Earnings call transcript: Harvard Bioscience Q2 2025 results show mixed signals

Harvard Bioscience (HBIO) reported its Q2 2025 earnings on August 11, revealing a mixed performance. The company posted a revenue of $20.5 million, falling short of the $21.4 million forecast, while earnings per share (EPS) came in at -$0.01, below the expected -$0.005. Despite these figures, the stock showed resilience, with a pre-market dip of just 0.23% to $0.527. According to InvestingPro data, the stock has demonstrated significant momentum with a 21.3% return over the past week, though it remains down nearly 75% year-to-date. The company’s strategic initiatives and cost reductions were key discussion points during the earnings call.

Key Takeaways

• Harvard Bioscience’s Q2 revenue of $20.5 million missed forecasts.
• EPS was reported at -$0.01, slightly below expectations.
• The company reduced its net debt to $27.9 million.
• New product launches and operational efficiencies were highlighted.
• Stock price showed minor movement in pre-market trading.

Company Performance

Harvard Bioscience’s performance in Q2 2025 reflected both challenges and progress. Revenue declined to $20.5 million from $23.1 million the previous year, indicating market pressures. The company improved its adjusted EBITDA to $1.5 million from $1.3 million in 2024, demonstrating operational efficiency gains. InvestingPro analysis indicates the company is currently trading at an EV/EBITDA multiple of 21x, suggesting premium valuation despite recent challenges. The reduction in net debt from $32 million to $27.9 million by the end of the quarter highlighted effective financial management, though InvestingPro metrics show short-term obligations still exceed liquid assets with a current ratio of 0.81.

Financial Highlights

• Revenue: $20.5 million, down from $23.1 million YoY
• EPS: -$0.01, compared to -$0.005 forecast
• Gross Margin: 56.4%, slightly down from 57.2% in 2024
• Adjusted EBITDA: $1.5 million, up from $1.3 million in 2024
• Operating Cash Flow: $2.8 million

Earnings vs. Forecast

The actual EPS of -$0.01 was 100% below the forecasted -$0.005, indicating a greater-than-expected loss. Revenue also fell short by 4.44%, coming in at $20.5 million against a $21.4 million forecast. These results reflect ongoing challenges in the market, particularly in the Asia Pacific region where revenue declined due to tariff uncertainties.

Market Reaction

Despite the earnings miss, Harvard Bioscience’s stock showed resilience in pre-market trading, with a minor decrease of 0.23% to $0.527. This movement is relatively stable compared to its 52-week range of $0.281 to $3.27. InvestingPro analysis suggests the stock is currently undervalued based on their proprietary Fair Value model, while also noting high price volatility with a beta of 1.55. For deeper insights into HBIO’s valuation and 13 additional ProTips, including growth prospects and financial health metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking ahead, Harvard Bioscience provided Q3 revenue guidance of $19-$21 million and gross margin guidance of 56-58%. The company is optimistic about its growth prospects, anticipating improved NIH funding and academic purchasing in 2026. This outlook aligns with InvestingPro’s forecast of potential profitability this year, though two analysts have recently revised their earnings expectations downward. The company has maintained a stable gross margin of 57.1% over the last twelve months, suggesting operational resilience despite market challenges. Strategic initiatives like the launch of the SOHO telemetry platform and expansion of the MeSH MEA organoid platform are expected to drive future growth.

Executive Commentary

CEO John Duke emphasized the company’s focus on execution and financial discipline in 2025, stating, "Our priority is to restructure our debt obligations and use our balance sheet to invest in the growth of our business." He also expressed confidence in overcoming current market uncertainties, asserting, "We believe the worst is behind us."

Risks and Challenges

• Tariff uncertainties in Asia Pacific impacting revenue.
• Dependence on NIH funding and academic purchasing.
• Potential volatility in European tariffs.
• Competitive pressure in the life sciences market.
• Need for continued operational efficiency to maintain margins.

Q&A

During the earnings call, analysts inquired about the company’s debt restructuring plans, which are expected to bring net debt to around $33 million by December 5. Questions also focused on the potential impact of NIH budget changes in 2026 and preparations for the Society of Neuroscience show in November.

Full transcript - Harvard Bioscience Inc (HBIO) Q2 2025:

Conference Operator: Good day, and welcome to the Second Quarter twenty twenty five Harvard Bioscience Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Taylor Krafchick, Senior Vice President of Ellipsis TA.

Please go ahead.

Taylor Krafchick, Senior Vice President of Ellipsis TA, Harvard Bioscience: Thank you, operator, and good morning, everyone. Thank you for joining the Harvard Bioscience Second Quarter twenty twenty five Earnings Conference Call. Leading the call today will be John Duke, President and Chief Executive Officer and Mark Frost, Interim 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 investors.harvardbioscience.com. Please note that statements made today in discussion that are not historical facts, including statements on management’s expectations of future events or future financial performance, are 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 Bioscience 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 ks and other filings with the Securities and Exchange Commission for additional disclosures on forward looking statements and the risks, uncertainties and contingencies associated therewith. 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 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 Mark. Mark, please go ahead.

