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HARROW, INC. (HROW)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 revenue of $66.831M (+84% YoY; +36% QoQ) and GAAP diluted EPS $0.24; Core diluted EPS $0.40; Adjusted EBITDA $22.489M, reflecting strong momentum across IHEEZO and VEVYE .
  • Wall Street consensus was materially low: revenue $61.801M vs actual $66.831M (+8.1% beat) and Primary EPS $0.0625 vs actual $0.40; both were significant beats, driven by higher gross-to-net and demand; management launched VEVYE Access For All to sustain ASP and refill growth .*
  • 2025 revenue guidance introduced at “over/more than $280M” (>40% YoY growth), with branded margins expected to drive most growth; TRIESENCE pass-through reimbursement begins April 1, 2025, expanding addressable reimbursement sites and supporting H2 acceleration .
  • Working capital tightened in Q4: AR up sharply due to extended distributor terms for buy-and-bill products (IHEEZO, TRIESENCE), and FY 2024 operating cash flow was negative; interest expense remained heavy, though management expects operating leverage and plans debt refinancing .

What Went Well and What Went Wrong

What Went Well

  • Demand inflection: IHEEZO Q4 revenue was $23M (34% of total) with +43% QoQ unit volume after the Retina Pivot; VEVYE prescriptions grew +44% QoQ, underpinning sequential revenue acceleration .
  • Margin expansion: Q4 gross margin 79% and core gross margin 84%; Adjusted EBITDA $22.489M vs $8.808M in Q3, evidencing scale and mix benefits .
  • Management confidence: “We closed out 2024 with record financial performance... core gross margins... 84% for Q4 and 80% for the full year 2024,” and “VAFA... guarantees access for eligible patients for as little as $0 to $59 per bottle,” supporting sustained ASP and refill growth .

What Went Wrong

  • Working capital build: AR increased as Harrow extended distributor payment terms to allow end-user revenue cycle completion for buy-and-bill products; “AR was up about $68 million sequentially” (analyst), with management confirming extended terms for IHEEZO/TRIESENCE .
  • Cash flow and interest burden: FY 2024 operating cash flow was $(22.202)M and total other expense net was $(26.142)M; interest expense for FY 2024 was $22.786M, constraining cash conversion .
  • Auditor timing and reporting cadence: Audited Q4/FY results were delayed due to new auditor integration; management committed to avoiding future delays .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD)$48,939,000 $49,257,000 $66,831,000
GAAP Diluted EPS ($)$(0.18) $(0.12) $0.24
Core Diluted EPS ($)$(0.06) $(0.05) $0.40
Gross Margin (%)74% 76% 79%
Core Gross Margin (%)79% 80% 84%
Adjusted EBITDA ($USD)$8,803,000 $8,808,000 $22,489,000

Segment/Product contributions (select):

ItemQ2 2024Q3 2024Q4 2024
IHEEZO Revenue ($USD)——$23,000,000
IHEEZO QoQ Unit Demand (%)+98% vs Q1 +15% vs Q2 +43% vs Q3
VEVYE TRx QoQ Growth (%)+212% vs Q1 +55% vs Q2 +44% vs Q3

Select P&L structure (Q4 2024):

MetricQ4 2024
Gross Profit ($USD)$52,696,000
Total Operating Expenses ($USD)$39,797,000
Operating Income ($USD)$12,899,000
Net Income ($USD)$6,777,000

KPIs:

  • Q4 Gross-to-net and ASP in VEVYE improved materially QoQ per management; VAFA designed to further support ASP and refill economics .
  • Q4 core net income $11,366,000 and Q4 core diluted EPS $0.40, highlighting non-GAAP profitability trajectory .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2025—“Over/More than $280 million” Introduced
TRIESENCE Reimbursement StatusEffective Apr 1, 2025Office only (permanent J‑Code)Adds separate reimbursement at ASP+6% in ASC and HOPD for 3 years Expanded Access
Operating Leverage/SG&AFY 2025—Expect operating leverage; SG&A growth largely variable tied to revenue Commentary
TaxesFY 2025—Expect to start paying taxes in 2025 Commentary
Debt Refinancing Plan2025–2026—Intend to refinance senior debt; options with Oaktree/others Plan Announced

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
IHEEZO Retina Pivot & AdoptionLarge supply agreements; unit +98% QoQ Retina pivot initiated; unit +15% QoQ; office reimbursement clarity Unit +43% QoQ; $23M revenue; 34% of total; early innings Accelerating
VEVYE Access/ASPTRx +212% QoQ; building coverage TRx +55% QoQ; preferred Med D position; refill rates >90% TRx +44% QoQ; VAFA launched ($0–$59 per bottle); ASP expected to rise Improving ASP/access
TRIESENCE Relaunch/AccessPPQ progress; relaunch planned 2024 Relaunched Oct; Medicare MACs reimbursing; inventory push Pass-through approved; ASC/HOPD reimbursement from Apr 1, 2025 Access expansion
Working Capital/ARCash opex rising with growth Summer seasonality; modest sequential rev AR up on extended distributor terms for buy-and-bill Higher WC needs
Operating LeverageAdjusted EBITDA $8.8M Adjusted EBITDA $8.8M Adjusted EBITDA $22.5M; leverage inflecting Positive
Regulatory/LegalCMS clarity for IHEEZO office reimbursement Preferred VEVYE Med D position TRIESENCE pass-through; permanent J‑Code continues Favorable

