Harrow Q3 Earnings Call Highlights

Key Points

• Revenue hit a record $99.3 million, up 39% year over year, and Harrow reaffirmed full-year guidance of $350 million to $365 million. However, it cut its adjusted EBITDA outlook to more than $40 million from $80 million to $100 million, citing weaker margins, earlier revenue shortfalls and higher spending.
• VEVYE led product growth with $39.7 million in third-quarter revenue, up 35% sequentially; management pointed to improving prescription economics and new insurance coverage. CEO Mark Baum expects the fourth quarter to be the strongest in the company’s history.
• Harrow’s phase IV QUELL study did not meet IHEEZO’s primary endpoint for non-inferiority to routine anesthesia. The company characterized the result as inconclusive and noted exploratory findings of lower pain scores and fewer adverse events with IHEEZO.

Harrow NASDAQ: HROW reported record third-quarter revenue and reaffirmed its full-year sales forecast, but sharply reduced its adjusted earnings outlook as lower-than-expected margins and accelerated spending weighed on profitability.

The ophthalmic pharmaceutical company also reported that a clinical study of its IHEEZO anesthetic did not meet its primary endpoint. Management said it plans to use other findings from the study in its medical messaging.

Revenue rose 39% from a year earlier to $99.3 million in the third quarter of 2026, while net income was $9.8 million. Founder and CEO Mark Baum said he expects the fourth quarter to be the strongest in Harrow’s history.

Revenue Guidance Holds, but Profit Outlook Falls

Harrow reaffirmed its full-year revenue guidance of $350 million to $365 million. President and Chief Financial Officer Andrew Boll said the range implies fourth-quarter revenue of approximately $136 million to $151 million, or sequential growth of roughly 37% to 52%.

Boll pointed to improving prescription economics for dry-eye treatment VEVYE, seasonal strength for IHEEZO, growth in TRIESENCE and BYOOVIZ, and a first-quarter contribution under Harrow’s ownership from TYRVAYA. TYRVAYA began contributing revenue in the fourth quarter.

The company lowered its full-year adjusted EBITDA outlook to more than $40 million from a previous range of $80 million to $100 million. It expects more than $33 million in fourth-quarter adjusted EBITDA, after reporting $21.2 million in the third quarter and $7.3 million for the first nine months.

Boll said a first-half revenue shortfall and lower-than-anticipated gross margins put the company behind its original profitability expectations. The revised outlook also reflects expenses associated with an earlier G-MELT drug application, accelerated clinical programs and TYRVAYA transition costs and purchase accounting impacts.

Third-quarter gross margin was 75%, up from 71% in the second quarter but below the company’s expectations because of product mix and lower margins in its compounding business. Research and development expense was $10.3 million, while selling, general and administrative expense was $53.1 million. Results also included a one-time $5 million gain from the settlement of litigation with OSRX.

VEVYE Leads Product Growth

Branded products generated $83.5 million in third-quarter revenue, approximately 84% of the total. VEVYE contributed $39.7 million, IHEEZO generated $25.3 million and TRIESENCE brought in $10.7 million. Compounded revenue was $15.8 million.

VEVYE revenue increased 35% sequentially, outpacing prescription growth as changes to prescription economics took hold, Boll said. Chief Commercial Officer Patrick Sullivan said total VEVYE prescriptions rose 17% from the second quarter and 83% year over year.

Sullivan said covered prescriptions were increasing and that a recently secured national plan covering approximately 10 million lives would take effect in January. Baum declined to detail the business rules used to improve VEVYE’s economics, citing competition, but said covered prescriptions generally provide meaningfully higher economics than cash-pay prescriptions.

TRIESENCE unit demand reached 20,022, up 37% sequentially and 110% year over year. IHEEZO unit demand of 62,210 was up 21% from a year earlier but down about 5% from the prior quarter, which Sullivan attributed to slower procedure activity and elevated purchases late in the second quarter.

For BYOOVIZ, Sullivan said more practices placed initial orders than expected, but many began with small purchases while checking reimbursement. Several accounts have reordered, he said, and demand strengthened through September and into the fourth quarter.

QUELL Study Misses Primary Endpoint

Harrow’s phase IV QUELL study compared IHEEZO with routine anesthesia in 231 patients undergoing intravitreal injections. Chief Scientific Officer Amir Shojaei said the trial did not establish non-inferiority on its primary endpoint, which measured successful anesthesia immediately before and after injection.

Success was achieved in 55.2% of IHEEZO patients and 59.7% of those receiving routine anesthesia. Shojaei said the study had assumed an 88% success rate in each group and that the lower observed rate left the confidence interval too wide to meet the prespecified non-inferiority margin. He described the result as inconclusive rather than evidence that IHEEZO was inferior.

Shojaei said exploratory findings included lower cumulative pain scores through 24 hours and fewer adverse events in the IHEEZO group. Adverse events occurred in 27% of IHEEZO patients versus 47% receiving routine anesthesia, with no serious adverse events in either group. Harrow plans to present full results at the Hawaiian Eye & Retina Conference in January 2027.

Shojaei said Harrow currently has no plans for another study in the same line, although investigator-initiated IHEEZO studies are ongoing.

Pipeline and Licensing Updates

Harrow expects to submit its new drug application for G-MELT, a proposed cataract-surgery sedation product, later in the month or at the beginning of the following month. Shojaei said the company completed a productive pre-submission meeting with the FDA and anticipates a review goal date in 2027.

During the question-and-answer session, an analyst asked about a potential conflict between the TYRVAYA license and Harrow’s VEVYE licensing agreement with Novaliq. Baum said the parties were in active, confidential discussions and did not specify potential outcomes.

Shojaei also said a phase III TRIESENCE study was enrolling on track, with a readout anticipated toward the end of the first quarter or beginning of the second quarter of 2027.

About Harrow (NASDAQ:HROW)

Harrow is a pharmaceutical company focused on developing, acquiring and commercializing treatments for eye conditions. Its portfolio includes prescription ophthalmic medicines used in areas such as dry eye disease, eye inflammation and pain management, as well as products used in eye surgery and clinical settings.

The company markets branded products including VEVYE, a treatment for dry eye disease, and IHEEZO, an ophthalmic anesthetic gel. Through its ImprimisRx subsidiary, Harrow also provides compounded medications and related services for ophthalmology practices and patients.

Harrow, formerly known as Harrow Health, is headquartered in Nashville, Tennessee, and primarily serves the U.S.

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