Harrow Health, Inc. (HROW) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to Harrow's second quarter 2026 earnings conference call. My name is Michelle, and I will be the operator for today's call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mike Biega, Vice President of Investor Relations and Communications for Harrow. Please go ahead.

Thank you, operator. Good morning, and welcome to Harrow's second quarter 2026 earnings conference call. My name is Mike Biega, Vice President of Investor Relations and Communications, and I'm excited to be introducing today's call. The company's remarks may include forward-looking statements within the meaning of federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow's control, including risks and uncertainties described from time to time in its SEC filings, such as the risks and uncertainties related to the company's ability to make commercially available its FDA-approved products and compounded formulations and technologies, and the approval of certain drug candidates in a timely manner or at all. For a list and description of those risks and uncertainties, please see the risk factors section of the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. Harrow's results may differ materially from those projected. Harrow disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Additionally, Harrow will refer to non-GAAP financial metrics, specifically adjusted EBITDA. A reconciliation of any non-GAAP measures with the most directly comparable GAAP measures is included in the company's earnings release and letter to stockholders, both of which are available on the website. Joining me on today's call are Mark L. Baum, Chief Executive Officer; Andrew Boll, Chief Financial Officer; Patrick Sullivan, Chief Commercial Officer; and Amir Shojaei, Chief Scientific Officer. With that, I would like to turn the call over to Mark. Mark?

Thank you, Mike, and good morning, everyone. We spent the first half of 2026 building demand and strengthening the commercial foundation of our business. The second half is about converting that demand into accelerating revenue and growth and profitability and, of course, hitting numbers. Let me be direct. First half revenue of approximately $115 million was lighter than we expected entering the year, primarily because of the VEVYE net revenue impact we discussed last quarter. At the same time, we executed on major operating priorities we established for the first half, expanding our commercial organization, improving the economics of key products, strengthening our portfolio, launching Byooviz, and building physician and demand across our key growth drivers. Those actions have positioned us to deliver meaningfully stronger revenue and growth and profitability during the second half of 2026. And IHEEZO is a good example. Despite the loss of pass-through on April 1 of this year, IHEEZO generated the highest quarterly unit demand in its history and delivered record new account growth. Channel inventory has now normalized, and an approximately 25% improvement in net pricing became effective July 1 with gross margins exceeding 90%. We expect IHEEZO will be a major contributor to both revenue growth and profitability during the second half. These are the 2 major, and VEVYE is also positioned for stronger growth. During the second quarter, prescriptions increased 21% sequentially. Our prescriber base grew 15%, and the product delivered record quarterly revenue. The business rule changes we implemented at the end of April worked as intended. VEVYE's economics improved sequentially and meaningfully lower copay card utilization, which drove a higher ASP. Those results validated our ability to improve the economics of the franchise while continuing to grow prescription demand and physician adoption. During the second half, VEVYE will benefit from the full period of those revised business rules, broader commercial coverage that became effective August 1, an expanded sampling program, and a sales organization that has doubled in size over the past year. Together, those factors position VEVYE for stronger prescription growth and improved net revenue realization. TRIESENCE also reached another quarterly demand record with more than half of unit demand now coming from ocular surgery. We tripled our surgical commercial organization during the second quarter, and those representatives remain early in their productivity ramp. As they broaden account coverage and deepen utilization, we expect TRIESENCE revenue growth to build throughout the second half. Byooviz represents another incremental growth that we launched on July 1 with encouraging early reception. And our specialty portfolio is similarly positioned to contribute more meaningfully. VERKAZIA has been relaunched, and interest is growing in the form of rising prescription volumes. And IOPIDINE now benefits from a permanent J-code. We also expanded our AccessPlus commercial organization. This was either absent or only partially reflected in our first half results. Finally, subject to closing, TYRVAYA will further strengthen our dry eye franchise. We are acquiring global rights to the product, which is approved in the United States and China and is under regulatory review in 5 additional countries. TYRVAYA also offers a distinctive tolerability profile, 0 contraindications, 0 ocular adverse events, and 0 warnings on its label, with sneezing as its most common adverse reaction. From a strategic perspective and given our commitment to relentlessly compete and win in the U.S. dry eye market, this acquisition makes a ton of sense. And I would encourage stockholders to check out slide 15 in our updated corporate deck on that subject. From an acquisition cost perspective also, this deal may be the best deal we've ever struck. From sales and marketing to market access to share of voice in the ophthalmologist and the optometrist's office, we're a much stronger company with TYRVAYA in our bag. In the past, I always wondered why people would be interested in a nasal spray for their dry eye disease. But after going through our due diligence process and speaking to committed prescribers, I finally get it. There is a very sizable patient base who benefits from this unique product, even down to the side effect profile. I had 1 fantastic dry eye specialist tell me that his patients just love TYRVAYA and would much rather have someone say, "God bless you," after a sneeze than to endure the stinging and burning or dysgeusia after applying eye drops multiple times a day. Financially, while we expect only a modest revenue contribution this year based on the anticipated timing of the transaction, TYRVAYA and its experienced commercial organization will expand our reach and create additional opportunities to grow the entire dry eye franchise. Sum taken together, our principal growth drivers enter the second half with stronger demand, improved economics, broader access, and greater commercial support. And breadth matters. Our outlook is not dependent on 1 product, 1 launch, or 1 reimbursement event. We have multiple commercial growth drivers positioned to contribute more meaningfully during the second half. That is why we are reiterating our full year guidance. We recognize the magnitude of the second half ramp, and Andrew will walk through the financial bridge in more detail. We expect revenue to grow sequentially in both the third and fourth quarters with the larger step-up occurring in the fourth quarter as these initiatives contribute more fully. The first half was about doing the work required to create the opportunity in front of us. The second half is about execution. Converting that opportunity into revenue, earnings, and durable value for our stockholders. Before I turn it over to Andrew, I did want to share something that has only deepened my conviction about [ G-MELT ]. At this year's American Society of Retina Specialists meeting, I spoke with dozens of retina specialists, and 1 theme came up again and again. Practices are struggling to secure reliable anesthesia coverage for their procedures. Many are now paying what they call stipends out of their own facility and global surgical fees just to keep anesthesia services available. We do not believe this is a short-term dislocation. We believe it is a reality that eye surgeons and physicians and other specialties will be managing for many years to come. [ G-MELT ], if approved, could be part of the solution to this growing problem. In nearly 15 years of running this company, I've never seen as consistently positive a reaction to a Harrow product candidate. And that has got me extremely excited about the future of [ G-MELT ]. With that, I'll turn the call over to Andrew.

