Summary of Harrow (NasdaqGM:HROW) FY Conference Call - December 02, 2025 Company Overview - **Company**: Harrow Health, Inc. - **Industry**: Biopharmaceuticals, specifically focusing on ophthalmology and anesthesiology Key Points MELT Acquisition and Technology - The MELT acquisition, closed in mid-November, is seen as a strategic fit to expand into procedural sedation beyond ophthalmology, targeting markets like dental and plastic surgery [5][6][7] - The MELT-300 product aims to reduce opioid exposure in cataract surgeries, with over 90% of patients currently receiving IV fentanyl [6] - The company has a patent portfolio that supports both domestic and international markets [7] - A special protocol agreement (SPA) with the FDA is in place, with efficacy studies completed showing MELT-300's superiority over individual components [8] Commercialization Strategy - Harrow plans to leverage its established infrastructure in ophthalmology while seeking partnerships in non-ophthalmology markets [10][11] - The company has hired Frank Mullery, a former Mylan executive, to enhance its access to the hospital market [10] Product Pipeline - **MELT-210**: Positioned as an oral dissolving tablet for sedation, targeting a wide range of procedures and potentially tens of millions of use cases [12][14][15] - **Vevye**: A product for dry eye disease that has nearly doubled its market share in recent quarters due to a significant coverage win, allowing for easier patient access [16][18][20] - **IHEEZO**: A topical anesthetic for intravitreal injections, expected to generate around $50 million in revenue for the year, with a goal of capturing 10% market share by 2027 [27][28][29] - **TRIESENCE**: After a disappointing start, the product is showing signs of recovery with new commercial leadership and a focus on full-label promotion [30][31][32] Biosimilars Strategy - Harrow plans to enter the biosimilar market with ranibizumab and aflibercept, aiming to create a comprehensive solution for retinal practices [34][36] - The company expects to capture a modest market share, focusing on quality and service rather than competing aggressively with existing products [39][40] Access Programs - The Harrow Access for All program aims to ensure that patients have access to medications with minimal out-of-pocket costs, achieving over 90% coverage for key products [42][44] Business Development and M&A - The company is open to further business development and M&A opportunities, particularly if they can acquire valuable assets at favorable prices [45] Additional Insights - The company emphasizes a patient-centric approach in its product development and marketing strategies, aiming to improve patient experiences across its offerings [6][16][27] - Harrow's focus on building a comprehensive suite of products for surgical and retinal markets positions it well for future growth [35][36] This summary encapsulates the key insights from the conference call, highlighting Harrow's strategic initiatives, product developments, and market positioning within the biopharmaceutical industry.

Company Overview - Harrow, Inc. (HROW) is an emerging leader in FDA approved branded ophthalmic pharmaceuticals, having transitioned from an ophthalmic compounding pharmacy since its inception in 2015 [1] - The company currently holds approximately 35% market share in its niche, which is significantly larger than its competitors, estimated to be around 10 times their share [1] Investment Philosophy - The investment approach reflects principles similar to those of renowned investors Warren Buffett and Charlie Munger, focusing on a select group of companies with which the analyst has developed a long-standing familiarity [1] - The analyst emphasizes the importance of maintaining composure during market panics, suggesting that current market conditions present a favorable investment opportunity [1]

Core Insights - Harrow's revenue growth and expanding product portfolio have attracted the attention of Penn Capital Management, which acquired a new position in the company valued at approximately $15.7 million [1][2][10] Company Overview - Harrow operates as a specialty pharmaceutical company focused on the ophthalmic sector, offering a diversified portfolio of branded and compounded products [5][6] - The company's market capitalization is $1.5 billion, with a revenue of $250 million and a net income of -$5 million over the trailing twelve months (TTM) [4] Financial Performance - In the third quarter, Harrow reported a revenue increase of 45% to $71.6 million, with GAAP net income of $1 million and adjusted EBITDA reaching $22.7 million, nearly tripling from the prior year [10] - The company ended the quarter with $74.3 million in cash, enhancing its liquidity during a period of portfolio expansion [10] Strategic Positioning - Harrow's strategy includes direct product commercialization and strategic equity and royalty interests in innovative drug development, targeting ophthalmologists and specialty healthcare providers in the U.S. [6] - Recent strategic wins, such as formulary listings for VEVYE and the acquisition of Melt Pharmaceuticals, position the company for continued growth and optionality heading into 2026 [10][11] Market Context - As of the latest market close, Harrow shares were priced at $41.30, down 2% over the past year, underperforming the S&P 500, which increased by 13% in the same period [3]

