Harrow, Inc. (HROW) Q1 2025 Earnings: Growth Amid Growing Pains

Harrow, Inc. (NASDAQ: HROW) delivered a mixed performance in its Q1 2025 earnings report, showcasing robust revenue growth but falling short of expectations on both earnings and top-line metrics. While the stock price declined sharply following the results, the transcript revealed strategic momentum in key product lines and long-term growth catalysts that could position the company for a strong rebound.

Revenue Growth Outpaces Losses, But Misses Estimates

Harrow reported $47.8 million in revenue for Q1 2025, a 38% year-over-year increase from $34.6 million in Q1 2024. This growth was driven by its VEVYE® dry eye treatment, which saw revenue jump 35% sequentially to $21.5 million. However, the company’s GAAP net loss widened to $17.8 million, compared to $13.6 million in the prior-year period, largely due to one-time expenses ($3.7 million) and elevated operational costs.

The miss on revenue estimates—$13.3 million below expectations—sparked a 10% combined decline in stock price during regular and premarket trading. Yet, the $19.7 million record cash flow from operations and strong sequential performance in VEVYE underscored the company’s financial resilience.

VEVYE® Dominates: The Power of the VAFA Program

The VEVYE® Access for All (VAFA) program, launched late in Q1, emerged as a game-changer. Within seven weeks, it quadrupled new prescriptions and prescribers, with refill rates averaging nine refills per patient. CEO Mark L. Baum emphasized VEVYE’s potential to become Harrow’s first “nine-figure revenue product”, projecting annual sales of $100 million+ in 2025.

VEVYE’s success is critical to Harrow’s $280 million+ full-year revenue target, which requires generating $232 million in the remaining three quarters. Analysts at InvestingPro noted the stock’s undervalued status, with a $52–$65 price target range, suggesting a potential 150% upside from its current price of $21.75.

Other Product Lines Show Promise, but Challenges Linger

• IHEEZO®: April sales doubled compared to Q1’s monthly average, signaling a recovery from seasonal softness. Management expects 80,000 incremental annual units from new institutional accounts.
• TRIESENCE®: Market access gains unlocked 40% of its addressable market, with ASC and hospital sales driving adoption.
• ImprimisRx Compounding Business: Achieved a record April, contributing to Harrow’s $80 million+ compounding revenue target.

However, risks persist:
- Debt Management: Harrow’s total liabilities rose to $308.1 million, with refinancing discussions with Oaktree Capital critical to avoid liquidity strains.
- Gross Margin Pressures: One-time expenses and tariff impacts (50 basis points in 2024) could dampen near-term profitability.
- Competition: Rivals in dry eye treatments and buy-and-bill markets threaten market share.

Strategic Initiatives to Watch

1. Project Eagle: Transitioning patients from Klarity-C to VEVYE aims to boost profitability without abandoning compounding—a $80 million+ revenue stream.
2. Acquisitions: Management hinted at pursuing ophthalmic pharmaceutical assets to expand its portfolio, leveraging its “best-in-class” sales platform.
3. Debt Restructuring: A refinancing deal by late 2025 is essential to reduce interest expenses ($6.5 million in Q1) and free capital for growth.

Conclusion: A Risky Bet with High Upside

Harrow’s Q1 results reflect a company in transition: revenue is soaring, but profitability is hampered by strategic investments and debt. The VAFA program’s early success and VEVYE’s dominance in dry eye treatments justify optimism, especially with a 5-year revenue CAGR of 31% and a 74.5% gross profit margin.

Analysts’ bullish consensus and Harrow’s $66.7 million cash balance provide a cushion for execution risks. However, investors must weigh the 129% annual stock return against the 55% six-month decline and lingering debt concerns.

In the near term, meeting the $280 million revenue target hinges on:
- Sustaining VEVYE’s momentum.
- IHEEZO’s recovery from destocking.
- TRIESENCE’s market penetration.

For now, Harrow remains a high-risk, high-reward play for investors willing to bet on its ophthalmic drug pipeline and operational turnaround.

Disclosure: This analysis is for informational purposes only and not financial advice. Always consult a professional before making investment decisions.