Q1 2025 Harrow Inc Earnings Call

Unknown Executive: Good morning, and welcome to Harrow's first quarter 2025 earnings conference call.

Okay.

Shannon: Good morning, and welcome to Harrow's first quarter's 2025 Ernie's conference call. My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listening mode.

Unknown Executive: My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.

Unknown Executive: As a reminder, this conference is being recorded.

Jamie Webb: I would now like to turn the call over to Jamie Webb, Director of Communications and Investor Relations for Harrow. Thank you, operator. Good morning and welcome to Harrow's first quarter 2025 earnings conference call.

Mark Baum: Before we begin today, let me remind you that the company's remarks may include forward-looking statements within the meaning of federal security 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 FDC 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. 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.

Shannon: 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.

Shannon: Forward looking statements are subject to numerous risks and uncertainties many of which are beyond <unk> 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 technology.

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

Shannon: 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.

Mark Baum: 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.

Shannon: <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.

Mark Baum: This conference call contains time-sensitive information and is accurate only as of today.

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

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

Shannon: Additionally, Harrow refer 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.

Shannon: 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.

Shannon: Now you should have received a copy of the earnings press release, you have not received a copy. Please go to the Investor Relations page of the company's website.

Mark Baum: If you have not received a copy, please go to the investor relations page of the company's website, www.harrow.com.

Shannon: PW Dot hero.

Mark Baum: Joining me on today's call are Harrow's Chief Executive Officer, Mark L.

Shannon: Dot com.

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

Mark Baum: Baum, and Harrow's Chief Financial Officer, Andrew Boll.

Mark Baum: With that, I'd like to turn the call over to Mark to go over some prepared remarks prior to the questions and answers. Thanks, Jamie. And good morning, everyone. Thank you for joining us today. I hope you've had an opportunity to review our supplemental documents for the first quarter, including our earnings release, corporate presentation and letter to stockholders, all of which are now available on the investor relations section of our corporate website.

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.

Speaker Change: Okay.

Mark: Thanks, Jamie and good morning, everyone. Thank you for joining us today I.

Mark: I hope you've had an opportunity to review our supplemental documents for the first quarter, including our earnings release corporate presentation and letter to stockholders all of which are now available on the Investor Relations section of our corporate website.

Mark Baum: Let me begin by stating that as Harrow stockholders, the first quarter is always the toughest revenue period for the company. However, it is now in the rearview mirror. And as I will discuss in more detail shortly, we are very well positioned to achieve and hopefully exceed our 2025 directional revenue guidance of more than $280 million. To get there, we'll need to generate approximately $232 million in revenue over the remaining three-quarters of the year.

Mark: Let me begin by stating that adhering stockholders. The first quarter is always the toughest revenue period for the company.

Mark: However, it is now in the rearview mirror.

Mark: And as I will discuss in more detail. Shortly we are very well positioned to achieve and hopefully exceed our 2025 directional revenue guidance of more than $280 million to get there will need to generate approximately $232 million in revenue over the remaining three quarters of the year.

Mark Baum: In the next few minutes, my intention is to discuss the key drivers underpinning my confidence in meeting our guidance for the year. As you know, the Harrow team grew revenues in the first quarter of 2025 by 38% year over year, and that's growth that is nothing to sneeze at. We also delivered a record $19.7 million in cash flow from operations.

Mark: And the next few minutes my intention is to discuss the key drivers underpinning my confidence in meeting our guidance for the year as you know the hero team grew revenues in the first quarter of 2025 by 38% year over year and Thats growth there is nothing to sneeze at.

Mark: We also delivered a record $19 $7 million in cash flow from operations. Another bright spot a very bright spot with V. VI V by revenue rose, 35% sequentially from $16 million in the fourth quarter of 2024 to <unk>.

Mark Baum: Another bright spot, a very bright spot, was VIVI. VIVI revenue rose 35% sequentially, from $16 million in the fourth quarter of 2024 to $21.5 million in the first quarter of 2025. And that was even before the launch of the VIVI Access for All program, which happened at the very end of the first quarter.

Mark: 21 5 million.

Mark: In the first quarter of 2025 and that was even before the launch of the Dubai access for all program.

Mark: Which happened at the very end of the first quarter.

Mark Baum: We also completed our critical market access initiatives for TriEssence, allowing us to finally begin to realize this product's potential. On the expense side, the first quarter was challenged by a few one time expenses, including increased costs related to our annual audit and a one time special project, all which totaled three point seven million dollars in the aggregate. We also continue to invest in building out our commercial infrastructure to support both current operations and future growth, particularly in sales and marketing. The VBuy team now exceeds 80 sales and marketing professionals. The Buy and Build team for IESO and TriEssence is just shy of 50 experienced commercial professionals.

Mark: We also completed our critical market access initiatives for Troy assets, allowing us to finally begin to realize this product's potential.

Mark: On the expense side. The first quarter was challenged by a few one time expenses, including increased costs related to our annual audit and a one time special project, all which totaled $3 $7 million in the aggregate.

Mark: We also continued to invest in building out our commercial infrastructure to support both current operations and future growth, particularly in sales and marketing. The VIP now exceeds 80 sales and marketing professionals, the buy and build team for <unk> and <unk> is just shy of 50 experienced commercial.

Mark Baum: We're very comfortable with our current cost structure and believe investments in commercial labor in particular will be favorably viewed as we deliver quarterly results throughout the year.

Mark: We're very comfortable with our current cost structure and believe investments in commercial labor in particular will be favorably viewed as we delivered quarterly results throughout the year.

Mark Baum: On the revenue side, first quarter revenues for some segments of our business were softer than we had hoped. And as I explained in my letter to stockholders, there is seasonality to our business, and the first quarter, as I mentioned before, is always our weakest, especially this year, which followed such a strong fourth quarter in 2024. Our specially branded products stand out because of volatility and gross-to-net estimates, which caused a reduction in recognizable revenue for the period.

Mark: On the revenue side first quarter revenues for certain segments of our business were softer than we had hoped and as I explained in my letter to stockholders. There is seasonality to our business in the first quarter as I mentioned before is always our weakest, especially this year, which followed such a strong fourth quarter in 2002.

Mark: For our specialty branded products stand out because of volatility in gross to net estimates, which caused a reduction and recognizable revenue for the period.

Mark Baum: Now, with the above said, you've heard me describe myself as a glass-half-empty kind of guy. I'm always striving for performance improvement. I'm never really completely satisfied, especially when I know we could do a little bit better.

Mark: That would be above said, you've heard me describe myself as a glass half empty kind of guy I'm always striving for performance improvement I'm never really completely satisfied, especially when I know, we could do a little bit better.

Mark Baum: That said, the first quarter will go down as one of the most important periods in our company's history. And I'm very proud of the work our team did. Importantly, I am truly excited about the remainder of the year.

Mark: That said the first quarter will go down as one of the most important periods in our company's history and I'm very proud of the work our team did.

Mark: Importantly, I am truly excited about the remainder of the year and I want to spend the rest of my prepared remarks discussing specific products and the setup for the balance of the year and how we intend to deliver and hopefully exceed our 2025 revenue guidance. So here we go.

Mark Baum: And I want to spend the rest of my prepared remarks discussing specific products and the setup for the balance of the year and how we intend to deliver and hopefully exceed our 2025 revenue guidance. So here we go. VBI continues to outperform expectations.

Mark: <unk> continues to outperform expectations.

Mark Baum: As I said in my letter to stockholders, after launching more than 40 ophthalmic prescription products over the past 12 years, including Vivi, I can say with confidence, one, given the consistent weekly growth in new prescriptions, new prescribers, and the stability we see with Vivi refills, this product is poised to be our largest revenue product. And number two, the VIVI Access for All program is the most successful market access strategy I've been a part of. And finally, three, without question, VIVI is presently Harrow's most valuable asset.

Mark: As I said in my letter to stockholders after launching more than 40 ophthalmic prescription products over the past 12 years, including the VI I can say with confidence one given the consistent weekly growth in new prescriptions, new prescribers and the stability, we see with Veeva refills. This.

Mark: <unk> is poised to be our largest revenue product.

Mark: And number two the Veeva access for all program is the most successful market access strategy I've been a part of and finally three without question Veeva is presently payrolls most valuable asset.

Mark Baum: We launched the VIVI Access for All program, or VAFA, late in the first quarter, so there was little or no impact in the first quarter results. However, as of today, just seven weeks post-launch of this program, both new prescriptions and weekly VIVI prescribers at Philorex have quadrupled. If things continue at the current pace, a year or two from now, I expect VBuy to be right at or near the top of the leading U.S. prescription drying medications. In fact, it should be at the top if we continue at this pace.

