Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 878

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 5
Chunk 878
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 the related claim has not been billed, as well as an estimate for future
claims that will be made when inventory in the distribution channel is sold through to plan participants. Many of the Company’s
branded products are also covered under Medicare. We participate in the Coverage Gap Discount Program in order for its branded products
to be covered by Medicare Part D and must provide a rebate for any products sold under NDAs dispensed to Medicare Part D beneficiaries
while the beneficiaries are in the Coverage Gap phase of the benefit. This applies to all products sold under NDAs. Estimates for these
discounts are based on historical experience with Medicare rebates for products. Medicare rebates are billed quarterly for drugs dispensed
to Medicare beneficiaries in the prior quarter, which is typically 120 days after the product is shipped. As a result of the delay between
selling the products, dispensing the products and rebate billing, Medicare rebate reserve includes both an estimate of outstanding claims
for end-customer sales that have occurred but for which the related claim has not been billed, as well as an estimate for future claims
that will be made when inventory in the distribution channel is sold through to Medicare Part D participants.

To evaluate the adequacy of the
government rebate reserves, reserves are reviewed on a quarterly basis against actual claims data to ensure the liability is fairly stated.
We continually monitor the government rebate reserve and adjust estimates if it is expected that actual government rebates may differ
from established accruals. Accruals for government rebates are recorded as a reduction to gross revenues in the consolidated statements
of operations and as an increase to accrued government rebates in the consolidated balance sheets.

Returns

A returns policy is in place
that allows customers to return product within a specified period prior to and after the expiration date. Generally, product may be returned
for a period beginning six months prior to its expiration date to up to one year after its expiration date. Product
returns are settled through the issuance of a credit to the customer. The estimate for returns is based upon historical experience with
actual returns. While such experience has allowed for reasonable estimation in the past, history may not always be an accurate indicator
of future returns. We continually monitor estimates for returns and adjust when it is expected that actual product returns may differ
from the established accruals. Accruals for returns are recorded as a reduction to gross revenues in the consolidated statements of operations
and as an increase to the return goods reserve in the consolidated balance sheets