HARROW, INC.
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
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Sep 30, 2026 · Filed Nov 9, 2026
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Item 1. Financial Statements (unaudited)
Item 1. Financial Statements
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30,2026 | December 31,2025 | |
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | $75,336,000 | $72,927,000 |
| Accounts receivable, net | 155,308,000 | 110,895,000 |
| Inventories | 19,220,000 | 13,523,000 |
| Prepaid expenses and other current assets | 11,462,000 | 14,405,000 |
| Total current assets | 261,326,000 | 211,750,000 |
| Property, plant and equipment, net | 2,818,000 | 3,260,000 |
| Capitalized software costs, net | 1,324,000 | 1,183,000 |
| Operating lease right-of-use assets | 7,192,000 | 7,783,000 |
| Intangible assets, net | 170,029,000 | 175,174,000 |
| Goodwill | 332,000 | 332,000 |
| TOTAL ASSETS | $443,021,000 | $399,482,000 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| Current liabilities | ||
| Accounts payable and accrued expenses | $31,399,000 | $41,959,000 |
| Accrued rebates and copay assistance | 67,032,000 | 42,236,000 |
| Accrued payroll and related liabilities | 14,853,000 | 10,432,000 |
| Deferred revenue and customer deposits | 47,000 | 788,000 |
| Current portion of operating lease obligations | 893,000 | 887,000 |
| Total current liabilities | 114,224,000 | 96,302,000 |
| Operating lease obligations, net of current portion | 7,247,000 | 7,905,000 |
| Notes payable, net | 292,716,000 | 243,184,000 |
| TOTAL LIABILITIES | 414,187,000 | 347,391,000 |
| Commitments and contingencies (Note 9) | ||
| STOCKHOLDERS’ EQUITY | ||
| Common stock, $0.001 par value, 50,000,000 shares authorized, 37,522,597 and 37,229,159 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | 37,000 | 37,000 |
| Additional paid-in capital | 220,791,000 | 208,933,000 |
| Accumulated deficit | (191,639,000) | (156,524,000) |
| TOTAL HARROW, INC. STOCKHOLDERS’ EQUITY | 29,189,000 | 52,446,000 |
| Noncontrolling interests | (355,000) | (355,000) |
| TOTAL STOCKHOLDERS’ EQUITY | 28,834,000 | 52,091,000 |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $443,021,000 | $399,482,000 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Revenues: | ||||
| Product sales, net | $99,133,000 | $71,497,000 | $213,834,000 | $182,899,000 |
| Other revenues | 164,000 | 141,000 | 327,000 | 312,000 |
| Total revenues | 99,297,000 | 71,638,000 | 214,161,000 | 183,211,000 |
| Cost of sales | 24,394,000 | 17,712,000 | 61,850,000 | 49,466,000 |
| Gross profit | 74,903,000 | 53,926,000 | 152,311,000 | 133,745,000 |
| Operating expenses: | ||||
| Selling, general and administrative | 53,145,000 | 35,856,000 | 149,673,000 | 109,604,000 |
| Research and development | 10,287,000 | 3,323,000 | 24,254,000 | 9,217,000 |
| Total operating expenses | 63,432,000 | 39,179,000 | 173,927,000 | 118,821,000 |
| Income (loss) from operations | 11,471,000 | 14,747,000 | (21,616,000) | 14,924,000 |
| Interest expense, net | (6,208,000) | (6,038,000) | (17,968,000) | (18,994,000) |
| Litigation settlement gain | 5,000,000 | — | 5,000,000 | — |
| Loss on extinguishment of debt | — | (7,750,000) | — | (7,750,000) |
| Other income, net | — | 61,000 | — | 55,000 |
| Income (loss) before income taxes | 10,263,000 | 1,020,000 | (34,584,000) | (11,765,000) |
| Income tax expense | (506,000) | — | (531,000) | — |
| Net income (loss) | $9,757,000 | $1,020,000 | $(35,115,000) | $(11,765,000) |
| Basic net income (loss) per share of common stock | $0.26 | $0.03 | $(0.94) | $(0.32) |
| Diluted net income (loss) per share of common stock | $0.25 | $0.03 | $(0.94) | $(0.32) |
| Weighted average number of shares of common stock outstanding, basic | 37,501,971 | 37,145,440 | 37,362,222 | 36,588,163 |
| Weighted average number of shares of common stock outstanding, diluted | 38,533,699 | 38,875,005 | 37,362,222 | 36,588,163 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2026 and 2025
| Common Stock · AdditionalPaid-inCapital · Accumulated Deficit · Total Harrow, Inc. Stockholders’ Equity · Total Noncontrolling Interest Equity · Total Stockholders’ Equity | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Shares · ParValue | ||||||||||
| Balance at January 1, 2025 | 35,622,214 | $35,000 | $221,002,000 | $(151,385,000) | $69,652,000 | $(355,000) | $69,297,000 | |||
| Issuance of common stock in connection with: | ||||||||||
| Exercise of employee stock-based options | 628,146 | 1,000 | 286,000 | — | 287,000 | — | 287,000 | |||
| Vesting of RSUs | 1,654,009 | 2,000 | (2,000) | — | — | — | — | |||
| Shares withheld related to net share settlement of equity awards | (869,787) | (1,000) | (19,859,000) | — | (19,860,000) | — | (19,860,000) | |||
| Stock-based compensation expense | — | — | 8,702,000 | — | 8,702,000 | — | 8,702,000 | |||
| Net loss | — | — | — | (11,765,000) | (11,765,000) | — | (11,765,000) | |||
| Balance at September 30, 2025 | 37,034,582 | $37,000 | $210,129,000 | $(163,150,000) | $47,016,000 | $(355,000) | $46,661,000 | |||
