Executive Summary / Key Takeaways

• Harrow, Inc. is rapidly transforming into a leading U.S. ophthalmic pharmaceutical company, leveraging a scalable commercial infrastructure and a diverse portfolio spanning branded, compounded, and biosimilar medications. The company aims to achieve $250 million in quarterly revenue by the end of 2027.
• Key branded products, VEVYE and IHEEZO, are demonstrating strong momentum. VEVYE, a dry eye treatment, saw 22% quarter-over-quarter revenue growth in Q3 2025 and is poised for significant expansion with preferred formulary status from a major U.S. pharmacy benefit manager starting January 2026.
• The company's strategic "retina pivot" for IHEEZO and the relaunch of TRIESENCE, coupled with the upcoming launches of Samsung Bioepis' biosimilars (BYOOVIZ in mid-2026, OPUVIZ in mid-2027) and BYQLOVI (Q1 2026), are expected to drive substantial growth in the high-value retina and surgical segments.
• Harrow has updated its full-year 2025 revenue outlook to a range of $270 million to $280 million, reflecting strong performance from its branded portfolio despite some near-term operational challenges in its ImprimisRx segment.
• The recent $250 million senior notes offering in September 2025, used to prepay prior debt, and an undrawn $40 million revolving credit facility, bolster Harrow's liquidity and provide capital for strategic initiatives and continued growth.

The Foundation of Ophthalmic Leadership

Harrow, Inc. has evolved from its 1998 founding into a prominent provider of ophthalmic disease management solutions across North America. The company's overarching vision is to become the next great U.S. ophthalmic company, a goal it pursues by offering a comprehensive portfolio that includes branded, generic, over-the-counter, compounded, and biosimilar medications. This unique breadth allows Harrow to address a wide array of conditions affecting both the front and back of the eye, such as dry eye disease, cataracts, glaucoma, and macular degeneration.

The company's journey began with its ImprimisRx compounding pharmacy business, which served as a critical foundation, building commercial credibility with thousands of eye care professionals. This established network and operational expertise proved instrumental in securing opportunities for branded product development and strategic acquisitions. Harrow's strategy emphasizes a low-risk, capital-efficient pipeline development and M&A approach, allowing it to scale its operations and impact without requiring heavy additional investment. This scalable commercial infrastructure is a key differentiator, designed to support multiple product launches and continued expansion efficiently.

The ophthalmic market itself presents significant opportunities, with large and growing segments like dry eye disease and intravitreal injections. Harrow's approach is to deliver safe, effective, accessible, and affordable medications that enhance patient compliance and improve clinical outcomes, directly addressing unmet needs within these expansive markets.

Technological Edge and Innovation Driving Growth

Harrow's competitive advantage is deeply rooted in its differentiated approach to ophthalmic solutions, combining traditional pharmaceutical development with innovative market access and product strategies. The company's portfolio includes products with distinct technological benefits that set them apart in the marketplace.

VEVYE, Harrow's flagship dry eye treatment, exemplifies this. It is an FDA-approved 0.1% cyclosporine ophthalmic solution known for its rapid onset, efficacy, and favorable tolerability profile. A key benefit highlighted by management is VEVYE's "amazing refill rate," with patients often continuing therapy for the entirety of the year, significantly outpacing typical dry eye prescription refill rates. This high patient adherence underscores its clinical value and contributes to sustained revenue growth. Furthermore, VEVYE's out-of-pocket cost for consumers can be less expensive than generic cyclosporine, even without prior authorization or step therapy, making it a highly competitive option.

In the surgical and retina segments, TRIESENCE offers a preservative-free triamcinolone acetonide injection, addressing a critical unmet need for ocular surgeons. This formulation avoids the potential blinding risks associated with preservatives like benzyl alcohol found in some alternatives. BYQLOVI, an FDA-approved clobetasol propionate ophthalmic suspension, represents another technological leap. It is the first new ophthalmic steroid in its class in over 15 years, offering high potency and a significantly lower incidence of increased intraocular pressure (IOP) at 1.4% compared to other less potent corticosteroids. Its twice-daily dosing regimen also enhances patient compliance over typical four-times-daily alternatives.

Harrow's R&D and strategic initiatives further bolster its technological moat. "Project Beagle" is a strategic effort to transition patients from compounded formulations to Harrow-owned FDA-approved products, such as moving Klarity-C patients to VEVYE. This not only offers patients an FDA-approved option but also significantly improves Harrow's profitability per unit. The acquisition of Melt Pharmaceuticals, Inc., which closed in November 2025, introduces MELT-300, a non-opioid procedural sedation candidate with global patent protection and potential applications beyond ophthalmology. This strategic move positions Harrow to revolutionize ophthalmic surgery by enabling opioid-free, IV-free, and drop-free cataract procedures, a transformative vision for the nearly 5 million annual U.S. surgeries.