Thank you, Mark, and good morning, everyone. We reported a revenue of $70.7 million, up 11% year-over-year and approximately 60% sequentially. That brings first half revenue to approximately $115 million. The year-over-year comparison understates the underlying trajectory. First half results reflected limited IHEEZO revenue as channel inventory normalized, as well as only a partial quarter benefit from the VEVYE business rule changes. VEVYE delivered quarterly revenue of $29.4 million, up nearly 58% year-over-year. The result reflected continued prescription growth and improved net revenue realization following the business rule changes implemented at the end of April. IHEEZO generated $15.6 million of revenue, primarily related to wholesaler stocking orders of our new 5-pack presentation. Unit demand for IHEEZO reached a quarterly record, but reported revenue continued to lag underlying demand as distributors sold through previously purchased inventory. We expect IHEEZO to enter the third quarter with a normalized revenue cycle and improved economics. Our specialty portfolio and TRIESENCE generated approximately $11 million of revenue, while our compounded portfolio generated $14.6 million of revenue. GAAP gross margin was 71%. For the second half, we expect gross margins to trend back towards the high 70s supported by IHEEZO's return to a normal revenue cycle, increased overall revenue, continued VEVYE growth, and more favorable product mix. SG&A was $53.3 million, which increased quarter-over-quarter, largely reflecting the commercial investments made during the quarter. Excluding the additional headcount expected to be added through the TYRVAYA transaction at closing, we expect base SG&A dollars to remain approximately flat with second quarter levels for the balance of the year. The core operating cost structure is largely in place, and our objective is to grow revenue against that expense base. Adjusted EBITDA was negative $1.2 million. We ended the quarter with cash and cash equivalents of $83.9 million. With the TYRVAYA transaction, we expect to fund the upfront consideration of $30 million with cash on hand. Following closing, to the extent any of the contingent net sales milestones are hit, we expect the payment of those milestone amounts will essentially be self-funded. Turning now to our outlook, we are reiterating full year guidance of $350 million to $365 million in revenue and $80 million to $100 million in adjusted EBITDA. Based on first half revenue of approximately $115 million, our guidance implies second half revenue of approximately $235 million to $250 million. We're not providing quarterly guidance, but we expect revenue to grow sequentially in both the third and fourth quarters, with the larger step-up occurring in the fourth quarter. That is a substantial step-up. So let me be specific about the bridge. The largest incremental contributor should be IHEEZO. We enter the second half with record demand, normalized channel inventory, and an improvement in net pricing. Those factors should allow reported revenue to more closely reflect the strength of the underlying business beginning in the third quarter. VEVYE is another major driver. Its expanded sales organization should begin to contribute in the third quarter. The revised business rules will be in effect for the full second half of the year. Expanded commercial coverage became effective August 1, and net revenue realization should benefit as more patients satisfy their annual deductibles. TRIESENCE should also continue to grow. Demand reached another quarterly record, and the surgical organization we tripled during the second quarter remains early in its productivity curve. Byooviz formally launched July 1 following modest initial stocking activity in the second quarter. VERKAZIA has been relaunched, and now IOPIDINE benefits from a permanent J-code. Each contributes against a first half revenue base that was either minimal or constrained. Subject to closing, TYRVAYA should also contribute modest revenue this year in addition to revenue synergies with VEVYE that we expect to be realized following the close. Our guidance assumes only a limited 2026 contribution given the anticipated timing of the close and integration. The adjusted EBITDA bridge follows directly from the revenue bridge, substantially higher revenue, increasing gross margins into the high 70s, and a base operating expense structure that remains approximately flat. Upon closing the TYRVAYA transaction, we expect to expand our dry eye sales force and territories further by adding experienced professionals from the Viatris Eye Care Division, increasing SG&A expenses by approximately $20 million on an annualized basis once fully integrated. Looking ahead, we expect TYRVAYA to contribute more than $30 million in revenue during 2027 and overall to be financially accretive. We recognize the magnitude of the second half ramp. Our confidence is based on factors already visible in the business. Prescription growth, record product demand, normalized inventory, improved pricing, broader coverage, and a growing commercial organization that remains early in its productivity curve. On that note, I'll now ask Pat to discuss our commercial progress in more detail.

