Q1 2024 Harrow Inc Earnings Call

Operator: Good day, everyone, and welcome to the Harrow, Inc. First Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Jamie Webb, Director of Communications and Investor Relations. Please go ahead.

Good day, everyone and welcome to the Harrow, Inc. First quarter 'twenty 'twenty four earnings conference call.

All participants will be in a listen only mode.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May press Star then one on a touchtone phone.

To withdraw your question. Please press Star then two.

Please note this event is being recorded.

I would now like to turn the conference over to Jamie Webb Director of Communications and Investor Relations. Please go ahead.

Jamie Webb: Thank you operator.

Jamie Webb: Good morning, and welcome to Harrow's first quarter 2024 earnings conference call. Before we begin today, let me remind you that the company's remarks may include forward-looking statements within the meaning of federal securities law. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow's control, including risk and uncertainties described from time to time in its SEC filings, such as the risk and uncertainties related to the company's ability to make commercially available its FDA-approved products and compounded formulations and technologies and FDA approval of certain drug candidates in a timely manner or at all.

Jamie Webb: Good morning, and welcome to Harold's first quarter 2024 earnings conference call.

Jamie Webb: 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.

Jamie Webb: Before we begin today, let me remind you that the company's remarks may include forward looking statements within the meaning of federal Securities law.

Jamie Webb: Forward looking statements are subject to numerous risks and uncertainties many of which are beyond Harrow its 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 at 50, I approved products and compounded formulations and technology.

Jamie Webb: And FDA approval of certain drug candidates in a timely manner or at all.

Well at least 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 condition.

<unk> 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.

Jamie Webb: This conference call contains time sensitive information and is accurate only as of today.

Jamie Webb: Additionally, Harrow referred to non-GAAP financial metrics, specifically adjusted EBITDA and our adjusted earnings as well as core results such as core gross margin, core net income, and core diluted net income per share. 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. By now, you should have received a copy of the earnings press release.

Jamie Webb: Additionally, Harold referred to non-GAAP financial metrics, specifically adjusted EBITDA and our adjusted earnings as well as core result, such as core gross margin core net income and core diluted net income per share.

Jamie Webb: 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.

Of which are available on the website.

Jamie Webb: By now you should have received a copy of the earnings press release.

Jamie Webb: If you have not received a copy, please go to the investor relations page of the company's website, www.harrow.com. Joining me on today's call are Harrow's Chief Executive Officer, Mark L. Baum, and Harrow's Chief Financial Officer, Andrew Boll. With that, I'd like to turn the call over to Mark to go over some prepared remarks prior to the question and answer session.

Speaker Change: If you have not received a copy. Please go to the Investor Relations page of the company's website Www Dot Harrow dotcom.

Speaker Change: Joining me on today's call are Harris, Chief Executive Officer, and Mark L Baum, and <unk>, Chief Financial Officer, Andrew Boll.

Speaker Change: With that I'd like to turn the call over to Mark to go over some prepared remarks prior to the question and answer session.

Mark L. Baum: Thanks, Jamie, and welcome to everyone joining us on today's call. I will start, as I always do, with a reminder to review our earnings release, corporate presentation, and letter to stockholders, all of which are posted in the Investor Relations section of our website.

Mark: Thanks, Jamie.

Mark: Welcome to everyone joining us on today's call.

Mark: I will start as I always do with a reminder to review our earnings release and corporate presentation letter to stockholders all of which are posted to the Investor Relations section of our website.

Mark L. Baum: Our business demonstrated remarkable resilience in the first quarter of 2024, especially given the effects of the change health care cyber attack, with revenues for the first quarter of 2024 increasing 33% over the same period in 2023. Here are a few key recent accomplishments of note. We strengthened our management team, adding Greg DePasquale, who started this week in the newly created role of Senior Vice President and head of commercial. Greg is responsible for all sales, marketing, and sales operations activities for Harrow's portfolio of branded ophthalmic products.

Mark: Our business demonstrated remarkable resilience in the first quarter of 2024.

Mark: Given the effects of the change healthcare cyber attack.

Mark: With revenues for the first quarter of 2024, increasing 33% over the same period in 2023.

Mark: You are a few key recent accomplishments of note.

Mark L. Baum: Greg comes to us from a sales leadership role at Regeneron, where he experienced great success driving revenue growth for the retina product ILEA and ILEA HD. Prior to Regeneron, Greg held leadership roles at Essilor, Novartis' Retina Division, Dice, and Balsham Law. We're excited about what Greg brings to Harrow, especially at this time in our day. John Saharik will continue to oversee Harrow's commercial business as Chief Commercial Officer.

Mark: We strengthened our management team, adding Greg because squall, who started this week in the newly created role of senior Vice President and head of commercial.

Mark: Greg is responsible for all sales marketing and sales operations activities for heroes portfolio of branded ophthalmic products, Greg comes to us from a sales leadership role at Regeneron, where you experienced great success driving revenue growth for the retina product Eylea and Eylea HD.

Mark: The Regeneron, Greg held leadership roles at Essilor Novartis as retina Division.

Mark: Dice and.

Mark: Shimon.

Speaker Change: Excited about what Greg brings to hero, especially at this time and our development.

Speaker Change: John Sahara will continue to oversee heroes commercial business as Chief commercial officer. However, he also serves as the CEO of Imprimis Rx and he will focus on the day to day management of our market, leading imprimis Rx compounded division.

Mark L. Baum: However, he also serves as the CEO of ImpermissRx, and he will focus on the day-to-day management of our market-leading ImpermissRx compounded division. Now, let's talk about VIVA, the first and only water-free cyclosporine designed to treat the signs and symptoms of dry eye disease.