These technological differentiators and strategic R&D efforts are crucial for Harrow's competitive positioning. They contribute to a stronger competitive moat by offering superior clinical outcomes, improved patient compliance, and enhanced economic value for both patients and healthcare providers. This translates directly into higher average selling prices (ASPs), lower costs through efficient manufacturing and distribution, and ultimately, better margins and market share gains for Harrow.

Strategic Execution and Competitive Landscape

Harrow's strategic initiatives are designed to capitalize on its product portfolio and scalable infrastructure within a competitive ophthalmic market. The company operates in a landscape populated by larger, diversified players like Alcon Inc. (ALC), Bausch Health Companies Inc. (BHC), Johnson & Johnson (JNJ), and AbbVie Inc. (ABBV). While these competitors possess greater scale, broader global reach, and extensive R&D budgets, Harrow distinguishes itself through niche specialization, agility, and a focus on market access.

A prime example of Harrow's strategic execution is the "retina pivot" for IHEEZO, a chloroprocaine hydrochloride ophthalmic gel. In Q3 2024, Harrow shifted its commercial team's focus almost exclusively to retina specialists, recognizing the massive and growing intravitreal injection market and clear CMS reimbursement for same-day bilateral use cases. This targeted approach, coupled with IHEEZO's 82% reorder rate and 25% quarter-over-quarter unit volume growth in Q2 2025, demonstrates effective market penetration. IHEEZO also boasts broad coverage, with over 81% of commercial and government payers providing reimbursement and only 4% requiring prior authorization.

The relaunch of TRIESENCE in October 2024, after years of market absence, further strengthens Harrow's retina presence. TRIESENCE has achieved 84% coverage with minimal prior authorization requirements, making it a highly accessible option. The combination of IHEEZO and TRIESENCE creates a powerful offering for retina specialists, enhancing the commercial team's effectiveness. The company is also expanding TRIESENCE's use into the ocular inflammation market, including cataract surgery, which represents its largest market opportunity.

Harrow Access for All (HAFA) and VEVYE Access for All (VAFA) are cornerstone programs designed to improve patient access and affordability across Harrow's ophthalmic portfolio. These initiatives aim to streamline prescribing and provide predictable access, leading to a higher proportion of covered prescriptions and improved pricing stability for VEVYE. VEVYE's market share doubled over the past two quarters, reaching 10.5% of the total dry eye market by the end of Q3 2025, surpassing competitors like Cequa and gaining on Miebo in several U.S. markets. This success is further bolstered by VEVYE securing preferred formulary status with the largest U.S. pharmacy benefit manager, effective January 2026, which is expected to drive significant volume and improve ASP.

The company's strategic acquisitions, such as the exclusive U.S. commercial rights to BYQLOVI (Q1 2026 launch) and Samsung Bioepis' ophthalmology biosimilars portfolio (BYOOVIZ in mid-2026, OPUVIZ in mid-2027), integrate seamlessly into Harrow's existing commercial infrastructure. These biosimilars, referencing Lucentis and Eylea, both with interchangeability status, allow Harrow to compete aggressively in the large anti-VEGF market, leveraging its deep retina expertise.

Harrow's competitive advantages lie in its specialized compounding expertise, which allows for customized solutions, and its risk-sharing model through equity interests and royalty rights in clinical-stage companies. While larger competitors benefit from scale and diversified revenue streams, Harrow's agility in targeted R&D and market access strategies allows it to carve out significant niches. The company's operational efficiency is evident in its ability to leverage its existing commercial infrastructure for new launches, translating revenue growth into earnings.

Financial Performance and Liquidity

Harrow's financial performance in 2025 demonstrates significant growth and increasing operational leverage. For the third quarter ended September 30, 2025, total revenues reached $71.6 million, marking a 45% increase over the prior-year period and a 12% sequential increase from Q2 2025. For the nine months ended September 30, 2025, total revenues were $183.21 million, up from $132.78 million in the same period of 2024.

The Branded segment is the primary growth engine, with revenues increasing 80.66% year-over-year in Q3 2025 to $51.58 million and 74.32% for the nine-month period to $121.64 million. This growth was driven by strong demand for VEVYE and IHEEZO. VEVYE generated $22.6 million in Q3 2025 revenue, a 22% quarter-over-quarter increase, while IHEEZO contributed $21.9 million, up 20% sequentially. The ImprimisRx segment, while providing stable recurring revenue, saw a slight decline in Q3 2025 revenue to $20.06 million from $20.70 million in Q3 2024, primarily due to a product mix with lower gross margins and one-time costs impacting efficiency.

