Heron Therapeutics, Inc. (HRTX) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Total Net Revenues $38.2 million for Q3 2025, $114.3 million year-to-date. Reasons: Strong operational and financial performance.
Adjusted EBITDA $1.5 million for Q3 2025, $9.5 million year-to-date. Reasons: Improved operational efficiency.
Gross Margin 68.8% for Q3 2025, down from previous quarters. Reasons: One-time write-off of SUSTOL polymer inventory.
ZYNRELEF Net Sales $9.3 million for Q3 2025, 49% growth year-over-year. Reasons: VAN, Ignite program, education and support teams, permanent J-code clarity.
APONVIE Net Sales $3 million for Q3 2025, 173% growth year-over-year. Reasons: Dedicated team, VAN, Ignite program.
CINVANTI Net Sales Approximately $24 million for Q3 2025, 6% growth year-over-year. Reasons: Broadened relationships with anesthesia and pharmacy.
SUSTOL Net Sales $1.9 million for Q3 2025, down 32% year-over-year. Reasons: Increased market competition.
Product Gross Profit $26.3 million for Q3 2025 (68.8%), decreased from 71.2% in Q3 2024. Reasons: Inventory reserves and write-offs, supplier mix.
SG&A Expenses $26.9 million for Q3 2025, up from $23.3 million in Q3 2024. Reasons: Higher personnel expenses, increased marketing costs.
Research and Development Expenses $3.5 million for Q3 2025, down from $4.5 million in Q3 2024. Reasons: Timing of expenses.
Net Loss $17.5 million for Q3 2025, compared to $4.8 million in Q3 2024. Reasons: $11.3 million loss on debt extinguishment.
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Operating Highlights
ZYNRELEF net sales: Grew 49% in Q3 2025 compared to Q3 2024, reaching $9.3 million. Average daily units increased by 28% year-over-year.
APONVIE net sales: Grew 173% in Q3 2025 compared to Q3 2024, reaching $3 million. Average daily units increased by 142% year-over-year.
CINVANTI net sales: Remained stable with approximately $24 million in Q3 2025, up 6% year-over-year.
J-code for ZYNRELEF: Went into effect on October 1, 2025, streamlining reimbursement and reducing administrative burden, expected to improve access and coverage.
APONVIE inclusion in guidelines: Expected to be part of the 2025 PONV prophylaxis consensus guidelines, which should increase awareness and adoption.
CrossLink Ignite program: Incentive-based initiative to improve distributor engagement for acute care products.
200-milligram vial access needle (VAN): Launched to simplify preparation in operating rooms.
Dedicated APONVIE sales team: Fully trained and deployed in Q4 2025 to support product momentum.
SUSTOL commercialization wind-down: Planned over the next 12 months due to declining sales, with potential reintroduction in late 2027.
Financing completion: Successfully completed, allowing management to focus on commercial execution and product growth.
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Risk or Challenges
SUSTOL performance: SUSTOL has been trending downward over the past several months due to increased market competition, and this trend is expected to continue for the foreseeable future.
CINVANTI pricing pressure: Ongoing competitive pressure has historically impacted the average selling price of CINVANTI, although net sales have remained fairly consistent.
Inventory write-offs: A one-time write-off of SUSTOL polymer inventory negatively impacted gross margins, which decreased to 68.8% from previous quarters.
Supplier mix impact: An increase in the cost of units sold, primarily due to supplier mix, has contributed to a decrease in gross profit margins.
SUSTOL commercialization wind-down: SUSTOL net sales decreased by 32% year-over-year, and the company plans to wind down its commercialization over the next 12 months while evaluating potential product updates.
Debt extinguishment loss: The company incurred an $11.3 million loss on debt extinguishment, significantly impacting net loss for the quarter.
Increased SG&A expenses: SG&A expenses increased due to higher personnel and related expenses from new hires and increased marketing costs, particularly for ZYNRELEF.
R&D expense reduction: Research and development expenses decreased due to terminations and reduced write-offs of property and equipment, which may impact future innovation and development.
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Guidance & Outlook
CINVANTI Performance: Despite ongoing competitive pressure, net sales of CINVANTI are expected to remain consistent through Q4 2025 and into 2026.
Acute Care Portfolio: The acute care products, including ZYNRELEF and APONVIE, are anticipated to show more prominent growth as we move into late Q3 and Q4 2025.
ZYNRELEF Sales Growth: ZYNRELEF net sales grew 49% year-over-year in Q3 2025, and the company expects continued momentum supported by the new J-code effective October 1, 2025, which will streamline reimbursement and improve access.
