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HERON THERAPEUTICS, INC. /DE/ (HRTX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean topline and earnings beat: Net revenue $38.903M (+12.2% Y/Y) and diluted EPS $0.01 vs S&P Global consensus of $37.42M and -$0.01; adjusted EBITDA reached a record $6.216M, driven by acute care strength and higher gross margin mix from CINVANTI . Estimates from S&P Global marked with an asterisk; see disclaimer.*
  • Guidance: Full‑year 2025 net revenue maintained at $153–$163M; adjusted EBITDA raised to $4–$12M (from $0–$8M), reflecting a stronger start and lower expected legal spend after the Mylan settlement .
  • Strategic updates: Patent settlement with Mylan pushes potential generic entry for CINVANTI and APONVIE to June 1, 2032 (or earlier under customary circumstances), removing a legal overhang; operational tailwinds include NOPAIN Act implementation (Apr 1), VAN rollout for ZYNRELEF, and Crosslink promotion partnership .
  • Balance sheet: Cash, cash equivalents, and short‑term investments stood at $50.7M at quarter‑end, supporting execution priorities into 2H25 .

What Went Well and What Went Wrong

What Went Well

  • Acute Care acceleration: Acute Care revenue grew 89.4% Y/Y to $10.3M, with APONVIE +432% Y/Y to $2.26M and ZYNRELEF +60% Y/Y to $8.04M, benefiting from access, VAN launch and NOPAIN Act .
  • Margin execution: Gross profit reached $30.446M on $38.903M revenue; CFO cited 78% gross margin, helped by higher CINVANTI mix and larger‑scale manufacturing lots; management expects mid‑70s gross margin through 2025 .
  • Legal clarity and EBITDA raise: Settlement with Mylan reduces litigation uncertainty/costs; 2025 adjusted EBITDA guidance raised to $4–$12M from $0–$8M after a record $6.216M in Q1 .
  • Quote: “We are off to a strong start in 2025, achieving record adjusted EBITDA for the first quarter… strong tailwinds for our lead product, ZYNRELEF… NOPAIN Act, the launch of the VAN, and the partnership with Crosslink” — CEO Craig Collard .

What Went Wrong

  • Oncology softness ex‑CINVANTI: Oncology franchise declined modestly Y/Y to $28.6M (-2.2%), with SUSTOL down 20.9% Y/Y to $2.86M despite CINVANTI being relatively flat (+0.5%) .
  • Seasonality muted sequential revenue: Net revenue declined sequentially from Q4 to Q1 ($40.781M to $38.903M) amid typical Q1 seasonality; management noted demand units +2% Q/Q while the market was -5.3% .
  • ZYNRELEF inflection timing still ahead: Management points to several onboarding accounts and expects more pronounced uptake into late Q3/Q4 as initiatives take hold, implying timing risk to near‑term sequential growth .

Financial Results

Sequential performance (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$32.810 $40.781 $38.903
Gross Profit ($M)$23.352 $30.552 $30.446
Gross Margin (%)71.2% (derived from reported figures) 74.9% (derived from reported figures) 78.3% (derived from reported figures)
Net Income ($M)-$4.848 $3.663 $2.635
Diluted EPS ($)-$0.03 $0.02 $0.01
Adjusted EBITDA ($M)N/AN/A$6.216

Notes: Gross Margin (%) for each period is computed directly from reported revenue and gross profit.

Year-over-Year (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Revenue ($M)$34.670 $38.903
Gross Profit ($M)$26.226 $30.446
Net Income ($M)-$3.160 $2.635
Diluted EPS ($)-$0.02 $0.01

Actual vs S&P Global Consensus – Q1 2025

MetricConsensusActualSurprise
Revenue ($M)$37.417M*$38.903M +$1.486M (~+4%)*
Diluted EPS ($)-$0.01*$0.01 +$0.02*

Values marked with an asterisk (*) are retrieved from S&P Global.

Segment Net Revenue ($M)

SegmentQ3 2024Q4 2024Q1 2025
Acute Care$7.4 $10.389 $10.302
• APONVIE$1.1 $1.932 $2.260
• ZYNRELEF$6.3 $8.457 $8.042
Oncology$25.4 $30.392 $28.601
• CINVANTI$22.6 $26.873 $25.742
• SUSTOL$2.8 $3.519 $2.859
Total$32.810 $40.781 $38.903

KPIs and Operating Metrics

KPIQ4 2024Q1 2025
Cash & ST Investments ($M)$59.283 (Cash $25.802 + ST Inv $33.481) $50.679 (Cash $19.269 + ST Inv $31.410)
Total Operating Expenses ($M)$26.379 $27.292
• R&D ($M)$3.178 $2.279
• G&A ($M)$12.144 $12.702
• Sales & Marketing ($M)$11.057 $12.311
Adjusted EBITDA ($M)N/A$6.216

