HBIO Q1 2026 Earnings Transcript

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Date

May 12, 2026

Call participants

• President and Chief Executive Officer — John Duke
• Chief Financial Officer — Mark Frost
• Senior Vice President, Ellipsis TA — Taylor Krafchik

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Takeaways

• Revenue -- $20.8 million, within the $20 million to $22 million guidance range, and $1 million lower than the prior year's $21.8 million. The decrease was attributed to weaker academic and distributor sales.
• Adjusted gross margin -- 59%, up 300 basis points year over year from 56%, and at the high end of the 57% to 59% guidance. This was driven by higher-margin NPI product sales and operational efficiencies.
• NPI revenue contribution -- NPI products generated more than 12% of total revenue, a substantial increase from approximately 4% in the previous year.
• Adjusted EBITDA -- $0.8 million, flat compared to the prior year and slightly below internal forecasts due to higher sales and marketing investment late in the quarter.
• Operating loss -- $1.2 million loss compared to a $49.7 million loss last year, with the previous loss primarily due to a $48 million goodwill impairment.
• Segment performance — Americas -- Revenue down 9% year over year, reflecting lower academic and governmental demand.
• Segment performance — Europe -- Revenue up 7% year over year, driven by gains from distribution partners and increased pharma sales.
• Segment performance — APAC -- Revenue down 9% year over year, but China posted 3% growth, powered by stronger CRO sales. The “Made in China” BTX pilot initiative was launched.
• Sales channel update -- High single-digit sales growth reported through Fisher North America, following last August’s expanded distribution agreement.
• Pharma and biotech customer sales -- More than 20% growth, with NPI portfolio adoption identified as a key factor.
• Full-year guidance -- Management reaffirmed full-year expectations for 2% to 4% revenue growth, 58% to 60% gross margin, and 6% to 10% adjusted EBITDA growth.
• Adjusted EPS -- Negative $0.33, improved from negative $1.25 in the prior year, with figures adjusted for a recent 1-for-10 reverse split.
• Cash used in operations -- $0.7 million outflow compared to $3 million generated last year, largely attributable to inventory builds and one-time corporate administrative costs.
• Net debt -- Rose by $1.9 million due to deferred finance costs following a December 2025 debt transaction, with principal partially offsetting the increase.
• Q2 2026 guidance -- Revenue outlook set for $20.5 million to $22.5 million, adjusted gross margin between 57% and 59%, and adjusted EBITDA between $1 million and $2 million. Guidance implies 5% revenue growth and 160 basis points of margin expansion at the midpoint.
• Project Viking progress -- One product line transferred and further consolidations on track, with $3 million in savings expected for 2027 and $4 million annually afterward.
• NPI growth portfolio outlook -- Management anticipates double-digit revenue growth for Mesh MEA, BTX Electroporation, and SoHo Telemetry platforms, which currently comprise 15% to 20% of total revenue.
• Leadership addition -- Appointment of Dave Panzarella as SVP of Commercial, highlighted for potential impact on revenue expansion.
• Academic segment outlook -- “Significant” increase in U.S. proposal activity following the February 3 NIH budget passage, with funds required to be committed by September 30.

Summary

Harvard Bioscience (NASDAQ:HBIO) reported results highlighted by stable overall financials, year-over-year gross margin gains, and growing momentum from new product introductions focused on translational science. Management communicated a clear commitment to higher-margin, recurring-revenue streams and confirmed operational milestones for strategic initiatives, including Project Viking and regional expansion in China. Guidance for both the upcoming quarter and full year was reiterated without revisions, underscoring management's confidence in current demand trends.

• CFO Mark Frost cited the “reinstated bonuses and merit-based compensation for our employees,” and a ramp-up in sales activities, which are now factored into expense and EBITDA guidance as business conditions stabilize.
• Sales growth through the Fisher North America channel was described as “high single digits,” supporting broader distribution leverage, with management expressing satisfaction on early results from the enhanced agreement.
• Inventory increases were specifically linked to efforts to “support improving lead times,” and prepare for manufacturing shifts under Project Viking, rather than reflecting weaker fundamentals.
• Management indicated that “accelerating adoption of the new approach methodologies” in pharma and biotech is directly benefiting the NPI product portfolio, positioning the company as a solution for the industry’s push toward more predictive, human-relevant models.
• Guidance for the second quarter anticipates sequential margin expansion and revenue growth relative to Q1, with adjusted EBITDA expected to remain flat year over year at the guidance midpoint.
• China growth of 3% was confirmed as a regional highlight, attributed mainly to contract research organization (CRO) sales and the initial success of the “Made in China” initiative.

