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SEGMENTS AND CONCENTRATIONS
 3 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
SEGMENTS AND CONCENTRATIONS

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 on two 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 our 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 research and development expenses, 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:

 

   Branded   Compounding   Consolidated 
   Three Months Ended March 31, 2026 
   Branded   Compounding   Consolidated 
Product sales, net  $30,631,000   $13,499,000   $44,130,000 
Other revenues   73,000    -    73,000 
Total revenues   30,704,000    13,499,000    44,203,000 
Cost of sales   10,954,000    6,204,000    17,158,000 
Gross profit   19,750,000    7,295,000    27,045,000 
Operating expenses               
Selling, general and administrative   25,759,000    6,742,000    32,501,000 
Research and development   5,621,000    210,000    5,831,000 
Segment contribution  $(11,630,000)  $343,000    (11,287,000)
                
Corporate   -    -    10,729,000 
Research and development             64,000 
Loss from operations            $(22,080,000)

 

 

   Branded   Compounding   Consolidated 
   Three Months Ended March 31, 2025 
   Branded   Compounding   Consolidated 
Product sales, net  $27,694,000   $20,051,000   $47,745,000 
Other revenues   86,000    -    86,000 
Total revenues   27,780,000    20,051,000    47,831,000 
Cost of sales   8,181,000    7,343,000    15,524,000 
Gross profit   19,599,000    12,708,000    32,307,000 
Operating expenses               
Selling, general and administrative   20,682,000    7,522,000    28,204,000 
Research and development   1,993,000    224,000    2,217,000 
Segment contribution  $(3,076,000)  $4,962,000    1,886,000 
                
Corporate   -    -    12,309,000 
Research and development             809,000 
Loss from operations            $(11,232,000)

 

Substantially all revenue is attributable to the U.S. All long-lived assets at March 31, 2026 and December 31, 2025 were located in the U.S.

 

Revenues by segment are further described as follows:

 

   For the Three Months Ended March 31, 
   2026   2025 
IHEEZO  $1,851,000   $5,222,000 
VEVYE   20,947,000    21,516,000 
Other branded products   7,833,000    956,000 
Other revenues   73,000    86,000 
Branded revenue, net   30,704,000    27,780,000 
Compounding revenue, net   13,499,000    20,051,000 
Total revenues, net  $44,203,000   $47,831,000 

 

Other than IHEEZO for the three months ended March 31, 2025 and VEVYE, 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. There were two customers who comprised more than 10% of the Company’s Branded revenues for the three months ended March 31, 2026 and one customer who comprised more than 10% of the Company’s Branded revenues for the three months ended March 31, 2025. There were no customers who comprised more than 10% of Compounding revenues for either the three months ended March 31, 2026 or 2025. As of March 31, 2026, accounts receivable from three customers accounted for 95% of total consolidated accounts receivable. As of December 31, 2025, accounts receivable from two customers accounted for 90% of total consolidated accounts receivable.

 

The Company received its active pharmaceutical ingredients from three main suppliers during each of the three months ended March 31, 2026 and 2025. These suppliers collectively accounted for 69% and 67% of manufacturing supplies purchases during the three months ended March 31, 2026 and 2025, respectively.