Harrow, Inc. (HROW) Q1 2026 Earnings Call Transcript
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Overview
The earnings call highlights strong growth in TRIESENCE and IHEEZO, with substantial unit demand increases. While revenue challenges exist due to inventory and pricing adjustments, optimistic guidance for future quarters and strategic product launches (BYQLOVI, BYOOVIZ) indicate potential growth. The Q&A section reveals analysts' positive sentiment towards sales force expansion and product demand. Despite some uncertainties, such as VEVYE's pricing issue, the overall outlook is positive due to strong product performance, strategic expansion, and expected revenue normalization, supporting a positive stock price movement prediction.
Key Financial Performance
Consolidated Revenues $44.2 million for Q1 2026, reflecting a decrease due to several factors including a minimal GAAP contribution from IHEEZO as channel inventories absorbed, and softer revenue from the compounding business due to prior inventory constraints.
Adjusted EBITDA Negative $12.7 million for Q1 2026, reflecting the impact of lower revenues and gross-to-net modeling dynamics.
VEVYE Revenue $20.9 million for Q1 2026, with an $8 million revenue reduction due to gross-to-net modeling dynamics related to the VEVYE coverage rollout. The issue was tied to a higher-than-anticipated proportion of high deductible patients filling prescriptions, which increased out-of-pocket buydowns.
IHEEZO Revenue $1.9 million for Q1 2026, in line with expectations but reflecting minimal GAAP contribution as channel inventories absorbed.
Specialty and TRIESENCE Portfolio Revenue $7.8 million for Q1 2026, showing sequential growth despite a challenging seasonal period for surgery.
Access+ Revenue $13.5 million for Q1 2026, reflecting recovery from prior inventory constraints and positioning for growth.
TRIESENCE Unit Volume 136% year-over-year growth in Q1 2026, driven by increasing adoption in ocular surgery accounts and strong reorder behavior.
IHEEZO Unit Demand 18% year-over-year growth in Q1 2026, with new ordering accounts increasing by 21% and total accounts up nearly 50% versus last year.
VEVYE Prescription Growth New prescriptions grew approximately 25% sequentially, and total prescriptions grew about 11% in Q1 2026, driven by expanded prescriber base and market share gains.
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Operating Highlights
VEVYE: Record prescription growth, market share gains, and increasing prescriber adoption. Surpassed XIIDRA in total prescriptions as of March. Expanded sales force to double its size, aiming for further growth.
IHEEZO: Demand is building with record new accounts. Positioned for growth with improved pricing, new packaging, and upcoming clinical data for retina procedures.
TRIESENCE: Consistent demand growth even in challenging periods. Expansion into surgical inflammation market is contributing to long-term revenue growth.
Access+ cash pay business: Successfully resolved prior inventory constraints, increasing safety stock, and expanding sales team to support growth.
Dry eye category: Growing 20% year-over-year in prescription volume. VEVYE is actively taking share in this expanding market.
Retina and in-office markets: IHEEZO is expanding into these markets, with retina representing over 80% of its volume. New packaging and clinical data expected to drive further growth.
Surgical inflammation market: TRIESENCE is gaining traction, particularly among cataract surgeons, and is expected to drive new volume.
Sales force expansion: Hired over 90 new sales professionals, doubling the sales force for dry eye and surgical products.
Inventory management: Resolved inventory constraints for compounded products and rebuilt inventory levels.
Business rule adjustments: Implemented changes to address gross-to-net pricing issues for VEVYE, ensuring better alignment with financial expectations.
Commercial investments: Targeted investments in scaling commercial platform and recruiting top talent to unlock portfolio potential.
New product opportunities: Exploring opportunities for VERKAZIA and NATACYN to enter new markets and contribute incremental revenue.
G-MELT development: Advancing clinical and manufacturing progress for G-MELT, an opioid-free procedural sedation candidate, with NDA submission on track.