| Common Stock · AdditionalPaid-inCapital · Accumulated Deficit · Total Harrow, Inc. Stockholders’ Equity · Total Noncontrolling Interest Equity · Total Stockholders’ Equity | |||||||
|---|---|---|---|---|---|---|---|
| Shares · ParValue | |||||||
| Balance at January 1, 2026 | 37,229,159 | $37,000 | $208,933,000 | $(156,524,000) | $52,446,000 | $(355,000) | $52,091,000 |
| Issuance of common stock in connection with: | |||||||
| Exercise of employee stock-based options | 298,376 | — | 1,682,000 | — | 1,682,000 | — | 1,682,000 |
| Vesting of RSUs | 28,000 | — | — | — | — | — | — |
| Shares withheld related to net share settlement of equity awards | (32,938) | — | (1,178,000) | — | (1,178,000) | — | (1,178,000) |
| Stock-based compensation expense | — | — | 11,354,000 | — | 11,354,000 | — | 11,354,000 |
| Net loss | — | — | — | (35,115,000) | (35,115,000) | — | (35,115,000) |
| Balance at September 30, 2026 | 37,522,597 | $37,000 | $220,791,000 | $(191,639,000) | $29,189,000 | $(355,000) | $28,834,000 |
| Common Stock · AdditionalPaid-inCapital · Accumulated Deficit · Total Harrow, Inc. Stockholders’ Equity · Total Noncontrolling Interest Equity · Total Stockholders’ Equity | |||||||
|---|---|---|---|---|---|---|---|
| Shares · ParValue | |||||||
| Balance at July 1, 2025 | 36,714,679 | $36,000 | $213,788,000 | $(164,170,000) | $49,654,000 | $(355,000) | $49,299,000 |
| Issuance of common stock in connection with: | |||||||
| Exercise of employee stock-based options | 617,528 | 1,000 | 161,000 | — | 162,000 | — | 162,000 |
| Vesting of RSUs | 20,000 | — | — | — | — | — | — |
| Shares withheld related to net share settlement of equity awards | (317,625) | — | (7,091,000) | — | (7,091,000) | — | (7,091,000) |
| Stock-based compensation expense | — | — | 3,271,000 | — | 3,271,000 | — | 3,271,000 |
| Net income | — | — | — | 1,020,000 | 1,020,000 | — | 1,020,000 |
| Balance at September 30, 2025 | 37,034,582 | $37,000 | $210,129,000 | $(163,150,000) | $47,016,000 | $(355,000) | $46,661,000 |
| Common Stock · AdditionalPaid-inCapital · Accumulated Deficit · Total Harrow, Inc. Stockholders’ Equity · Total Noncontrolling Interest Equity · Total Stockholders’ Equity | |||||||
|---|---|---|---|---|---|---|---|
| Shares · ParValue | |||||||
| Balance at July 1, 2026 | 37,484,233 | $37,000 | $216,559,000 | $(201,396,000) | $15,200,000 | $(355,000) | $14,845,000 |
| Issuance of common stock in connection with: | |||||||
| Exercise of employee stock-based options | 33,282 | — | 580,000 | — | 580,000 | — | 580,000 |
| Vesting of RSUs | 7,500 | — | — | — | — | — | — |
| Shares withheld related to net share settlement of equity awards | (2,418) | — | (76,000) | — | (76,000) | — | (76,000) |
| Stock-based compensation expense | — | — | 3,728,000 | — | 3,728,000 | — | 3,728,000 |
| Net income | — | — | — | 9,757,000 | 9,757,000 | — | 9,757,000 |
| Balance at September 30, 2026 | 37,522,597 | $37,000 | $220,791,000 | $(191,639,000) | $29,189,000 | $(355,000) | $28,834,000 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Nine Months EndedSeptember 30, | ||
|---|---|---|
| 2026 | 2025 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net loss | $(35,115,000) | $(11,765,000) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
| Depreciation and amortization of property, plant and equipment and software development costs | 1,361,000 | 1,451,000 |
| Amortization of intangible assets | 16,228,000 | 12,676,000 |
| Noncash lease expense | 591,000 | 583,000 |
| (Recovery of) provision for credit losses | (443,000) | 548,000 |
| Amortization of debt issuance costs, discount and premium, net | 1,256,000 | 3,692,000 |
| Litigation settlement gain | (5,000,000) | — |
| Loss on extinguishment of debt | — | 7,750,000 |
| Stock-based compensation | 11,354,000 | 8,702,000 |
| Changes in assets and liabilities: | ||
| Accounts receivable | (38,970,000) | 38,225,000 |
| Inventories | (5,697,000) | (2,132,000) |
| Prepaid expenses and other current assets | 2,808,000 | 2,449,000 |
| Accounts payable, accrued expenses, accrued rebates and copay assistance | 20,584,000 | (27,049,000) |
| Accrued payroll and related liabilities | 4,421,000 | 22,000 |
| Deferred revenue and customer deposits | (741,000) | 301,000 |
| NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | (27,363,000) | 35,453,000 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Investment in patent and trademark assets | (83,000) | (22,000) |
| Purchase of product rights | (18,000,000) | (162,000) |
| Purchases of property, plant and equipment | (1,060,000) | (546,000) |
| NET CASH USED IN INVESTING ACTIVITIES | (19,143,000) | (730,000) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Net proceeds from 8.625% notes payable, net of commissions | 49,000,000 | 244,375,000 |
| Payment of debt issuance costs | (589,000) | (1,581,000) |
| Repayment of notes payable, including exit costs | — | (230,901,000) |
| Proceeds from exercise of stock options | 1,418,000 | 287,000 |
| Payment of payroll taxes upon exercise and issuance of equity awards | (914,000) | (19,860,000) |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 48,915,000 | (7,680,000) |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 2,409,000 | 27,043,000 |
