Harrow (HROW) Q1 2025 Earnings Call May 09, 2025 08:00 AM ET Company Participants Jamie Webb - Director of Communications & Investor RelationsMark Baum - Chief Executive Officer and Chairman of the BoardAndrew Boll - Chief Financial OfficerJeffrey Cohen - MD - Equity ResearchYi Chen - Managing Director, Equity ResearchMayank Mamtani - Senior Managing Director Conference Call Participants Thomas Flaten - Senior Research AnalystChase Knickerbocker - Senior Equity Research Analyst - Healthcare Operator Good mo ...

Financial Data and Key Metrics Changes - The company reported a 38% year-over-year revenue growth in Q1 2025, achieving $280 million in revenue guidance for the year [7][20] - Cash flow from operations reached a record $19.7 million in the first quarter [7] - The company aims to generate approximately $232 million in revenue over the remaining three quarters of 2025 [7] Business Line Data and Key Metrics Changes - Vevi revenue increased by 35% sequentially from $16 million in Q4 2024 to $21.5 million in Q1 2025, prior to the launch of the VIVI Access for All program [8][21] - iHizo's sales were impacted by destocking in Q1 2025, but unit sales more than doubled in April compared to the first quarter average, indicating a return to growth [16][22] - Triassence completed critical market access initiatives in Q1, leading to a doubling of accounts ordering the product since the beginning of the year [19] Market Data and Key Metrics Changes - The company noted seasonality in its business, with Q1 typically being the weakest revenue period [9] - The specially branded products faced challenges in gross to net estimates, affecting recognizable revenue [10] Company Strategy and Development Direction - The company is focused on achieving and potentially exceeding its 2025 revenue guidance through various product lines, including Vevi, iHizo, and Triassence [20][24] - The VIVI Access for All program is seen as a transformative initiative that could significantly impact revenue growth [12][14] - The company is not planning to exit the compounding business, emphasizing its importance in building commercial relationships and credibility [33][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting revenue guidance, citing strong momentum in new prescriptions and refill rates for Vevi [21][24] - The company acknowledged challenges in the first quarter but expects significant improvement in subsequent quarters [58][92] - Management is optimistic about the long-term potential of its products and the overall business model [92] Other Important Information - The company is actively engaged in discussions for debt refinancing, aiming for a positive outcome by late summer or early fall [86][87] - The impact of current tariff policies on gross margins is estimated to be negligible, around 50 basis points [67][69] Q&A Session Summary Question: Price increase initiatives for iEZO - Management indicated that there were no significant price increases for iEZO, and some prices were actually decreased to enhance accessibility [26][29] Question: Project Beagle initiatives - Project Beagle aims to transition CLARITY C patients to Vevi, which is expected to be financially beneficial [30][31] Question: Sequential changes in iHizo - Management confirmed that unit demand for iHizo is returning to growth mode after destocking in Q1 [36][40] Question: Triassence volume inflection - Management noted that new accounts are opening and using Triassence, with positive signs for future growth [42][44] Question: Impact of tariffs on products - Management stated that the impact of tariffs on gross margins is minimal, around 50 basis points [67][69] Question: Transition of compounding products to prescription - Management highlighted the hidden value in the compounding business and its role in building commercial relationships [53][55] Question: Revenue dynamics for iHizo - Management acknowledged the need for improvement in revenue and unit demand for iHizo, with expectations for growth in 2025 [75][76] Question: VIVI patient transition from CLARITY - Management confirmed that over 25,000 patients are being transitioned from CLARITY C to Vevi, with positive feedback from KOLs [77][80] Question: Debt refinancing outlook - Management expressed confidence in achieving favorable terms for debt refinancing by late summer or early fall [86][87]

Financial Data and Key Metrics Changes - The company reported a 38% year-over-year revenue growth in the first quarter of 2025, achieving $280 million in directional revenue guidance for the year [6][20] - Cash flow from operations reached a record $19.7 million [6] - The company aims to generate approximately $232 million in revenue over the remaining three quarters of the year [6] Business Line Data and Key Metrics Changes - Vevi revenue increased by 35% sequentially from $16 million in Q4 2024 to $21.5 million in Q1 2025, prior to the launch of the VIVI Access for All program [7][12] - iHizo's sales were impacted by destocking in Q1 2025, but unit sales more than doubled in April compared to the monthly average in Q1 [15][16] - Triassence completed critical market access initiatives in Q1, leading to a doubling of accounts ordering the product since the beginning of the year [18][19] Market Data and Key Metrics Changes - The company noted seasonality in its business, with Q1 typically being the weakest revenue period [9] - The specially branded products faced challenges due to volatility in gross to net estimates, affecting recognizable revenue [10] Company Strategy and Development Direction - The company is focused on achieving and potentially exceeding its 2025 revenue guidance through various product lines, including Vevi, iHizo, and Triassence [6][20] - The VeeVai Access for All program is expected to significantly impact revenue growth, with the potential to become a leading product in the dry eye medication market [12][14] - The company is not planning to exit the compounding business, emphasizing its importance in building commercial relationships and credibility [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting revenue guidance, citing strong momentum in new prescriptions and refill rates for Vevi [11][21] - The company anticipates that the third quarter will see stronger numbers driven by compounding effects from new prescriptions [23] - Management acknowledged the need for improvement in certain product lines and plans to review current strategies [59] Other Important Information - The company expects to deliver over $50 million in revenue from iHizo in 2025, with significant growth anticipated [22] - The ImprimisRx compounding business is projected to deliver more than $80 million in revenue in 2025 [22] Q&A Session Summary Question: Price increase initiatives for iHizo - Management indicated that there were no significant price increases for iHizo, and some price decreases were implemented to enhance accessibility [26][29] Question: Project Beagle initiatives - Management clarified that Project Beagle focuses on transitioning Clarity C patients to Vevi, which is expected to be financially beneficial [30][32] Question: Sequential changes in iHizo - Management noted that unit demand is returning to growth mode, with expectations for incremental growth in Q2 [38][41] Question: Triassence volume inflection - Management reported that many new accounts are beginning to use Triassence, with positive signs of adoption in various care settings [44][46] Question: Impact of tariffs on products - Management estimated a negligible impact of current tariff policies on gross margins, around 50 basis points [68][70] Question: Debt refinancing plans - Management expressed confidence in successfully restructuring debt by late summer or early fall, with positive discussions ongoing with lenders [85][86]