Speaker Change: Let's talk about <unk>, the first and only water free cyclosporin designed to treat the signs and symptoms of dry eye disease. Eli is the cornerstone product and our dry eye disease franchise, we launched Veeva in January of 2024, and with four months under our belt since the launch the early success.

Mark L. Baum: Levi is the cornerstone product in our dry eye disease franchise. We launched VIVI in January of 2024, and with four months under our belt since the launch, the early success we are seeing in the numbers, coupled with feedback from very experienced ophthalmic leaders, is gratifying for Starco. Given the opportunity we see in the U.S. chronic dry disease market, the reception for VIVI thus far should give you confidence in what we are doing at Harrow. Not only have new prescriptions continued to ramp up month to month. But we are now seeing the beginning of our fifth refill cycle.

Speaker Change: You see numbers, coupled with feedback from very experienced ophthalmic leaders is gratifying.

Speaker Change: For our stockholders given the opportunity we see in the U S. Chronic dry eye disease market. The reception would be by thus far should give you confidence.

Speaker Change: What we are doing at Harold not only have new prescriptions continued to ramp up month to month, but we are now seeing the beginning of our fifth refill cycle. This is very good news is the true value their hero stockholders does not the initial V by prescription but in the stream of monthly refills were.

Mark L. Baum: This is very good news, as the true value to Harrow stockholders is not in the initial VIVI prescription but in the stream of monthly refunds. We're also pleased with our success in market access for VIVI. As of our last earnings call in mid-March, only a couple of months ago, our market access team had secured coverage for just over 40 million lives. I am thrilled to report that this number has since climbed to north of 150 million covered lives for VIVA. New payer contracts are also being added.

Speaker Change: We're also pleased with our success with market access for Veeva.

Speaker Change: As of our last earnings call in mid March only a couple of months ago.

Speaker Change: Our market access team has secured coverage for just over 40 million lives I am thrilled to report that this number has since climbed to north of 150 million covered lives for Veeva.

Speaker Change: New payer contracts are also being added daily.

Mark L. Baum: I've always believed that being the best product in a market, while important, isn't enough for long-term success. It must also be accessible and affordable to patients. I'm delighted to say that our market access strategy is ahead of schedule and is helping to ensure patient access to this amazing new dry eye product. VIVI's success is also the result of our dedicated and experienced small but mighty VIVI sales team. Size can matter less when your team has deep experience in the ophthalmic business and specifically with dry eyes.

Speaker Change: Always believed the being the best product in the market, while important isn't enough for long term success. It must also be accessible and affordable to patients and I'm delighted to say that our market access strategy is ahead of schedule and is helping to ensure patient access to this amazing new dry eye.

Speaker Change: B by success is also the result of our dedicated and experienced small, but mighty revised deals to sign.

Speaker Change: Size can matter less when your team has deep experience in the ophthalmic business and specifically with dry eye and many of our sales leaders who participated in the launching some of the best selling dry disease products that said as we ramp up sales gain coverage and hit our internal average sale.

Mark L. Baum: And many of our sales leaders have participated in launching some of the best-selling dry eye disease products. That said, as we ramp up sales, gain coverage, and hit our internal average sales price, or ASP targets, we intend to add more VIVI sales professionals. The most rewarding aspect of our VIVI launch so far has been the positive responses from both prescribers and patients. Prescribers are anecdotally reporting that patients who previously found no relief with other treatments are experiencing significant improvements with VIVI, often in as little as two weeks and with little or no adverse side effects.

Speaker Change: <unk> prides, where a S. P targets, we intend to add more vivant sales professionals. The most rewarding aspect of our V. VI launch so far it has been a positive responses from both prescribers and patients prescribers are anecdotally reporting the patients who previously found no relief with other treatments.

Speaker Change: We are experiencing significant improvements would be buy often in as little as two weeks and with little or no adverse side effects b by refills are also a great story, our data demonstrates in plain common sense supports the notion that patients don't refill or chronic disease <unk>.

Mark L. Baum: BVI refills are also a great story. Our data demonstrates and plain common sense supports the notion that patients don't refill a chronic disease prescription unless they're getting relief. The consistent increase in VIVI prescription refills, as I said, now into this fifth cycle, underscores the value VIVI provides to patients nationwide. Let's also spend some time on iHESO, the only J-coded or reimbursable ophthalmic anesthetic in the U.S. market. iHESO is now a full year into its launch.

Speaker Change: Scripture, unless they're getting relief.

Speaker Change: The consistent increase in revised prescription refills as I said now under this fifth cycle underscores the value of Levi provides to patients nationwide.

Speaker Change: Let's also spend some time on our he's though the only J code at a reimbursable.

Speaker Change: Dominique anesthetic in the U S market are he's though is now a full year into its launch we are pleased with the increase in adoption that we're seeing from eye care professionals in all settings of care, particularly following the recent confirmation from the centers for Medicare and Medicaid services or CMS, but he's though is separately.

Mark L. Baum: We are pleased with the increase in adoption that we are seeing from eye care professionals in all settings of care, particularly following the recent confirmation from the Centers for Medicare and Medicaid Services, or CMS, that iHESO is separately reimbursable in the physician's office setting of care and for both unilateral and bilateral in-office procedures. As a result, AHISO is well-positioned to gain market penetration, especially among retinal, and in particular with large group purchases.

Speaker Change: Reimbursable.

Visions office setting of care and for both unilateral in bilateral in office procedures.

Speaker Change: As a result.

Speaker Change: <unk> is well positioned to gain market penetration, especially among retina specialists and in particular with large group purchasers.