Thank you, Andrew. Before turning to VEVYE, I'll briefly discuss what the pending TYRVAYA transaction means for our dry eye franchise. VEVYE remains the cornerstone of that franchise. TYRVAYA is complimentary, offering physicians a differentiated, drop-free option for patients who may struggle with eye drops, prefer another route of administration, or are among the 45 million Americans who wear contact lenses. Subject to closing, we expect to add a large number of experienced dry eye sales representatives from Viatris whose territories are largely complementary to our existing coverage. This will expand our geographic reach, increase the frequency of our engagement with eye care professionals, and give our team more touch points through a broader portfolio. We expect to integrate those representatives during the fourth quarter and have them supporting both VEVYE and TYRVAYA. Together, the products give us more treatment options, greater commercial reach, and additional opportunities to grow the entire portfolio. Turning to VEVYE, total prescriptions grew 21% sequentially compared with 14% growth for the broader branded dry eye market based on IQVIA data. New prescription growth grew 4% sequentially while our prescriber base expanded 15%, and VEVYE exited June with a 14.6% share of the branded dry eye market, up from 14% at the end of March and 7.8% a year ago. Those results are particularly encouraging because they were achieved while we implemented significant new business rules designed to improve the economics of the franchise. Co-pay utilization declined meaningfully, yet physician adoption and prescription demand continued to grow. We are also still in the early stages of realizing the full potential of our expanded sales organization with broader commercial coverage through a top 3 pharmacy benefit manager effective August 1, an expanded sampling program now underway, and the ACTIVATE initiative encouraging clinicians to use VEVYE earlier in the treatment paradigm. We have multiple meaningful growth drivers coming online at the same time. Together, these initiatives position VEVYE to accelerate prescription growth and expand its share of the branded dry eye market during the second half. IHEEZO delivered one of the strongest commercial performances of the quarter. Despite the loss of pass-through reimbursement in the cataract surgery on April 1, unit demand reached a record of 65,477 units, up 44% sequentially and 34% year-over-year. We exited the quarter with 224 total ordering accounts, up 32% year-over-year, and 62 placed their first-ever IHEEZO order during that quarter, the strongest quarter for a new account acquisition since launch. Paired with a trailing 12-month reorder rate of approximately 85.5%, that reinforces that adoption continues to broaden following the reimbursement transition. Our focus now is on increasing utilization within existing accounts while expanding IHEEZO into additional procedures and sites of care, including the broader in-office procedure market, which adds more than 2.5 million annual procedures to our addressable opportunity. We believe those factors position the franchise for a substantially stronger second half. Before moving to TRIESENCE, I want to briefly touch on Byooviz. We formally launched the product on July 1, and while it remains early, initial physician engagement has been encouraging. Byooviz is a natural fit within our retina organization, expands the options our team can bring to retina specialists, and increases the value of each customer interaction. TRIESENCE also continued its exceptional momentum. Demand reached another quarterly record of 14,529 units, up 162% year-over-year. Total ordering accounts reached 805, a net increase of 69 over the quarter. And 54% of unit demand now comes from ocular surgery. That mix shift demonstrates that TRIESENCE is expanding beyond its historical retina base. We tripled our surgical commercial organization during the second quarter, and those representatives remain early in their productivity ramp. As they expand account coverage and drive broader adoption, we expect their contribution to begin showing up in the third quarter and build from there. Finally, our specialty portfolio continues to build momentum. The permanent J-code for IOPIDINE became effective on July 1. VERKAZIA continues to progress following its relaunch, and we expanded our AccessPlus commercial organization to support what we believe is the broadest ophthalmic cash pay portfolio in the industry. Across each of these, our focus remains the same, expanding physician access, improving reimbursement, and increasing commercial execution. While I step back and look across this portfolio, what stands out most is the breadth of our momentum. We're seeing growth across multiple franchises, continued physician adoption, and expanded commercial reach, and the benefits of the investments we made throughout the first half of the year. I believe Harrow enters the second half of 2026 in its strongest commercial position to date. I'm excited about the opportunities ahead.

I'll turn it over to Amir to discuss some exciting developments with our R&D pipeline. Thank you, Pat. I'll start with [ G-MELT ] or MELT-300. As I mentioned during our last quarterly webcast, we have now officially secured our pre-NDA meeting with the FDA, which is scheduled for early in the fourth quarter. We are currently preparing the meeting dossier, completing the remaining ancillary activities, and remain on track to submit our NDA during the first half of 2027. This represents another important milestone for the program and keeps us on track for our anticipated regulatory timeline. The program continues to execute according to the development plan we outlined for the investors. From a scientific perspective, I remain very excited about MELT-300. We believe it has the potential to fundamentally change procedural sedation by offering a rapid, IV-free, opioid-free alternative that addresses a significant unmet need across multiple procedural settings. Assuming a successful regulatory review, we continued to target a potential FDA approval in the first half of '28, followed by a commercial launch later that year. Turning to [ YoChill ] or MELT-210, the simplest way to think about the program is [ G-MELT ] for pediatric patients. [ YoChill ] is being developed for children undergoing diagnostic and therapeutic endoscopic procedures. Today, oral midazolam is administered primarily as a syrup, which can be difficult for children to tolerate because of its taste and the challenges associated with administration. We believe an orally disintegrating tablet could provide a more convenient and child-friendly option while fitting within the dosing paradigm physicians already use for oral midazolam. Earlier this year, we completed our end of phase 2 meeting with the FDA. We are currently modifying our pharmacokinetics study protocol to align with the agency's feedback on this program. The development approach is a 505(b)(2) pathway to bridge to oral midazolam syrup through PK, and we expect to develop multiple dose strengths, likely 4, to accommodate the current weight-based dosing paradigm. [ YoChill ] also benefits from the formulation, development, and regulatory experience we have generated through MELT-300, including use of the Zydis orally disintegrating tablet platform. We continue to target an NDA submission in 2027. Together, [ G-MELT ] and [ YoChill ] represent the foundation of a broader procedural sedation platform addressing both adult and pediatric patients. We look forward to providing additional detail on the development plan for both programs at our Investor Day next March. With that, I'll turn the call over to the operator for questions.

