Harrow Health, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• VEVYE Access for All initiative led to 66% growth in prescription volumes quarter-over-quarter. Entered strategic alliance with Apollo Care as a second specialty pharmacy partner for the BAFA program, expanding distribution and improving coverage. VEVYE captured 7.8% of the national dry eye disease market, a 2.6+% increase quarter-over-quarter.
• IHEEZO saw 25% growth in unit volume quarter-over-quarter, with 170% increase in distributor shipment volume Q2 vs Q1 2025. Launched IHEEZO for All strategy to expand utilization.
• TRIESENCE achieved 32% quarter-over-quarter growth, added 870 new accounts year-to-date, with strong traction in the retina community.
• Announced strategic acquisitions: U.S. rights to BYQLOVI for postoperative inflammation and pain following ocular surgery, and U.S. rights to Samsung's ophthalmic biosimilars pipeline including BYOOVIZ and OPUVIZ.
• ImprimisRx showed sequential recovery following seasonal softness in Q1, with April being a record month.

Segment Performance:

• VEVYE: Generated $18.6 million in revenue, a 13% decrease from the first quarter of 2025. Revenue contribution was approximately 29.2% of total second quarter revenue ($63.7 million).
• IHEEZO: Generated $18.3 million in revenue, a 251% increase from the first quarter of 2025. Revenue contribution was approximately 28.7% of total revenue.
• TRIESENCE: Generated $5.2 million in revenue, a 447% increase from the first quarter of 2025. Revenue contribution was approximately 8.2% of total revenue.
• ImprimisRx: Generated $21.5 million in revenue, a 7% increase from the first quarter of 2025. Revenue contribution was approximately 33.7% of total revenue.

Guidance:

• 2025 guidance remains intact; need to generate approximately $169 million in revenue in the second half of 2025 to reach over $280 million for the year.
• VEVYE expected to generate over $60 million in revenue in the second half of 2025.
• IHEEZO on track to surpass $50 million in revenue.
• TRIESENCE second half to outperform first half by a wide margin.
• ImprimisRx on track to reach $80 million or more in revenue this year.

Risks:

• Uncertainties related to the company's ability to make commercially available its FDA-approved products and compounded formulations and technologies.
• Risks related to FDA approval of certain drug candidates in a timely manner or at all.
• Supply chain risks, including ensuring sufficient manufacturing capacity to meet demand.

Q: Congrats on the progress here. Mark, maybe just first on VEVYE. Can you help us a little bit with kind of any kind of business rule changes within there as you guys onboard Apollo Care, et cetera, as far as how we should be thinking about ASPs sequentially from here?

A: Thanks for the question, Chase. Yes. So on VEVYE ASP, I think a couple of things. One, in terms of new business rules going forward, we continue to tweak our algorithm, but it's really -- these are really minor things. At this point, the business rules are, I think, performing very well. The reality, though, is that between Q1 and Q2, we kind of needed to wash, if you will, all of the existing VEVYE patients through those new business rules for the VEVYE Access for All program. And what I mean by that is, at the beginning of the year, you had a lot of patients, especially with co-pay resets that were paying $300, $400, $500 out of pocket for VEVYE. And the reality is that many patients just can't afford that level of payment for a product like VEVYE or really any product for that matter. And what the VEVYE Access for All program allowed those patients to do is to continue to stay on therapy and to be able to access the product at a much lower cost. Those are patients we probably would have lost anyway. But the bottom line is that as we got through Q2 and certainly now in Q3 with the existing business rules, we're really seeing what the ASP should look like. Now with Apollo Care, we have been losing patients. So we have patients that have coverage, but that are not able to use their coverage because the plan may have not been contracted with our existing pharmacy provider. And with this expansion of the network, we should be able to capture many more high-value patients into the overall ASP calculation. So we're thinking that certainly by the end of the year, we should see, as I said, a bias upward in terms of ASP, but we're also very confident that from here, given the fact that all of those existing patients have washed through these business rules that we do have stability to our ASP.

Q: First question, I just want to ask about the growth in new prescriptions in the second quarter for VEVYE. How much of that was driven by Klarity-C switchers? And are you largely through any expected bolus of patients from Klarity-C now? And then just second part of that question, you mentioned you're sort of cautious about growing too much faster for the remainder of the year for VEVYE in your stockholder letter. I'm just wondering how much growth would slow naturally from the Klarity-C patient bolus sort of unwinding? Or are you also expecting a slowing of sort of the organic growth ex Klarity-C?

A: Thanks for that question, Steve. I'm going to -- I'll tell you just straight up how many units came from Klarity-C. It was about 7,000 or so during the period. And in terms of those patients falling off, those patients typically have been as loyal, I think, refillers or even more loyal than the VEVYE experience that we've seen so far. The other thing that I would mention that I think you're hitting on, which is true, and I kind of alluded to this a little bit in the stockholder letter is that we really didn't count on VEVYE taking off in the way that it did in terms of our forecasting, in terms of our production with our supply chain partners. And I don't want to say that we got caught flat-footed. These are very luxurious problems to have. But we had purposely, I would say, not poured gasoline onto the VEVYE fire with intention because we really -- we want to make sure that if an existing patient needs VEVYE or if an NRx comes in that we can supply the market. I think over the next couple of months, we're going to have far greater clarity in terms of acceptable levels of safety stock with VEVYE. And as I said in the stockholder letter, because every unit of VEVYE is -- nearly every unit is profitable, we feel really confident in entering a new investment cycle and dramatically hopefully taking additional market share, probably starting that process at the end of the year and really setting us up well for 2026.