Mark L. Baum: Since CMS confirmed separate payments, we have executed supply agreements with seven large multi-practice strategic accounts that, in the aggregate, are responsible for over 450,000 annual cataract surgeries and over 1.1 million intravitreal injections each year. These supply agreements are critical to our commercial strategy, as is order pull-through at the practice level, which will be a primary focus for Greg over the next few months. One last item of note on IHESA is that the U.S. Patent and Trademark Office recently granted IHESA a new set of patent claims with an expiration date of 2039.

Speaker Change: CMS confirmed separate payment, we have executed supply agreements with seven large multi practice strategic accounts.

Speaker Change: In the aggregate are responsible for over 450000 annual cataract surgeries and over $1 1 million.

Speaker Change: Digital injections each year.

Speaker Change: These supply agreements are critical to our commercial strategy as his order pull through at the practice level, which would be a primary focus for Greg over the next few months one last item of note on a huge though is that the U S patent and trademark office recently granted he's though a new set of patent claims.

Speaker Change: With an expiration date of 2039.

Mark L. Baum: We also continue to progress in our strategy to reintroduce Prite Essence to the market. Analytical testing of the Commercial Scale Process Performance Qualification, or PPQ, batch of triessence that was manufactured during the week of April 15th is nearing completion, and I am pleased to report that the batch has passed all preliminary release parameters.

Speaker Change: We also continue to progress in our strategy to reintroduce price test to the market.

Speaker Change: In analytical testing of the commercial scale process performance qualification or PQ batch of Tri essence that was manufactured during the week of April 15th is nearing completion.

Speaker Change: And I am pleased to report that the batches past all preliminary release parameters, we anticipate having final results by the end of May and we intend to communicate our plan for the balance of our triad since relaunch program during the current calendar quarter.

Mark L. Baum: We anticipate having final results by the end of May, and we intend to communicate our plan for the balance of our triessence relaunch program during the current calendar. I want to add that we are making solid progress with our anterior segment products as well. And we expect this line of products to continue to be valuable for eye care physician customers who count on these products on a daily basis to maintain the eye health of their patients.

Speaker Change: We're making solid progress with our interior segment products as well and we expect this line of products to continue to be valuable for eye care physician customers, who count on these products on a daily basis to maintain the eye health of their patients. These products have great market access stories as well for exam.

Mark L. Baum: These products have great market access stories as well. For example, as you can see from slide six in our corporate presentation, Madison has 88% coverage, or approximately 276 million covered lives, while Alevro has 75% coverage, or 236 million covered lives.

Speaker Change: You can see from slide six and our corporate presentation Madison has 88% coverage or approximately 276.

Speaker Change: Million covered lives, while a level is 75% coverage or 236 million covered lives, it's up to us to get out there and tell the stories of these great products and we are.

Mark L. Baum: It's up to us to get out there and tell the stories of these great products, and we are. Lastly, I want to confirm that the progress we reported last quarter in our IMPROMIS-Rx compounding business is continuing. We are firmly back on track with our historical growth trajectory over the last several years of low double-digit growth in this business. Our balance sheet continues to be solid, with $76 million in cash and cash equivalents, including our investment in Eaton Pharmaceuticals, as of the end of the first quarter.

Speaker Change: Lastly, I want to confirm with the progress we reported last quarter and are improvements or its compounding business is continuing we are firmly back on track with our historical growth trajectory over the last several years of low double digit growth in this business.

Speaker Change: Our balance sheet continues to be solid with $76 million in cash and cash equivalents, including our investment in <unk>.

Speaker Change: Masuda calls as of the end of the first quarter since the close of the first quarter. However, we divested our non strategic holdings of about 2 million shares of Eaton, adding $5 $5 million to our cash position, which can now be deployed into more strategic investments and activities in clothing.

Mark L. Baum: Since the close of the first quarter, however, we have divested our non-strategic holdings of about 2 million shares in Eaton, adding $5.5 million to our cash position, which can now be deployed into more strategic investments and activities.

Mark L. Baum: In closing, Harrow has made critical strides to execute our five-year strategic plan, and this progress and what we're working on currently are the sources for the tremendous enthusiasm for what lies ahead during the balance of 2024. We're now happy to answer your questions. I will pause to have our operator poll for questions. Operator. We will now.

Speaker Change: Arrow has made critical strides executing our five year strategic plan and this progress and what we're working on currently are the sources for the tremendous enthusiasm for what lies ahead during the balance of 'twenty 'twenty four we're now happy to answer your questions I will pause to have our operator poll for questions.

Speaker Change: Operator.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Jeffrey Cohen with Lattinburg, Maryland. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question today comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.

Jeffrey Scott Cohen: Hi Mark and Andrew, how are you? Good morning, Jeff.

Jeffrey Scott Cohen: The HUD market, Andrew how are you.

Jeffrey Scott Cohen: Good morning, Jeff.

Mark L. Baum: So I guess, firstly, could you talk about VIVI a bit? It looks like you made some strong progress on covered lives. How does that look for the balance of the year on covered lives? And remind us how things look with Medicare and CMS.

Jeffrey Scott Cohen: So I guess, firstly could you talk about the revised bid it looks like you made some strong progress on covered lives how does the outlook for the balance of the year on the covered lives and remind us how things look with Medicare.

Jeffrey Scott Cohen: Medicare and CMS.

Mark L. Baum: Yes, so obviously, in a matter of really less than two months, we've dramatically increased the number of covered lives, as I said on the call, from the low 40 million range to more than 150 million, and we continue to add covered lives almost on a daily basis. We expect that to continue through the balance of the year and into the first quarter of next year. From the time that we launched VIVA, we always said that coverage was about an 18-month period.