| CASH AND CASH EQUIVALENTS, beginning of period | 72,927,000 | 47,247,000 |
| CASH AND CASH EQUIVALENTS, end of period | $75,336,000 | $74,290,000 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
| Cash paid for income taxes | $2,275,000 | $38,000 |
| Cash paid for interest | $23,898,000 | $18,718,000 |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
| Unpaid acquisitions of property, plant and equipment | $— | $74,000 |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2026 and 2025
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Company and Background
Harrow, Inc. (together with its consolidated subsidiaries, unless the context indicates or otherwise requires, the “Company” or “Harrow”) is a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative ophthalmic pharmaceutical products for the U.S. market. The Company owns commercial rights to one of the largest portfolios of branded ophthalmic pharmaceutical products in North America, all of which are marketed under its Harrow name. The Company also owns and operates ImprimisRx, one of the nation’s leading ophthalmology-focused pharmaceutical-compounding businesses.
Basis of Presentation
The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other period. For further information, refer to the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries.
Harrow consolidates entities in which it has a controlling financial interest. The Company assesses control under the variable interest entity (“VIE”) model to determine whether the Company is the primary beneficiary of that entity. The Company consolidates (i) entities in which it holds and/or controls, directly or indirectly, more than 50% of the voting rights, and (ii) VIEs for which the Company is deemed to be the primary beneficiary. All material intercompany accounts and transactions have been eliminated in consolidation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following represents an update for the three and nine months ended September 30, 2026 to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management are, among others, allowance for credit losses, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, renewal periods and discount rates for leases, realizability of inventories, recoverability of investments, realizability of deferred tax assets, recoverability of long-lived assets and goodwill, valuations and purchase price allocations related to business combinations and asset acquisitions, fair value of notes payable, and valuation of stock-based transactions with employees and nonemployees. Actual results could differ from those estimates.
Risks and Uncertainties
The Company is subject to certain regulatory standards, approvals, guidelines and inspections which could impact the Company’s ability to make, dispense, and sell certain products. If the Company was required to cease compounding and selling certain products because of regulatory guidelines or inspections, this may have a material impact on the Company’s financial condition, liquidity and results of operations.
Credit Losses
The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables. Management considers historical collection rates, the current financial status of the Company’s customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable, management believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical and current analysis of such financial instruments, including its trade receivables.
To determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of customer at the business component level, as management determined that the risk profile of the Company’s customers is consistent based on the type and industry in which they operate, mainly in the pharmaceuticals industry. Each business component is analyzed for estimated credit losses individually. In doing so, the Company establishes a historical loss matrix, based on the previous collections of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers, as available. Further, the Company considers macroeconomic factors and the status of the pharmaceuticals industry to estimate if there are current expected credit losses within its trade receivables based on the trends of the Company’s expectation of the future status of such economic and industry-specific factors. Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.
The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected at September 30, 2026:
| Balance, January 1, 2026 | $884,000 |
|---|---|
| Recovery of expected credit losses | (443,000) |
| Write-offs, net of recoveries | (106,000) |
| Balance, September 30, 2026 | $335,000 |
Fair Value Measurements
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, Level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
The Company’s 2030 Notes (as defined in Note 8) are carried at face value, less unamortized debt issuance costs, on the condensed consolidated balance sheets and the Company presents fair value for disclosure purposes only. The 2030 Notes are classified as Level 1 instruments as the fair value is determined using quoted market prices in active markets for the same securities.
