Harrow, Inc.

Good afternoon and welcome to the conference call covering HARO Health's financial results and business update for the third quarter 2020. On the call joining me today I have HARO's Chief Executive Officer Mark L. Baum and HARO's Chief Financial Officer Andrew Ball. My name is Taryn and I'll be your operator for today's call. Currently all participants are in a listen-only mode. Later we will conduct a question and answer session. By now you should have received a copy of the earnings press release. If you have not received a copy, please go to the investor relations page of the company's website at www.harrowinc.com. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond HARO Health's control, including risks and uncertainties described from time to time in its SEC filings, such as the risks and uncertainties related to the company's ability to make commercially available its compounded formulations and technologies, and FDA approval of certain drug candidates in a timely manner or at all. For a list and description of those risks and uncertainties, please see the Risk Factors section of the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. HARO Health's results may differ materially from those projected. HARO disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Additionally, HARO will refer to non-GAAP financial metrics, specifically adjusted EBITDA and or adjusted earnings. A reconciliation of any non-GAAP measures with the most directly comparable GAAP measures is included in the company's letter to stockholders available on the website. With that, I would like to turn the call over to Mark Baum to go over some prepared remarks prior to the question and answer session. Mark?

Thanks for joining our call today. I would encourage everyone listening to review our third quarter 2020 letter to stockholders, which was posted on the investor relations section of our website just after the close of trading today. A link to the stockholder letter is also available on the Q3 earnings press release we issued today. Before we begin the Q&A portion of today's call, I'd like to quickly touch on a few items to provide some additional color on our business since we last spoke in August. The third quarter of 2020 was the best financial quarter in the history of the company. Our team delivered on revenues, gross margins, and nearly every other internal metric that we chart revenues in July were better than June and each subsequent month continued to improve resulting in total revenues in Q3 of $14.4 million, a new record. We were also pleased that while we achieved record revenues, we also achieved 74% gross margins, a new record. We also had adjusted EBITDA of $3 million, another record. When compared to Q3 2019, I am proud of the $1.6 million of revenue growth and even more proud that during Q3 2020, versus Q3 2019, we also delivered a $2 million increase in gross profit. Continuing on with the efficiency theme, going forward, we expect that each incremental dollar of revenue growth will yield an increasing percentage of operational earnings, thus improving our adjusted EBITDA and margins, a demonstration of what we like to call our financial escape velocity point. As we move into the fourth quarter and set our sights on 2021, we are hopeful our revenue trend, which currently looks V-shaped, will quickly transition into a checkmark-shaped trend line into 2021. We believe this trend of growth will be driven by expanding our core business through new customer growth, continuing to expand with the many thousands of accounts we currently serve, exciting new product developments in our pipeline, and adding new revenue sources such as Dexacute commissions and other potentially transformative initiatives we've been working on and hope to conclude in the coming quarters. In addition to the outstanding performance of ImpromissRx, other Harrow businesses also continued to hit new and major milestones, and we expect to see more value inflection events in the coming quarterly periods. Importantly, Once we complete the deconsolidation of Mayfield Pharmaceuticals, we intend to leverage our position in eye care and, from a strategic perspective, exclusively focus on investing in and developing eye care-related health care assets. We believe this focus will better serve our stockholders. Now, let's jump into the Q&A. I will pause to have our operator poll for questions. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you do have a question, please press star 1 on your telephone keypad at this time. If you're using a speaker phone, we ask that while posing your question, you pick up your handset to provide the best sound quality. Again, ladies and gentlemen, if you do have a question or comment, please press star 1 on your telephone keypad at this time. We'll take our first question from Brooks O'Neill with Lake Street Capital Markets. Please go ahead.