Mark: We launched the V by access for all program or <unk> late in the first quarter. So there was little or no impact in the first quarter results. However, as of today just seven weeks post launch of this program, both new prescriptions and weekly V. VI prescribers that fill Rx have QUADRA.

Mark: Report.

Mark: Things continue at the current pace a year or two from now I expect <unk> to be right at or near the top of the leading U S. Prescription dry medications in fact, it should be at the top if we continue at this pace.

Mark Baum: In the more immediate term, assuming we can maintain our refill rates, even with our ASP expected to moderate a bit and then stabilize over the coming quarters, as we get into the third quarter and see more new prescriptions. that we've been filling over the last seven weeks begin to stack or compound, it is very easy for you as a Harrow stockholder to come up with some very large potential revenue numbers for VIVI, especially as we get into the third quarter. Those numbers are real, and that is what is possible. and that's without much NRX growth or new prescription growth from our current daily new prescription levels.

Mark: In the more immediate term, assuming we can maintain our refill rates, even with our ASP is expected to moderate a bit and then stabilize over the coming quarters as we get into the third quarter and seeing more new prescriptions that we've been filling over the last seven weeks begin to stack or compound. It is very easy.

Speaker Change: Z for you as a hero stockholder to come up with some very large potential revenue numbers for <unk>, especially as we get into the third quarter those numbers are real.

Mark: And.

Mark: That is what is possible.

Mark: And that's without much an rx growth or new prescription growth from our current daily new prescription levels. The reality, though is that we're seeing consistent weekly <unk> growth and we have been for the past seven weeks. So we don't expect this growth to abate in the near term.

Mark Baum: The reality though is that we're seeing consistent weekly NRX growth and we have been for the past seven weeks, so we don't expect this growth to abate in the near term.

Mark Baum: These are still early days, but the VIVI Access for All program's early momentum is surpassing our expectations, and it's reinforcing my conviction that this groundbreaking initiative is one of the most impactful and potentially financially transformative in Harrow's history.

Mark: These are still early days, but the veeva access for all programs early momentum is surpassing our expectations and it's reinforcing my conviction that this groundbreaking initiative is one of the most impactful and potentially financially transformative and heroes history and by the way when I.

Mark Baum: And by the way, when I talked about producing $250 million in revenue in a calendar quarter by the end of 2027, this is the type of product, given the success we're seeing in this program, that is going to help us deliver on that promise and that belief that we can hit those numbers.

Mark: Talked about producing $250 million in revenue and a calendar quarter by the end of 2027. This is the type of product.

Mark: Given the success, we're seeing in this program that is going to help us deliver on that promise and that belief that we can hit those numbers.

Mark Baum: But what about IHESO? IHESO's first quarter sales were impacted by an elevated stocking activity at the end of 2024. Many of you know that.

Mark: But what about E zone I use those first quarter sales were impacted by an elevated stocking activity at the end of 2020 for many of you know that that dynamic, though has now normalized with significant destocking occurring during the first quarter were now back in growth mode for ISO for.

Mark Baum: That dynamic, though, has now normalized with significant destocking occurring during the first quarter. We're now back in growth mode for IHESO. For example, in April, unit sales more than doubled compared to the monthly average in the first quarter. This rebound indicates a return to typical ordering behavior, and it reflects strengthening demand as downstream inventory levels rebalance and new accounts begin to ramp up utilization.

Mark: Ample and April unit sales more than doubled compared to the monthly average in the first quarter.

Mark: This rebound indicates a return to typical ordering behavior and it reflects strengthening demand as downstream inventory levels rebalance in new accounts begin to ramp up utilization. We also made solid commercial headway in the first quarter with our sales team engaging with several new and potentially large.

Mark Baum: We also made solid commercial headway in the first quarter with our sales team engaging with several new and potentially large accounts moving through the various early stages of onboarding, such as sample evaluations, formulary discussions, and initial orders. With a quarterly average of 30 new IHESO institutional accounts and the top 10 accounts in our pipeline representing an estimated 80,000 incremental annual units of IHESO unit demand, we are confident in seeing meaningful unit demand growth through the remainder of the year and a sizable increase in IHESO revenue in 2025 versus 2024.

Mark: Accounts moving through the various early stages of Onboarding, such as sample evaluations formulary discussions and initial orders with a quarterly average of 30, new Zoe institutional accounts in the top 10 accounts in our pipeline representing an estimated 80000 incremental.

Mark: Mental annual units of IC unit demand, we are confident in seeing meaningful unit demand growth through the remainder of the year and a sizable increase in <unk> revenue in 2025 versus 2024.

Mark Baum: So, what about triessence?

Mark Baum: When is that going to blossom? Well, the first quarter was truly a pivotal period for the long-term plans that we have for this product. We were able to complete market access initiatives, including the publication of triessence's average selling price, the granting of pass-through status for the product, opening the market for ASC use and hospital and outpatient department use, as well as the authorization for bilateral use case reimbursement for triessence. This all happened in the first quarter. These changes have greatly increased purchasers' confidence in their ability to obtain reimbursement for triessence. So these market access initiatives took effect April 1st, effectively unlocking, you know, about 40% of the overall market for triessence.

Mark: So what about prices when is that going to blossom over the first quarter was truly a pivotal period for the long term plans that we have for this product we were able to complete market access initiatives, including the publication of Tri Essences average selling price.

Mark: The granting of pass through status for the product opening the market for <unk>.

Mark: <unk> use in hospital and outpatient department use.

Mark: As well as the authorization for bilateral use case reimbursement for Triassic. This all happened in the first quarter.

Mark: These changes are greatly increased purchasers confidence in their ability to obtain reimbursement for <unk>. So these market access initiatives took effect April one effectively unlocking about 40% of the overall market for <unk> and this is being reflected in sales momentum.

Mark Baum: And this is being reflected in sales momentum that we're seeing in the second quarter, accelerating meaningfully. Already, the number of accounts ordering triessence has more than doubled since the beginning of the year, a strong signal of growing market confidence and adoption. Ophthalmologists and retina specialists in particular are performing procedures in the ASC and hospital and outpatient department settings of care now have the assurance that triessence will be reimbursed outside of the bundled fee, a reimbursement feature that we positively impact the success of iHESO. We now have that for triessence. We believe this momentum will accelerate throughout the year.

Mark: We're seeing in the second quarter accelerating meaningfully.

Mark: Already the number of accounts ordering try essence has more than doubled since the beginning of the year, a strong signal of growing market confidence and adoption ophthalmologists and retina specialists in particular are performing procedures in the ASC and hospital outpatient department settings of care now have the assure.

<unk> will be reimbursed outside of the bundled fee a reimbursement feature that we saw directly positively impact the success of E. So we now have that for <unk>. We believe this momentum will accelerate throughout the year now outside of our lead brands our specialty branded products.

Mark Baum: Now, outside of our lead brands, our specially branded products, which faced gross to net challenges during the first quarter, are picking up in the second quarter. In addition, our IMPROMIS RX compounding business continues to perform well, showing consistent revenue and operational reliability. In fact, April appears to be a record month for IMPROMIS RX.

Mark: Each faced gross to net challenges during the first quarter are picking up in the second quarter. In addition.

Mark: Our imprimis Rx compounding business continues to perform well showing consistent revenue and operational reliability. In fact April appears to be a record month for imprimis Rx.

Mark Baum: So let's bring this back to the original objective for today's call, to show you how we expect to achieve our 2025 revenue guidance of more than $280 million. Remember, we have $232 million left to go, and here's how I break things down. On VBuy, we believe we are on a glide path to generate at least $100 million in VBuy revenues this year, and perhaps much more. We've already reported over $21 million in revenue for the first quarter. Given VBuy's refill profile, averaging nine refills per year per covered patient, and VaFa's strong momentum, we expect revenues from VBuy to consistently grow quarter to quarter, with accelerated growth expected in the third and fourth quarters.

Mark: So let's bring this back to the original objective for today's call to show you. How we expect to achieve our 2025 revenue guidance of more than $280 million remember, we had $232 million left to go and here's how I break things down on <unk>. We believe we are on a glide path to generate at least.

Mark: $100 million in V. VI revenues this year and perhaps much more.

Mark: We have already reported over $21 million in revenue for the first quarter, given the revised refill profile, averaging nine refills per year per covered patient and <unk> strong momentum, we expect revenues from veeva to consistently grow quarter to quarter with accelerated growth expected in the <unk>.

Mark Baum: Based on the number of refills and the growth in the number of new prescriptions and prescribers since launching this program, you should be able to build a model with some very big numbers, large numbers, similar to what we're seeing in our internal models. However, we will try to be conservative and leave the opportunity to surprise stockholders meaningfully as the year progresses. On iHESA, we're on track. We expect to deliver over $50 million in 2025 revenue for this product, with quarter-over-quarter increases expected now that distributor inventory levels have normalized. Our specialty-branded products, which includes Trieste... In the aggregate, we expect them to deliver at least $50 million in revenue.