The following table presents the estimated fair values and the carrying values:
| September 30, 2026 | December 31, 2025 | |||
|---|---|---|---|---|
| Carrying Value | Fair Value | Carrying Value | Fair Value | |
| 2030 Notes | $292,716,000 | $295,110,000 | $243,184,000 | $262,500,000 |
The Company’s other financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, accrued payroll and related liabilities, deferred revenue and customer deposits. The carrying amount of these financial instruments approximates fair value due to the short-term maturity of these instruments.
Basic and Diluted Net Income (Loss) per Common Share
Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders for the period by the weighted-average number of common and common equivalent shares, such as stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), and warrants, outstanding during the period. Common equivalent shares (using the treasury stock or “if converted” method) from stock options, unvested RSUs, and unvested PSUs were 346,225 and 1,493,348 for the three and nine months ended September 30, 2026, respectively, and 0 and 1,911,979 for the three and nine months ended September 30, 2025, respectively, and are excluded in the calculation of diluted net income (loss) per common share for the periods presented, because the effect is anti-dilutive. Included in the basic and diluted net income (loss) per share calculation were RSUs awarded to directors that had vested, but for which the issuance and delivery of the shares are deferred until the director ceases providing services to the Company. The number of shares underlying vested RSUs at September 30, 2026 and 2025 was 251,141 and 216,483, respectively.
The following table reconciles the number of weighted-average shares outstanding used to calculate diluted earnings per share:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Weighted-average number of shares outstanding, basic | 37,501,971 | 37,145,440 | 37,362,222 | 36,588,163 |
| Dilutive common equivalents: | ||||
| Restricted stock units | 79,516 | 121,280 | — | — |
| Stock options | 952,212 | 1,608,285 | — | — |
| Weighted average number of shares outstanding, diluted | 38,533,699 | 38,875,005 | 37,362,222 | 36,588,163 |
Accounting Guidance Issued but Not Adopted at September 30, 2026
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements—Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modifies the disclosure or presentation requirements of a variety of topics in the codification by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the effective date for the Company for each amendment will be determined based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirement by June 30, 2027, then the related amendment in ASU 2023-06 will be removed from the codification and will not become effective. Early adoption of this ASU is prohibited. The Company does not expect the amendments in this ASU to have a material impact on the disclosures or presentation in its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, to improve the disclosures by a public business entity about the types of expenses in commonly presented expense captions. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. Except for expanded footnote disclosure, the Company does not expect the adoption of ASU 2024-03 will have a material effect on its consolidated financial statements.
NOTE 3. REVENUES
The following table summarizes activity and ending balances of the Company’s variable consideration provisions in the consolidated financial statements for the nine months ended September 30, 2026 and 2025:
| Accruals for Chargebacks, Returns, and Other Allowances | |||||||
|---|---|---|---|---|---|---|---|
| Chargebacks | Rebates | Returns | Administrative Fees and OtherRebates | Co-Pay Assistance | Prompt PayDiscounts | Total | |
| Balance at December 31, 2024(1) | $960,000 | $12,360,000 | $1,449,000 | $32,873,000 | $9,612,000 | $2,377,000 | $59,631,000 |
| Accruals/adjustments | 22,976,000 | 12,082,000 | 12,810,000 | 61,730,000 | 35,100,000 | 3,540,000 | 148,238,000 |
| Credits taken against reserve | (18,144,000) | (9,977,000) | (7,375,000) | (75,765,000) | (42,299,000) | (4,444,000) | (158,004,000) |
| Balance at September 30, 2025(1) | $5,792,000 | $14,465,000 | $6,884,000 | $18,838,000 | $2,413,000 | $1,473,000 | $49,865,000 |
| Balance at December 31, 2025(1) | $11,027,000 | $28,217,000 | $8,018,000 | $16,540,000 | $2,085,000 | $2,494,000 | $68,381,000 |
| Accruals/adjustments | 13,990,000 | 36,967,000 | 6,063,000 | 122,273,000 | 14,621,000 | 3,209,000 | 197,123,000 |
| Credits taken against reserve | (18,748,000) | (32,667,000) | (8,322,000) | (101,290,000) | (14,411,000) | (4,402,000) | (179,840,000) |
| Balance at September 30, 2026(1) | $6,269,000 | $32,517,000 | $5,759,000 | $37,523,000 | $2,295,000 | $1,301,000 | $85,664,000 |
(1)Chargebacks and other allowances are included as an offset to accounts receivable in the condensed consolidated balance sheets. Administrative Fees and Other Rebates, Prompt Pay Discounts and Returns are included as a reduction to accounts receivable, net of chargebacks and other allowances, or accrued rebates and copay assistance in the condensed consolidated balance sheets. Government rebates are included in accrued rebates and copay assistance in the condensed consolidated balance sheets.