APONVIE Sales Growth: APONVIE net sales grew 173% year-over-year in Q3 2025, with further growth expected as the dedicated sales team becomes fully active in Q4 2025 and the updated 2025 PONV prophylaxis consensus guidelines are published.
SUSTOL Commercialization: SUSTOL commercialization will be wound down over the next 12 months, with a potential reintroduction in late 2027 subject to development and regulatory progress.
Prefilled Syringe Development: The prefilled syringe for ZYNRELEF is advancing with a potential approval timeline in late 2027.
Revenue Guidance: The company reaffirms its guidance for net revenue of $153 million to $163 million and adjusted EBITDA of $9 million to $13 million for 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Is the 18% increase in ZYNRELEF sales in October on a month-over-month basis correct?
A:Yes, it is roughly correct, around 17% to 18%.
Q:What is the adjusted gross profit margin after backing out the one-time stocking charge of $2.2 million?
A:The adjusted gross profit margin is approximately 74.5%, which is consistent with previous quarters.
Q:What is the net interest income line after adjusting for the extinguishment of debt?
A:For the quarter, it is approximately $2.1 million, and going forward, it is expected to be about $2.5 million.
Q:How is the internal sales team performing for ZYNRELEF and APONVIE, and are there plans to expand these teams in 2026?
A:The structural changes made in Q3, including dedicated teams for ZYNRELEF and APONVIE, have shown positive results. There are plans to evaluate and potentially expand in specific areas based on success and profitability.
Q:Was there any inventory stocking benefit in the reported revenue line for ZYNRELEF in Q3?
A:There was minimal inventory stocking benefit from the 200 VAN, which accounts for about 35% of total sales, unlike the significant bump seen with the 400 VAN.
Q:What is the update on the NOPAIN Act implementation and its impact on commercial plans?
A:The NOPAIN Act is gaining momentum, with education efforts ongoing. Commercial payers like Aetna and Cigna are providing separate reimbursements, and about 75% of ZYNRELEF procedures have some form of coverage. Additional tailwinds are expected in 2025 due to CMS value-based care models and changes in inpatient-only lists.
Q:What is the long-term outlook for the oncology care franchise, including SUSTOL and CINVANTI?
A:CINVANTI faces competitive pressures but has maintained accounts and pricing stability. SUSTOL will be wound down by the end of next year due to declining ASP and competitive challenges, with plans to relaunch in 2027 or 2028 with improvements.
Q:What is the expected impact of the ZYNRELEF prefilled syringe program, and when is it expected to be approved?
A:The prefilled syringe program is expected to simplify and speed up the application process, potentially increasing account conversions. It is anticipated to be approved in 2027 after completing stability testing.
Q:Is the J-code for ZYNRELEF applicable to the prefilled syringe and VAN?
A:Yes, the J-code will be applicable to the prefilled syringe once it is launched.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact measures of success for expanding sales teams in 2026, as well as the precise impact of the NOPAIN Act on commercial plans beyond general trends. Additionally, the response on the long-term outlook for SUSTOL lacked clarity on specific strategies for its relaunch.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APONVIE CINVANTI
APONVIE hospital
APONVIE sale
CINVANTI anchor
Ignite program
PONV consensus
SUSTOL
Slide
VAN Ignite
ZYNRELEF
acute care
adoption
anchor APONVIE
anesthesia pharmacy
code clarity
consensus guideline
curve
decline
demand
distributor account
education support
field
franchise sale
friction removal
program distributor
program education
protocol
relationship
sale APONVIE
site case
support team
team code
HRTX Transcript
Heron Therapeutics, Inc. (HRTX) Q1 2026 Earnings Call Transcript
Unknown5-11
The earnings call reflects mixed sentiment. While Acute Care products show strong growth and market expansion plans are promising, challenges such as competitive pressures in oncology, temporary gross margin issues, and weather-related disruptions impact overall performance. The Q&A session reveals management's proactive strategies but also highlights uncertainties, particularly regarding the Baxter settlement. The financial guidance indicates potential recovery, but the negative EBITDA and current market conditions suggest a neutral outlook for stock price movement over the next two weeks.
Heron Therapeutics, Inc. (HRTX) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights strong growth in Acute Care products, particularly ZYNRELEF and APONVIE, with optimistic future guidance and strategic initiatives. Despite some competitive and regulatory challenges, the company exceeded its financial guidance, showing resilience. The Q&A session provided additional positive insights, especially regarding the beneficial impact of the NOPAIN Act and new guidelines for APONVIE. However, some uncertainties remain, such as the litigation outcome and the exact impact timelines. Overall, the strong financial performance and growth potential suggest a positive stock price movement.
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.
HRTX Slides
HRTX Report
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