Harrow, Inc. (HROW) Q3 2025 Earnings Call Transcript

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Overview

The earnings call summary and Q&A highlight strong product development and market strategy, especially with VEVYE's market penetration and new PBM coverage. Although there are concerns regarding ASP decline and inventory shortages, the overall sentiment is positive due to expected revenue growth, strategic expansions, and leverage on SG&A. The positive guidance and strategic market moves outweigh the potential risks, leading to a likely positive stock price movement.

Key Financial Performance

Total Revenue (Q3 2025) $71.6 million, representing a 45% increase over the same period in 2024 and a 12% sequential increase from the second quarter of this year. The increase was driven by strong demand across key products like VEVYE and IHEEZO.

Total Revenue (First 9 months of 2025) $183.2 million, showing strong year-to-date growth. The growth is attributed to disciplined execution and rising demand for key products.

Adjusted EBITDA (Q3 2025) $22.7 million. This reflects the company's ability to translate revenue growth into earnings, showcasing operating leverage.

GAAP-based Net Income (Q3 2025) $1 million. This indicates profitability while maintaining stable operating expenses.

VEVYE Revenue (Q3 2025) $22.6 million, a 22% increase from the second quarter of 2025. The growth was driven by increased unit volumes and strong demand.

IHEEZO Revenue (Q3 2025) $21.9 million, a 20% increase from the second quarter of 2025. Despite a seasonal slowdown in July and August, demand rebounded sharply in September.

TRIESENCE and Specialty Portfolio Revenue (Q3 2025) $6.9 million, a 33% sequential increase. Growth was driven by new leadership, a dedicated sales force, and the launch of the Harrow Access for All program.

ImprimisRx Revenue (Q3 2025) $20.1 million. The revenue remained stable, but a potential dispute with the California Board of Pharmacy and an inventory shortage in October may impact future performance.

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Operating Highlights

VEVYE: Delivered 22% quarter-over-quarter revenue growth. Signed agreements with leading national payers for preferred product status starting January 2026, improving coverage and access.

IHEEZO: Achieved 20% quarter-over-quarter revenue growth despite seasonal slowdown. Positioned for a strong finish to 2025.

TRIESENCE: Underperformed earlier but gaining traction in retina and launched into ocular inflammation market in October 2025, showing positive early feedback.

MELT-300: Acquisition of Melt Pharmaceuticals and its non-opioid procedural sedation candidate MELT-300 is underway.

Dry Eye Market: VEVYE captured 10.5% of the total dry eye market, doubling its market share in two quarters. Positioned to become the leading cyclosporine therapy in the U.S.

Ocular Inflammation Market: TRIESENCE launched into this market, the largest opportunity for the product to date.

Revenue Growth: Achieved 45% year-over-year revenue growth in Q3 2025, with total revenue of $71.6 million. Updated full-year revenue outlook to $270-$280 million.

Commercial Infrastructure: Built a scalable infrastructure to support multiple product launches and expansion without heavy additional investment.

Product Launches: Preparing for 4 product launches over the next 3 years, including BYOOVIZ, OPUVIZ, BYQLOVI, and MELT-300.

Access for All Program: Expanded this program across the entire ophthalmic portfolio to improve affordability and patient access.

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Risk or Challenges

Regulatory Hurdles: The company is engaged in a dispute with the California Board of Pharmacy regarding the renewal of its ImprimisRx license, which is set to expire on December 1, 2025. Failure to resolve this issue could impact operations in California.

Product Performance Variability: While VEVYE and IHEEZO are performing strongly, TRIESENCE and the broader specialty branded portfolio have underperformed this year. This variability in product performance could affect overall revenue stability.

Supply Chain Disruption: ImprimisRx experienced an inventory shortage in October, leading to a one-time revenue decrease of $4 million to $6 million for the fourth quarter.

Seasonal Revenue Fluctuations: The company anticipates a typical seasonal decline in revenue from Q4 2025 to Q1 2026, which could impact financial performance.

Strategic Execution Risks: The company is preparing for multiple product launches over the next three years, which requires significant coordination and investment. Any delays or missteps could impact growth projections.

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Guidance & Outlook

Revenue Outlook: The company updated its full-year revenue outlook to a range of $270 million to $280 million for 2025, slightly lowering the original target of over $280 million. This adjustment reflects a more conservative approach, though the original target is still within reach.

Product Launches: Harrow plans to launch four new products over the next three years: BYOOVIZ (mid-2026), OPUVIZ (mid-2027), BYQLOVI, and MELT-300. These launches are expected to significantly expand the company's market reach and growth potential.

VEVYE Growth: VEVYE is expected to achieve record revenue in 2025, nearing its $100 million annual revenue target. Improved coverage starting in January 2026, including preferred status on major formularies, is anticipated to drive further growth and pricing stability.

IHEEZO Growth: IHEEZO is projected to have a strong finish to 2025, with expectations of record revenue driven by increased adoption and end-of-year ordering patterns. The product is positioned for continued growth into 2026.

TRIESENCE Expansion: TRIESENCE has entered the ocular inflammation market, its largest opportunity to date, with positive early feedback. The company expects this launch to act as a catalyst for significant growth in this segment.

Rare & Specialty Products: The Rare & Specialty portfolio is being revitalized with new leadership and the launch of the Harrow Access for All program. This segment is expected to return to growth and exceed its previous revenue levels.

Commercial Infrastructure: Harrow plans to expand its commercial infrastructure, including opening 10 additional sales territories for VEVYE in 2026, to support the next phase of growth.

Seasonality Impact: The company anticipates a typical seasonal decline in revenue from Q4 2025 to Q1 2026, consistent with historical patterns, but expects record results for the full year 2026.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Could you talk about VEVYE prescription data and why we don't see it this quarter?