Thank you.

Mark, maybe just first to start on the national top 3 PBM win. Just maybe talk about exactly what that coverage constitutes. Is it, you know, kind of tier 1 preferred, like that other, you know, top 3 win that you already have?

Yes, I think the only thing we want to say about that coverage win is number 1, it's obviously a top 3 PBM. Number 2, it's for commercial lives. I think the third element is that these were lives that were formerly blocked, that we did not have access to. And then the fourth item, [ Chase ], is the number of lives that we now have access to is in the many millions. And other than that, I think that's about all I can say. I don't want to go into the specific positioning on the formulary, but we're really excited about this coverage win. And, you know, it's something that we promised our stockholders, and we were able to deliver actually, I think, ahead of time. We didn't think this would come until the first part of next year, but I know the VEVYE team is really pumped to have millions and millions of lives that they now have access to that were formerly blocked.

Got it. And maybe just a two-parter, one on IHEEZO, one on VEVYE. Just as we think about kind of the recent volume acceleration for IHEEZO, can you just discuss what percentage of that business is now in-office versus kind of retina as far as kind of characterizing that acceleration? And then just on VEVYE, Andrew, if you could just comment on kind of how you see ASP in the second half. Since there is still an impact from those kind of pre-business rule changes in the second quarter, is it fair to assume kind of continued sequential improvement in VEVYE ASP? Thanks.

Sure, thanks for that, [ Chase ]. So on IHEEZO, look, the ASC market is now effectively shut because of the loss of pass-through. I think the fact that we hit a record number in terms of unit demand for IHEEZO in the second quarter, which I don't think anyone expected, was an extraordinary result. And it really goes to the focus that the team has put on the in-office market, and that includes both retina as well as other in-office procedures. The in-office market, which we've talked about, which opens up about 2.5 million additional procedures for us, is a significant market, but it's one that we've really just barely scratched the surface on. A significant amount of the growth in IHEEZO for the second quarter came in these retina practices that we've been targeting for the last year and a half or so. We're really making progress. We forecast that in the third quarter we would be set up well with the new 5-pack, the new pricing, the data that's starting to come out, and that that would cause this acceleration in the second half of this year. But IHEEZO is definitely exceeding all of our expectations. And to be clear, we've really simply just scratched the surface. We have probably less than 2% market share in the overall addressable market, less than 2%. And we continue to grow and pick up record numbers of accounts, and we're seeing that acceleration, by the way, in the third quarter. You'll see it in the numbers in the third quarter, and then the fourth quarter as Andrew discussed. But IHEEZO is going to be a really important part of us hitting our numbers for the second half. Andrew, do you want to talk about VEVYE?

Yes, absolutely. Thanks for the question. So with VEVYE ASP and generally anything going through the pharmacy benefit, we typically improved pricing throughout the year as patients are hitting the deductible. And certainly we're expecting to see that with VEVYE. But to your point about the amended business rules, we didn't get a full quarter benefit of that. And so now moving forward, obviously starting in Q3, we'll get the full benefit of those amended rules, which should add a little bit of additional positive momentum to VEVYE ASP going forward.

Thanks, guys.

Thank you. And the next question will come from Steven Seedhouse of Cantor.

First, I just wanted to ask on TYRVAYA, and if you can give us a sense of what actually were the sales for that product, maybe in 2025, 2026 year-to-date, and whether it's growing or if it's stable or even declining slightly in recent years before you take over? And then also, what are you modeling for loss of exclusivity of that product?

Andrew, do you want to talk about what we know? I know that we're trying to keep things quiet as we get to the closing, but is there anything you can discuss on that front?

Yes, Steve, there's not a whole lot we can say until we actually own the asset. And so I think you can take a look at some of the Viatris' comments. Our focus right now though is closing as quickly as possible. I think those are going to be strategically really important assets for us. And so that's the primary focus is getting it closed. And then once closed, what we're guiding to is, you know, that it will contribute more than $30 million of revenue. We're also adding additional heads on the sales and commercial front with the product. And those people are going to be not only promoting TYRVAYA, but also VEVYE. So we should see, regardless of the trajectory of the product currently, we're expecting our ability, we should have the ability to continue to grow it. And then in regards to loss of exclusivity, we're assuming the product will have exclusivity through 2034.

