Harrow Third Quarter 2026 Earnings Conference Call - HARROW INC

Explicit Guidance:

• Revenue: Reaffirmed full-year 2026 revenue guidance of $350 million to $365 million; implies Q4 2026 revenue of $136 million to $151 million (representing 37–52% sequential growth).
• Profitability: Updated full-year 2026 adjusted EBITDA outlook to > $40 million, with a specific Q4 2026 floor of > $33 million; previously guided $80M–$100M.
• Product Revenue: Expects Tervaya to generate > $30 million in revenue in 2027.
• Growth Outlook: Management projects 2027 to be a stronger year for IHSO volumes and revenue compared to 2026; anticipates VBI coverage expansion continuing through 2027.

Business-Segment Outlook:

• VBI (Vivi): Expecting continued sequential growth and improved economics in Q4 and 2027 driven by expanded insurance coverage (including a new national plan effective January 2027 covering ~10M lives) and a larger, more productive commercial team.
• IHSO (Quell): Projected to have its "historically strongest quarter" in Q4 2026 following strong Q3 data; expects sequential demand growth in Q4.
• TriEssence: Entering its strongest quarter; seeing increased adoption in ocular inflammation protocols and predictable unit volumes.
• BioViz: Observed acceleration in follow-on purchases in Q4 2026; learnings from the launch will inform the OpioViz launch in 2027.
• Commercial Structure: Fully deployed four focus teams (Ocular Surface Disease, Retina, Surgical, Access Plus); the new Ocular Surface Disease team integrates Tervaya reps and focuses on VBI, Kervia, Fresh Coat, and Flarex.

Market and Competitive Outlook:

• Demand Trends: Demand is growing across key products; VBI prescription growth (83% YoY) is outpacing market expansion.
• Pricing & Economics: Q4 expected to see further improvement in net realized ASP for VBI and a shift from cash-pay to covered prescriptions; Q3 data suggests improved "covered-to-cash" ratios.
• Competitive Landscape: IHSO data from the QWEL study provides a unique ability to market benefits regarding patient comfort and ocular surface health post-injection (24-hour window), differentiating from routine anesthesia.
• Supply Chain: Transitioning from "inch deep, mile wide" to deeper adoption and consistent purchasing cycles for buy-and-bill products.

Macro / Industry Outlook:

• Regulatory (FDA): G-Melt NDA submission targeted for late 2026 or early 2027 (PDUFA date hoped for in 2027); study design context clarified for QWEL data (non-inferiority endpoint inconclusive, but secondary endpoints favorable).
• Market Access: New national coverage win expected to avoid the Q1 "market access challenges" seen previously in 2026; expects continued payer receptivity for biosimilars.
• Operational Costs: Q4 2026 will include one-time FDA filing fees for G-Melt, costs for accelerating clinical programs (QWEL, Tri-Essence, YoCHO), and purchase accounting impacts from the Tervaya acquisition.

Strategic Initiatives:

• Product Launch: G-Melt (cataract sedation) expected to become the only on-label product for sedation without IVs/opioids; Harrow RX platform to launch as a single destination for ~20 branded products to simplify prescribing workflows.
• M&A Integration: Integration of Tervaya (Vivia) sales team complete; four new products (Kervia, Madison, Vercasia, Vivia) now under the Ocular Surface Disease team.
• Clinical Programs: TriEssence Phase 3 enrollment on track for readout in Q1/Q2 2027; new clinical data for IHSO to be presented at the Hawaii Eye and Retina Conference in January 2027.
• Commercial Expansion: "Harrow RX" MDA filing to be accepted with a PDUFA date hoped for in 2027; aim to reduce/eliminate IVs and opioids in cataract surgery.

Risks and Headwinds to Outlook:

• Clinical Outcomes: QWEL study primary endpoint was inconclusive (non-inferiority not established); while secondary data is positive, regulatory labeling amendments remain uncertain.
• Financial Headwinds: Q4 profitability constrained by accelerating R&D spending, FDA filing fees, and acquisition transition costs.
• Competitive & Contractual Risks: Potential contractual disputes regarding Tervaya licensing with Novaleak remain under active discussion; competitive pricing pressure in the biosimilar market.
• Execution Risk: Dependence on Q4 product mix favorability to achieve EBITDA floor; biosimilar uptake requires successful reimbursement validation by practices.
• Disclaimer: No update or obligation to revise projections; risks include FDA approval delays, regulatory changes, and commercial execution uncertainties.

Management Tone on the Future:

• Confidence: High confidence in "commercial execution" and "momentum" for a record Q4 2026 and growth into 2027.
• Shift in Focus: Emphasis shifted from "building the platform" to "excellence in commercial execution."
• Caveats: Adjusted EBITDA guidance provided as a floor rather than a range, acknowledging room to outperform if product mix is favorable.
• Strategic Optimism: Management views the QWEL results as a valuable asset for "medical messaging" despite the primary endpoint miss, and remains bullish on the Ocular Surface Disease franchise.

Miscellaneous:

• One-time Gain: Recorded a $5 million non-GAAP gain from the resolution of litigation with OSRX.
• Event: Investor Day planned for March in New York City.
• Tax/Litigation: Reference to OSRX litigation settlement impact on Q3 results.