NOTE 4. INVENTORIES
Inventories are comprised of finished compounded formulations, over-the-counter and prescription retail pharmacy products, branded pharmaceutical products, including those held at the Company’s third-party logistics partner, related laboratory supplies and active pharmaceutical ingredients. The composition of inventories as of September 30, 2026 and December 31, 2025 was as follows:
| September 30, 2026 | December 31, 2025 | |
|---|---|---|
| Raw materials | $8,362,000 | $6,958,000 |
| Work in progress | 656,000 | 1,036,000 |
| Finished goods | 10,202,000 | 5,529,000 |
| Total inventories | $19,220,000 | $13,523,000 |
NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets at September 30, 2026 and December 31, 2025 consisted of the following:
| September 30, 2026 | December 31, 2025 | |
|---|---|---|
| Prepaid insurance | $2,389,000 | $2,185,000 |
| Prepaid computer software licenses and related expenses | 1,321,000 | 598,000 |
| Prefunded co-pay assistance | 1,914,000 | 3,342,000 |
| Other prepaid expenses | 4,369,000 | 1,825,000 |
| Prescription Drug User Fee Act (“PDUFA”) program fees | — | 4,327,000 |
| Deposits and other current assets | 1,469,000 | 2,128,000 |
| Total prepaid expenses and other current assets | $11,462,000 | $14,405,000 |
NOTE 6. INTANGIBLE ASSETS AND GOODWILL
The Company’s intangible assets at September 30, 2026 consisted of the following:
| Weighted-average useful life(in years) | Cost | AccumulatedAmortization | NetCarrying Value | |
|---|---|---|---|---|
| Definite-lived Intangibles | ||||
| Patents | 19 | $289,000 | $(90,000) | $199,000 |
| Licenses | 20 | 50,000 | (41,000) | 9,000 |
| Acquired product rights | 14 | 225,480,000 | (56,112,000) | 169,368,000 |
| Customer relationships | 7 | 190,000 | (158,000) | 32,000 |
| Trade name | 5 | 70,000 | (5,000) | 65,000 |
| State pharmacy licenses | 25 | 8,000 | (4,000) | 4,000 |
| Indefinite-lived Intangibles | ||||
| Trademarks | Indefinite | 352,000 | — | 352,000 |
| $226,439,000 | $(56,410,000) | $170,029,000 | ||
Amortization expense for intangible assets for the three and nine months ended September 30, 2026 and 2025 was as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Patents | $8,000 | $2,000 | $25,000 | $8,000 |
| Acquired product rights | 5,558,000 | 4,219,000 | 16,191,000 | 12,659,000 |
| Customer relationships | 6,000 | 3,000 | 12,000 | 9,000 |
| $5,572,000 | $4,224,000 | $16,228,000 | $12,676,000 | |
Estimated future amortization expense for the Company’s intangible assets at September 30, 2026 was as follows:
| Remainder of 2026 | $5,620,000 |
| 2027 | 20,241,000 |
| 2028 | 17,112,000 |
| 2029 | 17,001,000 |
| 2030 | 16,594,000 |
| Thereafter | 93,109,000 |
| $169,677,000 |
In January 2026, the Company amended the Asset Purchase Agreement with Eyevance Pharmaceuticals, LLC and the License Agreement with Santen S.A.S. (collectively, the “Santen Agreements”), each a subsidiary of Santen Pharmaceuticals Co., Ltd. (collectively, “Santen”). Pursuant to the amendment, the parties agreed to a full and final settlement of all contingent milestone obligations related to specified manufacturing-related events for the Santen products in exchange for a one-time lump sum payment by the Company of $7,000,000. Following this payment, no further milestone payments will be due under the Santen Agreements. The Company capitalized this payment as an intangible asset within acquired product rights.
In February 2026, the Company made a one-time upfront payment of $4,000,000 to Samsung Bioepis Co., Ltd. (“Samsung”) upon the license effective date related to the development and commercialization agreement with Samsung entered into in July 2025. The payment was capitalized as an intangible asset within acquired product rights because the products had received FDA approval prior to the license effective date.
In March 2026, the Company paid a commercial milestone payment of $7,000,000 related to the sales of VEVYE during 2025. The milestone payment was included in accounts payable and accrued expenses on the December 31, 2025 condensed consolidated balance sheet and was capitalized in acquired product rights.
There wereno changes to the carrying value of the Company’s goodwill during the three and nine months ended September 30, 2026 and 2025.
NOTE 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at September 30, 2026 and December 31, 2025 consisted of the following:
| September 30,2026 | December 31,2025 | |
|---|---|---|
| Accounts payable | $30,071,000 | $35,355,000 |
| Accrued interest | 1,222,000 | 6,498,000 |
| Other accrued expenses | 106,000 | 106,000 |
| Total accounts payable and accrued expenses | $31,399,000 | $41,959,000 |
NOTE 8. DEBT
8.625% Senior Notes Due 2030
In March 2026, the Company entered into the First Supplemental Indenture to the Indenture dated September 12, 2025 pursuant to which the Company issued $50,000,000 aggregate principal amount of additional 8.625% Senior Notes due 2030 (the “New Notes”). The New Notes were issued at 100.25% of par value and resulted in net proceeds to the Company of $48,411,000 after deducting underwriting discounts, commissions and other offering expenses of $1,589,000. The New Notes, together with the 8.625% Senior Notes due 2030 issued in September 2025 (the “Existing Notes”) (together, the “2030 Notes”) are treated as a single series and have the same terms as the Existing Notes. The issuance costs and premium relating to the New Notes were deferred and will be recognized as interest expense using the effective-interest method (9.36%) over the remaining term of the debt.