Management Commentary

  • “We closed out 2024 with record financial performance… core gross margins into the 80s, actually 84% for Q4 and 80% for the full year 2024.”
  • On VAFA: “We guarantee access to VEVYE for eligible patients… for as little as $0 to $59 per bottle… every VEVYE prescription is now profitable for Harrow…”
  • On IHEEZO: “IHEEZO produced $23 million in revenue for the fourth quarter of 2024 or 34% of Harrow’s total revenues… we are just in the early innings of the growth cycle for this product.”
  • On TRIESENCE: “CMS approved our pass-through application… reimbursement in all sites of care… positions us to meet and hopefully exceed our internal revenue forecast.”
  • On FY25 guide: “We are confident… ‘more than $280 million’... representing an increase over 2024 revenue of more than 40%.”

Q&A Highlights

  • VEVYE ASP/gross-to-net uplift: Management cited fewer co-pay buy-downs and business rule changes, plus stronger demand; VAFA expected to further increase ASP and units; “hold me to that” on ASP rising within six months .
  • Operating leverage and cash conversion: SG&A growth to be more variable tied to revenue; expect EBITDA-to-cash conversion to improve as extended distributor terms normalize; begin paying taxes in 2025 .
  • Working capital and AR: Extended distributor terms used to allow buy-and-bill customers’ revenue cycle completion; AR increased notably in Q4 with TRIESENCE introduction .
  • TRIESENCE life-cycle: Next-gen TRIESENCE in development; aim to file NDA before end of 2027 .
  • FY25 cadence and refinancing: H1 lighter; H2 stronger; comfortable with >$280M revenue; intend to refinance 2026 notes with Oaktree or other partners .

Estimates Context

MetricPeriodConsensusActual
Revenue ($USD)Q4 2024$61,801,000*$66,831,000
Primary EPS ($)Q4 2024$0.0625*$0.40 (Core diluted EPS)
Revenue ($USD)FY 2024$194,567,600*$199,614,000
Primary EPS ($)FY 2024$(0.6175)*$(0.06) (Core diluted loss/share)
# of EPS EstimatesQ4 20244*—
# of Revenue EstimatesQ4 20245*—
  • Both Q4 revenue and Primary EPS posted significant beats; the EPS delta reflects use of non-GAAP Primary/Core EPS vs GAAP diluted EPS ($0.24), consistent with S&P methodology and company Core reporting .*
  • Implication: Street models likely need to raise FY25 run-rate assumptions for IHEEZO and VEVYE volumes and ASP, and reflect TRIESENCE reimbursement tailwinds beginning Q2 2025 .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q4 delivered a strong inflection in revenue and profitability, with margins and Adjusted EBITDA scaling as branded mix expands .
  • VEVYE’s VAFA program should support both unit growth and ASP improvement; management expects continued refill-driven recurring revenue and ASP uplift within six months .
  • IHEEZO’s Retina Pivot is working; with $23M Q4 revenue and clarity on office reimbursement, unit capture in the large anti-VEGF injection market is a multi-year lever .
  • TRIESENCE pass-through reimbursement adds ASC/HOPD economics for three years starting April 1, unlocking broader site-of-care monetization; expect revenue contribution to accelerate from Q2 .
  • Watch working capital: extended distributor terms elevated AR in Q4; monitor cash conversion versus Adjusted EBITDA as VAFA and reimbursement initiatives mature .
  • 2025 guide “> $280M” signals >40% growth; operating leverage and mix should expand profitability; debt refi plans reduce financing overhang .
  • Near-term catalysts: execution on VAFA, additional payer wins, IHEEZO retina adoption, TRIESENCE uptake with pass-through; mid-term: next-gen TRIESENCE, MELT-300 NDA path .

Appendix: Additional Q4 Materials

  • Preliminary Q4/FY unaudited results and 2025 guide (8-K 2.02): Revenues $65–$67M Q4; Adjusted EBITDA $21–$23M Q4; 2025 revenue “over $280M” .
  • Audited Q4/FY press release: full P&L, Balance Sheet, Adjusted EBITDA and Core reconciliations .
  • TRIESENCE pass-through reimbursement status press release (ASC/HOPD separate reimbursement for 3 years from Apr 1, 2025) .