A:Mark Baum explained that they decided to ensure the most accurate information by withdrawing from some data reporting services for competitive reasons. They are focusing on revenue generated from products rather than potentially inaccurate third-party data. Andrew Boll added that presenting such data could compromise competitive positioning.

Q:Could you talk about the leverage you're achieving on SG&A and how to think about leverage overall into 2026?

A:Andrew Boll stated that they are seeing operating leverage due to prior investments in operational and commercial infrastructure. Q3 showed great adjusted EBITDA of just under $23 million and $16 million in cash from operations. Future investments in commercial infrastructure are expected to generate immediate returns on revenue without a significant increase in OpEx.

Q:Could you define the magnitude of the modest ASP decline for VEVYE in Q3 and explain the assumptions for ASP stabilization?

A:Mark Baum stated the decline was less than 10%. ASP stabilization is expected due to increased coverage and a shift from cash pay to covered prescriptions. A major coverage win with the largest U.S. pharmacy benefit manager is expected to drive this shift starting January 1, 2026.

Q:Can you share more specifics about the largest PBM coverage win for VEVYE and its impact on ASP and volume?

A:Mark Baum confirmed the win involves commercial lives, which are highly attractive. He emphasized the potential for significant ASP improvement (e.g., $20 per unit) and volume growth due to the coverage win. The company plans to expand territories to capitalize on this opportunity.

Q:What proportion of VEVYE cash pay patients do you expect to transition to insurance coverage in 2026, and what impact will this have on net price per unit?

A:Mark Baum stated they cannot provide precise numbers but expect a significant transition due to the preferred status of VEVYE under the largest commercial PBM. This is expected to improve ASP and drive volume growth.

Q:Are you doing anything to keep patients on VEVYE until insurance coverage kicks in, and is there any expected inventory impact in Q4?

A:Mark Baum and Patrick Sullivan mentioned a high-touch program to support patients and drive conversion. Andrew Boll stated there is no significant inventory impact expected in Q4 as specialty pharmacies order just-in-time.

Q:Could you comment on the notably high $80 million revenue threshold in Q4 and the dynamics driving it?

A:Mark Baum attributed the growth to the emergence of TRIESENCE and volume improvements across the portfolio. Andrew Boll added that end-of-year dynamics, such as lower co-pay buydowns, may also contribute to revenue growth.

Q:What is the conversion rate from cash pay to commercial insurance for VEVYE under Project Beagle, and what is the new price point for TRIESENCE?

A:Mark Baum stated that most Klarity-C patients have transitioned to VEVYE. TRIESENCE pricing was reduced to better compete in the ocular inflammation market, which has led to new orders and positive adoption trends.

Q:Is it easy to reengage TRIESENCE users, and are you adding conventional salespeople for VEVYE?

A:Mark Baum explained that reengaging TRIESENCE users takes time but is progressing well. The company plans to expand VEVYE territories to 100 by mid-next year and has added FLAREX and FRESHKOTE to the sales team's portfolio.

Q:What is the duration of therapy for commercially covered VEVYE patients?

A:Mark Baum stated that commercially covered VEVYE patients typically stay on therapy for nearly the entire year, with refill rates exceeding expectations.

Q:What should we anticipate in terms of business development in 2026-2027?

A:Mark Baum highlighted the transformative potential of the Melt acquisition, which aligns with their vision for opioid-free, drop-free cataract surgery. The company is focused on executing its current portfolio but remains open to new deals.

Q:Could you provide additional color on market dynamics for VEVYE prescriptions flipping from other products?

A:Mark Baum stated that prescriptions flipping to VEVYE are primarily from non-cyclosporine anti-inflammatory products. The company aims to become the #1 cyclosporine in the market, leveraging new coverage to drive growth.

Q:Review of Unclear Management Responses

A:Management avoided providing precise details on the magnitude of ASP improvement for VEVYE, the exact proportion of cash pay patients transitioning to insurance coverage, and specific tactics for keeping patients on therapy until coverage kicks in. Additionally, they did not disclose the specific products losing coverage to VEVYE or the exact pricing details for TRIESENCE.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

HROW Transcript

Harrow, Inc. (HROW) Q3 2025 Earnings Call Transcript

Positive11-11

Harrow, Inc. (HROW) Q2 2025 Earnings Call Transcript

Positive8-12

The earnings call summary indicates strong growth in key revenue segments like IHEEZO and TRIESENCE, with positive guidance for the future. Despite a decline in VEVYE revenue, prescription volumes are up, and ASPs are expected to rise. The Q&A section reveals management's confidence in growth strategies and upcoming launches, although some uncertainty remains around biosimilar timing. Overall, the positive growth outlook and strategic initiatives suggest a likely positive stock price movement.

Harrow, Inc. (HROW) Q3 2024 Earnings Call Transcript

Neutral11-14

The earnings call presents a strong financial performance with record revenue growth and optimistic future guidance. The Q&A section reinforces positive sentiment with strong demand for TRIESENCE and VEVYE, despite minor disruptions. The lack of share repurchase announcements and some regulatory risks are potential concerns, but the overall outlook with strategic agreements and market expansion is favorable. The absence of market cap data suggests a moderate impact on stock price, leading to a positive prediction.

Harrow, Inc. (HROW) Q2 2024 Earnings Call Transcript

Positive8-8

The earnings call reveals strong financial performance, with a 46% YoY revenue increase, and strategic growth in VEVYE and IHEEZO. Despite risks in FDA approvals and market competition, the company shows robust market access and prescription growth. The lack of a share buyback program is a minor negative, but the overall sentiment is positive due to strong financial metrics and optimistic guidance for 2024.

HROW Slides

Harrow Health Q2 2025 slides: Mixed results amid strategic portfolio expansion

2025-08-11

HROW Report

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