Core Insights - Harrow, Inc. is a leading provider of ophthalmic disease management solutions in North America, focusing on a comprehensive portfolio of products for various eye conditions [2] Upcoming Events - Harrow management will participate in two investor conferences in December 2025: - BTIG 5th Annual Ophthalmology Day (Virtual) on December 1, 2025, at 8:30 AM EST [1] - Piper Sandler 37th Annual Healthcare Conference in New York on December 2, 2025, at 3:00 PM EST, which will be webcast live [1] Company Overview - Harrow offers solutions for conditions affecting both the front and back of the eye, including dry eye disease, age-related macular degeneration, cataracts, refractive errors, glaucoma, and other ocular surface and retina diseases [2] - The company is committed to providing safe, effective, accessible, and affordable medications to enhance patient compliance and improve clinical outcomes [2]

Core Viewpoint - Harrow has completed the acquisition of Melt Pharmaceuticals, enhancing its portfolio with innovative non-opioid, non-IV sedation therapies for medical procedures, particularly in ophthalmology and outpatient settings [1][2][3] Company Overview - Harrow is a leading provider of ophthalmic disease management solutions in North America, focusing on safe, effective, and affordable medications to improve patient outcomes [7] Acquisition Details - The acquisition of Melt Pharmaceuticals marks a strategic expansion for Harrow, allowing entry into the multi-billion-dollar procedural sedation and anxiety market [2][3] - Melt's product candidates, including MELT-210 and MELT-300, utilize the proprietary Zydis® ODT drug delivery platform, which is designed for rapid and effective sedation [1][2] Product Development - MELT-300 is a sublingual formulation combining midazolam (3mg) and ketamine (50mg), showing statistical superiority to midazolam alone in clinical trials [3][5] - The MELT-300 program has received a Special Protocol Assessment (SPA) from the FDA, confirming its Phase 3 study design and endpoints for future regulatory submission [5][6] Future Steps - Harrow plans to submit the NDA for MELT-300 in the first half of 2027, with potential FDA approval expected in the first half of 2028 [9] - The company aims to leverage its existing commercial infrastructure to facilitate the launch of MELT-300, initially targeting cataract and other ophthalmic procedures [9]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $71.6 million, a 45% increase year-over-year and a 12% sequential increase from Q2 2025 [12][13] - Adjusted EBITDA for Q3 was $22.7 million, with GAAP-based net income of $1 million [14] - For the first nine months of 2025, total revenue reached $183.2 million, with an updated full-year revenue outlook of $270-$280 million [13][17] Business Line Data and Key Metrics Changes - VEVYE generated approximately $22.6 million in revenue during Q3, a 22% increase from Q2 2025, and is expected to finish the year strong [14][15] - IHEEZO revenue for Q3 was $21.9 million, up 20% from Q2, with strong demand expected to continue into Q4 [15][16] - TRIESENCE and the specialty portfolio generated $6.9 million in revenue, showing a 33% sequential increase, with new strategies in place to reignite growth [16][30] Market Data and Key Metrics Changes - VEVYE captured 10.5% of the total dry eye market by the end of Q3, up 2.7 share points from the prior quarter [22] - IHEEZO's unit demand was up 47% year-over-year, indicating strong market resonance [25] - TRIESENCE is gaining traction in the retina market, with a 67% sequential increase in unit demand [28] Company Strategy and Development Direction - The company aims to become a leading U.S. ophthalmic company, with plans for four new product launches over the next two years [6][11] - A focus on building a scalable commercial infrastructure to support multiple product launches without heavy additional investment [6][11] - The acquisition of Melt Pharmaceuticals and the expansion of the Access for All program are key strategic moves to enhance growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall trajectory of the business, despite some areas underperforming due to seasonal factors [7] - The company anticipates a strong finish to 2025, with expectations for continued growth in 2026 driven by improved coverage and commercial investments [18][24] - Management is actively working to resolve licensing disputes in California, which could impact future revenue [11] Other Important Information - The company is preparing for the launch of new products, including BioViz, OpioViz, Biclovi, and Melt 300, which are expected to drive future growth [11][30] - The ImprimisRx business remains stable, generating approximately $20.1 million in revenue, but may face challenges due to ongoing regulatory disputes [17] Q&A Session Summary Question: Why was VEVYE prescription data not available this quarter? - Management decided to withdraw from certain reporting services to ensure accuracy and maintain competitive positioning [34][35] Question: Can you discuss the operating leverage achieved? - The company is seeing operating leverage from new revenue growth, with expectations for moderate increases in operating expenses as investments are made in commercial infrastructure [36][37] Question: What is the expected impact of VEVYE's coverage win on ASP? - Management anticipates that improved coverage will lead to a stabilization and potential increase in ASP, particularly as the ratio of covered prescriptions increases [39][40] Question: What proportion of cash-pay patients is expected to transition to insurance coverage? - While precise figures are not available, management believes that many cash-pay patients will transition to covered prescriptions due to favorable coverage wins [46][47] Question: What are the dynamics expected between Q3 and Q4 revenue? - Management expects Q4 to be strong, driven by volume growth across the portfolio, particularly from VEVYE and TRIESENCE [55][58]