One other comment I would just add is that the operational synergy between these assets is remarkable, and I think you're going to see that probably as early as the fourth quarter. And you'll also see that these assets are clinically complementary. In going out and talking to dry eye professionals, you know, the ability to treat the disease with a chronic care product like VEVYE is our primary asset, I think is important, but also to supplement the treatment, the interest in supplementing the treatment with a product that nearly immediately produces tears like TYRVAYA is very strong, and it's much stronger than we had anticipated before we did our diligence on this product. And, you know, you'll be surprised about the degree to which these are clinically complementary and operationally synergistic.

All right, thanks. That's helpful color. And I wanted to also ask, on IHEEZO, I guess I'm just curious where such strong demand has been coming from specifically, because a lot of the tailwinds, the clinical data, obviously, QUEL is still running and that data is in the fourth quarter. And even the launch of your biosimilars that maybe provide some sort of synergy in the marketing effort, like that's sort of on the come still. And yet you still had this record demand amid all of this, you know, resetting of price and inventory and all this. So is there any way you can just articulate what specifically you think has been driving such strong demand and how likely that is to sort of continue into these subsequent quarters as you have these additional tailwinds coming online? Thanks.

Yes. Well, first of all, even though the demand is impressive and you're right, it is across the board, you know, the team has just done a phenomenal job growing that business in terms of new accounts and then pushing through, you know, units used within specific accounts. We're also picking up larger accounts that are using higher volumes within their practices. Once again, even though we've achieved, I think, a phenomenal result in the second quarter, we've really just barely scratched the surface. In terms of why doctors are encouraging us increasingly using IHEEZO, it's because the product is fantastic. It performs amazingly well clinically. It feels good on the patient's eye. You know, it has predictable onset, predictable duration. And then, you know, the excipient that's in the product actually makes the eye feel better than the alternatives, which includes an injection into the eye of lidocaine to anesthetize the eye. So there are tremendous product attributes that we think give us huge advantages, and the word is spreading certainly among the retina community, but also within these multi-specialty practices that we're increasingly opening up. So, you know, the in-office market is real. There's a growing market for cataract surgery, for example, in the office. And that's a market that we're picking up. So across the board, you should expect continued growth and acceleration for that product. And once again, we've really just barely scratched the surface, but probably, as I said, less than 2% of the addressable market.

Makes sense. Thanks, Mark.

Thank you. And the next question will come from Lachlan Hanbury-Brown with William Blair.

Maybe just a quick follow-up there on TYRVAYA and the sort of contribution to 2026. I appreciate that's obviously somewhat dependent on the exact timing of the close, but should we just be thinking about sort of pro rata-ing what you said about '27 for '26? And maybe would it also be accretive EBITDA in '26, or are there some sort of initial maybe like the initial cost associated with the sort of closing integration that would affect that?

Yes. Hey, Lachlan. I think that's a fair assessment to kind of pro rata the guide for next year depending on closing, which like I said, we're rapidly trying to get that closed as fast as possible. And then do you think about operating margin and contribution this year? I think it's safe to say it's not going to, we don't expect it to pull down earnings this year. There may be some integration costs this first few months as we're implementing the product, getting it into our system. So expect a little bit higher cost in the first few months, but certainly beginning next year, those integration costs should largely have been cleared out, and we should have positive contributions from the product data.

Got it. Thanks. And maybe another on VEVYE. Mark, I know you said you don't want to say too much about that new coverage. Can you at least give some commentary on, like, where the ASP from that coverage may end up relative to, you know, the current coverage or what you've been realizing? You know, is that an improvement? Is it about the same or is it worse than the current coverage and what you've been seeing? And maybe also related to VEVYE, you talked about the sampling program. Can you give us a sense of how impactful that is and maybe like, how much of the current volume has been going through that $0 first fill that this can maybe help to convert more quickly?

Yes, so, you know, in terms of the effect on ASP, simply put, we never sign deals unless there is a net improvement, you know, to ASP. We're not going to, you know, sign a deal unless at the end of the day we're not unable to make a difference. So for example, if we take a lower net price but we're massively able to increase volume, the amount of revenue that we're able to generate from the franchise ultimately improves. And so we have, I think, a pretty good modeling on the effect now of these coverage opportunities. But in this one in particular, this is something that should improve our unit revenue for VEVYE. In terms of the $0 first fill, we've built the company on a foundation of access. So, you know, for us, market access, simply put, means any patient in the United States that is in need of any of our medications will have affordable access to the product that they're in need of. And for us, when we were launching VEVYE, without the coverage, and frankly, our coverage has been pretty poor. As I said, the recent coverage win came from a PBM where we were really blocked. But, you know, for us, you know, we implemented a $0 first fill to ensure that everyone who needed VEVYE had access to VEVYE. The problem with that is it's very expensive for us financially. And what we've, I think, realized is, you know, you'll see significant improvement financially with the sampling program that's now replacing the $0 first fill. Not only do you have the COGS cost with the $0 first fill program, you have all the processing fees, the pharmacy fees, distribution, and so on. And you're really reliant on getting a meaningful number of refills for that patient in order to make up for those investments. And the sampling program is, we believe, going to achieve the same effect in terms of giving patients access to the medication that they need at a far lower cost and ultimately a far more profitable structure for our stockholders.

Okay, thanks. So I guess should we just think about that showing through as maybe slightly lower actual like scripts per se that are written, but just a higher ASP per script that's written?

