Answer
$E_{\text{mech}} = E_k + E_p = \text{constant}$, so $\frac{1}{2}mv_1^2 + mgh_1 = \frac{1}{2}mv_2^2 + mgh_2$.
Explanation
When non-conservative forces such as friction or drag do work, the total mechanical energy changes by $W_{\text{nc}} = \Delta E_{\text{mech}}$.