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Risk or Challenges
Revenue Reduction: The company experienced an $8 million revenue reduction in the first quarter due to a gross-to-net modeling issue related to VEVYE coverage rollout. This was caused by a higher-than-anticipated proportion of high-deductible patients filling prescriptions, leading to increased out-of-pocket buydowns and lower realized net revenue per unit.
Inventory Constraints: The compounding business faced softer revenue due to prior inventory constraints, which impacted the first quarter's performance.
High Deductible Patient Mix: The unexpected mix of high-deductible patients filling prescriptions created financial pressure and required adjustments to business rules to protect net pricing.
Market Penetration Challenges: Despite strong demand trends, the company faces challenges in fully penetrating large, underpenetrated markets, requiring significant commercial investments and scaling efforts.
Regulatory and Approval Risks: The company is exposed to risks related to FDA approval timelines and the ability to make commercially available its FDA-approved products and drug candidates.
Economic Accomplishment Focus: The company emphasizes economic accomplishment over activity, which could create pressure to meet high financial and operational expectations.
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Guidance & Outlook
Revenue Guidance for 2026: The company reaffirmed its 2026 revenue guidance of $350 million to $365 million, with expectations of accelerating momentum in the second half of the year.
Quarterly Revenue Target for 2027: The company aims to achieve $250 million in quarterly revenue by the end of 2027.
Second Quarter 2026 Revenue Expectations: Total revenues for Q2 2026 are expected to range between $71 million and $81 million.
VEVYE Revenue Outlook: VEVYE is expected to exceed $100 million in revenue for 2026, with sequential growth anticipated starting in Q2.
IHEEZO Growth Catalysts: IHEEZO is expected to experience a step change in growth in the second half of 2026, driven by improved pricing, new packaging, and upcoming clinical data specific to retina procedures.
TRIESENCE Growth: TRIESENCE is expected to continue its growth trajectory, supported by increasing adoption in ocular surgery and a label expansion study in cataract surgery and pain.
Access+ Cash Pay Business: The Access+ business is positioned for growth following the resolution of prior inventory constraints and the expansion of the sales team.
IOPIDINE 1% Market Opportunity: The permanent J-code for IOPIDINE 1% becomes effective on July 1, 2026, unlocking a significant market opportunity in in-office procedures.
BYOOVIZ Commercial Launch: The commercial launch of BYOOVIZ is scheduled for July 1, 2026, with initial revenues expected in Q2.
Clinical Milestones for IHEEZO: Initial retina data for IHEEZO will be presented at the ASRS meeting in July 2026, with additional data from the QUELL study expected in Q4 2026.
VERKAZIA and NATACYN Opportunities: Plans for VERKAZIA and NATACYN, targeting underdiagnosed and sight-threatening conditions, will be shared later in 2026.
G-MELT Development Timeline: The G-MELT program remains on track, with key pharmacokinetic and toxicology studies expected to be completed by Q4 2026, and a pre-NDA meeting date with the FDA anticipated to be announced soon.
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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 the gross to net adjustment for VEVYE in more detail, including seasonality and major buckets like co-pay assistance and high deductible buydowns?
A:The first quarter is challenging for Part D products due to deductible resets. The dry eye category saw a decline in total prescriptions, with the branded market down 18%. However, VEVYE's new prescription growth was up 25% sequentially, and total prescription growth was up 11%. CVS plans saw a 170% sequential growth. The surge in volume exceeded modeling expectations, leading to an $8 million revenue reduction. Adjustments were made to business rules to improve net pricing and reduce out-of-pocket buydowns for patients.
Q:Should we assume a mid-30s percent increase in ASP for VEVYE in Q2 and onward?
A:Yes, assuming status quo, a roughly 30% increase in ASP is a reasonable assumption.
Q:What has been the impact of recent business rule changes on VEVYE volumes and patient out-of-pocket costs?
A:Recent business rule changes have shown minimal to no impact on demand. Patient out-of-pocket costs may improve due to tweaks in business rules. VEVYE volumes have shown higher highs and higher lows in recent weeks, indicating positive trends.
Q:How should we think about the dynamics of IHEEZO in Q2, including channel inventory normalization and new packaging introduction?
