HROW · Harrow
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $37.64
Note written ·
Price against the kill line
20.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $37.64, on record since 11 November 2026. The shares are down 23.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $37.64, a level over the 200-day average of closes, which would show the shares leading the S&P 500 and prove this call wrong. Reported fourth-quarter revenue above $151 million, the top of the path the 2026 guide implies, would point the same way.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 9 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 99.3
- Revenue, change on a year (%)
- +38.6
- Gross margin (%)
- 75.4
- Operating margin (%)
- 11.6
- Free cash flow, four quarters ($M)
- −20.4
- Net cash, cash less debt ($M)
- −217
- Enterprise value to sales (×)
- 4.4
- Free-cash-flow yield (%)
- −1.8
All filed numbers
What Harrow reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 99.3 | +38.6 | 75.4 | 11.6 |
| first filed | 70.7 | +10.9 | 71.3 | −15.6 |
| first filed | 44.2 | −7.6 | 61.2 | −50.0 |
| first filed | 89.1 | +33.3 | 79.3 | 17.5 |
| first filed | 71.6 | +45.4 | 75.3 | 20.6 |
| first filed | 63.7 | +30.2 | 74.5 | 17.9 |
| Pre-tax income ($M) | 10.3 |
| Net income ($M) four quarters: −28.5 | 9.8 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −0.9 |
| Operating cash flow ($M) | −19.0 |
| Capital spending ($M) | 1.4 |
| Free cash flow ($M) | −20.4 |
| Cash and short-term investments ($M) | 75.3 |
| Debt ($M) notes | 293 |
| Net cash, cash less debt ($M) | −217 |
| Deferred revenue ($M) −86.4% on a year | 0.0 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 155 |
| Inventory ($M) | 19.2 |
| Shareholders' equity ($M) | 29.2 |
| Market value ($M) | 1,131 |
| Enterprise value, market value plus net debt ($M) | 1,348 |
| Enterprise value to sales (×) | 4.4 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 38.7 |
| Free-cash-flow yield (%) | −1.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 19.9% of shares outstanding sold short, 11.2 days of average trading to cover, −3.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $469K | $9.6M |
The thesis
Harrow's profit outlook was cut by more than half on 9 November 2026, and the shares are more likely to lag the S&P 500 than lead it over the next three months. The company reaffirmed 2026 revenue of $350–365 million, which requires fourth-quarter revenue of about $136–151 million. The fourth-quarter report, expected around March 2027, settles whether revenue delivers.
The company lowered 2026 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance to "more than $40 million" from $80–100 million (third-quarter shareholder letter, Form 8-K, 9 November 2026). Third-quarter revenue was $99.3 million, up 39% from a year earlier, against a $98.5 million analyst estimate (company news, 9 November 2026). Nine-month adjusted EBITDA was $7.3 million, so the new floor leans on a fourth quarter that management guides above $33 million (earnings call, 10 November 2026).
The shares closed at $30.36 on 10 November 2026, the first session after the release, from $27.47 on 9 November 2026. They then fell to $29.37 on 11 November 2026 and $28.30 on 12 November 2026. The price has handed back most of the post-report rise, which says the market has not accepted the profit reset as a one-quarter event.
Bullish and bearish views on Harrow, Inc.
The bull case on Harrow, Inc. (HROW), in brief: VEVYE is scaling quickly. The bear case: profit guidance was cut by more than half.
Bull case
- VEVYE is scaling quickly. Third-quarter VEVYE revenue was $39.7 million, up 35% from the second quarter and 75% from a year earlier (shareholder letter, 9 November 2026). The letter says net revenue per prescription is improving as covered fills rise.
- Branded products carry the revenue. Branded products were $83.5 million of the $99.3 million third-quarter total, and IHEEZO revenue was $25.3 million (Harrow release, 9 November 2026). Third-quarter gross margin was 75%, up from 71% in the second quarter, according to MarketBeat's summary of the 10 November 2026 call.
- Management guides to a record fourth quarter. The letter expects fourth-quarter adjusted EBITDA above $33 million, record VEVYE revenue, record IHEEZO unit demand and the first TYRVAYA revenue. The TYRVAYA acquisition from Viatris closed on 1 October 2026.
- Coverage and access are widening. A commercial coverage win covering more than 10 million lives takes effect on 1 January 2027, and the HarrowRx prescribing platform launched on 1 November 2026 (shareholder letter).
- A pipeline filing is close. Management said on the 10 November 2026 call that the G-MELT new drug application is expected to be submitted in late November or early December, after a pre-submission meeting with the US Food and Drug Administration it called productive (MarketBeat call summary).
- A sell-side target sits far above the price. BTIG maintained its Buy rating and $63 target on 11 November 2026 and again on 12 November 2026, after the report.
Bear case
- Profit guidance was cut by more than half. Adjusted EBITDA guidance fell to more than $40 million from $80–100 million. The letter says the old low end would have required close to $73 million in the fourth quarter.