Interest expense totaled $6,882,000 and $19,748,000 for the three and nine months ended September 30, 2026, respectively, and included the amortization of debt issuance costs and premium of $405,000 and $1,256,000, respectively.
A summary of the Company’s debt at September 30, 2026 and December 31, 2025 is as follows:
| September 30,2026 | December 31,2025 | |
|---|---|---|
| 8.625% Senior Notes due September 2030 | $300,000,000 | $250,000,000 |
| Less: Unamortized debt issuance costs, discount and premium, net | (7,284,000) | (6,816,000) |
| $292,716,000 | $243,184,000 |
At September 30, 2026, future minimum principal payments under the Company’s debt were as follows:
| Remainder of 2026 | $— |
| 2027 | — |
| 2028 | — |
| 2029 | — |
| 2030 | 300,000,000 |
| Total minimum principal payments | 300,000,000 |
| Less: unamortized debt issuance costs, discount and premium, net | (7,284,000) |
| Notes payable, net | $292,716,000 |
NOTE 9. COMMITMENTS AND CONTINGENCIES
Legal
General and Other
In the ordinary course of business, the Company is involved in various legal proceedings, government investigations and other matters that are complex in nature and have outcomes that are difficult to predict. The Company describes legal proceedings and other matters that are, or were, significant or that it believes could become significant in this footnote.
The Company records accruals for loss contingencies to the extent that it concludes it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of a liability that has been accrued previously.
The Company’s legal proceedings involve various aspects of its business and a variety of claims, some of which present novel factual allegations and/or unique legal theories. Typically, a number of matters pending against the Company are at early stages of the legal process, which in complex proceedings of the sort the Company faces often extend for several years. While it is not possible to accurately predict or determine the eventual outcomes of matters that have not concluded, an adverse determination in one or more of these matters (whether discussed in this footnote or not) currently pending may have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows. Legal costs incurred for loss contingencies are expensed as incurred.
Ocular Science, Inc. et al.
In July 2021, ImprimisRx, LLC ("ImprimisRx"), a subsidiary of the Company, sued Ocular Science, Inc. and OSRX, Inc. (together, "OSRX") in the U.S. District Court for the Southern District of California. The suit asserted claims for copyright infringement, trademark infringement and unfair competition. After a jury trial, the court entered an amended final judgment on October 1, 2025. The judgment awarded ImprimisRx $11,249,000, plus post-judgment interest, and enjoined OSRX from using certain trademarks. OSRX appealed the judgment and deposited $11,249,000 into the court's registry as security pending appeal.
On September 10, 2026, the Company and certain of its subsidiaries entered into a settlement agreement with OSRX. The agreement resolved this matter and related proceedings between the parties. The settlement depended on the court vacating the injunction and releasing the registry funds, which the court ordered on September 24, 2026. Under that order, $5,000,000 of the registry funds is scheduled to be released to ImprimisRx in November 2026, and the remainder was returned to OSRX. The parties exchanged mutual releases and agreed to certain covenants on the use of each other's trademarks. No party admitted liability. The Company recognized a gain of $5,000,000 in the condensed consolidated statements of operations for the three and nine months ended September 30, 2026.
Product and Professional Liability
Product and professional liability litigation represents an inherent risk to all firms in the pharmaceutical and pharmacy industry. The Company utilizes traditional third-party insurance policies with regard to its product and professional liability claims. Such insurance coverage at any given time reflects current market conditions, including cost and availability, when the policy is written.
Judy and Paul Conner v. ImprimisRx, et al.
In October 2023, Judy and Paul Conner filed a medical malpractice and product liability lawsuit against Carl J. May, M.D., The May Eye Care Center & Associates, May Eye Care, P.C., UPMC Pinnacle, Hanover Surgicenter, Harrow, Inc.,
ImprimisRx, LLC, and Imprimis NJOF, LLC in Philadelphia County, Pennsylvania. The complaint alleges that Ms. Conner sustained vision loss following procedures performed by Dr. May, in which a compounded formulation supplied by Imprimis NJOF, LLC was used. Trial is currently scheduled to begin on December 7, 2026. The Company believes it has meritorious defenses and intends to defend the matter vigorously. The Company’s product liability insurer is providing a defense subject to a reservation of rights.
Indemnities
In addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate indemnification agreements with each of the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. Several of the Company’s asset purchase and license agreements contain customary representations, warranties, covenants and confidentiality provisions, and also contain mutual indemnification obligations related primarily to performance under the respective agreements. The Company also indemnifies its lessors in connection with its facility leases for certain claims arising from the use of the facilities. These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying condensed consolidated balance sheets.
