Harrow, Inc. Common Stock 2026 Q2 Earnings Call

Good morning, and welcome to Harrow's second quarter 2026 earnings conference call. My name is Mike Biega, Vice President of Investor Relations and Communications, and I am excited to be introducing today's call. The company's remarks may include forward-looking statements within the meaning of federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow's control, including risks and uncertainties described from time to time in its SEC filings, such as the risks and uncertainties related to the company's ability to make commercially available its FDA-approved products and compounded formulations and technologies, and FDA approval of certain drug candidates in a timely manner or at all.

For a list and description of those risks and uncertainties, please see the Risk Factors section of the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. Harrow's results may differ materially from those projected. Harrow disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Additionally, Harrow will refer to non-GAAP financial metrics, specifically adjusted EBITDA. A reconciliation of any non-GAAP measures with the most directly comparable GAAP measures is included in the company's earnings release and letter to stockholders, both of which are available on the website. Joining me on today's call are Mark L.

Baum, Chief Executive Officer, Andrew Boll, President and Chief Financial Officer, Patrick Sullivan, Chief Commercial Officer, and Amir H. Shojaei, Chief Scientific Officer. With that, I would like to turn the call over to Mark.

Mark? Thank you, Mike, and good morning, everyone.

We spent the first half of 2026 building demand and strengthening the commercial foundation of our business. The second half is about converting that demand into accelerating revenue and growth and profitability and, of course, hitting numbers. Let me be direct. First half revenue of approximately $115 million was lighter than we expected entering the year, primarily because of the VEVYE net revenue impact we discussed last quarter. At the same time, we executed on major operating priorities we established for the first half, expanding our commercial organization, improving the economics of key products, strengthening our portfolio, launching BYOOVIZ, and building physician demand across our key growth drivers. Those actions have positioned us to deliver meaningfully stronger revenue and growth and profitability during the second half of 2026. IHEEZO is a good example.

Despite the loss of passthrough on April 1 of this year, IHEEZO generated the highest quarterly unit demand in its history and delivered record new account growth. Channel inventory has now normalized and an approximately 25% improvement in net pricing became effective July 1. With gross margins exceeding 90%, we expect IHEEZO to be a major contributor to both revenue growth and profitability during the second half. VEVYE is also positioned for stronger growth. During the second quarter, prescriptions increased 21% sequentially. Our prescriber base grew 15% and the product delivered record quarterly revenue. The business rule changes we implemented at the end of April worked as intended. VEVYE's economics improved sequentially with meaningfully lower co-pay card utilization, which drove a higher ASP. Those results validated our ability to improve the economics of the franchise while continuing to grow prescription demand and physician adoption.

During the second half, VEVYE will benefit from the full period impact of those revised business rules, broader commercial coverage that became effective August 1, an expanded sampling program, and a sales organization that has doubled in size over the past year. Together, those factors position VEVYE for stronger prescription growth and improved net revenue realization. TRIESENCE also reached another quarterly demand record, with more than half of unit demand now coming from ocular surgery. We tripled our surgical commercial organization during the second quarter, and those representatives remain early in their productivity ramp. As they broaden account coverage and deepen utilization, we expect TRIESENCE revenue growth to build throughout the second half. BYOOVIZ represents another incremental growth driver that we launched on July 1 with encouraging early reception. Our specialty portfolio is similarly positioned to contribute more meaningfully.

VERKAZIA has been relaunched and interest is growing in the form of rising prescription volumes. IOPIDINE now benefits from a permanent J-code. We also expanded our Access Plus commercial organization. Each of these initiatives was either absent or only partially reflected in our first half results. Finally, subject to closing, TYRVAYA will further strengthen our dry eye franchise. We are acquiring global rights to the product, which is approved in the U.S. and China and is under regulatory review in five additional countries. TYRVAYA also offers a distinctive tolerability profile, zero contraindications, zero ocular adverse events, and zero warnings on its label, with sneezing as its most common adverse reaction. From a strategic perspective, and given our commitment to relentlessly compete and win in the U.S. dry eye market, this acquisition makes a ton of sense.

I would encourage stockholders to check out slide 15 in our updated corporate deck on that subject. From an acquisition cost perspective also, this deal may be the best deal we have ever struck. From sales and marketing to market access to share a voice in the ophthalmologist and the optometrist's office, we are a much stronger company with TYRVAYA in our bag. In the past, I always wondered why people would be interested in a nasal spray for their dry eye disease. But after going through our due diligence process and speaking to committed prescribers, I finally get it. There is a very sizable patient base who benefits from this unique product, even down to the side effect profile.

I had one fantastic dry eye specialist tell me that his patients just love TYRVAYA and would much rather have someone say "God bless you" after a sneeze than to endure the stinging and burning or dysgeusia after applying eye drops multiple times a day. Financially, while we expect only a modest revenue contribution this year based on the anticipated timing of the transaction, TYRVAYA and its experienced commercial organization will expand our reach and create additional opportunities to grow the entire dry eye franchise. In sum, taken together, our principal growth drivers enter the second half with stronger demand, improved economics, broader access, and greater commercial support. Breadth matters. Our outlook is not dependent on one product, one launch, or one reimbursement event. We have multiple commercial growth drivers positioned to contribute more meaningfully during the second half. That is why we are reiterating our full year guidance.

We recognize the magnitude of the second half ramp, and Andrew will walk through the financial bridge in more detail. We expect revenue to grow sequentially in both the third and fourth quarters, with the larger step up occurring in the fourth quarter as these initiatives contribute more fully. The first half was about doing the work required to create the opportunity in front of us. The second half is about execution, converting that opportunity into revenue, earnings, and durable value for our stockholders. Before I turn it over to Andrew, I did want to share something that has only deepened my conviction about G-MELT. At this year's American Society of Retina Specialists meeting, I spoke with dozens of retina specialists, and one theme came up again and again.

Practices are struggling to secure reliable anesthesia coverage for their procedures, and many are now paying what they call stipends out of their own facility and global surgical fees just to keep anesthesia services available. We do not believe this is a short-term dislocation. We believe it is a reality that eye surgeons and physicians in other specialties will be managing for many years to come. G-MELT, if approved, could be part of a solution to this growing problem. In nearly 15 years of running this company, I have never seen as consistently positive a reaction to a Harrow product candidate, and that has got me extremely excited about the future of G-MELT. With that, I will turn the call over to Andrew.

Andrew? Thank you, Mark, and good morning, everyone.