Profitability metrics are showing improvement. GAAP net income for Q3 2025 was $1.0 million, and Adjusted EBITDA reached $22.7 million. The company's operating leverage is becoming increasingly evident, with operating expenses remaining relatively stable quarter-to-quarter, allowing new revenue gains to translate into earnings.

Gross profit for the Branded segment was $42.09 million in Q3 2025, while ImprimisRx recorded $11.84 million. The Branded gross margin, however, decreased slightly due to increased fixed expenses, particularly amortization of acquired product rights related to TRIESENCE and a capitalized contingent milestone payment in Q4 2024.

Cash flow from operations was robust, with $16 million generated in Q3 2025 and $35.45 million for the nine months ended September 30, 2025. This increase was largely attributed to a significant reduction in accounts receivable due to collections.

Harrow's liquidity position is strong. As of September 30, 2025, cash and cash equivalents stood at $74.29 million, which management believes is sufficient to sustain planned operations and capital expenditures for at least the next 12 months. In September 2025, the company successfully completed a private offering of $250.00 million in 8.62% senior notes due 2030, generating net proceeds of approximately $242.79 million. These proceeds were strategically used to prepay all outstanding senior debt obligations, including the Oaktree Loan, 2026 Notes, and 2027 Notes, thereby streamlining its debt structure. Additionally, Harrow secured an undrawn $40.00 million senior secured revolving credit facility with Fifth Third Bank (FITB), with an incremental $20.00 million line of credit, providing further financial flexibility.

Outlook and Strategic Roadmap

Harrow has updated its full-year 2025 revenue outlook to a range of $270 million to $280 million, a slightly more conservative approach while still aiming for its original target of over $280 million. This guidance is supported by strong expectations for its key branded products. VEVYE is on track to achieve nearly $100 million in annual revenue for 2025, with significant additional growth anticipated in 2026 as improved coverage from national payers takes effect. IHEEZO is also expected to have a record year, surpassing $50 million in revenue for 2025. The Specialty branded products, including TRIESENCE, are projected to deliver at least $50 million in revenue, while the ImprimisRx compounding business is expected to contribute over $80 million.

Looking ahead, Harrow anticipates a typical seasonal decline from Q4 2025 to Q1 2026, consistent with prior patterns. However, the company expects to achieve record results in 2026, driven by continued investments in its commercial infrastructure, particularly for VEVYE, with plans to open 10 new sales territories in the near term and approximately 100 by mid-2026.

The strategic roadmap includes four new product launches over the next three years: BYQLOVI (Q1 2026), BYOOVIZ (mid-2026), OPUVIZ (mid-2027), and MELT-300. These launches are expected to significantly expand Harrow's market reach and leadership. The acquisition of Melt Pharmaceuticals, Inc., completed in November 2025, is considered transformative, with MELT-300 holding global patent protection and broad applications beyond ophthalmology.

Risks and Challenges

Despite a compelling growth trajectory, Harrow faces several risks and challenges. Regulatory scrutiny remains a constant, with a dispute ongoing with the California Board of Pharmacy regarding ImprimisRx's license renewal, which could impact Q4 revenue if unresolved. Historically, the company has addressed various FDA observations and warning letters related to its compounding facilities and marketing activities, demonstrating a commitment to compliance.

Reimbursement pressures and drug pricing legislation, including provisions in the Inflation Reduction Act, could impact the company's ability to set prices and secure favorable coverage, potentially affecting profitability. Global economic conditions, inflation, and supply chain challenges also pose risks, potentially increasing operating expenses and affecting patient affordability or demand.

While Harrow has strengthened its liquidity, its smaller operational scale compared to larger competitors could lead to higher per-unit costs and limit its ability to absorb market shocks. Dependency on partnerships for product development and commercialization also introduces risks related to revenue stability and strategic execution.

Conclusion

Harrow, Inc. is executing a clear and ambitious strategy to solidify its position as a leading U.S. ophthalmic pharmaceutical company. The core investment thesis is underpinned by the exceptional performance and growth potential of its branded portfolio, particularly VEVYE and IHEEZO, coupled with a robust pipeline of new product launches and strategic acquisitions. The company's innovative market access programs and scalable commercial infrastructure provide significant operating leverage, enabling efficient expansion and profitability.

With a strong balance sheet following its recent debt refinancing and an undrawn credit facility, Harrow is well-capitalized to pursue its strategic initiatives, including the integration of Melt Pharmaceuticals and the launch of Samsung Bioepis' biosimilars. While regulatory challenges and competitive pressures persist, Harrow's technological differentiators, such as VEVYE's superior tolerability and refill rates, TRIESENCE's preservative-free formulation, and BYQLOVI's high potency, position it favorably against rivals. The company's commitment to delivering accessible and affordable solutions, combined with its focused commercial execution, suggests a compelling long-term growth story for discerning investors.