Mark: Third and fourth quarters based on the number of refills and the growth in the number of new prescriptions and prescribers since launching this program you should be able to build a model with some very big numbers.

Mark: <unk> numbers similar to what we're seeing in our internal models. However, we will try to be conservative and leave the opportunity to surprise stockholders meaningfully as the year progresses.

Mark: So we're on track, we expect to deliver over $50 million in 2025 revenue for this product with quarter over quarter increases expected now the distributor inventory levels have normalized or specialty branded products, which includes <unk> and.

Mark: The aggregate, we expect them to deliver at least $50 million in revenue this year.

Mark Baum: And in terms of our IMPROMIS-Rx compounding business, it is a consistent performer on track once again to deliver more than $80 million in revenue in 2025. So if you add all of this up, these expected contributions, you will get to that $280 million or more in 2025 revenue with a clear runway for upside. Again, we're expecting to see overall quarter-over-quarter growth this year. And while the third quarter can be a historically softer period, this year we anticipate stronger numbers driven by the compounding effect from new VVI prescriptions under this program. Finally, we expect fourth quarter to be our strongest revenue quarter as it was last year.

Mark: And in terms of our Imprimis Rx compounding business. It is a consistent performer on track once again to deliver more than $80 million in revenue in 2025. So if you add all of this up these expected contributions you will get to that $280 million or more in 2000.

Mark: 25 revenue with a clear runway for upside again, we're expecting to see overall quarter over quarter growth this year and while the third quarter can be a historically softer period. This year, we anticipate stronger numbers driven by the compounding effect from new Veeva prescriptions under this.

Mark: Program finally, we expect fourth quarter to be our strongest revenue quarter as it was last year.

Mark Baum: So, in sum, I hope after today's discussion, combined with our letter to stockholders and other supporting materials, you have a clear view of where our growth is coming from and why we're confident in its acceleration and durability. With a diverse portfolio of category-leading products, innovative market access initiatives like the VBI Access for All program, and accelerating momentum across multiple franchises, Harrow is distinguishing itself as a leading U.S. pharmaceutical company.

Mark: In sum I hope after today's discussion combined with our letter to stockholders and other supporting materials do you have a clear view of where our growth is coming from and why we're confident in its acceleration and durability with a diverse portfolio of category, leading products innovative market access initiatives like the <unk>.

Mark: Access for all program and accelerating momentum across multiple franchises Taro is distinguishing itself as a leading U S. Ophthalmic pharmaceutical company now we are happy to answer your questions I'll pause to have our operator poll for questions operator.

Mark Baum: Now, we're happy to answer your questions. I'll pause to have our operator poll for questions.

Unknown Executive: Operator? Thank you.

Unknown Executive: We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Mark: Thank you we will now begin the question and answer session to ask a question. Please press star one one of your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Chase Knickerbocker: Our first question comes from the line of Thomas Flatton with Lake Street Capital Markets. Your line is now open. Good morning. I appreciate you taking the questions.

Operator: Our first question comes from the line of Thomas Flaten with Lake Street Capital markets. Your line is now open.

Thomas Flaten: Good morning, I appreciate you taking the questions.

Mark Baum: Mark or Andrew, I was curious if you could maybe walk us through some of the price increase initiatives you took at the end of the year going into 2025, particularly as relates to IESO. Do you want to take that on? Yeah, Thomas, we, we didn't, we did not do much for for price increases on the product. So he's Oh, in fact, the list price states I would add earlier in the year, we actually, and I think we made this public, Thomas, we actually took some price decreases to make some of our products more accessible and affordable.

Speaker Change: Andrew I was curious if you could maybe walk us through some of the price increase initiatives you took at the end of the year going into 2020 fives, particularly as it relates to I E.

Speaker Change: Do you want to take that.

Speaker Change: John.

Speaker Change: Yes, Thomas we didn't we did not do much for price increases on the products I Heizo in fact.

Speaker Change: The list price stayed the same.

Speaker Change: Got it.

Speaker Change: I would add earlier in the year, we actually.

Speaker Change: And I think we made this public Thomas we actually took some price decreases to make some of our products more.

Speaker Change: Festival and affordable.

Chase Knickerbocker: Understood.

Mark Baum: And then switching over, I was wondering, I know you mentioned Project Depot, Mark, in your letter, you didn't address it today, but any particular initiatives we should be aware of other than ClaritySeed? And then I'm trying to understand the scope and scale of that project. Would it, for example, include divesting the compounding business altogether? Or is that taking it way too far? Yeah, I appreciate the question. I mean, you know, the the initial impetus for Project Beagle was to transition the Clarity C patients to VIVI. You know, financially, it makes a lot of sense for us, but I think even clinically for the patient, they have an incredible opportunity to get access to an FDA approved 0.1% cyclosporine product.

Speaker Change: Understood and then switching over I was wondering I know you mentioned project depot Marc in your letter you Didnt address it today, but any any particular initiatives, we should be aware of other than clarity seat and then im trying to understand the scope and scale of that project would it for example include.

Speaker Change: Divesting the compounding business altogether or is that taken away too far.

Speaker Change: Yes, I appreciate the question.

Speaker Change: The initial impetus for project Eagle was to transition the clarity C patients to V VI.

Speaker Change: Financially it makes a lot of sense for us, but I think even clinically.

Speaker Change: Patient.

Speaker Change: They have an incredible opportunity to get access to an FDA approved 0.1% cyclosporin <unk>.

Mark Baum: But as I said, financially, it makes a lot of sense for us. Certainly with Clarity C, for example, doing about $9 million or so, you know, a little under $10 million in revenue, we're going to. very obviously see a reduction in imprimis revenue by that number, but on a corresponding basis we'll see a significant increase in Harrow revenue. What's really interesting financially is that even if every single one of the Clarity C patients came over to VVI at the $59 cash pay price, we estimate that our profit would be more than two times what it is on the Clarity C formulation, and that's with nobody that is a Clarity C patient having access to insurance coverage.

Speaker Change: Product.

Speaker Change: But as I said financially it makes a lot of sense for us certainly with clarity C. For example, doing.

Speaker Change: $9 million or so.

Speaker Change: A little under $10 million in revenue, we're going to.

Speaker Change: Very obviously see a reduction in <unk> revenue.

Speaker Change: By that number but on a corresponding basis, we'll see a significant increase.

Speaker Change: <unk> and hero revenue.

Speaker Change: Interesting financially is that.

Speaker Change: Even if every single one of the clarity see patients came over to V by at the $59 cash pay price we.

Speaker Change: We estimate that our profit would be more than two times, what it is on the clarity <unk> formulation and Thats whats nobody.

Speaker Change: That is clearly see patient having access to insurance coverage. So theres a lot of upside there for us with project Eagle in implementing this transition some clarity C to V VI.

Mark Baum: So there's a lot of upside there for us with Project Beagle and implementing this transition from Clarity C to VVI, and as I said, it's great for the consumer, the patient as well. But there are other formulations that we make within the imprimis portfolio that I think work really well as FDA-approved products. We've talked in the past about Melt to the extent that Melt is ultimately available as an FDA-approved product. That would certainly qualify, and there are several others that we're working on.

Speaker Change: And as I said, it's great for the consumer the patient as well.

Speaker Change: But there are other.

Speaker Change: Formulations that we make within the infamous portfolio that I think we're really well.

Speaker Change: As FDA approved products, we've talked in the past about milk to the extent that milk is ultimately available as an FDA approved product that would certainly qualify and there are several others that we're working on.

Mark Baum: But we're not planning to exit compounding. As I said in the letter to stockholders, we serve thousands and thousands of doctors, ophthalmologists, optometrists in the United States. They rely on our best-in-class compounded formulations. We have the broadest portfolio in the United States. We have the number one national brand. It is a consistent driver of not only revenue but profits, and it's a business that has served us incredibly well.

Speaker Change: But we're not planning to exit compounding.

Speaker Change: As I said in the letter to stockholders, we serve thousands and thousands of.

Speaker Change: Doctors ophthalmologists optometrists and the United States. They rely on our best in class compounded formulations, we have the broadest portfolio in the United States. We have the number one national brand. It is a consistent driver.

Speaker Change: Not only revenue, but profits and.

Chase Knickerbocker: It's been the foundation of our company for many years, so not planning to exit. Excellent.

Speaker Change: Business that has served us incredibly well it's been the foundation of our of our company for many years, so not planning to exit.

Chase Knickerbocker: I appreciate you taking the questions. Thank you.

Speaker Change: Excellent I appreciate you taking the questions. Thank you.

Speaker Change: Thank you.