Jeffrey Scott Cohen: Yeah. So obviously in a matter of really less than two months, we've dramatically increased the number of covered lives as I said on the call from the low $40 million range to more than 150 million and we continue to add.

Jeffrey Scott Cohen: Covered lives almost on a daily basis, we expect that to continue through the balance of the year and into the first quarter of next year.

Jeffrey Scott Cohen: From the time that we launched Veeva, we always said that coverage was about an 18 month.

Mark L. Baum: Activity, and that Medicare Part D coverage in particular would take some time. The coverage improvements that we're seeing with VIVI, I think, may accelerate our timeframes, but right now, we're kind of still leaving the overall coverage picture in that Q1 of 2025 range. But you should expect, on a quarterly basis, in August when we report Q2 numbers, to see further improvements and then further improvements in November when we report again.

Jeffrey Scott Cohen: Activity.

Jeffrey Scott Cohen: And that Medicare part D coverage in particular would take some time.

Jeffrey Scott Cohen: The coverage improve.

Jeffrey Scott Cohen: Improvements that we're seeing would be by I think may accelerate our timeframes, but right now we're kind of still leaving the overall coverage picture in that Q1 of 2025 range, but you should expect on a quarterly basis in August when we report.

Jeffrey Scott Cohen: Q2 numbers to see further improvements and then further improvements in November when we report again.

Andrew R. Boll: Got it. That's helpful. Andrew, any comment on margins or margins at all as far as gross margins for 24? How do you expect them to fold out, or any cadence or any guidance on the margin side for the year?

Speaker Change: Got it that's helpful.

Badger: Badger any comment on margins or margin if at all as far as gross margins were 24.

Badger: How do you expect them to a two fold out or any any cadence or any guidance on the margin side for the year.

Andrew R. Boll: Yeah, absolutely, Jeff. Thanks for the question. Good morning, on gross margins, core gross margins, in particular, where we're backing out the amortization of acquisition NDAs for the non-cash expense. We expect those right now in the mid-70s to float up, hopefully into the low-80s by the end of the year. The reason for that is that as the company grows this year from a revenue standpoint, most of that growth we expect to come from branded products, which are going to carry a higher gross margin profile than our compounded products.

Badger: Yeah, absolutely Jeff Thanks for the question good morning.

Badger: On gross margins core gross margins in particular, where we're backing out the the amortization of.

Badger: Acquisition.

Badger: D a.

Badger: That noncash expense.

Jeff: We expect those right now are in the mid seventies to float up and hopefully into the low eighty's by the end of the year.

Jeff: And the reason for that is as the company grows this year from a revenue standpoint.

Most of that growth, we expect to come from the branded products, which are going to carry a higher gross margin profile than.

Jeff: Our compounded products.

Jeff: Yeah.

Jeffrey Scott Cohen: Got it. Okay. And could you talk about this cyber attack from a couple folks out there?

Speaker Change: Got it Okay and could you talk about we've heard about this cyber attack from.

Speaker Change: A couple of folks out there so was there an impact on the revenue for Q2 and if so.

Mark L. Baum: So was there an impact on revenue for Q2? And if so, is that impact going to be seeping back in for Q3? or from Q1 to Q2.

Speaker Change: Is that impact going to be a steeping back in for Q3.

Speaker Change: Or from Q1 to Q2, sorry.

Mark L. Baum: Sure, you know obviously the, and you've heard from other companies you cover, the cyber attack had a big impact on the overall U.S. healthcare industry. It certainly had an impact on our customers, and in Q1, to be clear, it had a material impact on our sales. We're still assessing the total hit, but it's definitely in the millions of dollars. The good news, I think, is that we saw signs of improvement in the month of March and in April, and we're seeing the overall hit kind of die down, you know, and frankly, the month of April and Q2, in general, the numbers look pretty good. So we think the risks and the damage from the changed cyber attack are waning for sure.

Speaker Change: Sure.

Speaker Change: Obviously, the and you've heard from other companies you cover the change.

Speaker Change: Cyber attack had a big impact on the overall U S health care industry.

Speaker Change: Certainly had an impact on our customers and in Q1 to be clear it had a material impact on our sales.

Speaker Change: We're still assessing the total hit but it's definitely in the millions of dollars.

Speaker Change: The good news I think is that we saw signs of improvement in the month of March and in April and we're seeing the overall hit kind of died down.

Speaker Change: And frankly, the month of April and Q2 in general would the numbers look pretty good so.

We think the the risks and the damage from the change cyber attack are waning.

Speaker Change: For sure.

Speaker Change: Yeah.

Jeffrey Scott Cohen: Okay, got it. And then lastly, first, can you talk about the top line and its cadence for 2024? Anything to guide us on as far as the quarterly rate?

Speaker Change: Okay got it and then lastly for US can you talk about the top line and it's a cadence for 'twenty 'twenty four anything for guide as hard as far as.

Speaker Change: Quarterly Readouts.

Mark L. Baum: Yes, so, you know... We don't really give quarterly guidance, as you know. We've given a guidance number for the 2024 period, which is greater than $180 million. And what I can tell you is we have kind of creeped into 2024's second quarter. So this present quarter, the numbers look pretty good. And we have a lot of interesting activities, I think, that we're excited about this year. That gives us even greater confidence that we'll be able to focus on the greater than sign of the $180 million, and not just on the $180 million, but hopefully going over $180 in a more pronounced way. I got it.

Speaker Change: Yeah. So you know.

Speaker Change: We don't really give quarterly guidance as you know we've.

