Private Equity-Style Fund Buys $15.7 Million in Harrow Stock as Revenue Jumps 45%
Key Points
Philadelphia-based Penn Capital Management added 325,478 shares of Harrow for an estimated $15.7 million in the third quarter.
The move created a new position for Penn, which did not report holding any shares of Harrow in the previous quarter.
The new holding places Harrow outside Penn Capital’s top five positions by fund value.
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Philadelphia-based Penn Capital Management Company disclosed a new position in Harrow (NASDAQ:HROW) on Monday, acquiring 325,478 shares valued at approximately $15.7 million during the third quarter.
What Happened
Penn Capital Management Company reported a new equity stake in Harrow (NASDAQ:HROW), acquiring 325,478 shares with an estimated value of $15.7 million as of September 30, according to an SEC filing released on Monday. This new position accounted for 1.2% of the firm’s $1.3 billion in reportable U.S. equity holdings for the quarter.
What Else to Know
Top holdings after the filing:
- NYSE:DY: $25.2 million (1.9% of AUM)
- NYSE:AMTM: $23.1 million (1.8% of AUM)
- NASDAQ:ATEC: $22.8 million (1.8% of AUM)
- NASDAQ:MIRM: $22.6 million (1.7% of AUM)
- NASDAQ:WFRD: $22.3 million (1.7% of AUM)
As of Wednesday's market close, Harrow shares were priced at $41.30, down 2% over the past year and far underperforming the S&P 500, which is up 13% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Wednesday) | $41.30 |
| Market capitalization | $1.5 billion |
| Revenue (TTM) | $250 million |
| Net income (TTM) | ($5 million) |
Company Snapshot
Harrow operates as a specialty pharmaceutical company focused on the ophthalmic sector, leveraging a diversified portfolio of branded and compounded products. More specifically, the company provides ophthalmic pharmaceuticals and compounding services, including branded and generic products for eye care, as well as royalty interests in clinical-stage drug candidates.
The company’s strategy combines direct product commercialization with strategic equity and royalty interests in innovative drug development ventures. This approach enables Harrow to address a broad range of ocular conditions, while maintaining exposure to emerging therapeutic opportunities in the specialty pharmaceutical market. The firm targets ophthalmologists, outpatient surgical centers, and specialty healthcare providers in the United States.
Foolish Take
For long-term investors, a new position initiated by a concentrated, fundamentals-driven firm like Penn Capital is meaningful because it often signals where the fund sees asymmetric value in small-cap names undergoing operational or balance-sheet transitions. Penn’s strategy—shaped by a private-equity lens—tends to favor companies with improving financial profiles, recoverable margins, and catalysts tied to structural change. Against that backdrop, adding Harrow fits their pattern of targeting niche healthcare operators with accelerating revenue momentum and expanding end-market opportunities.
Harrow’s third-quarter results underscore that thesis. Revenue grew 45% to $71.6 million, GAAP net income came in at $1 million, and adjusted EBITDA reached $22.7 million—nearly triple the prior-year period. The firm also ended the quarter with $74.3 million in cash, reinforcing liquidity during a phase of portfolio expansion. Strategic wins—including significant formulary listings for VEVYE, the expansion of its access program, and the acquisition of Melt Pharmaceuticals (announced in September)—position the company for continued top-line growth and optionality heading into 2026.
For investors, Penn’s entry doesn’t guarantee outperformance—but in combination with Harrow’s accelerating fundamentals, strong cash flow from operations, and a broadened product footprint, it adds weight to the view that Harrow may be transitioning into a more durable specialty pharma platform.
Glossary
13F reportable assets: Assets that institutional investment managers must report quarterly to the Securities and Exchange Commission (SEC), disclosing their U.S. equity holdings.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a financial institution or fund manager.
Equity stake: Ownership interest in a company, represented by holding its shares.
Compounding services: Custom preparation of pharmaceutical products to fit specific patient needs, often when commercial drugs are unavailable.
Royalty interests: Rights to receive a portion of revenue from products or intellectual property developed by another party.
Clinical-stage drug candidates: Experimental drugs currently being tested in human clinical trials but not yet approved for sale.
Ophthalmic pharmaceuticals: Medications specifically designed for the diagnosis or treatment of eye conditions.
Specialty pharmaceutical company: A firm focused on developing and marketing drugs for specific medical fields or complex conditions.
Direct product commercialization: Selling products directly to customers or healthcare providers, rather than through third parties.
TTM: The 12-month period ending with the most recent quarterly report.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amentum. The Motley Fool has a disclosure policy.
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