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$153M – $163M $153M – $163M Maintained
Adjusted EBITDAFY 2025$0M – $8M $4M – $12M Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
ZYNRELEF adoption, VAN, NOPAIN ActVAN FDA‑approved (9/24/24) and Q4 launch; CMS separate payment from Apr 1, 2025; positioning for significant growth VAN rollout and NOPAIN Act cited as tailwinds; formulary access ~19% of orthopedic procedures; onboarding several large accounts; stronger trajectory expected into late Q3/Q4 Improving execution with mid‑year inflection expected
Crosslink partnershipExpansion to drive ZYNRELEF promotion Crosslink “fully integrated”; frees reps to drive APONVIE pull‑through beyond initial bariatric use Integration deepening, broader hospital penetration
Patent/LegalCINVANTI patents upheld vs Fresenius Kabi; ANDA litigation ongoing Settlement with Mylan; licensed generic entry June 1, 2032 (or earlier under customary circumstances) Overhang reduced; lower legal spend
Gross margin trajectoryNot explicitly quantifiedQ1 margin ~78% benefited from CINVANTI mix and larger‑scale lots; guide to mid‑70s as smaller‑scale lots enter Structurally mid‑70s; mix‑driven upside near term
APONVIE adoptionGrowing from low base (Q3 data) +432% Y/Y; strategy to expand beyond bariatric into system‑wide usage; multi‑hundred‑million potential long term per management Accelerating with hospital pull‑through focus

Management Commentary

  • Strategy and setup: “We are now focused on targeted product growth for our 2 key assets, ZYNRELEF and APONVIE… with key catalysts such as our expanded label, the VAN launch, the approval of the NOPAIN Act and the Crosslink partnership” — CEO Craig Collard .
  • Oncology franchise resilience: “Combined net revenues from CINVANTI and SUSTOL reached $28.6 million… we have maintained market share in a highly competitive environment” — CEO .
  • ZYNRELEF trajectory: “Daily unit sales are steadily increasing… believe ZYNRELEF is positioned to show a significantly stronger growth trajectory as we approach Q3 and beyond” — CEO .
  • Profitability & margins: “Product gross profit… was $30.4 million or 78%… due to a lower cost per unit… and increase in units sold” — CFO Ira Duarte .
  • Guidance rationale: “We are revising… adjusted EBITDA… to a range of $4 million to $12 million” — CFO, citing spend efficiencies and impact of settlement on future spend .

Q&A Highlights

  • Litigation settlement implications: Management emphasized removal of uncertainty and cost avoidance tied to Mylan litigation, helping support EBITDA guidance raise .
  • ZYNRELEF momentum: Despite seasonal Q1 dynamics, unit demand +2% Q/Q vs market -5.3%; several hospital systems are mid‑onboarding with inflection anticipated into late Q3/Q4 .
  • Gross margin outlook: Q1 margin slightly above typical due to CINVANTI volume and large‑scale lots; expect mid‑70s% as mix normalizes with smaller‑scale manufacturing lots .
  • APONVIE expansion: From initial bariatric use to broader system adoption as reps spend more time outside OR; long‑term multi‑hundred‑million potential if third‑line agent of choice .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $38.903M vs $37.417M* (+~4%); EPS $0.01 vs -$0.01* (+$0.02). Beat driven by acute care outperformance (ZYNRELEF, APONVIE) and higher gross margin mix from CINVANTI . Values marked with an asterisk (*) are retrieved from S&P Global.
  • Outlook vs consensus tone: Management stated comfort with consensus as onboarding accounts, VAN, NOPAIN Act, and Crosslink integration build into 2H25 .

Values marked with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

  • Clean beat and raised EBITDA guide de‑risk 2025 trajectory; legal overhang eased by Mylan settlement (generic entry June 2032), supporting multiple expansion narratives tied to profitability execution .
  • Acute Care growth engines are working: ZYNRELEF adoption should accelerate with VAN/NOPAIN Act/Access wins; APONVIE showing strong uptake with room for broader system pull‑through .
  • Gross margin quality improved in Q1; expect mid‑70s% baseline with potential upside from mix and scale — an important lever for sustained positive EBITDA .
  • Sequential revenue could remain timing‑sensitive near term as hospital onboarding completes; management points to a more pronounced inflection into late Q3/Q4 .
  • Oncology franchise remains durable with CINVANTI stability; SUSTOL softness warrants monitoring but overall franchise supports margin profile .
  • Balance sheet liquidity ($50.7M) adequate for targeted commercial investments and onboarding; watch working capital (AR, inventory) as growth scales .
  • For trading: Near‑term catalysts include ZYNRELEF formulary onboarding progress and any updates on VAN utilization/NOPAIN Act payor dynamics; medium‑term thesis centers on acute care scale‑up driving sustained EBITDA growth .

Additional Company Materials (Q1 2025 period)

  • 8‑K/Press release: Q1 2025 results, segment performance, updated guidance, balance sheet and EBITDA reconciliation .
  • Settlement press release: Mylan generic entry date for CINVANTI/APONVIE set to June 1, 2032 (or earlier under customary circumstances) .
  • Appointment: Mark Hensley named commercial leader (April 28), reinforcing hospital market execution focus .