Speaker Change: We've given a guidance number for the 2024 period, which was greater than $180 million and you know what I can tell you is as we did.

Speaker Change: Kind of creeped into 'twenty 'twenty four is second quarter. So this present quarter. The numbers look pretty good and we have a lot of interesting activities I think that we're excited about this year that give us even greater confidence that we'll be able to focus.

Speaker Change: Focus on the greater than sign of the $180 million.

Speaker Change: And not just on the 180 million, but hopefully doing over 180 and a more pronounced way.

Mark L. Baum: Got it. But is there any reason to believe it would not be sequential through the balance of the year?

Jeffrey Scott Cohen: Is there any reason to believe it would not?

Speaker Change: Got it is there any reason to believe it would not be sequential through the balance of the year.

Speaker Change: Yeah.

Speaker Change: Talk about that.

Mark L. Baum: Yes, Jeff, so the answer to that is I think it depends. Our belief is that we will see sequential quarterly revenue growth. There are times, though, where, you know, we'll see wholesaler stocking quarter to quarter that may have some fluctuations, but our general expectation this year is that each quarter we will continue to see revenue growth. Part of that is, you know, Mark talked about the VIVI resales coming in. Those should just mount and grow, and that will help extend and really accentuate that quarterly revenue growth, we believe, in addition to, you know, the additional new accounts on the HeZone that pull through on some of these larger account wins that we landed recently.

Speaker Change: Yeah, Jeff so the <unk>.

Jeff: So that is I think it depends or our belief is it will we will see sequential quarter quarterly revenue growth and there are times or you know, we'll see wholesaler stocking quarter to quarter that may have some fluctuations, but our general expectation. This year is that each quarter, we will continue to see revenue growth.

Jeff: Part of that as Mark talked about the Veeva refills coming in those should just mount and grow and that will help.

Jeff: Extend and really accentuate that quarterly revenue growth we believe.

Jeff: In addition to the additional new accounts.

Jeff: On that pull through on.

Jeff: Some of these larger account wins that we landed recently.

Jeffrey Scott Cohen: Perfect. Okay, that does it for us. Thanks for the questions. Nice quarter. Hey, thanks Jeff.

Speaker Change: Perfect. Okay that does across price for the questions nice quarter I think thanks, Jeff.

Speaker Change: Thanks, Jeff.

Operator: The next question comes from Chase Knickerbocker with Craig Hallam. Please go ahead.

Speaker Change: The next question comes from Chase Knickerbocker with Craig Hallum. Please go ahead.

Chase Knickerbocker: Morning. Thanks for taking the questions, guys. I just want to start first on kind of that impact from change. Those millions of dollars of impact, Mark, that you just mentioned, was that primarily in the anterior segment kind of products bucket? And then maybe a related question. Can you kind of speak to if there was any kind of impact from change just from like a position payment perspective driving less willingness there that kind of drove sequential declines in volumes for IHESO in Q1?

Chase Knickerbocker: Good morning, Thanks for taking the questions guys I just want to start first on kind of an impact from change those millions of dollars of impact Mark that you. Just mentioned was that primarily in the anterior segment kind of products bucket and then maybe a related question can you kind of speak to if there was any kind of impact from chain.

Chase Knickerbocker: <unk> just from like a physician payment perspective, driving less willingness there that kind of drove sequential declines in volumes for I. He's though in Q1, and then along those lines just maybe speak to what you're seeing so far in Q2 fried Zoe I think the you know the script data that we've seen so far in April.

Chase Knickerbocker: And then along those lines, just maybe speak to what you're seeing so far in Q2 for IHESO. I think the, you know, the script data that we've seen so far in April has gotten some people excited from an acceleration perspective now that you have that J code.

Chase Knickerbocker: That's gotten some people excited from an acceleration perspective, now that you have that Jacob.

Mark L. Baum: Yeah, so thanks for the question. And welcome to the mix, by the way. Good to speak with you.

Jacob: Yeah. So thanks for the question, Doug and welcome to the mix by the way good to speak with you. The assessment that we've done so far has really been on I E. Zoe.

Mark L. Baum: The assessment that we've done so far has really been on IESO with respect to the CHANGE cyber attack. And so when I say that the hit has been in the millions of dollars, that assessment is really just for IHESO. We're still looking at the other lines of our business, you know, as we think about what our options are with respect to the CHANGE healthcare cyber attack. So I really can't comment on anything other than IHESO specifically, but it certainly was in the millions of dollars.

Jacob: With respect to the change cyber attack and so when I say that the.

Jacob: The hit has been in the millions of dollars.

Jacob: That assessment is really just for.

Jacob: I he's though we're.

We're still looking at the other lines of our business as we think about you know what our options are with respect to the change healthcare cyber attack. So I really can't comment on anything other than than I have those specifically, but it certainly was.

Jacob: And in the millions of dollars as far as I use though in the quarter or two we are seeing a pick up and I would say that the pick up is not only due to the waning nature of the change.

Mark L. Baum: As far as IHESO in the second quarter, we are seeing a pickup. And I would say that the pickup is not only due to the waning nature of the CHANGE healthcare cyber attack, which certainly affected our customers. I was in an office in New Jersey recently, and this doctor was still not getting paid. In fact, I know of several accounts that were taking out personal loans in order to make payroll.

Jacob: Health care cyber attack, which certainly affected our customers I was in an office in New Jersey recently and this this doctor was still not getting paid in fact I know of several accounts that we're taking out personal loans in order to make payroll. So this is a very serious event.