Industry glossary

• NPI: New Product Innovation — refers to in-house developed or newly launched products that drive incremental revenue and typically offer higher-margin potential.
• Project Viking: Internal manufacturing consolidation plan involving the phased closure of the Holliston, Massachusetts facility, expected to generate significant cost savings beginning in 2027.
• Mesh MEA: Microelectrode array technology enabling high-resolution, long-term electrical recording for advanced biological models, such as organoids and 3D tissues.
• BTX Electroporation: The company’s proprietary solution for cell engineering and gene transfection by electrical field-mediated cell membrane permeability.
• SoHo Telemetry: Platform for continuous physiological monitoring and data collection in preclinical research environments.
• CRO: Contract research organization — provides outsourced research services to pharmaceutical, biotech, and medical device companies.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, further adjusted for excluded items to reflect core operating performance.

Full Conference Call Transcript

Operator: Good day, and welcome to the Q1 2026 Harvard Biosciences, Inc. Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. I would now like to turn the call over to Taylor Krafchik, Senior Vice President at Ellipsis TA. Please go ahead.

Taylor Krafchik: Thank you, operator, and good morning, everyone. Thank you for joining the Harvard Bioscience First Quarter 2026 Earnings Conference Call. Leading the call today will be John Duke, President and Chief Executive Officer; and Mark Frost, Chief Financial Officer. In conjunction with today's recorded call, we have provided a presentation that will be referenced during our remarks that is posted to the Investor Relations section of our website at investor.harvardbioscience.com. Please note that statements made in today's discussion that are not historical facts, including statements on management's expectations of future events or future financial performance and forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements reflect the current views of Harvard Biosciences management, and Harvard Bioscience assumes no obligation to update or revise any forward-looking statements. Actual results may differ materially from those expressed or implied. Please refer to today's press release, the Harvard Bioscience Form 10-Q and other filings with the Securities and Exchange Commission for additional disclosures on forward-looking statements and the risks, uncertainties and contingencies associated there within. During the call, management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations related to our financial condition and results. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered as a substitute.

Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release. I will now turn the call over to John. John, please go ahead.

John Duke: Thanks, Taylor. Good morning, everyone, and thank you for joining us. Overall, Q1 reflected continued progress on transforming Harvard Bioscience from a traditional tool provider into a leading supplier of the emerging translational science market. To summarize our Q1 financial performance, revenue was $20.8 million, in line with their expectations. Adjusted gross margin was 59%, growing nearly 300 basis points year-over-year, and adjusted EBITDA came in at $0.8 million, which was flat with Q1 last year. Our Q1 results were driven by growth in sales of our new product innovation pipeline, including Mesh MEA for organoids, BTX Electroporation and SoHo Telemetry products. We expect this suite of products will deliver double-digit revenue growth for the full year.

These products are the centerpieces of our evolution into a leading supplier of translational products. As anticipated, growth in consumables and software products and our NPI portfolio is translating into higher margins. This puts us on a path toward consistent gross margins greater than 60% and recurring revenue approaching 60%. Our NPI products are also increasing opportunities with pharma and large biotech customers. Sales to these customers grew more than 20% in the quarter versus prior year. A key driver of sales to biopharma is an accelerating adoption of the new approach methodologies.

As biopharma customers seek more predictive human-relevant outcomes, demand is shifting towards technologies that can deliver deeper, more actionable insights and help form a stronger translational science bridge to traditional animal models. Our NPI portfolio is directly aligned with this shift. Mesh MEA enables high resolution, long-term electrical recording of organoids and 3D tissue models, allowing researchers to study complex human biology in vitro with the level of fidelity not previously possible. BTX provides electroporation-enabled cell engineering and transfection solutions, supporting everything from gene editing to advanced cell-based development. critical tools for building and manipulating next-gen biological models.

SoHo Telemetry delivers continuous real-time physiological monitoring and preclinical settings, generating rich data sets that help bridge in vivo insights with emerging in vitro approaches, improving the translational relevance of preclinical research. The industry's growing need for more predictive models reinforces our confidence in the strategy and long-term growth trajectory of the company. We are pleased with the early results of the enhanced distribution agreement we signed in August of last year with Fisher North America. Sales through Fisher North America grew by high single digits in Q1. We strengthened our leadership team by adding Dave Panzarella as our new SVP of Commercial.

With 30 years of industry experience as a global growth-oriented sales leader across multiple life science tools companies, we believe he will be instrumental in driving overall revenue expansion and sales of our translational science platforms. We're excited to have him on board. We've done much work in the past year to strengthen our leadership team and Board, and we're pleased with the deep expertise we've added as we work to scale the business. In China, Q1 revenue grew 3%, driven by increased CRO revenue. Incentives exist for Chinese companies to source domestically. As a result, we launched our Made in China initiative, beginning with our BTX Electroporation products. We plan to expand this initiative to other products in 2026.