Yi Chen: Our next question comes from the line of Chase Knickerbocker with Kerag Halim. Your line is now open. Good morning. Thanks for taking the questions. Mark, I just want to start on a HESO to make sure I kind of understand the sequential changes. So if I kind of normalize ASP to account for what the potential stocking was, it looks like the impact was about 9 million. And then is that all from, is that all from that unwinding of some potential stocking in Q4? Or was there any other kind of movers there? Thanks.

Speaker Change: Our next question comes from the line of Jason Knickerbocker with Craig Hallum. Your line is now open.

Jason Knickerbocker: Good morning, Thanks for taking the questions Mark I, just want to start on a <unk> to make sure I kind of understand the sequential changes so if I kind of normalize asps.

Yes.

Jason Knickerbocker: To account for what the potential stocking was it looks like the impact was about $9 million is that all from is that all from.

Jason Knickerbocker: Unwinding of some potential stocking in Q4 or was there any other.

Jason Knickerbocker: Kind of movers there thanks.

Andrew Boll: Yeah, I don't I don't have your numbers in front of me, Andrew, do you want to kind of talk through the, you know, the the impact of stocking and destocking from Q4? 213-89 Hemp Services Page PAGE of NUMPAGES Yeah, absolutely. Absolutely. Chase, good morning. I think the easiest way to address it is maybe on a go-forward basis and what we're seeing from a unit volume and unit demand perspective, which is Q4 to Q1, we saw this last year too, there's softness in the numbers between Q4 and Q1 on IHESA on unit demand. But then we started seeing that increase in Q2 and getting back to sort of a growth mode, Mark was talking about in the prepared remarks.

Jason Knickerbocker: Yes, I don't I don't have your numbers in front of me Andrew do you want to kind of talk through.

Jason Knickerbocker: <unk>.

Jason Knickerbocker: The impact of stocking and Destocking from Q4.

Jason Knickerbocker: Q1.

Jason Knickerbocker: Yes, absolutely.

Jason Knickerbocker: Okay.

Jason Knickerbocker: Absolutely.

Jason Knickerbocker: Morning.

Jason Knickerbocker: I think.

Jason Knickerbocker: But I think easiest just to address it as maybe on a go forward basis on what we're seeing from a unit volume and unit demand perspective, which is.

Jason Knickerbocker: Q4 to Q1, we.

Jason Knickerbocker: We saw this last year or two there is softness in the numbers between Q4 and Q1 on a <unk> unit on unit demand.

Jason Knickerbocker: But then we started seeing that increase in Q2.

Jason Knickerbocker: And getting back to sort of a cross vote as Mark was talking about in the prepared remarks, and that's what we're seeing again with ISO So the unit demand is getting back to that.

Mark Baum: And that's what we're seeing again with IHESA. So the unit demand is getting back to that. that mobile will see incremental growth quarter over quarter or should assuming customer reorder rates continue at a normal pace that they've been been going at as well as some of these new accounts that will come online. As for like that exact impact that was stocked that where you had some stocking events, I don't think we we know the exact numbers there. but happy to have an additional conversation later with you, Chase. Yeah, I would add, I would, I would add to that, if you look at the difference between Q4 of 23 and Q1 of 24, there was a, about an 80% decline and we actually saw a, a, a better decline if that's, if that's, you know, worth mentioning, but we actually had a lower decline.

Jason Knickerbocker: That mode, where we will see incremental growth quarter on quarter or should I.

Jason Knickerbocker: Assuming customary alright.

Continue at a normal pace that they've been.

Jason Knickerbocker: And going out and as well as some of these new accounts come online.

Jason Knickerbocker: As for like that exact impact that was stock that where you had some stocking events I don't think we know the exact numbers there.

Jason Knickerbocker: Yes.

Jason Knickerbocker: But.

Jason Knickerbocker: We're happy to have additional conversation.

Jason Knickerbocker: Later with some interest.

Jason Knickerbocker: Yes, I would add.

Jason Knickerbocker: I would add to that if you look at the difference between Q4 of 23 in Q2.

Jason Knickerbocker: <unk> 24, there was a about an 80% decline and we actually saw a.

Jason Knickerbocker: A better decline fits if that's worth mentioning but we actually had a lower decline so.

Andrew Boll: So, it was, it was probably, you know, 5 to 6 percentage points lower this year in Q1 of 25 versus Q4 of 24. So, we did a little bit better, but look, it's wobbly, you know, there is stocking at the end of the year for this product. And, you know, I think the, the focus here is the continued unit demand growth throughout the year 2025 for the product, which is what we expect, and ultimately delivering more revenue for that product and more growth for that product this year relative to last year. Got it.

Jason Knickerbocker: It was probably.

Jason Knickerbocker: 5% to six percentage points lower this year.

Jason Knickerbocker: In Q1 of 'twenty five versus Q4 of 2004, so we did a little bit better but look it's wildly.

There is stocking at the end of the year for this product and I think the focus here is the continued unit demand growth throughout the year.

Jason Knickerbocker: 25% for the product, which is what we expect and ultimately delivering more revenue for that product to more growth for that product this year relative to last year.

Mark Baum: And it sounds like in April, you know, shipments to distributors is now kind of winding up with end user demand. And then I guess just kind of confirmation there. And then on triessence, you spoke to kind of better fundamentals in April. Are you seeing a meaningful inflection in volumes? And then kind of can you split that between kind of the ASC and the retina opportunity and kind of where you're seeing some early signs of inflection and progress? Yeah, I, I would say that what I'm seeing is that we're opening a lot of accounts, there are a lot of accounts dabbling, and, you know, picking off, you know, small numbers of units to begin using the product and seeking reimbursement for it.

Jason Knickerbocker: Got it and then it sounds like in April.

Jason Knickerbocker: Shipments to distributors there is now kind of winding up with.

Jason Knickerbocker: And user demand and then.

Jason Knickerbocker: I guess, just kind of confirmation there and then on the Entre essence.

Jason Knickerbocker: You spoke to kind.

Jason Knickerbocker: Kind of better fundamentals in April.

Speaker Change: Are you seeing a meaningful inflection in volumes and then Kevin can you split that between kind of the ASC in the retina opportunity and kind of where you are seeing.

Jason Knickerbocker: Some early signs of inflection in progress.

Yes.

Jason Knickerbocker: I would say that what I'm seeing is that we're opening a lot of accounts there are a lot of accounts gambling.

Jason Knickerbocker: Picking off.

Jason Knickerbocker: Small numbers of units to begin using the product and seeking reimbursement for it.

Mark Baum: And that's a typical pattern that you see with these buy and build products. The account gets open, they buy a few units, they use them, they know what, what TriEssence does, you know, they're very familiar with the product, but the back office, which drives a lot of the purchasing of buy and build products wants to make sure that they're going to get reimbursed and the reimbursement work that we did in the first quarter was critical for the long term success. We are seeing the product being used in the ASC, we're seeing it used in the hospital, we're seeing it being used by cataract surgeons, we're seeing it being used by retina specialists.

Jason Knickerbocker: And that's a typical pattern that you see with these buy and bill products. The account gets open they buy a few units they use them.

Jason Knickerbocker: They know what what.

Jason Knickerbocker: What <unk> does they are very familiar with the product, but the back office, which drives a lot of the purchasing of buy and bill products wants to make sure that they are going to get reimbursed.

Jason Knickerbocker: The reimbursement work that we did in the first quarter was critical for the long term success, we are seeing the product being used in the ASC. We're seeing it used in hospital, we're seeing it being used by cataract surgeons, we're seeing it being used.

Mark Baum: So there's a lot of upside. We think this is going to be the number one intraocular, you know, injectable steroid in the market in fairly short order. But, you know, the team is really, has just been given the tools from a reimbursement perspective that they need in order to be successful. They're really only about 40 days into that. So we are seeing the right signs with lots of new account openings, but dabblers at this point, and then as the year progresses, we will, we expect to see greater density within those accounts. Got it.

Jason Knickerbocker: By retina specialists, so theres a lot of upside we think this is going to be the number one intra ocular.

Jason Knickerbocker: Injectable steroid and the market in fairly short order, but.

Jason Knickerbocker: Team is really.

Jason Knickerbocker: He's just been giving you the tools from a reimbursement perspective that they need in order to be successful. There are really only about 40 days into that so we are seeing the right signs with lots of new account openings, but but dabbler. It's at this point and then as the year progresses.

Jason Knickerbocker: We will.

Jason Knickerbocker: We expect to see greater density within those accounts.

Mark Baum: And then on on DVI, obviously, continued impressive progress there. If I think about the improvements sequentially in gross to nets, again, it's, you know, it's pretty impressive kind of sequential improvement there. Can you kind of speak to the drivers and then in 25, you kind of spoke to it a little bit, but basically gross to nets moderate a little bit in Q2 and then improve sequentially from there.