Group 1: Market Overview - U.S. stock futures were mostly lower, with S&P 500 futures down approximately 0.2% on Tuesday [1] - Several stocks experienced significant declines in pre-market trading [2][4] Group 2: Outset Medical Inc - Outset Medical reported a quarterly loss of 69 cents per share, missing the analyst consensus estimate of a 66 cents loss [2] - The company's quarterly sales were $29.431 million, below the analyst consensus estimate of $30.880 million [2] - Following the disappointing results, Outset Medical shares fell 25.8% to $8.95 in pre-market trading [2] Group 3: Other Companies - Gemini Space Station Inc shares dipped 9.7% to $15.20 after disclosing third-quarter results [4] - CoreWeave Inc saw a decline of 9.2% to $95.90 following its third-quarter results [4] - Life360 shares declined 7.3% to $86.45 after announcing an agreement to acquire Nativo [4] - Century Aluminum Co fell 6% to $30.37 after posting weak quarterly earnings [4] - Beyond Meat Inc declined 6% to $1.26 following a wider-than-expected quarterly loss [4] - Harrow Inc shares fell 5.3% to $32.30 after reporting worse-than-expected quarterly sales [4] - Nanobiotix SA – ADR dropped 5.3% to $20.99 after a previous jump of 12% on Monday [4] - CleanSpark Inc declined 5.3% to $14.24 as it announced the upsize and pricing of a $1.15 billion convertible notes offering [4]

Corporate Presentation November 2025 Safe Harbor This presentation contains "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Harrow, Inc. (the "Co ...

Financing Activities - The company entered into a senior secured revolving credit facility with Fifth Third Bank for an initial principal amount of $40,000,000, with an additional uncommitted line of credit of up to $20,000,000[141]. - The company closed a private offering of $250,000,000 in senior notes due 2030, resulting in net proceeds of approximately $242,794,000 after expenses[149]. - The company plans to use proceeds from the senior notes offering to prepay $107,500,000 in senior debt and other outstanding loans[150]. - The company completed the sale of the 2030 Notes in September 2025, receiving net proceeds of $242,794,000, which were used to prepay outstanding borrowings[178]. - The 2030 Notes issued in September 2025 have a fixed coupon rate of 8.625%, which mitigates interest rate risk for the company[183]. - The company currently has no borrowings against its 5/3 Revolver, which is based on SOFR plus an interest rate spread, thus avoiding immediate interest rate exposure[183]. - The company believes that its interest rate risk related to cash and cash equivalents is not material, with no significant downside risk from falling interest rates[184]. - The company faces potential challenges in obtaining financing due to its limited history of profitability and general economic conditions[180]. - Any downgrade in the company's corporate or senior unsecured debt rating may increase borrowing costs and negatively impact the ability to raise additional debt capital[181]. - The company may need to modify operations to reduce spending if unable to raise necessary funds, potentially delaying or eliminating ongoing investments[180]. Revenue and Profitability - Total revenues for the three months ended September 30, 2025, increased to $71,638,000, up $22,381,000 (45.4%) from $49,257,000 in 2024[158]. - Branded revenue, net for the nine months ended September 30, 2025, was $121,636,000, reflecting an increase of $51,856,000 (74.4%) compared to $69,780,000 in 2024[158]. - Gross profit for the three months ended September 30, 2025, was $42,091,000, an increase of $18,708,000 (80.0%) from $23,383,000 in 2024[160]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $35,453,000, compared to $(4,423,000) in 2024, indicating a significant improvement[174]. - Cash on hand at September 30, 2025, was $74,290,000, an increase from $47,247,000 at December 31, 2024[170]. Acquisitions and Partnerships - The company agreed to acquire the remaining equity interests in Melt Pharmaceuticals for an initial cash payment of approximately $4,300,000, with contingent payments based on FDA approval and sales milestones[145]. - The company entered a commercialization agreement with Samsung Bioepis for the development of BYOOVIZ and OPUVIZ, with additional payments based on sales milestones[151]. - The company acquired exclusive U.S. commercial rights to BYQLOVI, expected to be available in Q4 2025, marking the first new ophthalmic steroid in over 15 years[153]. Research and Development - Research and development expenses for the nine months ended September 30, 2025, rose to $9,217,000, an increase of $1,742,000 (23.3%) from $7,475,000 in 2024[166]. - The company initiated Project Beagle to transition approximately 25,000 patients from compounded formulations to FDA-approved products, discontinuing certain compounded formulations[155]. Corporate Ratings and Financial Covenants - Harrow, Inc. received a Long-Term Corporate Family Rating of B3 from Moody's and a Long-Term Issuer Default Rating of B- from Fitch, both with a Stable outlook as of September and October 2025 respectively[181]. - The company is subject to a financial covenant requiring a fixed charge coverage ratio of at least 1.10 to 1.0 under the new credit facility[143]. - The company anticipates achieving various sales milestones that could total up to approximately $261,000,000 based on annual net sales ranging from $100,000,000 to $1,000,000,000 for the MELT-300 product candidate[152]. Expenses - Selling, general and administrative expenses for the three months ended September 30, 2025, were $35,856,000, up $2,211,000 (6.6%) from $33,645,000 in 2024[163]. - The company recorded a loss on extinguishment of debt of $7,750,000 during the three and nine months ended September 30, 2025, related to the payoff of various notes[169].