Asset Purchase, License and Related Agreements
FDA Approved Product Acquisitions
In recent years, the Company has acquired commercial and product rights to various FDA-approved ophthalmic medications and products through asset purchase, licenses, supply and/or other related agreements. In general, in exchange for product and commercial rights these agreements provide the counterparties with certain upfront and contingent milestone payments typically related to certain annual sales amounts and manufacturing events, and in certain cases, per unit transfer prices and royalties on sales of some of the products.
During the three and nine months ended September 30, 2026, $5,099,000 and $10,952,000, respectively, were incurred under these agreements as royalty expenses. During the three and nine months ended September 30, 2025, $2,480,000 and $6,853,000, respectively, were incurred as royalty expenses. During the nine months ended September 30, 2026, $18,000,000 was paid under these agreements related to upfront and milestone payments. Royalty expense is included in cost of sales in the condensed consolidated statements of operations. As of September 30, 2026, the remaining contingent considerations payable pursuant to these agreements were not considered probable as the contingency is not resolved and, therefore, no amount has been recognized related to these contingent considerations as of September 30, 2026.
Contract Manufacturing
The Company has entered into manufacturing agreements with respect to third-party contract manufacturers for its FDA-approved pharmaceutical products. Some of these contract manufacturing agreements require minimum annual order amounts. The Company has committed to pay approximately $10,723,000 related to contract manufacturing agreements for the year ending December 31, 2026. Minimum annual quantities carry no payment obligation for quantities not purchased; the supplier's sole remedy for a shortfall is prospective repricing and, if no agreement on pricing can be reached, termination of the agreement. No liability has been recorded, and no commitment loss has been recognized under ASC 330, as of September 30, 2026.
NOTE 10. SEGMENTS AND CONCENTRATIONS
The chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM does not review segment assets when assessing segment performance and deciding how to allocate resources. The Company reports ontwo reportable segments which are generally determined based on the decision-making structure of the Company and the grouping of similar products and services: Branded and Compounding.
The Branded segment includes activities of the Company’s FDA-approved ophthalmology pharmaceutical products, including the out-licensing of rights to certain of the Company's branded products.
The Compounding segment represents activities in the Company’s ophthalmology-focused pharmaceutical compounding business.
The CODM evaluates segment performance and makes resource-allocation decisions primarily on the basis of segment contribution. Segment contribution is the internal measure of profitability that the CODM reviews on a regular basis to assess the operational performance of each segment, determine the appropriate level of sales and marketing investments, evaluate pricing decisions, and prioritize capital deployment among branded product initiatives and the compounding operations.
Segment contribution for the segments represents net revenues less cost of sales, certain general and administrative expenses, selling and marketing expenses, and research and development expenses. The Company does not evaluate the following items at the segment level:
Selling, general and administrative expenses that result from shared infrastructure, including certain expenses associated with legal matters, public company costs (e.g., investor relations), Board of Directors and principal executive officers and other similar shared expenses.
Operating expenses within selling, general and administrative expenses that result from the impact of corporate initiatives. Corporate initiatives primarily include integration, restructuring, acquisition and other shared costs.
Other select revenues and operating expenses including certain research and development expenses, non-product related amortization, and asset sales and impairments, net, as not all such information has been accounted for at the segment level, or such information has not been used by all segments.
Segment net revenues, segment operating expenses and segment contribution information consisted of the following:
| Three Months Ended September 30, 2026 · Three Months Ended September 30, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Branded · Compounding · Consolidated · Branded · Compounding · Consolidated | ||||||||
| Product sales, net | $83,298,000 | $15,835,000 | $99,133,000 | $51,441,000 | $20,056,000 | $71,497,000 | ||
| Other revenues | 164,000 | — | 164,000 | 141,000 | — | 141,000 | ||
| Total revenues | 83,462,000 | 15,835,000 | 99,297,000 | 51,582,000 | 20,056,000 | 71,638,000 | ||
| Cost of sales | 17,305,000 | 7,089,000 | 24,394,000 | 9,491,000 | 8,221,000 | 17,712,000 | ||
| Gross profit | 66,157,000 | 8,746,000 | 74,903,000 | 42,091,000 | 11,835,000 | 53,926,000 | ||
| Operating expenses | ||||||||
| Selling, general and administrative | 35,405,000 | 7,642,000 | 43,047,000 | 20,085,000 | 7,344,000 | 27,429,000 | ||
| Research and development | 9,841,000 | 392,000 | 10,233,000 | 2,929,000 | 378,000 | 3,307,000 | ||
| Segment contribution | $20,911,000 | $712,000 | 21,623,000 | $19,077,000 | $4,113,000 | 23,190,000 | ||
| Corporate | 10,098,000 | 8,427,000 | ||||||
| Research and development | 54,000 | 16,000 | ||||||
| Income from operations | $11,471,000 | $14,747,000 | ||||||
| Nine Months Ended September 30, 2026 · Nine Months Ended September 30, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Branded · Compounding · Consolidated · Branded · Compounding · Consolidated | ||||||||
| Product sales, net | $169,944,000 | $43,890,000 | $213,834,000 | $121,324,000 | $61,575,000 | $182,899,000 | ||
| Other revenues | 327,000 | — | 327,000 | 312,000 | — | 312,000 | ||
| Total revenues | 170,271,000 | 43,890,000 | 214,161,000 | 121,636,000 | 61,575,000 | 183,211,000 | ||
| Cost of sales | 41,694,000 | 20,156,000 | 61,850,000 | 26,406,000 | 23,060,000 | 49,466,000 | ||
| Gross profit | 128,577,000 | 23,734,000 | 152,311,000 | 95,230,000 | 38,515,000 | 133,745,000 | ||
| Operating expenses | ||||||||
| Selling, general and administrative | 97,551,000 | 21,970,000 | 119,521,000 | 61,097,000 | 21,964,000 | 83,061,000 | ||
| Research and development | 23,136,000 | 941,000 | 24,077,000 | 7,312,000 | 1,044,000 | 8,356,000 | ||
| Segment contribution | $7,890,000 | $823,000 | 8,713,000 | $26,821,000 | $15,507,000 | 42,328,000 | ||
| Corporate | 30,152,000 | 26,543,000 | ||||||
| Research and development | 177,000 | 861,000 | ||||||
| (Loss) income from operations | $(21,616,000) | $14,924,000 | ||||||
Substantially all revenue is attributable to the U.S. All long-lived assets at September 30, 2026 and December 31, 2025 were located in the U.S.