Jason Knickerbocker: Got it and then on <unk> obviously.

Jason Knickerbocker: Continued impressive progress there.

Jason Knickerbocker: If I think about the improvement sequentially.

Jason Knickerbocker: And gross to net again.

Jason Knickerbocker: That's a pretty impressive kind of sequential improvement there.

Jason Knickerbocker: Can you kind of speak to the drivers and then.

Jason Knickerbocker: <unk> 25, you kind of spoke to it a little bit, but basically gross to nets moderate a little bit in Q2, and then improve sequentially from there. So at the right way to think about it mark.

Mark Baum: Is that the right way to think about it, Mark? Yeah, I wouldn't, I wouldn't say gross nets moderate down and then begin to improve. I would say, well, first of all, we, we, I think, said in prior conference calls that we were making changes to our business rules that that we expected to, you know, significantly improve our ASP for VVI. And I think we've delivered 100% on that promise. That said, as I said, in the letter to stockholders, we do expect certainly at the levels that we're currently at to see some reduction in the ASP over the next quarter or so.

Speaker Change: Yes, I wouldn't I wouldn't say gross to nets moderate down and then begin to improve I would say well first of all.

Speaker Change: We I think said in prior conference calls that we were making changes to our business rules that.

Speaker Change: We expect it to significantly improve our.

Speaker Change: ASP.

Speaker Change: For Veeva and I think we've delivered.

Speaker Change: 100% on that promise.

Speaker Change: That said as I said in the letter to stockholders, we do expect.

Speaker Change: Certainly at the levels that we're currently out to see some reduction in the asps over the next quarter or so.

Andrew Boll: And then we expect it to stabilize at a very attractive level. I mean, this is a level that even when Andrew and I think about our initial models before the launch, this was this was an aspirational level for us. So, we're really happy at where we think the, the ASP is going to kind of settle out at. But I think the key, which is also, you know, way beyond even our aspirational data pre-launch is what we're seeing in NRX growth and the refill rate and so on. It's just been an amazing ride the last seven weeks.

Speaker Change: And then we expect it to stabilize at a very attractive level. I mean, this is a level that you see even when Andrew and I think about.

Speaker Change: Our initial models.

Speaker Change: Before the launch this was this was an aspirational level for us. So we're really happy at where we think the.

Speaker Change: The ASP is going to kind of <unk>.

Speaker Change: Settle out at.

Speaker Change: But I think the key.

Speaker Change: Which is also.

Speaker Change: Way beyond even our aspirational.

Speaker Change: Data pre launch is what we're seeing in Rx growth and the refill rate and so on.

Speaker Change: It's just been an amazing ride for the last seven weeks and this is really I would say.

Mark Baum: And this is really, I would say, a company maker type product and really has the potential to, to lead the category and dry eye and realize the promise of treating more of the 30 plus million Americans who suffer from this disease.

Speaker Change: A company maker type product and really has the potential to lead the category in dry eye and realize the promise of treating more of the 30 plus million Americans, who suffer from this disease, Andrew do you want to add to that at all.

Andrew Boll: Andrew, do you want to add to that at all? Nothing to add, Mark. I'll leave it there.

Speaker Change: Nothing to add Mark.

Mark Baum: Thank you, guys.

Speaker Change: Ill leave it there thank you guys.

Mark Baum: Thank you, Chase.

Chase: Thank you chase.

Jeffrey Cohen: Our next question comes from Jeffrey Cohen with Lattenberg. Your line is now open. Hi, Mark and Andrew, thanks for taking our questions. I wanted to poke you a little bit further on the compounding business as some of the transition of the compounding products to prescription. Can you talk about the base that exists as far as imprimis and the base opportunity, both internal and perhaps external? Yeah, so yeah, I think I tried to, you know, discuss the promise of the compounding business. I've been talking about this for many years now, that there was a lot of hidden value in the compounding business.

Jeffrey Cohen: Our next question comes from Jeffrey Cohen with Ladenburg. Your line is now open.

Jeffrey Cohen: Hi, Mark and Andrew Thanks for taking our questions.

Jeffrey Cohen: I wanted to spoke to you a little bit further.

Jeffrey Cohen: On the compounding business, so I'm going to transition of the compounding products to subscription could you talk a barrel based on existing as far as our.

Promise.

Jeffrey Cohen: Based opportunity, both internal or perhaps external.

Jeffrey Cohen: Yes, so yes, I think I tried to.

Jeffrey Cohen: Discuss.

Jeffrey Cohen: Thomas of the compounding business that I've been talking about this for many years now.

Jeffrey Cohen: That.

Jeffrey Cohen: There was a lot of.

Jeffrey Cohen: Hidden value in the compounding business first of all the commercial relationships that we created with more than 10000 eyecare professionals around the United States gave us tremendous commercial credibility that's the commercial credibility that we used to.

Mark Baum: First of all, the commercial relationships that we created with more than 10,000 eye care professionals around the United States gave us tremendous commercial credibility. That's the commercial credibility that we use to transact with EyePoint ultimately to take on Dexacube, you know, several years ago, and we're able to increase sales of that product by more than 400% in short order. That credibility led to us being able to get access to iHizo from Synthetica, and that has driven a tremendous amount of value for our company. And that success ultimately led to the people at Novaleak having the confidence in us to offer us Vivi at a very attractive price with, you know, most of the opportunities were born from the compounding business, frankly.

Jeffrey Cohen: Transact with I point ultimately to take on <unk> several years ago.

Jeffrey Cohen: We're able to increase sales of that product by more than 400% short order that credibility led to us being able to get access to it.

Jeffrey Cohen: Zoe from synthetic <unk> and that has driven a tremendous amount of value for our company.

Jeffrey Cohen: And that success ultimately led to the people at <unk>, having the confidence in us to offer us the buy at a very attractive price with most of the economics on the backend.

Jeffrey Cohen: And you can see what we're doing with Veeva now all of that success all of those opportunities were born from the compounding business frankly, and even within the compounding business today as I mentioned.

Mark Baum: And even within the compounding business today, as I mentioned, we're in the process of transitioning these clarity C patients to to Vevi, there are more than 25,000 of them. Believe me, if I called a marketing company up and I asked them what the cost would be to get access to well over 25,000 highly targeted consumers that have a nearly 100% chance of purchasing a product that is chronic in nature, that can deliver the kind of net ASP that we're seeing, it would be extremely expensive for me to get access to those consumers. Well, ImprimisRx has those, more than 25,000 of those potential Vevi patients and we have them as a result of this success of the ImprimisRx business over the last 12 years.

Jeffrey Cohen: Or in the process of transitioning these clinics clarity see patients too.

Jeffrey Cohen: <unk> either more than 25000 of them believe me if I call the marketing company up and I asked them, what the cost would be.

Jeffrey Cohen: To get access to well over 25000 highly targeted consumers that have nearly 100%.

Jeffrey Cohen: <unk>.

Jeffrey Cohen: Purchasing product that is chronic in nature.

Speaker Change: That can deliver the kind of net ASP that we're seeing it would be extremely.

Speaker Change: Expensive for me to get access to those consumers and permits are ex pass those.

Speaker Change: More than 25000 of those potential fee by patients and we have them as a result of this success.

Speaker Change: The <unk> business over the last 12 years, there are other products within the <unk> portfolio that are highly correlate highly correlated highly related to.

Mark Baum: There are other products within the ImprimisRx portfolio that are highly correlated and highly related to branded products that we now sell. You know, whether it's an NSAID, whether it's an antibiotic or a topical steroid, whether it's an injectable product, you know, there's a lot of overlap between the two portfolios. And so for us, our preference always, if the customer wants and is interested is to offer them an FDA approved product. for at or around the same economics as a compounded product would be. And to the extent we can do that, we're going to do that.

Speaker Change: Branded products that we now sell.

Speaker Change: Whether it's an NSAID, whether it's an antibiotic or topical steroids.

Speaker Change: Whether it's an injectable.

Speaker Change: Product there are a lot of there's a lot of overlap between the two portfolios and so for us.

Speaker Change: Our preference always if if the customer wants.

Speaker Change: He is interested is to offer them an FDA approved product for.

Speaker Change: We're at or around the same economics as a compounded product would be and to the extent, we can do that we're going to do that and that's how we're going to see.

Mark Baum: And that's how we're going to, I think, you know, continue to proceed with this project, Beagle. Got it.

Speaker Change: <unk>.

Speaker Change: Continue to proceed with this project Eagle.

Jeffrey Cohen: That's helpful. And secondly, can you talk about the interior segment a bit as far as Q4 to Q1 looked a little bit weak. Is that seasonality or could you maybe Thank you.

Speaker Change: Got it Thats helpful and then.

Speaker Change: Secondly, can you talk about the.