Project Viking, our manufacturing consolidation initiative remains on track. As a reminder, this initiative includes the phased closure of our Holliston, Massachusetts facility into our sites in Minneapolis and Europe. In Q1, we moved one product line and are on track to move several product lines in Q2. We remain confident Project Viking will generate $3 million in savings in 2027 and $4 million annually thereafter. Looking ahead, Mark will provide additional details on our guidance. At a high level, in the second quarter, at the midpoint of our guidance, we anticipate mid-single-digit year-over-year revenue growth, continued margin expansion and flat adjusted EBITDA on a year-over-year basis. We are reaffirming our full year 2026 guidance.

For the full year, we expect continued growth of NPI with our Mesh MEA, BTX and SoHo platforms. We expect continued growth with pharma and biotech customers and growth in China. We remain committed to improving our operational efficiency and driving profitability. In summary, we're excited about path ahead and remain laser-focused on executing our translational science strategy to create long-term shareholder value. I will now turn the call over to Mark, who will go through the financials and our guidance in more detail. Mark?

Mark Frost: Thank you, John. I will start my comments with our first quarter 2026 financial results, the details of which will be found starting on Slide 4 of the earnings presentation posted to our IR site. We had strong growth from pharma and biotech customers, as John mentioned, reflecting momentum from new products. Revenue was $20.8 million, in line with our $20 million to $22 million guidance and below the $21.8 million we reported in the first quarter of 2025. The year-over-year decline was primarily due to lower sales from academic institutions in the Americas and distributors in APAC, although our Chinese business rebounded to growth in the first quarter.

With regard to academics, we expect university level approvals to increase in quarter 2 with the passage of the NIH budget on February 3, setting the stage for improved Q2 and Q3 results in the U.S. academic sector. These are use it or lose it funds and must be committed by the September 30 fiscal year-end, and we are seeing increased proposal activity. Gross margin of 59% was at the high end of our 57% to 59% guidance range and up 300 basis points from 56% in the first quarter of 2025.

The improvement is attributable to cost actions related to employee costs and operational efficiencies that were implemented at the end of 2024 and in 2025 as well -- as well as higher-margin NPI revenue, which grew to more than 12% of total revenue in the quarter from approximately 4% in the prior year quarter. Operating loss was $1.2 million compared to a loss of $49.7 million last year, which included $48 million from goodwill impairment. Adjusted operating income of $0.2 million was slightly down from $0.3 million last year.

Adjusted EBITDA of $0.8 million was flat year-over-year and came in slightly below our expectations due to higher investment in sales and marketing activities, which we believe will pay dividends in later quarters. A significant portion of the cost came in at the end of the quarter. Now moving to Slide 5, results by -- for revenue results by geography. Geographically, quarter 1 revenues in the Americas were down 9% year-over-year due to lower academic and government sales. In Europe, quarter 1 revenues were up 7% year-over-year, thanks to increased sales from our distribution partners and pharma customers. And in APAC, quarter 1 revenues were down 9% year-over-year due to lower distributor sales in a number of our Asian markets.

That said, as John noted, we saw 3% year-over-year growth in China, driven primarily by CRO sales. We also piloted our Made in China initiative, which we anticipate will be a tailwind in this region as we implement additional products throughout the year. Now I will now move to Slide 6 to discuss further financial metrics. GAAP diluted EPS in quarter 1 was negative $0.77 compared to a loss $11.42 last year. And quarter 1 adjusted EPS was negative $0.33 compared to negative $1.25 last year. The year-over-year comparisons have been retroactively presented to reflect the 1 for 10 reverse split that took effect in March. Last year's figures reflect the $48 million goodwill impairment we recorded in the quarter.

Now as I've mentioned in the past, the differences between GAAP EPS and adjusted EPS are typically the impact of stock compensation, amortization and depreciation as well as now our restructuring charges related to Project Viking. These differences between net loss and adjusted EBITDA are highlighted in the reconciliation tables on Slide 10 and 11 and are all noncash items except Project Viking costs. Now cash used in operations was $0.7 million in the quarter compared to cash generation from operations of $3 million in quarter 1 last year due primarily to higher inventory. The increase in inventory stems from inventories built to support improving lead times for certain products and prebuild for Project Viking.

There are also onetime administrative costs related to our reverse split and S3 filing to meet regulatory compliance around these corporate actions, which reduced operating cash. The cash balance itself decreased in the quarter by $1.5 million reflecting payment of strategic debt costs from 2025. Now net debt is up roughly $1.9 million from prior year due to the recording of deferred finance costs related to December 2025 debt deal including fees, debt legal expense, warrant fair value costs and debt discount with a debt balance reduced by principal payments made last year. The deferred financing costs will be amortized over the life of the credit facility.

