to patients and shareholders. Exploring creative strategies for growth in the oncology market.
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Risk or Challenges
Financing Risks: The company has recently completed a complex financing process involving multiple transactions, including a new credit facility, issuance of convertible notes, and stock placements. While this strengthens the balance sheet, it also increases financial obligations and dependency on achieving milestones for additional funding.
Revenue Volatility: Revenue from key products like ZYNRELEF and APONVIE was impacted by transient inventory drawdowns and wholesaler inventory swings, which could lead to unpredictable revenue patterns in the short term.
Product Adoption Challenges: Despite growth in product demand, the company faces challenges in converting formulary access into actual utilization, requiring targeted pull-through strategies and enhanced compensation programs.
Competitive Pressures: The oncology franchise operates in a highly competitive environment, which could impact market share and revenue stability.
Operational Restructuring Risks: The company has restructured its sales force and implemented new commercial strategies, which may take time to yield results and could disrupt short-term operations.
Regulatory and Reimbursement Risks: The transition to a permanent J-code for ZYNRELEF is expected to streamline reimbursement, but its immediate impact on growth is limited, and broader adoption depends on regulatory and payer dynamics.
Economic and Market Conditions: The company’s financial performance and strategic initiatives are subject to broader economic uncertainties and market conditions, which could impact funding availability and product demand.
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Guidance & Outlook
Net Revenue Guidance: The company is maintaining its previously given net revenue guidance of $153 million to $163 million for 2025.
Adjusted EBITDA Guidance: The company has revised its adjusted EBITDA guidance for 2025 from a range of $4 million to $12 million to a new range of $9 million to $13 million.
ZYNRELEF J-code Implementation: A permanent J-code for ZYNRELEF will become effective on October 1, 2025, which is expected to streamline reimbursement processes, reduce administrative burden, and improve access and coverage across government and commercial payers.
ZYNRELEF Commercial Strategy: The company has implemented several initiatives to drive growth in the second half of 2025, including enhanced per-unit compensation programs, targeted pull-through strategies, and the establishment of a Post-Operative Clinical Educator Team.
APONVIE Sales Team: A dedicated APONVIE sales team was launched on July 1, 2025, to support hospital account conversions and drive growth.
Oncology Franchise Growth: The company is actively exploring creative strategies to drive continued growth in its oncology supportive care franchise, which has outperformed expectations.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide more details on the VAN 400-milligram transition and its impact on Q2 revenue?
A:The VAN 400-milligram transition began at the end of Q4 (late December). Most of Q1 was spent in transition, and by Q2, the company was no longer selling any of the VVS. Inventory buildup at the end of Q4 and into Q1 normalized by Q2. The company expects inventory normalization to be complete as of July 1.
Q:What role does the J-code for ZYNRELEF play in reimbursement and adoption moving forward?
A:The J-code is more universally recognized compared to the C-code, especially by commercial payers. With the NOPAIN Act, commercial payers are expected to align with CMS or Medicare reimbursement practices. Over time, the J-code is expected to simplify reimbursement and support adoption, though no immediate impact is anticipated.
Q:What drove the ZYNRELEF sales force reorganization, and how does it affect the CrossLink partnership?
A:The reorganization was driven by the need for different skill sets for ZYNRELEF and APONVIE sales teams. ZYNRELEF reps focus on surgeons in the OR, while APONVIE reps are traditional hospital sales reps. The CrossLink partnership now focuses on specific accounts with enhanced incentives, aligning with the ZYNRELEF sales team's targets.
Q:Why is there a discrepancy between APONVIE's demand growth (19%) and revenue growth (9%)?
A:The discrepancy is due to wholesaler inventory adjustments and gross-to-net effects. Large academic centers came online in the quarter, skewing the amount of 340B purchases. This is expected to normalize in the second half as more accounts are added.
Q:Are the sales force changes for ZYNRELEF and APONVIE a refocusing or an expansion?