Speaker Change: Anterior segment a bit as far as.

Speaker Change: Q4 to Q1 looked a little.

Speaker Change: A little bit weaker seasonality or could you maybe.

Mark Baum: Thank you. expand upon that a bit. Well, I mean, you know, I appreciate the question. And just to be clear, I'm not right now. And if you were in my shoes, you wouldn't be happy either with the current strategy. I think the results, the numbers are speaking for themselves. We should be doing much better. And, you know, we intend to do better. One of the nice things about the way I operate the business, the way Andrew and I have partnered over the years is, you know, we take action when we see something obvious in front of our eyes, which is that these products should be doing quite a bit better.

Speaker Change: To expand upon that a bit.

Speaker Change: All right.

Speaker Change: Well I mean.

Speaker Change: I appreciate the question and just to be clear I'm not right. Now if you were in my shoes, you wouldn't be happy either with the current strategy I think the results. The numbers are speaking for themselves, we should be doing much better and.

Speaker Change: We intend to do better one of the nice things about the way I operate the business the way Andrew and I have partnered over the years is.

Speaker Change: We take action.

Speaker Change: When we see something obvious in front of our eyes, which is that these products should be doing quite a bit better.

Mark Baum: And we intend to review and reconsider the current strategy. I think that's certainly in order, and that's what we intend to do. But you should expect, as stockholders, to see significant improvement from the levels that you saw in the first quarter. So there's some technical revenue recognition issues and accounting issues that are related to, you know, the showing in the first quarter specifically. So that's as bad as it can get financially. You should see significant improvement from there. But overall, I'm not happy with the strategy, and we intend to do a few things here to make some improvements.

Speaker Change: And we intend to review and reconsider the current strategy I think that's certainly in order and that's what we intend to do but you should expect.

Speaker Change: Talk holders to see significant improvement from the levels that you saw in the first quarter. There is some technical revenue recognition.

Speaker Change: Issues.

Speaker Change: And accounting issues that are related to the showing in the first quarter, specifically, so that's as bad as it can get.

Speaker Change: Financially.

Speaker Change: Should see significant improvement from there, but overall im not happy with the strategy and we intend to do a few things here too to make some improvements.

Mark Baum: Got it.

Mark Baum: Super. Thanks for taking our questions. Thank you.

Speaker Change: Got it Super Thanks for taking my questions.

Speaker Change: Okay.

Yi Chen: Our next question comes from the line of Yi Chen with HC Wainwright. Your line is now open. Yee Chin, your line is open, please check your mute button. I thank you for taking my questions. Can you hear me? Yes. Good morning.

Speaker Change: Thank you. Our next question comes from the line of <unk> Chen with H C. Wainwright. Your line is now open.

Speaker Change: Ken Your line is open please check your mute button.

Speaker Change: Alright, Thank you for taking my questions.

Speaker Change: Yes, hi.

Andrew Boll: You mentioned that V-value revenue grew sequentially, but I noticed that the quarterly prescription was lowering the first quarter. So could you comment on the current average collection cycle for the Yeah, Andrew, do you want to cover that? And obviously, the revenues were up, you know, we had significant improvements in our ASP, Net ASP. Andrew, do you want to talk about volumes. Yeah, thanks for the question. And I want to make sure I understood the question correctly. But the our revenue recognition, obviously, is well correlated to the prescription volume isn't isn't a perfect match. Yes. And so, but we, but we did see on the prescription side, Mark mentioned some business rules that were implemented at the beginning of the year that changed and helped improve ASP as a result, that also had an impact on on access for some patients.

Speaker Change: Good morning.

Speaker Change: You mentioned that revised revenue growth.

Speaker Change: Sequentially.

Speaker Change: I noticed that the quarterly prescription was lower in the first quarter. So could you comment on the currently the average collection cycle for ourselves.

Speaker Change: Yes, Andrew do you want to cover that and obviously the <unk>.

Speaker Change: Revenues were up we had significant improvements in our ASP net ASP, Andrew do you want to.

Speaker Change: Talk about volumes.

Andrew I: Yes, thanks for the question and I want to make sure I understood the question correctly.

Andrew I: Our revenue recognition obviously.

Andrew I: All correlated to prescription volume isn't.

Andrew I: Yes.

Andrew I: Is it a perfect match.

Andrew I: Yes, and so but we did see.

Andrew I: Patients side, Mark mentioned, some business rules are implemented at the beginning of the year has that changed.

Speaker Change: And helped improve ASP.

Andrew I: As a result that also had.

Speaker Change: <unk> had an impact on on access for some patients.

Andrew Boll: Those business rules and the whole market access and patient access program change right at the end of March with the introduction of VIVI access for all. And so, as Mark was talking about in an earlier question, the, when we look forward, volumes are increasing rapidly, especially from a new prescription perspective. And we will see some of the will, as a result, have to sacrifice some of the gross to net improvements that we saw in Q1. But importantly, number one, our expectation is that ASP is going to be higher with VIVI Access for All than it was prior, last year.

Speaker Change: Those business rules and the whole market access and patient access program changed at the end of March with the introduction of <unk> access for all.

Mark: And so as Mark was talking about in an earlier question.

Mark: When we look forward volumes are increasing rapidly.

Mark: Especially on from a new prescription perspective.

Mark: And.

Mark: We will see some of that will as a result have to sacrifice some of the gross to net.

Mark: Improvements that we saw in Q1.

Mark: But importantly, it number one our expectation is that.

Mark: Asps is going to be higher.

Mark: Veeva access for all.

Mark: Then it was higher last year.

Andrew Boll: And then importantly, the volumes that we're seeing from an increased perspective are incredible. And one of the things that I love about VIVI and why I always say it's my favorite product is that mathematical compounding you get on the refills, that sort of annuity that you get with refills. And so all of these new prescriptions that we're getting in April and continue to see in May. Where we really see value is in the third quarter and fourth quarter when we start getting the prescriptions compounding on each other for the new Rx's we're getting in the immediate.

Mark: And then importantly, the volumes that we're seeing from an increase perspective.

Mark: Our are incredible.

Mark: And one of the things that I love about Veeva <unk> I always say, it's my favorite product does that mathematical compounding you get on the refills that sort of annuity that you get with the resellers and so all of these new new prescriptions that were getting in in April.

Mark: We're continuing to see in May.

Mark: Where we really see value is in the third quarter and fourth quarter, when we start getting the prescriptions compounding on each other for those.

Mark: For the new R. R access we're getting.

Andrew Boll: So we're excited about the program. We think it's a win-win for everyone, better access for patients, lower prices for patients. And then for us and for shareholders, we're going to be netting more per prescription basis than we were last year.

Mark: In the immediate.

Mark: So we're excited about the program, we think it's a win win for everyone.

Mark: Better access for patients lower lower prices for patients and then for us and for shareholders.

Mark: We're gonna be netting more.

Mark: On a per prescription basis than we were.

Mark: Last year.

Yi Chen: Okay, thank you.

Mark Baum: And could you also let us know whether any of Harrow's products are affected by current tariff policies? You know, we actually addressed that. I tried to address it. Andrew had done some analysis on tariff impact, and it's on page six of the letter to stockholders. And I think we estimated that our 2024 gross margins, and this is all based on what we currently know about the tariff programs that are in place, but the impact would have been about 50 basis points on gross margins. So, for us, it's fairly negligible. You know, I've been asked this by a couple of other folks.

Mark: Okay got it. Thank you and could you also let us know whether any of those products are affected by the current tariff policy.

Mark: Okay.

Mark: We actually addressed that.

Speaker Change: Tried to address that Andrew had done some analysis on.

Speaker Change: Tariffs impacting its on page six of the letter to stockholders and I think we estimated that our 2020 for gross margins and this is all based on what we currently know about.

Speaker Change: The tariffs programs that are in place, but the impact would have been about 50 basis points on gross margin so for us it's fairly negligible.

Speaker Change: I've been asked this by a couple of other folks I think people know for example, what our cost is.

Mark Baum: I think people know, for example, what our cost is on IHESA, which is, in fact, made outside the United States. And if you were to tack on 25% or 10% or even 125% onto that cost, you know, based on what we receive, it really doesn't impact gross margins that much. So, we don't estimate much impact with our portfolio as a result of the existing and the existing tariff structure. And then we're also working to, you know, at least on some of our compounding formulations, bring more of our excipients and APIs in from domestic sources. So, you know, we'll see even a slightly smaller impact, but the overall impact, our estimate was about 50 basis points.

Speaker Change: On I E Zoe, which is in fact made outside the United States.

Speaker Change: If you were to tack on 25% or 10% or even 125% onto that cost.

Speaker Change: Based on what what what we receive it really doesn't impact gross margins that much.

So we don't estimate much impact with our portfolio.

Speaker Change: As a result of the existing and the.