So it effectively, I don't know that I would think about it that way. I mean, I think that we're seeing higher volumes of prescriptions, both new prescriptions and total prescriptions as a result of this program. I think what Andrew said in his remarks, and Pat reinforced this, is that the business rule changes that we made most recently, the expectation, I think, among some was that this would constrict, you know, prescribing, it would constrict dispensing. And the opposite has happened. So, these business rules, and I think this actually has exceeded our expectations, these business rules have not affected at all the demand for the product, and not only the demand, but our ability to ultimately process a prescription and dispense it. You know, both NRx and TRx moved up meaningfully in the second quarter. And by the way, it's continuing even in the third quarter, which is extraordinary. So we're getting great productivity from the sales force. The business rules that Andrew and the team implemented, I think, were extremely successful so far. And we're in really good shape with our VEVYE franchise. And the team is fantastic. There's also, by the way, a direct relationship, I think, between the investment in the field force and our ability to get new prescriptions in the door. So we're seeing that correlation, that connection. More reps is going to mean more NRx, and when you have a product as extraordinary as VEVYE, that's going to mean more TRx. And with more coverage, where you're making more money on a unit basis, that should give us increasing overall revenue for the franchise. Andrew, do you want to add to that at all?

I would just kind of reinforce what I said in the previous questions, which is, I think, considered, we do still expect ASP to improve for VEVYE throughout the year.

Thanks.

Thank you. And our next question is going to come from Thomas Schrader with [ U.S. Bank ].

Seems like all 50 balls are back in the air. A question on TYRVAYA and VEVYE. Are they going to be in lockstep, which is the sales force has both? And when you add a TYRVAYA sales force, they'll also have VEVYE, they'll have the same sampling. Is that the way to see it? You'll have 2 products that are essentially everybody in the sales force has?

Yes, I don't want to go into the specific strategy, Tom, too much, but what I can tell you is VEVYE is our primary product. It is the product, it's the lady that we went to the dance with. And it is the core focus of our team, and it will continue to be. But there is, as I said, tremendous operational synergy between these products, and they are clinically complementary. Pat, do you want to talk at all about what you intend to do on the VEVYE-TYRVAYA front?

Yes, thanks, Mark. You know, to the question, we're really excited about the complementary nature of these products. I mean, when you think about it, VEVYE has performed really, really well. And I think what we're really excited about when you think about this, just some context, we're in a very large and active market. Just to give context, this time last year we have a market that's up about 18%. And the branded RXs are representing over 75%. With VEVYE, the real key point here is we're focused on inflammation as the cornerstone to treating dry eye. We continue to see a positive experience and performs well. And as we've expanded the team, I think we continue to see a positive experience growing on NRx, TRx, as well as writers. TYRVAYA helps us, 1, open up another segment opportunity when it comes to basal tear production, which often is, you know, similar presenting in the inflammation patients. So we see an opportunity for both of these products to, 1, grow our Harrow share to further help these patients and doctors that we cover right now and actually bring in more writers and grow our business.

Okay, and then on the biosimilars, obviously growing the brand is important, but protecting your price is a huge part of this game. Any thoughts on, I mean, Amgen seems to have done it, but any thoughts on, you know, your strategy there or maybe one you want to answer even less, but I'm just curious what you can say.

I think right now, Tom, the team has received a tremendous amount of inbound interest in the product, and we're focused on really converting that interest to demand and revenue. Other than that, you know, I think we have a phenomenal market access strategy that's designed to, you know, maximally preserve pricing. And we have, I think, some unique advantages with our product over other choices, you know, including the branded Lucentis as well as the other biosimilar. Andrew, do you want to comment on that at all?

Not really. We're obviously really ASP and maintaining net revenue per unit durability for the product is super important, as you pointed out. And so we, like Mark was saying, we do have a strategy to do that. We have a lot of experience doing this too with some of the other buy-and-bill products. Obviously, this is a little bit different, but you're still kind of in the same sort of, you know, it's going through the medical benefit. It's reimbursed on its own J-code or Q-code. Pardon me. So still a similar dynamic, and so we're using some of that experience to try to extend durability of both Byooviz and when Opuviz launches Opuviz.

Okay, last one, which may be yes, no. IHEEZO in the surgical setting, is that gone forever or as you are generating clinical data, is there a way you might get some use back? It was a pretty decent market, and people loved the product. Is there any way back or is that just not worth it at this point?

Yes, to be very clear, if we have a minute of time to invest commercially making a sale, given what we're seeing in terms of new account development and reach within these practices, we're going to focus on where we know we are winning and where we have a massive amount of room, headroom, which is in-office in the retina market and in the in-office procedure market. So, you know, we have literally well over 10 million more procedures that we can address with this product on an annual basis. And so certainly the surgical market is an attractive market. It's how we launched the product, but we have a massive market ahead of us in the interventional injection market, as well as the office procedure market, where we have a permanent product-specific J-code, reimbursement at better than 95%, and a sub-5% prior authorization rate. So we're having tremendous success in the office with retina professionals, as well as other in-office procedures. So that's where we're focusing and we're going to leave the surgical market alone right now.

Great. Thanks for all the details.

Thank you. And the next question will come from Mayank Mamtani with B. Riley Securities.