Mark L. Baum: So this is a very serious event, not only for our customers but for the entire healthcare system in the United States. I think the good news on IHESO is that we have seen a recovery, not only, as I said, confirming that IHESA was separately payable and then only a few hours later confirming that it was separately payable in the office for not only unilateral but also bilateral cases. This completely changed the game for us in terms of our ability to sell that product into the office setting, and we say that for good reason because our J code, our ability to get reimbursement in the surgical setting is limited, you know, it's a temporary pass-through period, but that is simply not the case for the office setting, and so we have permanence there; we have a permanent J code, and we now have confirmation that it is separately payable.

Jacob: Not only for our customers, but for the entire health care system in the United States I think the good news on our US though is that we have seen a recovery not only as I said because of the way nature of change, but primarily because of what happened on March 20th with CMS.

Jacob: Confirming that that Oh, he's always separately payable and then only a few hours later confirming that it was separately payable in the office for not only unilateral but also bilateral cases this.

Completely changed the game for us in terms of our ability to sell that product into the office setting and and we say that for good reason, because our J code our ability to get reimbursement in the.

Jacob: Surgical setting is limited you know its a temporary pass through period, but that is simply not the case for.

Jacob: The office setting and so we have permanent there we have a permanent J code and we have now confirmation that.

Mark L. Baum: So we are seeing an uptick in a meaningful way for IHESA. That was one of the attractions to Greg, along with some other interesting attractions as well, to come and join Harrow, and he's going to do a great job, I think, helping us to pull through with the strategic accounts that we have signed since March 20th and then, you know, numerous others that are in the works.

Jacob: It is separately payables. So we are seeing.

Jacob: An uptick in a meaningful way for I E. So that was one of I think the attractant to Greg along with some other interesting attractive as well.

Jacob: To come and join Harrow and he's going to do a great job I think.

Jacob: You know, helping us with pull through with the strategic accounts that we have signed since March 20th and then numerous others that are in the works.

Chase Knickerbocker: Got it. And then maybe just kind of purling that into... Kind of peeling back the layers on guidance, just to confirm that there's still no tri-essence contribution in that, and then maybe speak to what that $180 million floor kind of assumes from a sequential growth perspective. The largest growth, you know, driver sequentially, certainly in our model, is IHESO. Can you just kind of confirm that? And then on the anterior segment, ocular surface products, does it assume a fairly meaningful kind of sequential growth from that bucket of products as well, Mark?

Speaker Change: Got it and then maybe just kind of parlaying that into kind.

Speaker Change: Kind of peeling back the layers on guidance.

Speaker Change: Just to confirm there is still no triathletes contribution in that and then just maybe speak to what that 180 million dollar floor kind of assumes from a sequential growth perspective, the largest growth you know driver sequentially certainly an army idle is that he's L. Can you just kind of confirm that and then on the anterior segment ocular surface products.

Speaker Change: Does it assume a fairly meaningful kind of sequential growth from that bucket of products as well Mark.

Andrew R. Boll: Andrew, do you want to take both of those on guidance related to the inclusion of triacin and then the interior surface? Yeah.

Speaker Change: Andrew you want to take both of those on on the guidance related to inclusion of Tri essence, and an interior surface.

Andrew R. Boll: Hey Chase, good morning. In regards to So, in regards to triessence, just to confirm, the 180 does not include any contribution from triessence on the revenue side. We feel good about that number, regardless of any outcome with Trysence and the ability to relaunch that product this year, in regard to sort of product contribution to that revenue number. IESO is definitely going to be a big contributor, and that's what we have modeled, certainly, from the product perspective.

Speaker Change: Yeah.

Andrew R. Boll: Hey, good.

Mark: Good morning on in regards to.

Mark:

Andrew R. Boll: In regards to traffic and just to confirm the 180 does not include any contribution from Triathletes from the revenue side.

Andrew R. Boll: Feel good about that number of regardless of any outcome at trial.

Andrew R. Boll: Ability to relaunch that product this year.

Andrew R. Boll: I mean, regardless of sort of product contribution to that revenue number.

Andrew R. Boll: I E. It's definitely going to be a big contributor and that's what we have modeled certainly from a product perspective.

Andrew R. Boll: VIVI is really kicking in too. I've been surprised at what we had modeled and how the actuals are coming in. The refill rates are higher than we modeled, which is, For a product like this where it's chronic and refills are super important to actual revenue contribution, we're seeing a refill rate much higher than we're taking up our own internal expectations. So Veevi could be a bigger contributor than we initially thought as well. And then on the other anterior segment product.

Andrew R. Boll: Revised.

Andrew R. Boll: Early kicking into I've I've been.

Andrew R. Boll: Surprised at what we had modeled and how are the actuals are coming in on.

Andrew R. Boll: The refill rates are higher than we modeled which is.

Andrew R. Boll: For a product like this where it's chronic and greenfields are super important to actual revenue contribution.

Andrew R. Boll: We're seeing a refill rate much higher than what we're saying, we're taking up our own internal expectations. So veeva it could be a bigger contributor than we initially thought as well and then on the other one the other anterior segment products.

Andrew R. Boll: We talked a little bit about the change impact on iHESA, and certainly we focused on that impact internally, but we definitely saw fluctuations in volatility in the other front-of-the-eye products during the first quarter, and we think part of that was related to change. But we're also investing a little bit on the sales and marketing side for those other products, bringing in some additional commercial resources to help stabilize and then turn those products into growth products as well.

Andrew R. Boll: You know, we talked a little bit about the change impact he's on certainly we focused in on that impact them internally, but we definitely saw fluctuations.

Andrew R. Boll: The volatility in the other front of the eye products during the first quarter and we think part of that was related to change, but we're also investing a little bit on the sales and marketing side for those other products and bringing in some additional.