Speaker Change: The existing tariff structure.

Speaker Change: And then we're also working.

Speaker Change: Two two.

Speaker Change: At least on the.

Some of our compounding formulations brings.

Speaker Change: More of our excipient and <unk>.

Speaker Change: In from domestic sources so.

Speaker Change: We'll see even a slightly smaller impact, but the overall impact our estimate was about 50 basis points.

Mark Baum: Not too much. Thank you very Thank you.

Speaker Change: Too much got it.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Mayank Mamtani: Our next question comes from the line of Mayank Mamtani with B Raleigh Securities. Your line is now open. Good morning, team. Thanks for taking our questions and appreciate the comprehensive update on business. Sorry, one more question.

Speaker Change: Our next question comes from the line of Mike Mcmahon Tani with B Riley Securities. Your line is now open.

Good morning team. Thanks for taking our question I appreciate the comprehensive update on business sorry, one more question on diesel so it looks like your unit volume demand was compatible TQ, but revenues came in a little lighter than that actually a lot lighter than that.

Mayank Mamtani: It looks like your unit volume demand was comparable to 3Q, but revenues came in a little lighter than that, actually a lot lighter than that, which makes you wonder if anything we need to account for existing and new accounts sort of going forward. You know, I know there's a 1Q patient co-pay assistant support dynamic that other eye care retina players kind of faced, but I was also curious on a count by count basis, including, you know, the new GPOs that you have, anything we need to factor in? And if you can confirm that there was no major customer we lost in 1Q, then I will follow up on you.

Speaker Change: You Wonder if anything we need to account for your existing and new accounts out of going forward.

Speaker Change: I know there is about an <unk> patient co pay assistance support dynamic that other <unk>.

Speaker Change: Players kind of faced but.

Speaker Change: So curious on an account by account basis, including the new GPO is that do you have anything we need to factor in and if you can confirm there was no major customer we lost in <unk> and I have a follow up on <unk>.

Mark Baum: Yeah, I would just say that the the you know, the overall. play, if you will, with buy and build products where there are discounts and rebates. to manage. The ASP, I think that's, in addition to getting the products out, opening accounts, servicing accounts, at our level, at the executive level, we think about managing the ASP, and that is mission critical. So that is top of mind here. Clearly, if you saw some shift in ASP, and that affecting revenues, quarter to quarter, it's typically because of those features. by the fact that it's a buy and build product.

Speaker Change: Yes, I would just say that the.

Speaker Change: The overall.

Speaker Change: Play if you will with buy and bill products, where there are discounts and rebates.

Speaker Change: To manage.

Speaker Change: Asps I think that's in addition to getting the products out opening accounts servicing accounts.

Speaker Change: At our level at the executive level, we think about managing the ISP and that is mission critical so that is top of mind here clearly if you saw.

Speaker Change: Some some shift in ASP net affecting revenues quarter to quarter, it's typically because of.

Speaker Change: Those those features.

Speaker Change: By the fact that it's a buy and bill product.

Mark Baum: And, you know, that aside, and as I said, to be clear, we are thinking about ASP. I mean, Andrew and I talk about ASP management nearly every day and are thinking about ways to do that compliantly with the team.

Speaker Change: And.

Speaker Change: That aside and as I said to be clear, we are thinking about asp's, Andrew and I talk about ASP management nearly every day.

And our thinking about ways to do that.

Speaker Change: Compliance with the team, but what I would what I would say that to me is more important and I think you've kind of touched on it a little bit which is.

Mark Baum: But what I would say that to me is more important, and I think you kind of touched on it a little bit, which is what happened in the retina market in particular. you know, over the last six months with the complete loss of foundation support for, you know, good days as an example. That is interestingly having, we think, a positive impact as we get into the second quarter and it should have more of an impact later on this year. The, you know, we're seeing anecdotally more retina counts consider the clinical benefits of IHESO and, you know, the opportunity to not have to pay for the anesthetic cost.

Speaker Change: What happened in the retina market in particular.

Speaker Change: Over the last six months with the complete loss of foundation support.

Speaker Change: Four.

Speaker Change: Good day, so as an example.

Speaker Change: That is interestingly, having we think a positive impact is as we get into the second quarter and it should have more of an impact later on this year.

Speaker Change: See we're seeing anecdotally more retina counts consider the clinical benefits of <unk>.

Speaker Change: And the opportunity.

Speaker Change: To not have to pay for the anesthetic cost and so the overall reduction in revenue I think that some retina practices are seeing as a result of the depletion of good days.

Mark Baum: And so, the overall reduction in revenue, I think, that some retina practices are seeing as a result of the depletion of the good days funds is causing retina practices to rethink whether they want to go out of pocket for, for example, an anesthetic that may have, you know, clinical benefits that are, you know, not as strong as VIVI. And with VIVI, they can actually seek reimbursement for that. And so, we're seeing positive dynamics in the marketplace, increased interest in IHESO, you know, in terms of losing major accounts. You know, we don't comment on specific accounts, but what I did comment on is that we intend to see revenue growth and unit demand growth from 24 to 25 with IHESO.

Speaker Change: <unk> is causing retina practices to rethink whether they want to go out of pocket.

Speaker Change: Or for example, an anesthetic that may have.

Speaker Change: Clinical benefits that are.

Speaker Change: Not not as strong as V VI.

Speaker Change: <unk> can actually seek.

Speaker Change: Seek reimbursement for <unk>.

Speaker Change: For that and so we're seeing positive dynamics in the marketplace increased interest in ICU. So.

Speaker Change: In terms of losing major accounts.

Speaker Change: We don't comment on specific accounts, but what I did comment on is.

Speaker Change: That we intend to see revenue growth and unit demand growth.

Mark Baum: And I'm, you know, pretty, you know, highly convicted on that.

Speaker Change: From 24 to 25 without E zone and I'm.

Speaker Change: Pretty.

Speaker Change: Do you feel highly convicted on Mac.

Mark Baum: Very helpful, Khaled. Thank you, Mark. And regarding VY, we are also hearing a similar momentum from some KOL calls we did post-RAFA. Could you touch on what proportion of the 25,000 patients have already moved over from clarity, sort of quarter to date, and trying to understand how sequentially you could get to, you know, in terms of NRX volume growth. And if, you know, anything you could comment on the dynamic share you have right now in the broader cyclosporine market. Yeah, I can't comment on the specific share. And I'm glad you know, you're, you're seeing when you do your independent calls, the kind of feedback that we're also receiving with respect to VIVI, not only clinically, but with respect to this program, it is making a huge impact.

Speaker Change: Very helpful color. Thank you, Mike and regarding the why.

Speaker Change: Also heading a similar momentum from some kols colleagues, we did bullish rafa could you touch on what proportion of the 25000 patients have already mobility from that it would be.

Speaker Change: So I have quite a bit of data and trying to understand how sequentially you could get to.

Speaker Change: In terms of analytics volume growth then.

Anything you could comment on the dynamics you have right now and in the broader scientists burn market.

Speaker Change: Yes.

Speaker Change: Can't comment on the specific share and I'm glad you.

Speaker Change: Youre seeing when you do your independent calls.

Speaker Change: The kind of feedback that we are also receiving with respect to V VI not only clinically but with respect to this program.

Speaker Change: It is making a huge impact.

Mark Baum: I've always, you know, looked at the the dry market, and we've talked about this, or, you know, offline or, you know, many times, if I was a patient, what would I want? Or if my mother was a patient, what would I want my mother to have access to? And I wouldn't want, you know, one of these old cyclosporins that took nine clinical studies to get approved that doesn't have a label for signs and symptoms. I wouldn't want something that causes pain upon installation to a significant number of patients that put it in their eye. That's not the cyclosporin that I would want my mother to have.

Speaker Change: I've always.

Speaker Change: Looked at the dry eye market, we've talked about this.

Speaker Change: Offline are many times, if I was a patient.

Speaker Change: One or if my mother was a patient what would I want my mother to have access to.

Speaker Change: And I wouldn't want one of these old.

Speaker Change: Cyclosporin that took nine clinical studies to get approve that doesn't have a label for signs and symptoms I wouldnt want something that causes pain upon.

Speaker Change: Installation to a significant number of patients that put it in there I, that's not the cyclosporin, but I wouldn't want my mother to have.

Mark Baum: And it wouldn't matter, matter whether it was a branded version of that, or a generic version of that. Because, you know, it wouldn't matter at all. Bad is bad, or not great is not great, if you will, to be more, more politically correct. So we think that we can win the cyclosporin market. There's a lot of units available. You know, I wouldn't want to compete against Vivi.

Speaker Change: And it wouldn't matter matter, whether it was a branded version of that or a generic version of that because.

Speaker Change: It wouldn't matter at all bad is bad for not great. It's not great. If you will to be more.