On the shareholder letter, you mentioned the third-party data undercounts VEVYE. Was this curious, Mark, if you could maybe comment on what you're seeing on the total dispense units that we may not see in IQVIA here. And, you know, obviously trying to understand the volume demand to revenue conversion here. You know, to the extent you can maybe also comment on volume, how you might be tracking, you know, versus another maybe incumbent brand, which is also helping expand the dry eye disease market. And then on the new PBM win, did you comment on what percentage, you know, of the new lives that you have was previously filling as cash pay versus completely blocked?

I'll take the cash pay versus covered answer, and so we don't break that out, you know, specifically, and we don't really intend to. Obviously, this is an incredibly competitive market. Andrew, do you want to talk a little bit about the data issue on VEVYE and reporting specifically, anything you want to add there?

I think that I'll just kind of reiterate some of the things that we said, like Mark was saying in the shareholder letter, that we are seeing an increase in, I would say, disparity between the data that the third-party aggregators are putting out and our internal data. You know, we saw our total brand-to-drive prescriptions reach about 14.6% at the end of June. That's up from last quarter and obviously almost nearly double from a year ago. And so that share that we're drawing, especially when you look at the year-over-year numbers, that's what's basically the old territory setup. We were able to grow that prescription amount with a much smaller sales force. And we're just barely getting productivity from the new reps. So we're excited about what we're expecting to see in Q3 and Q4, and we're seeing this in the early days, is the reps are producing prescriptions. There's a direct correlation to number of feet on the street and increase in NRx and TRx. And that's only going to be furthered as we add TYRVAYA and some of the commercial organization from Viatris as well, which as Pat was talking about, they're also going to be selling VEVYE as well as TYRVAYA, which should just further accelerate our market position within dry eye between VEVYE and TYRVAYA.

To provide with the acquisition close pending. The other thing I would add is that the dashboard that I watch is our FillRX dashboard, and as I've said on previous calls, I watch it like a hawk, almost like some investors might watch a stock ticker, I suppose. And what I'm seeing and what gives me confidence in the franchise and the great work that the team is doing is that I'm seeing higher highs and higher lows in daily volume. And so even tracking 1 Tuesday this week versus the prior Tuesday, just monitoring week-over-week data, once again, higher highs, higher lows, and, you know, 1 week doesn't necessarily make a trend, but that's happening certainly on the monthly data. So we're really pleased with the work that the team is doing. There's a lot more work left to do, I would say. The second half is truly about commercial execution, and Pat and Maria and that whole VEVYE team, I have just tremendous confidence in their ability to make it happen and continue the trends that we're seeing on VEVYE.

Understood. And that's certainly what we are seeing on the IQVIA side. Just on pipeline, if I may, just a couple of quick ones. The ASRS interim data for IHEEZO was encouraging, but obviously a small sample size. So how do you see, you know, this data coming up, build on this learning, you know, including the comparator I think you are using of some subconjunctival lidocaine superiority. I think you're trying to demonstrate on post-procedure pain and maybe some of the other more retina clinic works for relevant endpoints. So just maybe talk about what is going to look like to drive utilization against obviously a generic sort of market backdrop. And then lastly, for [ G-MELT ], what are key questions for this pre-NDA meeting coming up in early 4Q? And do you anticipate most of your ancillary studies being wrapped up by the end of the year?

Yes, I'm going to turn both those questions over to Amir, but I do want to say just briefly on the QUEL data and the data that [ Dr. Deng ] made available at ASRS, that I always think of things from a patient's perspective. If I was a patient going in to get an intravitreal injection, and I'm going to get another injection of lidocaine in my eye and deal with the consequences of that, I would much rather prefer a single dose of IHEEZO. And so what we're really trying to demonstrate is that in terms of the anesthetic effect, it's the same. So, you know, you can either get a needle or you can get a topical drop. In terms of the anesthetic effect, it's the same. And, you know, whether there's any difference in pain and, of course, patient preference. And so we always think of things from a consumer perspective, and we think that patients ultimately were going to prefer IHEEZO, and that's got to be borne out in the data, and that's really the focus of the great work that Amir and his team are doing. Amir, do you want to add to the QUEL study that's ongoing and then talk about anything you can about the pre-NDA meeting?

Thanks, Mark. Yes. So, real quickly, on QUEL, this is a double-masked control trial. So, as far as any current data, we obviously don't have any, but the study is well-enrolling, and we anticipate to have the enrollment completed later this year, and then we'll have results later this year. That said, the kind of endpoints we're looking at are substantially twofold. 1, we're going to look at the numbing effect where we want to show that the product obviously numbs just as good as the lidocaine subconj. But more importantly, we're looking at patient outcomes, right? So from a patient outcomes perspective, we have a whole slew of symptoms that we track, as well as the overall satisfaction by the patient, all the way through 24 hours post-injection. So all of those metrics will come out, and we're pretty confident. Remember, everything that we are doing is based on what we've seen already. This isn't just started necessarily this quarter. We started this journey on evidence generation about 20 months ago. And a lot of this data is trickling out and supporting our continued sort of benefit that we are seeing from the patients using IHEEZO or in procedures especially. On [ G-MELT ], this is a pre-NDA meeting, and the nature of a pre-NDA meeting is really oriented around the submission package. What is it you're putting in, and what is the format, some of the basic necessities as far as the review division is concerned. That said, we will have CMC-oriented discussion, and most of the other ancillary programs, the PK studies, et cetera, will be discussed during this meeting. So it will be an important meeting, but that said, there isn't 1 specific thing in focus. It's the whole constellation of data that we're going to put into the NDA.