- The revenue guide needs a steep fourth quarter. First-half revenue was $114.9 million and third-quarter revenue was $99.3 million. The letter puts the fourth-quarter requirement at about $136–151 million and says a result modestly below the low end is possible.
- Costs are rising faster than the plan allowed. Third-quarter selling, general and administrative expense was $53.1 million against $35.9 million a year earlier. Research and development was $10.3 million against $3.3 million (shareholder letter, 9 November 2026).
- Compounded revenue keeps falling. ImprimisRx revenue was $15.8 million in the third quarter against $20.1 million a year earlier, and $43.9 million for nine months against $61.6 million.
- Cash fell and interest is heavy. Cash was $75.3 million on 30 September 2026, from $83.9 million on 30 June 2026. Third-quarter net interest expense was $6.2 million. Loans payable were $292.4 million and stockholders' equity $14.8 million at 30 June 2026 (Form 10-Q).
- Reported profit included a one-time gain. Third-quarter net income of $9.8 million included a $5.0 million litigation settlement gain.
- A licence question is open. An analyst asked on the 10 November 2026 call about a possible conflict between the TYRVAYA licence and the VEVYE licensing agreement with Novaliq. Management said the parties are in active, confidential discussions (MarketBeat call summary).
- An insider sold into the fall. Chief Scientific Officer Amir Shojaei exercised 11,250 options at $35.96 and sold the 11,250 shares at $40.00 on 14 August 2026 (SEC Form 4, filed 17 August 2026).
Price setup
Harrow closed at $28.30 on 12 November 2026. That is 48.4% below the 52-week intraday high of $54.85 set on 7 January 2026. The 52-week closing low is $26.04, reached on 5 November 2026.
The close sits under the 50-day average of $30.94 and well under the 200-day average of $37.57. The three-month change is negative 29.3%, from a $40.03 close on 14 August 2026. A rise to the 200-day average would take a gain of roughly a third from the latest close.
On pricing: BTIG's $63 target, reiterated on 12 November 2026, is more than double the latest close, while the shares trade near the low end of their 52-week closing range, so the market is pricing the fourth-quarter requirement as a real risk.
Catalysts ahead
- ~30 November 2026 (est.): G-MELT new drug application submission, which management said on the 10 November 2026 call would come in late November or early December. Shows whether the accelerated research spending behind the profit-guidance cut produces a regulatory filing.
- 1 January 2027: New commercial VEVYE coverage covering more than 10 million lives takes effect. Supports net revenue per prescription and VEVYE revenue in the first quarter of 2027.
- ~March 2027 (est.): Fourth-quarter and full-year 2026 results. Settles whether fourth-quarter revenue reaches the $136–151 million needed for the $350–365 million guide and whether adjusted EBITDA clears $40 million.
What would change the view
A daily close above $37.64, a level over the 200-day average of closes, which would show the shares leading the S&P 500 and prove this call wrong. Reported fourth-quarter revenue above $151 million, the top of the path the 2026 guide implies, would point the same way.
What it trades with
Harrow trades on its own product news more than on any sector basket. VEVYE coverage, IHEEZO demand and ImprimisRx revenue drive the numbers. Interest rates matter through its debt, which is large relative to equity. Small-cap healthcare names with similar leverage have tended to move together on rate changes, though no measured correlation backs that for Harrow.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $99.3 million, up 39% from a year earlier, against a $98.5 million analyst estimate; branded products were $83.5 million. Harrow third-quarter 2026 release (Form 8-K) and company news · as of
- 2026 revenue guidance of $350–365 million was reaffirmed; adjusted EBITDA guidance was lowered to more than $40 million from $80–100 million; nine-month adjusted EBITDA was $7.3 million. Harrow third-quarter 2026 shareholder letter (Form 8-K) · as of
- VEVYE third-quarter revenue was $39.7 million, up 35% from the second quarter and 75% from a year earlier; IHEEZO revenue was $25.3 million. Harrow third-quarter 2026 shareholder letter and release · as of
- Cash was $75.3 million and accounts receivable $155.3 million at quarter end; third-quarter net interest expense was $6.2 million. Harrow third-quarter 2026 shareholder letter · as of
- Third-quarter selling, general and administrative expense was $53.1 million against $35.9 million a year earlier; research and development was $10.3 million against $3.3 million. Harrow third-quarter 2026 shareholder letter · as of
- Third-quarter adjusted EBITDA was $21.2 million; management expects fourth-quarter adjusted EBITDA above $33 million and a G-MELT new drug application submission in late November or early December. Harrow third-quarter 2026 earnings call, via MarketBeat summary · as of
- BTIG maintained its Buy rating and $63 price target on Harrow after the third-quarter report. BTIG note reported by news outlets · as of
- Chief Scientific Officer Amir Shojaei exercised 11,250 options at $35.96 and sold 11,250 shares at $40.00. SEC Form 4 filed 17 August 2026 · as of
Sources
- SEC EDGAR ·
- SEC EDGAR ·
- Harrow Announces Third Quarter 2026 Financial Results · globenewswire.com ·
- MarketBeat ·