Speaker Change: Politically correct. So we think that we can win the cyclosporin market.

Speaker Change: There was a lot of units available.

Speaker Change: I wouldn't want to compete against Levi, but the most interesting thing I think I learned over the last quarter is the Mark Cuban.

Mark Baum: But the most interesting thing I think I learned over the last quarter is that Mark Cuban has a pharmacy business. I think it's called Cost Plus. And if you go to Mark Cuban Cost Plus, and you look at what the out-of-pocket cost is, at the consumer level for generic cyclosporine, which if you put in your eye, doesn't feel very good. And you look at what the cost is of Vivi, which I assure you feels probably a lot better and has much better data. It's actually less expensive these days to get access to VVI without a prior authorization being required and without the need for step And we're quite happy that so many patients are now moving in that direction.

Speaker Change: Yes.

Speaker Change: Pharmacy business I think it's called cost plus.

And if you go to Mark Cuban cost plus and you look at what the out of pocket cost is at the consumer level for generic cyclosporin, which if you put in your eye.

Speaker Change: It doesn't feel very good.

Speaker Change: And you look at what the cost is <unk>, which I assure you feels probably a lot better.

Speaker Change: And has much better data.

Speaker Change: It's actually less expensive these days to get access to <unk> without a prior authorization being required and without the need for step therapy, and we're quite happy that so many patients are now moving in that direction and we don't think thats going to abate as I said in my prepared remarks, so I wouldn't.

Mark Baum: And we don't think that's going to abate, as I said in my prepared remarks. So I wouldn't want to compete with us on VEFI in the cyclosporine market. And frankly, I think we're going to win the anti-inflammatory market within the category as well, because I think we've got the best anti-inflammatory. I think cyclosporine is highly trusted, and it's more trusted, I think, than anything else. And so anyway, look, we're real proud of VEFI as a product. We think it delivers clinically. We're proud of the team that is executing our commercial strategy. I wouldn't want to compete against us.

Speaker Change: Wanted to compete with us on these high.

Speaker Change: In the cyclosporin market and frankly, I think we're going to win the anti inflammatory market within the category as well because I think we've got the best anti inflammatory cyclosporine is highly trusted.

Speaker Change: More trusted I think than anything else.

Speaker Change: And so anyway outlook, we're real proud of Veeva is a product we think it delivers clinically we're proud of the team that is executing our commercial strategy.

Speaker Change: I wouldn't want to compete against us.

Mark Baum: and I think we're going to win the market.

Speaker Change: And I think we're going to win the market.

Mark Baum: Understood, Mark. Thank you.

Andrew Boll: And then maybe for Andrew, you know, a bit more color on debt refinancing, since, you know, that is viewed as a little bit of an overhang on stock. You know, if you could comment on what precisely are you looking to get to by summer to fall kind of timeframe you've said in the stockholder letter?

Speaker Change: Understood. Thank you and then maybe for Andrew a bit more color on debt refinancing since.

Speaker Change: That is viewed as a little bit of an overhang on stock.

Speaker Change: If you could comment on what precisely are you looking to get Dubai satellite do followed kind of timeframe. You have said in the stockholder letter and is it something you wanted to get fundamentally with your business internally or something externally.

Andrew Boll: And is it something you want to get fundamentally with your business internally or something externally you are watching out for, including maybe a milestone with a potential strategic acquisition, if you could comment on that. Thanks again for taking the time. Thank you, Mayank. You bet, Mayank.

Speaker Change: Watching out for including maybe a milestone with a potential strategic acquisition, if you could comment on that.

Speaker Change: Thanks again for taking the questions.

Speaker Change: Thank you you bet Mike.

Andrew Boll: The on the debt refund, I'm going to be somewhat guarded just because we're in active discussions with with lenders, including Oak Tree. And so I don't want to be handing giving away information in the middle of trying to get the best terms we can possibly get. But I would just I'm just going to say that we've had really positive discussions. I think we've got a lot of positive momentum going into the spring, and certainly summer to get something done and have have a good result for shareholders where the facilities restructured. We have plenty of room from a capital perspective to serve the debt and certainly from an operational perspective.

Speaker Change: On the debt refi I'm going to be somewhat guarded just because we're in active discussions with with lenders including Oaktree.

Speaker Change: And so I don't want to be handy.

Sandy giving away information in the middle of trying to get the best terms, we can possibly get.

Speaker Change: But I would just I'm just going to say that.

Speaker Change: We've had really positive discussions.

Speaker Change: I think we've got a lot of positive momentum going into.

Speaker Change: The spring and certainly summer to get something done.

Speaker Change: Have a good result for shareholders were.

Speaker Change: The facilities.

Speaker Change: <unk> restructured.

Speaker Change: We have.

Speaker Change: Plenty of room from a capital perspective to service to that certainly from an operational perspective.

Andrew Boll: The businesses will be operating at a great level where we'll be in a good position to eventually deliver the entire business. But the key, Mayank, and I think this is important for all shareholders to know is we have a lot of confidence in our ability to get the debt defined. The quality of institutions that we're talking to are really great institutions, great financing partners. And we have, we think we'll be able to get something done here in either late summer or early fall. makes sense. Thank you, David. Thank you, Mayank. Thank you.

Speaker Change: The businesses will be operating at a.

Speaker Change: Great level will be in a good position to <unk>.

Speaker Change: Eventually.

Speaker Change: Delever the entire business.

Speaker Change: But that the key and I think this is important for shareholders to know is we have a lot of confidence in our ability to get the debt refi.

Speaker Change: The quality of institutions that we're talking to are really great institutions, great financing partners.

Speaker Change: And we have we think we'll be able to get something done here.

Speaker Change: Either.

Speaker Change: Either late summer early fall.

Speaker Change: Makes sense. Thank you.

Speaker Change: Yes.

Speaker Change: Thank you Mike.

Mark Baum: That's all the time we have for questions.

Speaker Change: Thank you that's all the time, we have for questions I will now turn the call back to Mark L. Baum for closing remarks.

Mark Baum: I will now turn the call back to Mark L.

Mark Baum: Baum for closing remarks. Thank you. And thank you for the questions. And once again, thank you for joining us today.

Speaker Change: Thank you and thank you for the questions and once again, thank you for joining us today. So.

Mark Baum: So success really requires and this is long term success, which is what we're after building a business that we can be proud of. It requires a clear strategic vision, relentless execution, dedicated, a dedicated team. And unfortunately, it requires a little bit of time. As I mentioned earlier, you know, we've been at this for over 12 years, we built that imprimus business, that imprimus business led to all of these opportunities coming to fruition, for us to build this great company. And we think the leading eye care ophthalmic, eye care pharmaceutical company in the United States, we do expect some products to outperform others.

Speaker Change: Success really requires and this is long term success, which is what we're after building a business that we can be proud of it requires a clear strategic vision relentless execution dedicated.

Speaker Change: A dedicated team.

Speaker Change: And unfortunately, it requires a little bit of time as I mentioned.

Speaker Change: Earlier, we've been at this for over 12 years, we built that <unk> business that infamous business led to all of these opportunities coming to fruition for us to build this great company and we think the.

Speaker Change: <unk>, leading eye care ophthalmic.

Speaker Change: <unk> pharmaceutical company in the United States, we do expect some products to outperform others.

Mark Baum: Some will overperform, some will underperform, there will be fluctuations. And these are natural in any dynamic business. But overall, we're confident in the strength of our foundation, the fundamentals of our business model. And the momentum that we're seeing today really reinforces our belief that the best is yet to come. We're going to deliver record numbers this year.

Speaker Change: Some will over perform some will underperform there will be fluctuations and these are natural and any dynamic business, but overall, we're confident in the strength of our foundation the fundamentals of our business model and.

Speaker Change: And the momentum that we're seeing today really reinforces our belief that the best is yet to come we're going to deliver a record numbers this year and I want to thank the kearl family for all of their hard work.

Mark Baum: And I want to thank the Harrow family for all of their hard work. We are going to, I think, knock out our 2025 directional guidance. But we're also going to long term value for our stockholders onward and upward.

Speaker Change: We are going to I think knock out our 2025 directional guidance, but we're also going to create a lot of long term value.

Speaker Change: For our stockholders onward, and upward and if you have any.

Mark Baum: And if you have any other questions, please feel free to reach out to Jamie Webb. That's jwebb at harrow, inc.com.

Speaker Change: Other questions. Please feel free to reach out to Jamie Webb, that's J W. E DB at Hero, Inc. Dot com.

Unknown Executive: This will conclude our call. This concludes today's conference. Thank you for your participation.

Speaker Change: This will conclude our call.

Speaker Change: This concludes today's conference. Thank you for your participation you may now disconnect.

Unknown Executive: You may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

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Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Okay.

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