Heron Therapeutics Signals Recovery Despite Soft Q1

Heron Therapeutics Inc ((HRTX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Heron Therapeutics’ latest earnings call painted a cautiously upbeat picture, as management balanced near-term setbacks with signs of solid commercial traction. Severe weather and seasonal factors dragged on first-quarter results and margins, yet demand trends for key drugs remained strong and executives reiterated confidence in hitting their 2026 financial targets.

Total Net Sales Rebound and March Recovery

Heron reported first-quarter net product sales of $34.7 million, reflecting early-quarter disruptions from winter storms and softer surgical volumes. By March, net sales had recovered to more than $15 million, suggesting momentum exiting the quarter and setting up a stronger run-rate heading into the rest of the year.

Acute Care Franchise Shows Robust Growth

The acute care portfolio delivered combined net sales of $13.6 million, driven by ZYNRELEF at $10.2 million and APONVIE at $3.4 million. Demand growth was notable, with ZYNRELEF units rising 22% year over year and APONVIE demand units up 68%, including a 70% jump in average daily usage.

ZYNRELEF Adoption Accelerated by IGNITE Program

Heron highlighted the success of its IGNITE 1.0 initiative, which lifted ZYNRELEF unit volume in targeted accounts from about 9,000 to more than 19,000 units over two quarters, a 111% increase. The follow-on IGNITE 2.0 program will expand the number of targeted accounts by 38%, from 2,261 to 3,109, supporting continued share gains even in a softer local anesthetic market.

APONVIE Gains Clinical Endorsement and Access

APONVIE’s profile strengthened as it secured pharmacy and therapeutics approval in 1,903 accounts that collectively cover 5.8 million medium-to-high-risk procedures annually. The drug also obtained a permanent product-specific billing code in April and was prominently included with an A1 evidence rating in the latest PONV guidelines, positioning it as a new evidence-based standard.

Oncology Franchise and CINVANTI Maintain Durability

The oncology business remained resilient with CINVANTI generating $20.5 million in first-quarter net sales and sustaining a 25% exit market share in the NK1 category on a 12-month basis. Management expects the REIGNITE program to add roughly $10 million in annualized net revenue from new formulary wins, bolstering the franchise in a volatile chemotherapy-support market.

Pricing Discipline Supports Long-Term Economics

Heron stressed that it is prioritizing long-term profitability over short-term volume by maintaining pricing discipline across its portfolio. ZYNRELEF’s net selling price is trending higher, APONVIE pricing is being kept stable during its ramp phase, and CINVANTI reversed a temporary price dip seen in the prior quarter rather than leaning on concessions.

Commercial Expansion and R&D Programs on Track

The company’s commercial build-out remains on schedule, with expanded sales forces for ZYNRELEF and a dedicated aprepitant team planned for the third quarter of 2026. On the development side, Heron’s prefilled syringe program for ZYNRELEF is fully funded, with registration batches already produced and 12-month stability data expected by the first quarter of 2027.

Weather and Seasonality Weigh on Q1 Volumes

Management flagged two weeks of severe weather early in the quarter as a key factor that compounded typical seasonal headwinds tied to co-pays and insurance resets. These conditions made January the most difficult month since the current CEO joined and contributed to a high single-digit decline in surgical volumes versus the prior quarter.

Quarterly Results Slip Modestly Below Plan

First-quarter results landed modestly below internal expectations as weather-driven elective surgery delays and timing effects weighed on revenue. Adjusted EBITDA came in at a loss of $727,000 for the period, underscoring that the business has yet to achieve the sustained profitability targeted for the mid-decade.

Temporary Gross Margin Pressure from Secondary Supply

Gross margin compressed to 69%, below the usual low-to-mid-70s range, due to a contractual obligation to source CINVANTI from a secondary supplier. These smaller production batches are roughly three times more expensive per batch, but management expects to work through this high-cost inventory over the next two quarters, after which margins should normalize.

SUSTOL Wind-Down and Category Volatility

Legacy product SUSTOL generated just $0.6 million in first-quarter sales as its planned wind-down continued, reducing its contribution to overall results. In the broader NK1 category, Heron noted monthly volume swings ranging from negative 19% to positive 21%, highlighting a competitive and volatile environment even as CINVANTI holds its share.

Guidance and Outlook Remain Intact

Heron reaffirmed its 2026 outlook for net product sales between $173 million and $183 million and adjusted EBITDA of $10 million to $20 million, despite the soft first quarter. Management expects gross margins to return to the mid-70% range and adjusted EBITDA to move into positive territory as high-cost CINVANTI inventory is cleared and key growth drivers like ZYNRELEF, APONVIE and CINVANTI’s new wins scale alongside upcoming sales-force expansions.

Heron’s earnings call suggested a company navigating short-term turbulence while advancing a multi-product growth story, with acute care momentum offsetting weather and margin setbacks. Investors will be watching whether the sharp March rebound, IGNITE expansion and oncology stability translate into sustained growth and margin recovery that can deliver on the reaffirmed 2026 targets.