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Thank you, Taylor. Before discussing our results, I’d like to welcome John, our recently appointed President and CEO. John has significant experience in leading and growing businesses in the life science industry, and I, along with the entire Harvard Bioscience team, look forward to working with him to achieve our goals. I will turn it over to him after my remarks so he can walk through his initial observations and the key priorities that we are focused on. I’ll now move to our second quarter twenty twenty five financial results, the details of which can be found on Slide three of the earnings presentation that we posted to our IR site.

On Slide three, revenue was $20,500,000 below 23,100,000.0 in the prior year, but ahead of our guidance of 18,000,000 to $20,000,000 primarily because of higher Chinese shipments. Gross margin was 56.4% versus 57.2% in 2024 and was towards the high end of our guidance of 55% to 57%. Operating expenses declined $2,000,000 from prior year, driven by actions taken in 2024 and the 2025 to one, move to one U. S. ERP system two, lean out our SG and A organization and three, reprioritize our NPI projects.

This led to an improvement in adjusted operating income of $1,000,000 versus $800,000 in quarter two twenty twenty four. Quarter two adjusted EBITDA was $1,500,000 versus $1,300,000 in quarter two twenty twenty four, with a major driver being the reduction in operating expenses, which more than offset the volume impact from the lower year over year revenue. Now looking at Slide four, I will outline the revenue results for the quarter by product family and region. Overall revenues in the second quarter showed a slight decline from quarter one, finishing at $20,500,000 compared to $21,800,000 in the prior quarter. Now turning to the geographical results, starting with The Americas.

Revenue in the second quarter declined sequentially by 5.4% and were down 11.7% versus revenues in the second quarter of last year. As shown in the light blue on the slide, CMT had sequential growth driven by MEA’s organoids. The year over year decreases were caused primarily by a lack of budget clarity for academics and NIH. Our preclinical sales declined sequentially and year over year due to lower academic sales related to the aforementioned Budget Clarity challenge for NIH academics. Now moving on to Europe.

Overall revenue in Europe in the second quarter increased 9% sequentially, reflecting stronger academic shipments. Compared to last year’s Q2, European revenues were largely flat. Cellular and Molecular sales increased sequentially and was flat year over year. Our quarter two preclinical sales increased sequentially and year over year driven by higher pharma sales. Now moving to China and the Asia Pacific, which has been negatively impacted by macro uncertainty over tariffs.

Overall, in the second quarter, APAC revenue was down both sequentially and year over year by over 25% due in large part to the tariff situation with China. Orders and shipments halted in April, but gradually returned to more normal behavior after the tentative agreement of a 10% tariff level. Cellular and molecular APAC products declined sequentially and year over year. Preclinical APAC products also declined sequentially and year over year due to tariffs. Now I’ll move to Slide five to discuss further financial metrics.

Looking at gross margin first. Gross margin during quarter two twenty twenty five was 56.4% compared to 57.2% in quarter two twenty twenty four, but up 40 basis points from the 56% in the prior quarter despite the lower revenue. The gross margin decline compared to last year quarter two was mainly due to lower absorption of fixed manufacturing overhead costs on a reduction in volume. The sequential margin expansion was due to actions we took to reduce the manufacturing organization for the expected lower revenue volume. Now if you refer to the top right graph, our adjusted EBITDA during quarter two increased to $1,500,000 versus $1,300,000 in last year’s second quarter.

Compared to the prior year quarter two, reduced gross profit of $1,700,000 was fully offset by lower operating expenses of $2,000,000 Now moving to the bottom left, where we both show where we show both reported and adjusted loss earnings per share. As mentioned in the past, I’ll remind you that typically, the differences between GAAP EPS and adjusted EPS is the impact of stock compensation, amortization and depreciation. These differences between net loss and adjusted EBITDA are highlighted in the reconciliation tables on slide 10 and are all noncash items. Now moving to the bottom middle graph, year to date cash flow from operations was strong at $5,700,000 compared to $600,000 in the same period, with $2,800,000 of operating cash generated in the second quarter. The primary driver for improved cash flow from operations was working capital management progress from both AR and inventory as well as operating expense reductions.

Net debt was down over $4,000,000 from year end to $27,900,000 from $32,000,000 This reflects our quarterly principal payment of $1,000,000 and improved operating cash flow. Now with respect to our credit facility, we negotiated amendment with our bank group. Key elements of the agreement are first, an extension of refinance timing to December 5, close to the maturity date of the facility. Waiver or default on refinancing milestones and financial covenants relating to leverage, fixed interest coverage. Thirdly, elimination of testing of financial covenants for quarter three, except for liquidity, which is now $3,000,000 And fourth, an increase in the SOFR adder to 700 basis points and amendment fee of 100 basis points, which is primarily paid once debt is repaid.

