HRTX — Heron Therapeutics, Inc.

Summary of Heron Therapeutics Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Revenues: $34.7 million for Q1 2026, slightly below expectations.
• Gross Margin: 69%, lower than the typical low to mid-70s range due to temporary costs associated with a secondary supplier for CINVANTI.
• Adjusted EBITDA: Negative $727,000, impacted by revenue softness from winter storms and temporary gross margin pressures.
• Sales Performance: March net sales exceeded $15 million, indicating a recovery trend.

2. Strategic Updates and Business Highlights

• Acute Care Portfolio: Revenue growth of 32% year-over-year, with ZYNRELEF growing 27% and APONVIE over 50%.
• IGNITE Program: Continued success with the incentive program for orthopedic distribution partners, extended into 2026, contributing to ZYNRELEF's growth.
• Sales Force Expansion: Planned for Q3 2026 to enhance market presence and support growth across the portfolio.
• Oncology Performance: CINVANTI maintained a stable market share of 25% despite competitive pressures, with new accounts expected to add approximately $10 million in annualized revenue.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Maintained at $173 million to $183 million.
• Adjusted EBITDA Guidance: Expected to range from $10 million to $20 million, indicating anticipated recovery and profitability as the year progresses.

4. Bad News, Challenges, or Points of Concern

• Weather Impact: Severe winter weather in January led to a decline in elective surgeries, significantly affecting Q1 results.
• Temporary Gross Margin Pressure: Higher costs from a secondary supplier for CINVANTI are expected to normalize once contractual obligations are met.
• Competitive Landscape: Increased pressure in the oncology sector, particularly for CINVANTI, although it has shown resilience.

5. Notable Q&A Insights

• Surgical Volume Impact: A high single-digit decline in surgical volumes was noted due to weather and other factors; however, rescheduling is expected to provide a tailwind.
• NOPAIN Implementation: Improved commercial coverage for ZYNRELEF with more payers reimbursing outside surgical bundles, covering approximately 110 million lives.
• CrossLink Partnership: Enhanced alignment with CrossLink has led to a more targeted approach in account selection, improving confidence in growth for 2026.

Overall, while Heron Therapeutics faced challenges in Q1 2026, particularly from external factors like weather, the company remains optimistic about recovery and growth driven by strategic initiatives and market dynamics.