A:IHEEZO's Q2 revenue is expected to be muted compared to last year due to channel inventory and loss of pass-through. However, demand is increasing, especially in the retina segment. Revenue is expected to normalize in Q3 and Q4 with the introduction of a new multipack option in July.
Q:What is the adoption and market opportunity for IOPIDINE 1% with the new J-code?
A:IOPIDINE 1% is expected to be an incremental contributor in 2023, with more significant contributions in 2027. The laser procedure market, with over 1.5 million annual procedures, is a fraction of its potential use cases. The product's on-label and reimbursable status makes it attractive.
Q:Why did it take four months to identify and address the VEVYE pricing issue?
A:The delay was due to the time required to accumulate and analyze multiple data sets (co-pay, claims, script data). January data aligned with expectations, but February data raised concerns. March data confirmed the issue, and changes were implemented immediately after final data analysis in mid-April.
Q:What is the expected impact of the 100 new sales reps on VEVYE demand and commercial mix?
A:The new sales reps, many with ophthalmic experience, are expected to drive demand and improve the commercial mix. Early indicators in Q2 show positive signs of growth. The team is incentivized to prioritize commercial covered prescriptions.
Q:What are the growth catalysts for IHEEZO in the second half of the year?
A:IHEEZO's growth will be driven by increased unit demand, improved net pricing, and the introduction of a new multipack option. Revenue is expected to normalize in Q3 and Q4.
Q:What is the status of the G-MELT NDA submission timeline?
A:The G-MELT NDA submission is expected in Q1 2027. The remaining work involves low-risk data gathering, and the product has significant revenue potential.
Q:Has BYQLOVI been launched, and does the full-year revenue guidance include BYQLOVI and BYOOVIZ?
A:BYQLOVI has been soft-launched with samples distributed to select customers. Trade sales will begin in Q3. Full-year revenue guidance includes contributions from BYQLOVI and BYOOVIZ.
Q:Review of Unclear Management Responses
A:Management avoided providing specific revenue guidance for BYQLOVI and BYOOVIZ, citing the early stages of their launches. Additionally, they did not provide detailed information on new insurance reimbursement developments for VEVYE, only stating that improvements are expected over the next 12-18 months.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Access cash
Demand
Officer President
Officer Sullivan
VERKAZIA
XIIDRA
accomplishment
adoption
assumption
benefit coverage
catalyst
change
code IOPIDINE
conviction
coverage modeling
demand driver
demand key
demand trend
dynamic
engine
expansion office
factor
headline number
improvement pricing
industry
inventory
label
lack
mix
momentum
office setting
packaging
pay
portfolio
practice
rule
sale force
study
HROW Transcript
Harrow, Inc. (HROW) Q1 2026 Earnings Call Transcript
Positive5-12
The earnings call highlights strong growth in TRIESENCE and IHEEZO, with substantial unit demand increases. While revenue challenges exist due to inventory and pricing adjustments, optimistic guidance for future quarters and strategic product launches (BYQLOVI, BYOOVIZ) indicate potential growth. The Q&A section reveals analysts' positive sentiment towards sales force expansion and product demand. Despite some uncertainties, such as VEVYE's pricing issue, the overall outlook is positive due to strong product performance, strategic expansion, and expected revenue normalization, supporting a positive stock price movement prediction.
Harrow, Inc. (HROW) Q4 2025 Earnings Call Transcript
Positive3-3
The earnings call highlighted strong product development and market strategy, with plans to launch new products and expand market reach. Despite a slight revenue guidance downgrade, optimistic future projections for products like VEVYE and TRIESENCE, and positive Q&A insights, bolster sentiment. The company's focus on expanding its sales force and improving product pricing further supports a positive outlook. The lack of specific guidance for some products was noted, but overall, the strategic initiatives and optimistic projections suggest a positive stock movement.
Harrow, Inc. (HROW) Q3 2025 Earnings Call Transcript
Positive11-11
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.
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.
HROW Slides
HROW Report
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