Financial Performance - Harrow reported record Q3 2025 revenues of $71.6 million, a 45% increase from $49.3 million in Q3 2024, and a 12% sequential increase from Q2 2025[2]. - The company achieved $1.0 million in net income and $22.7 million in Adjusted EBITDA during Q3 2025[2]. - Revenues for Q3 2025 were $71.6 million, a 45% increase from $49.3 million in Q3 2024, and a 12% increase from Q2 2025[67]. - Total revenues for Q3 2025 reached $71.638 million, a 45.5% increase from $49.257 million in Q3 2024[72]. - Gross profit for Q3 2025 was $53.926 million, compared to $37.239 million in Q3 2024, reflecting a gross margin of 75%[72][74]. - Net income for Q3 2025 was $1.020 million, a significant improvement from a net loss of $4.220 million in Q3 2024[72][74]. - Core net income for Q3 2025 was $12.933 million, compared to a loss of $1.619 million in Q3 2024[74]. - Adjusted EBITDA for Q3 2025 was $22.732 million, up from $8.808 million in Q3 2024[86]. - For the nine months ended September 30, 2025, total revenues were $183.211 million, up from $132.783 million in the same period of 2024[72]. - Operating income for the three months ended September 30, 2025, was $14,747,000, while for the nine months it was $14,924,000[89]. - Net income for the three months ended September 30, 2025, was $1,020,000, and for the nine months, it was a loss of $11,765,000[89]. Product Performance - VEVYE revenue increased 22% quarter-over-quarter to $22.6 million, capturing a 10.5% share of the national dry eye disease market, reflecting a 2.7% gain from the previous quarter[16][19]. - IHEEZO revenue reached $21.9 million in Q3 2025, representing a 70% increase year-over-year and a 20% sequential increase[28]. - IHEEZO generated $21.9 million in revenue for Q3 2025, representing a 31% increase from $12.9 million in Q3 2024[70]. - VEVYE contributed $22.6 million in revenue for Q3 2025, a significant increase from $5.2 million in Q3 2024[70]. - TRIESENCE achieved 67% quarter-over-quarter unit growth in Q3 2025, with 53% of accounts being new customers[35]. - IHEEZO is on track to exceed $50 million in annual revenue by year-end 2025, supported by strong demand and new orders[32]. - The company anticipates a strong finish for VEVYE in Q4 2025, with October being the strongest month since launch[24]. - VEVYE's market share has doubled in two quarters, with expectations for continued growth driven by expanded coverage and new commercial resources[16][25]. Strategic Initiatives - The company launched Harrow Access for All (HAFA) to enhance patient access and streamline the prescriber experience, aiming to drive volume growth and profitability[9]. - The pending acquisition of MELT Pharmaceuticals and its candidate MELT-300 is expected to transform Harrow's growth strategy in ophthalmic surgery[9]. - The upcoming launch of the Harrow Access for All initiative in Q4 2025 aims to improve patient access and affordability across the Rare & Specialty Product portfolio[42]. - The NDA for MELT-300 is expected to be submitted in the first half of 2027, with a potential commercial launch in 2028[48]. Financial Guidance and Expectations - The company anticipates full-year revenue guidance of $270 million to $280 million, reflecting a conservative approach due to unexpected underperformance[55]. - The company expects a typical seasonal decline from Q4 2025 to Q1 2026 but anticipates stocking activity from new products launching in 2026[60]. Cost and Expenses - Research and development expenses increased to $3.323 million in Q3 2025 from $2.273 million in Q3 2024, indicating a focus on innovation[72]. - Selling, general and administrative expenses rose to $35.856 million in Q3 2025, compared to $33.645 million in Q3 2024[72]. - The company reported a core gross margin of 81% for Q3 2025, compared to 80% in Q3 2024[74]. Risks and Challenges - Management highlighted risks related to FDA approvals and the commercialization of products in their forward-looking statements[76].