The amortization will be reflected in our interest expense each quarter through the end of the debt facility. In quarter 1, the amortization interest expense was $300,000 in noncash. In addition, we are recording exit fees each quarter of approximately $200,000 which will start being paid 2 years from the initiation of our credit facility. These are noncash for the first 2 years. I'll now move to Slide 8 to discuss our outlook for the second quarter and full year 2026. In the second quarter, we expect revenue between $20.5 million and $22.5 million, adjusted gross margin between 57% and 59% and adjusted EBITDA between $1 million and $2 million.

Midpoint of these ranges implies revenue growth of 5% margin expansion of 160 basis points and flat EBITDA. Now as a reminder, with the expected growth in the business in 2026, we have reinstated bonuses and merit-based compensation for our employees, which was suspended in 2025 due to macro headwind impacts. In addition, as the business has stabilized, we have increased sales activities to help drive the business, including trade shows and T&E to get in front of customers and build relationships. These will have an impact on our operating expenses and are built into our year-over-year adjusted EBITDA guidance.

We're maintaining our full year 2026 guidance of revenue growth of 2% to 4%, gross margin of 58% to 60% and adjusted EBITDA growth of 6% to 10%. Our performance in the quarter as well as our line of sight to accelerated sales growth in the second half of the year, driven by high-margin NPI revenue growth driving bottom line improvement gives us confidence in our outlook for the full year. We look forward to updating you on our progress next quarter. Now before I turn it over, I want to mention that John and I will be attending and presenting at both the Sidoti Microcap Conference next week and Benchmark's Virtual Healthcare Conference the following week.

With that, I'll turn the call back to our operator to take questions. Michelle?

Operator: [Operator Instructions] Our first question comes from Paul Knight with KeyBanc.

Paul Knight: John, I think you had mentioned that Mesh MEA, SoHo and BTX, you said those three product lines would grow double digits in the year.

John Duke: Yes. That's right, Paul.

Paul Knight: Yes, how are you -- and what portion of the company is -- are those three businesses, 1/4, 1/3, 20% or a range?

Mark Frost: Yes, Paul, this is Mark. It's about 15% to 20% of our revenue right now.

Paul Knight: Okay. And how -- when I look at your comments around academia, you got -- they have to spend it by the end of this federal fiscal year. Are you seeing activity on bidding going up? What are your clues as you look here or sit here in 2Q?

John Duke: Yes. So we're definitely seeing what I would call an unthawing where -- basically funds, as you know, the reconciliation bill got approved February 3. And until then, many academics were unsure if they were going to be able to spend their money. So now that the budgets were locked in, we have seen orders come through. And as you know, our sales cycle is such that if we get many of the orders, would say, which come in March, those would translate into revenue in Q2. So we have a significant sales presence in North America, and that's fairly consistent across the country.

Paul Knight: Are you seeing CROs starting to spend due to the financing we're seeing from biotech?

John Duke: Yes. So our sales to our contract research organizations increased. And Mark mentioned both in China, but we're also seeing that in the Americas and Europe.

Operator: Our next question comes from Bruce Jackson with StoneX.

Bruce Jackson: So the Asian numbers were pretty encouraging. It's been kind of a tough spot for you over the past few years. What is the outlook for this particular region this year. Can it actually start to move back up or is flat the new up for you? How does that look?

Mark Frost: Yes, Bruce, based on the Made in China initiative as well as we're getting some progress as well on some of our NPI products, we do expect to be able to get it flat to growth in Asia for the year.

Bruce Jackson: And then in terms of the types of projects that are being initiated or that they're purchasing for, would you say that -- are these like new development projects? Or are these restarted development projects? What are the characteristics of the business that they're purchasing for?

John Duke: So for APAC, it's both. It's restarting of business, but also we have some clients who have opened new facilities, expanded and as a result, need more of our products.

Bruce Jackson: Okay. Great. And then same question for the United States with the CRO business. Are these new projects that are coming in? Are these the continuation of maybe previous projects that were slowed down a bit?

John Duke: It is mostly what I call a restarting of projects which had slowed. And from all indications that we have that their spending in North America and Europe will be up versus prior year.

Bruce Jackson: Okay. Great. And then last question for me. The expense control and the gross margins looked quite good. So if we were to get a lift in revenue, would those continue to be sustainable?

Mark Frost: Yes, Bruce, because of our new products and they're all at higher margins as well as there's a larger portion of recurring revenue, disposable service and software. we believe this is a cornerstone of how we're going to be able to push gross margins into the 60% plus range as we move forward over the next couple of years, Bruce.

Operator: Thank you. That's all the questions we have for today. Please proceed with any closing comments.

John Duke: Thank you for joining today.

Operator: Thank you. This does conclude the program, and you may now disconnect. Everyone, have a great day.

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