Thank you. The only thing I would add, by the way, on QUEL is it is a study that's taking place under an IND, which is really important as well, and that could have a significant impact, some advantages pending the outcome of the data.

Understood. Thank you.

Thank you. And the next question comes from Jeffrey Cohen with Ladenburg Thalmann.

Could you talk about the contact lens wearers and TYRVAYA and perhaps some pickup there from VEVYE in dry eye? I know it's a bit early, but do you expect any access program sampling programs, couponing, et cetera, on TYRVAYA as you launch it in the back half?

What was the first question, Jeff? I'm sorry.

I wanted to know as far as contact lens wearers in your dry eye franchise.

Yes. So, look, all of the other products that are administered on the eye for contact lens wearers require the patient to remove their contact lenses. And, you know, that takes time, and it is probably true that some patients don't do that. But 1 of the great advantages to TYRVAYA is that for the 45 million folks in the United States that are contact lens wearers, this is a unique product for them specifically. This is a product, by the way, that, you know, over the last couple of years has had, you know, significant revenue. What we've been able to demonstrate and what we intend to show once we close on the product is that we can restore that revenue structure and grow the business. And we think that that is certainly possible. It hasn't gotten a lot of attention over the last couple of years. And we intend to really focus in on making sure that certainly the contact lens wearers have access to it, but also other patients that we can serve that are suffering from dry eye disease and who could benefit from TYRVAYA. So we have high hopes for TYRVAYA, but that said, VEVYE is going to continue to always be our baby. It's where we focus. It is the lady that we brought to the dance. And we think that VEVYE will continue to be the primary driver of our dry eye franchise for sure. In terms of the access programs, I don't want to, you know, get into specifics about what we intend to do to ensure access to TYRVAYA. But what I can say is that we will continue to implement access programs that ensure that every patient in need has access to all Harrow products, whether they have poor, good insurance, bad insurance, or no insurance. We built the business, that is the foundation of who we are culturally, and that's the way we'll continue to be. Some companies talk a lot about access. We act a lot on access and have programs to make sure patients get what they need. That will certainly be the case with TYRVAYA.

Thanks, Mark, that's helpful. And then just 1 more quick question on the compounding business. I know we haven't talked about that. Any net changes there for the quarter? And as far as the second half outlook, should we expect a similar run rate to what we saw during Q2?

Do you want to talk at all about the compounded? I mean, what I said in the letter is really, I think, important, and that is, we've had an inventory recovery. So we now have inventory, which is half the battle. We've demonstrated that when we have inventory, we grow. You know, that said, we've talked about on past calls that our interest is in converting compounded units to branded units where that is possible. We feel that that's not only in many cases better for the patient, but it's better financially for Harrow stockholders. But we do expect that business to grow in the third and fourth quarters. Andrew, do you want to add to that at all?

Yes, Jeff, we guided, I think in March, the March conference call we guided that business. We thought we'd do about $60 million to $65 million in revenue. That guide is still in place. So that implies a continued increase in revenues through the second half of the year. And then importantly, we should see improvement in gross margins from that business as well as we progress through the year and start getting more revenue on top of the fixed costs that are built into that operating structure.

Thank you. Thanks for taking the questions.

Thank you. And the next question will come from [ Nelson Cox ] with Lake Street Capital.

I wanted to ask on the $250 million revenue exit rate from 2027, what are the, which did not when first issued have some of the more recent adds to the portfolio included in it. The question is why should we not view those incremental to the goal rather than being a part of it, or had the $250 million goal always baked in some kind of business development activities to supplement that portfolio at the time when you initially made that guidance?

Well, thank you for that, [ Nelson ]. Yes, we have a history of doing BD for products to generate revenue. And so certainly I think it would be reasonable to believe that we would do BD, but that was really not baked into that goal. The belief is that we can achieve that with the products that we have. We, you know, I must say, have an incredible team, and they're all focused on hitting that number. It is a difficult thing to achieve for sure, but I do believe we can do that. And there is a pathway to achieving that with the products that we had. Ex-TYRVAYA. TYRVAYA certainly helps, though. So we'll see where we land. We've got to get that product closed. But it definitely is additive and should be helpful in getting us to that number. But the idea was that we would hit that number without any business development activities.

Thank you, guys.

Thank you. I am showing no further questions at this time. I will now turn the call back over to Mark for closing remarks.

Thank you, operator. I will close where I began. The first half of 2026 was about setting the table, expanding our commercial organization, improving pricing, normalizing inventory, launching new products, and advancing our pipeline. We did what we said we would do. The second half is about serving the meal. Demand across every 1 of our growth drivers is strengthening, our commercial organization is larger and more capable than it has ever been, and the investments we made in the first half are already showing up in the business today. That is why we are reiterating our full year guidance and why I remain confident in our ability to deliver it. I want to end this call by letting our stockholders know that people within this organization matter. After nearly 15 years as the leader of this business, we have simply never had the level of talent we now have throughout the business. We have significantly upgraded our talent level, and this is most pronounced in our commercial group. I am betting on our commercial team to make it happen, and I believe you should too. The table is set. Now we serve. One final note. We announced our Investor Day on March 22, 2027, in New York City. It's going to be a tremendous event. Please mark your calendars. We hope to provide more information about this event later in the year. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.