Andrew R. Boll: Commercial resources to help.

Andrew R. Boll: Stabilized and then bring those products into growth products as well. So our expectation is we should get growth in all the product lines, including the imprimis Rx business, which we we didn't really even discuss here, but that product is returning to or that product line and businesses returning to growth as well from a topline perspective.

Andrew R. Boll: So our expectation is that we should get growth in all of the product lines, including the IMPROMIS-Rx business, which we didn't really even discuss here, but that product line and business are returning to growth as well from a top-line perspective.

Andrew R. Boll: <unk>.

Andrew R. Boll: Thanks, Andrew.

Chase Knickerbocker: And then, just last for me, guys, I just want to talk a little bit about the supply agreements with those seven large multi-practice organizations. What are the terms there? Is that essentially just you guys have access to their clinic network, and now it's a fairly easy process for those individual clinics to adopt when you send your sales rep out and pull that demand through? Or is there some sort of contracted volume commitment from these large multi-practice organizations?

Andrew R. Boll: And then just last for me you guys I just wanted to talk a little bit about the supply agreements with those seven large multi practice organizations. You know what are the terms there or is that essentially just you know you guys have access to their clinic network and now you. It's a fairly easy process for those individual clinics to adopt when you're kind of send your sales right at wrap out.

Mark L. Baum: more detail around terms there. Thank you. Sure.

Andrew R. Boll: Kind of pull that you know demand through or is there some sort of contracted kind of volume commitment from these large kind of multi practice organizations, just kind of dive into a little bit more detail around terms. There. Thank you sure sure I you know I can't get into specific terms with you know with with a an individual account, but there's a bit of a mix acts.

Mark L. Baum: I can't get into specific terms with an individual account, but it's a bit of a mix, actually. Some of these deals are essentially licenses to hunt, if you will, and they're really more than that, though, because in order to get into some of these practices, you really need to have authorization and approval. It's got to be easy for the physician to go ahead and make an order, and ultimately, purchase it. In other contracts, we certainly have volume discounts and other incentives built into those agreements, but it's a bit of a mixed bag, and I think the exciting thing for us is it's not easy to get these agreements in place, number one.

Mark L. Baum: I can't get into specific terms with you know, with, with. The with the. The with the.

Mark L. Baum: The. The. The. The. The. The. The. The. The. The. The. The. The. The. The. The. The.

Andrew R. Boll: Italy.

Andrew R. Boll: Some of these deals are essentially.

Speaker Change: Licenses to hunt, if you will and they're really more than that though because in order to get into some of these practices you really need to have.

Speaker Change: <unk> and approval, it's gotta be easy for the physician to to go ahead and make an order in and ultimately purchase and other contracts. We certainly have volume discounts and other incentives are built into those agreements, but it's a bit of a mix mixed bag and.

Us: No I think the exciting thing for US is it's not easy to get these agreements in place number one.

Mark L. Baum: And I think the most important feature that I'm seeing, and I believe you'll start to see this more in the numbers as we progress into the quarter and into the third quarter as well, is the pull-through. Pull-through is the key, and we certainly are signing these agreements, but I think our team is doing a much better job of pulling-through and actually getting orders from these accounts. I think you're going to see more of those strategic accounts happen on the retina side, which is very exciting, and that really hasn't even begun to kick in, but we expect it to. Certainly, Greg's involvement will... will, I think, support that effort.

Us: And I think the most important feature that I'm seeing and I believe you'll start to see this more in the numbers as we progressed into the quarter and into the third quarter as well as the pull through pull through is the key and we certainly are signing these agreements, but I think our team is doing a much better job.

Speaker Change: All through and actually getting orders from these accounts.

Speaker Change: Accounts Ah.

Speaker Change: I think youre going to see more of those strategic accounts happen and.

unknown: The retina side, which is very exciting.

Greg: And that really hasn't even begun to kind of kick in but we expect it to and certainly greg's our involvement will.

Greg Smith: I think support that effort.

Greg Smith: For the color guys.

Chase Knickerbocker: Thanks Chase.

Operator: The next question comes from Brooks O'Neill with Lake Street Capital. Please go ahead.

Chase Knickerbocker: The next question comes from Brooks O'neil with Lake Street Capital. Please go ahead.

Brooks O'Neill: Thank you, good morning. I jumped on a few minutes late, so if I ask you about something you talked about already, just mention it and I'll read the transcript. But I was hoping you could provide a little color on your pricing realization, in particular for the two eBranded drugs, and what you're seeing and how that's impacting your performance so far with those products.

Brooks O'neil: Thank you Barney I jumped on late so if I ask you about something you talked about it already just mentioned it now read the transcript, but I was hoping you could provide a little color on your pricing realization in particular for the two.

Brooks O'neil: He branded drugs, and what you're seeing and how.

Brooks O'neil: How that's impacting your performance so far with those products.

Brooks O'neil: Yes so.

Mark L. Baum: Yes. So.

Mark L. Baum: Pricing, you know, really from our perspective, is all about ASP, so our average selling price, which is really kind of what we end up getting. I can't go into ASP specifically by product for competitive reasons, but what I can tell you is that with respect to both iHESO and VIVI, you know, we're really pleased with where we are, and internally, I think we're probably ahead of where we thought we would be. But we're still getting data, you know, particularly with VVIPES; it's a new launch, but we're pleased with where we are on ASP. And as we collect more data, we'll be able to.

Brooks O'neil: I see you know really from our perspective is all about a S. P. So our average selling price, which is really kind of what we end up getting them I can't go into a S piece, specifically byproduct for competitive reasons, but what I can tell you is you know.

