Harrow Inc. shares plunged after its Q1 revenue and earnings fell short of estimates due to an $8 million reduction related to its VEVYE eye drops, triggering a securities law investigation. Despite the miss and a 21% stock decline, the company reaffirmed its full-year 2026 revenue guidance.
Harrow Inc. (NASDAQ:HROW) shares plunged 20.94 percent after the company’s first-quarter results missed revenue and earnings estimates, prompting an investigation by law firm Wohl & Fruchter LLP into potential securities law violations.
“While the first quarter presented challenges, we are confident in our strategic initiatives and expect to see improved performance in the coming quarters,” Chief Executive Officer Mark Baum said during the company's May 12 earnings call.
The Nashville-based ophthalmic pharmaceutical company reported first-quarter revenue of $44.2 million, falling nearly 16 percent short of the $52.55 million analyst consensus. A loss per share of 74 cents was more than double the forecast for a 35-cent loss. Management attributed the sharp miss to an unexpected $8 million gross-to-net revenue reduction for its flagship dry eye drug, VEVYE, tied to new commercial insurance coverage.
The investigation focuses on whether Harrow misled investors regarding VEVYE's revenue, which was negatively impacted by modeling issues and a higher-than-anticipated volume of patients with high-deductible plans. Despite the quarterly miss and subsequent stock drop to $30.09, Harrow reaffirmed its full-year 2026 revenue guidance of $350 million to $365 million, projecting a significant second-half recovery.
According to the company, the VEVYE revenue adjustment was a one-time issue. Executives stated on the earnings call that they acted immediately to implement new business rules to protect net pricing, and that early data shows the changes have not negatively impacted underlying demand. VEVYE’s total prescriptions grew 11 percent from the prior quarter, achieving 14 percent market share in the branded dry eye segment and surpassing Bausch + Lomb’s XIIDRA in monthly prescriptions.
For the second quarter of 2026, Harrow guided for revenue between $71 million and $81 million, which would represent sequential growth of approximately 72 percent at the midpoint. Management’s confidence for the rest of the year is supported by the full deployment of an expanded sales force and the upcoming July launch of its BYOOVIZ biosimilar drug.
The stock's decline to near 52-week lows reflects investor concern over the VEVYE revenue recognition issue and the company's path to profitability. Harrow's ability to hit its reaffirmed full-year guidance now depends heavily on several second-half catalysts, including the BYOOVIZ launch and a planned 20-25 percent net pricing improvement for its IHEEZO anesthetic beginning in the third quarter.
This article is for informational purposes only and does not constitute investment advice.