A:The changes are primarily a refocusing with a dedicated ZYNRELEF team and a small APONVIE team of 6 Institutional Business Managers. While there is a slight expansion for APONVIE, it was done without significantly increasing costs. Future expansion will depend on market response and performance.
Q:Have there been any changes in ZYNRELEF usage or uptake since the NOPAIN Act came into effect in April?
A:No immediate impact has been observed. However, conversations at pharmacies are becoming more open, with a focus on reimbursement. Over the next year, commercial payers are expected to come on board, potentially increasing uptake.
Q:What is the new overall share count after the recent transactions?
A:The pro forma common share count is approximately 183 million shares, and the pro forma share count including the convertible is about 208 million.
Q:What is the rate on the senior credit facility with Hercules, and how much cash will be added to the balance sheet?
A:The rate on the senior credit facility is slightly above 10%. After expenses, approximately $11 million to $12 million will be added to the balance sheet.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about changes in ZYNRELEF usage or uptake since the NOPAIN Act came into effect. While they mentioned no immediate impact and more open conversations at pharmacies, they did not provide specific data or detailed insights into usage changes.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APONVIE CrossLink
APONVIE mask
APONVIE quarter
APONVIE sale
APONVIE trend
Acute
Chief Officer
Clinical
Director Legal
Duarte Executive
Executive VP
Heron term
Ira Duarte
Jarel Executive
LLC Research
Research Division
ZYNRELEF APONVIE
account access
achievement
adoption
catalyst
code ZYNRELEF
demand unit
detail
financing
harbor
inventory
milestone
oncology
provider
pull account
reimbursement
rep account
territory
today program
transition
volume
wholesaler
HRTX Transcript
Heron Therapeutics, Inc. (HRTX) Q3 2025 Earnings Call Transcript
Unknown11-4
The earnings call presents mixed signals: strong revenue growth in key products like ZYNRELEF and APONVIE, but a significant net loss due to debt extinguishment and increased SG&A expenses. The Q&A highlights uncertainties in competitive pressures and future strategies. Positive elements include revised EBITDA guidance and strategic initiatives, but declining margins and unclear management responses temper optimism. With no market cap data, a neutral reaction is expected.
Heron Therapeutics, Inc. (HRTX) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call indicates strong financial performance with significant year-over-year revenue growth, improved net income, and reduced expenses. Although there are some uncertainties regarding the adoption of ZYNRELEF post-NOPAIN Act, management's strategic refocusing and partnerships seem promising. The positive financial health, coupled with optimistic future guidance, suggests a favorable stock price movement. Despite the lack of immediate impact from the NOPAIN Act, the overall sentiment is positive, driven by strong financial metrics and strategic initiatives.
Earnings call transcript: Heron Therapeutics beats Q1 2025 expectations, stock surges
Positive5-6
The earnings call reflects a positive outlook with strong financial performance, improved EBITDA, and net income. Product growth potential and strategic partnerships, like CrossLink, are expected to enhance sales. While there are risks, such as market competition and litigation, the company has managed to mitigate these through settlements. The Q&A section indicates optimism for future sales momentum and profitability, despite management's vague responses on litigation impacts. Overall, the financial health and strategic initiatives suggest a positive stock price movement over the next two weeks.
Heron Therapeutics, Inc. (HRTX) Q1 2025 Earnings Call Transcript
Positive5-6
The earnings call highlights a positive financial performance with a 14% YoY revenue increase and improved EBITDA guidance. Product growth, especially for ZYNRELEF, and strategic partnerships like CrossLink, signal optimism. Despite competitive pressures, the oncology franchise sustains market share, and cost restructuring strengthens financial health. The Q&A section reveals confidence in hitting consensus numbers and growth potential for APONVIE. While there's no share repurchase program, the overall sentiment is positive, indicating a likely stock price increase of 2% to 8% over the next two weeks.
HRTX Slides
HRTX Report
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