Speaker Change: With respect to both I use O N V VI.

Speaker Change: We're really pleased with where we are and internally I think we're probably ahead of where we thought we would be but we're still getting data.

Speaker Change: Particularly would be by its it's a you know a new launch, but we're pleased with where we are on on a on a S. P.

Speaker Change: And.

Speaker Change: As we collect more data.

Brooks O'Neill: I think there'll be more visibility into kind of where we are publicly. Yes. And then, I'm just curious. I think the G&A spending was a couple million higher than we were thinking. Not a shock to me at all, but I'm just curious how you're thinking about your level of G&A spending so far and what you anticipate sort of for the balance of the economy.

Speaker Change: We'll be able to I think they'll be more visibility into kind of where we are.

Speaker Change: With that.

Speaker Change: Publicly purpose.

Speaker Change: Yes, and then I'm just curious.

Speaker Change: I think the G&A spending was a couple million dollars higher than we were thinking not a shock to me at all but I'm just curious how you're thinking about your level of G&A spending so far and what you anticipate sort of for the balance of the year.

Andrew R. Boll: Andrew, do you want to take that?

Andrew R. Boll: Andrew you want to take that.

Andrew R. Boll: Sure. Hey Brooks, morning. Morning.

Andrew R. Boll: Sure Hey, Brooks good morning.

Andrew: In regards.

Andrew: Regards to SG&A and spend there.

Brooks O'Neill: In regards to SG&A and spend there, so the answer as we look at the year is it depends. We're trying to manage to that leverage ratio number that we talked about on the last call being coming in under five times. And so if revenue growth is there, if we're able to support the revenue growth and can provide additional resources on the sales and marketing side to drive further revenue growth and still hit our EBITDA number, at least from what we project internally, then we're going to do that.

Andrew: The answer is we look at the year. The answer is it depends we're trying to manage to a leverage ratio number that we talked about on the last call being coming in under five times.

Ken: And so if revenue growth is there if we're able to support them support the revenue growth and Ken with additional resources on the sales and marketing side to drive further revenue growth and still hit our EBITDA number at least from what we project internally and we're going to do that right.

Brooks O'Neill: Right now, the expectation is we'll make some incremental, incremental investments on the sales and marketing side, and on the G&A side, we just support what we have. And if there's an opportunity to invest, we will, but we're going to be cautious and sort of take a measured approach on that expense to manage it even better. Thank you. I think last quarter we talked about it too, right after the... Right after we filed the AK regarding the announcement from CMS or the message from CMS, we put up job postings for additional IHESA key account managers, and so we invested in that sales force.

Ken: Right now the expectation is we'll make some incremental.

Ken Chen: <unk> <unk>.

Ken Chen: Incremental investments on the sales and marketing side and G&A side, you just support them what we have.

Ken Chen: And if there's an opportunity to invest we will but we're gonna be cautious in and sort of taking a measured approach on that on that expense to manage that EBIT number.

Ken Chen:

Ken Chen: Last quarter, we talked about two right after right after the.

Ken Chen: It did.

Ken Chen: Right. After we file the 8-K regarding the the announcement from CMS for the message from CMS, we put up.

Speaker Change: Job posting traditional he's a key.

CMS: Key account managers and so we invest in that sales force and we'll see a little bit of additional sales and marketing expense related to that in Q2.

Brooks O'Neill: So we'll see a little bit of additional sales and marketing expenditure related to that in Q2, and if there are opportunities to continue to be strategic with the deployment of capital on the sales and marketing side, that'll drive revenue growth, and we'll do that. But, in full, we'll be cautious and measured about the approach to make sure we're managing to an even number that we have targeted. Perfect. Thanks for that color to graduate.

CMS: And if there are opportunities to continue to be strategic with deployment of capital on the sales and marketing side that will drive revenue growth and we'll do that but in info will be cautious and measured about the approach to make sure we're managing to an EBITDA number that.

CMS: We have targeted.

Brooks O'Neill: Perfect. Thanks for that color. Congratulations on a great start to the year.

CMS: Perfect. Thanks for that color.

CMS: <unk> gotten a great start to the year.

CMS: Thanks Brooks.

Mark L. Baum: That's all the time we have for questions today. I would like to turn the conference back over to Mark Baum for any closing remarks.

CMS: That's all the time, we have for questions today, I would like to turn the conference back over to Mark Baum for any closing remarks.

Mark L. Baum: Thanks Betsy and thank you to everyone joining today. We remain confident that our five-year strategic plan is going to lead to Harrow becoming a leader in the North American ophthalmic pharmaceuticals industry, and your trust and collaboration are the cornerstones of our success, and we're excited to share further developments in the near term and, of course, in upcoming quarters. Thank you once again for your commitment to our journey towards innovation and excellence and thank you to everyone for attending today's call and for your interest in Harrow. If you have any investor-related questions, please email Jamie Webb at jwebb@harrowinc.com. This will conclude our call.

Mark L. Baum: Thanks, Betsy and thank you for everyone. Joining today, we remain confident that our five year strategic plan is going to lead to Harrow, becoming a leader in the North American Ophthalmic pharmaceuticals industry and your trust and collaboration are the cornerstones of our success where it's.

CMS: Sided to share further developments in the near term.

CMS: And of course in upcoming quarters. Thank you once again for your commitment to our journey towards innovation and excellence and thank you to everyone for attending today's call and for your interest and Harold do you have any investor related questions. Please email Jamie Webb at J W. E B b.

CMS: Hero, Inc. Dot Com this will conclude our call.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Harold: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Harold: Okay.

Harold: [music].