Revenues by segment are further described as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| IHEEZO | $25,297,000 | $21,907,000 | $42,833,000 | $45,465,000 |
| VEVYE | 39,699,000 | 22,626,000 | 90,033,000 | 62,783,000 |
| TRIESENCE | 10,707,000 | 3,749,000 | 20,134,000 | 4,862,000 |
| Other branded products | 7,595,000 | 3,159,000 | 16,944,000 | 8,214,000 |
| Other revenues | 164,000 | 141,000 | 327,000 | 312,000 |
| Branded revenue, net | 83,462,000 | 51,582,000 | 170,271,000 | 121,636,000 |
| Compounding revenue, net | 15,835,000 | 20,056,000 | 43,890,000 | 61,575,000 |
| Total revenues, net | $99,297,000 | $71,638,000 | $214,161,000 | $183,211,000 |
Other than IHEEZO and VEVYE for the three and nine months ended September 30, 2026 and 2025 and TRIESENCE for the three months ended September 30, 2026, no other products accounted for more than 10% of total revenues for the periods presented.
Customer and Supplier Concentrations
Substantially all of the Company’s Branded sales are made to third-party distributors who sell the products to pharmacies and to the end-users. The table below represents the percentage of Branded sales for each customer who comprised more than 10% of the Company’s Branded revenues for the three and nine months ended September 30, 2026 and 2025:
| % of Branded Revenues | ||||
|---|---|---|---|---|
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2026 | 2025 | 2026 | 2025 | |
| Customer A | 34% | 66% | 38% | 71% |
| Customer B | 31% | 29% | 36% | 26% |
| Customer C | 33% | —% | 26% | —% |
There were no customers who comprised more than 10% of Compounding revenues for either the three or nine months ended September 30, 2026 or 2025.
As of September 30, 2026 and December 31, 2025, the following table represents the percentage of total accounts receivable from customers that comprise more than 10% of the total accounts receivable balance:
| September 30,2026 | December 31,2025 | |
|---|---|---|
| Customer A | 29% | 48% |
| Customer B | 18% | 13% |
| Customer C | 49% | 29% |
The Company received its active pharmaceutical ingredients from three main suppliers during each of the three and nine months ended September 30, 2026 and 2025. These suppliers collectively accounted for 49% and 36% of manufacturing supplies purchases during the three and nine months ended September 30, 2026, respectively, and 38% and 68% during the three and nine months ended September 30, 2025, respectively.
NOTE 11. SUBSEQUENT EVENTS
On October 1, 2026, the Company completed its previously announced acquisition of TYRVAYA® (varenicline solution) nasal spray 0.03 mg from Viatris Inc. (“Viatris”) (the "Acquisition") pursuant to an Amended and Restated Asset Purchase Agreement entered into on that date (the “Purchase Agreement”). The assets acquired consist of the related new drug application and other regulatory approvals, intellectual property, developed technology, inventory and related contracts, in each case relating to TYRVAYA in all countries of the world other than Japan, and the Company assumed certain specified liabilities relating to those assets. Viatris retained the rights to commercialize TYRVAYA in Japan and, under a related letter agreement, is obligated to pay the Company tiered royalties on net sales of TYRVAYA in Japan. In connection with the closing, the Company and Viatris also entered into a transition services agreement under which Viatris will provide specified commercial, supply chain, regulatory and other support services for a transitional period.
As consideration for the Acquisition, the Company paid Viatris $30,000,000 in cash at the closing of the Acquisition (the “Closing”) and has agreed to pay up to an additional $70,000,000 in contingent milestone payments, payable if specified net sales thresholds for TYRVAYA are achieved over specified twelve-month measurement periods ending on or before December 31, 2029. The Acquisition was treated as an asset acquisition.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.