We believe the extension provides us with sufficient time to identify and execute a transaction to refinance and pay down the existing debt. More detail is provided in the 10 Q, which will be filed after market today. Now move to Slide seven to discuss our outlook for quarter three. Now supported by our second quarter revenue performance as well as a strong start on orders in the third quarter, we are guiding to a range of 19,000,000 to $21,000,000 of revenue. With that, we expect the corresponding improvement in gross margin from the higher volume and are guiding to a gross margin range of 56% to 58.

This guidance shows our continuous progress in stabilizing our business as well as our prudent financial discipline. I’ll now turn the call over to John. John?

John Duke, President and Chief Executive Officer, Harvard Bioscience: Thanks, Mark. Good morning, and thank you for joining us today. I’m pleased to be speaking to you for the first time since my recent appointment as President and CEO. On behalf of our board of directors and the entire workforce, I would like to thank Jim Green for his leadership and many contributions he’s made to the company during the past six years. Let me start by sharing how encouraged I am by what I’ve seen since stepping into the role two weeks ago.

Harvard Bioscience has a strong operating team, a culture committed to advancing science and an innovation pipeline that positions us well for long term growth. Since joining the company, I’ve actively engaged with employees, customers, and partners with the goal of aligning the organization around a clear set of priorities. Our focus for the remainder of 2025 is clear. Number one, maintain financial discipline by continuing to deliver cost efficiencies and generate positive cash flow. Number two, accelerate product adoption by leveraging our strong product portfolio to position the company for long term growth.

And number three, strengthen our capital structure by completing the refinance process to invest in our future growth. As Mark indicated in his remarks, we made progress in each area during the second quarter. First, on maintaining financial discipline. The fundamentals of the business remain intact as we delivered second quarter revenue results of $20,500,000 which was above our guidance of 18,000,000 to $20,000,000 We reported gross margin of 56.4%, reduced operating expenses and managed our costs. These efforts resulted in $1,500,000 of adjusted EBITDA and $2,800,000 of operating cash flow.

Looking ahead, our third quarter guidance of 19,000,000 to $21,000,000 of revenue and 56% to 58% gross margin reflects continued financial discipline. With respect to how macro conditions may impact our operations, NIH funding delays continue to extend academic purchasing cycles. But budgets remain in place and we expect improvement into 2026 as procurement normalizes. As for tariffs, uncertainty remains in the market, but we believe the worst is behind us. We executed well in Q2 and are optimistic that greater clarity will emerge in the second half of the year.

Second, on accelerating product adoption. Our new product pipeline covers multiple high growth platforms. We began shipments of the SOHO telemetry platform, adding cardiac and neuro monitoring capabilities. We progressed our VivaMARS automation pilot with LabCorp, opening new CRO opportunities. We achieved a key milestone in BTX bioproduction with $1,000,000 in consumable revenue with additional applications underway.

And we continue to expand adoption of our MeSH MEA organoid platform driven by regulatory support for alternative testing methods and strong interest from academic CRO and biopharma customers. All this positions us for future growth in high value markets with structural tailwinds. Third, on our capital structure. As Mark noted, we entered into an amendment to our credit agreement. This reflects our commitment to strengthening the balance sheet and positioning the business for long term success.

Our priority is to restructure our debt obligations and use our balance sheet to invest in the growth of our business. This amendment provides us with additional time to continue working towards that goal. In closing, 2025 remains a pivotal year focused on execution and financial discipline. Our priorities are to continue to stabilize our core business and restructure our balance sheet to build sustainable sales and profitability. I’m confident this will position us for revenue growth and margin expansion in 2026 and beyond.

I truly appreciate your continued support and look forward to engaging with you going forward. I’ll now turn the call over to the operator so we can take your questions.

Conference Operator: Thank you. Our first question comes from Paul Knight with KeyBanc. Your line is open.

John Duke, President and Chief Executive Officer, Harvard Bioscience: Yes, good morning and thanks for the time on the questions.

Paul Knight, Analyst, KeyBanc: You have until December 5 on a refinance. What do you expect? What’s total debt going to be at that point in time?

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Sure, Paul. We would expect to continue to pay down the debt, which is a million a quarter. So our debt would likely be around $33,000,000 at that point in time.

Paul Knight, Analyst, KeyBanc: Okay. And, you know, I’m guessing terms are pretty much what what it would be like double b, single b type terms.

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Yeah, to answer that question, that would be our expectation. We think the environment may be slightly improved in view of our better results and seeing more clarity on the macro front from a tariff and NIH standpoint.

Paul Knight, Analyst, KeyBanc: And regarding the NIH, it does seem like we may get reprieve like the first year of the Trump administration and if the budget is actually up eight eighty bps like Senate Committee may want, what do you think happens? Is there going to be a budget burn through October this year after a September recess? Or this recess is over and we might have a bill in September? Or do you think that kind of NIH outlay while it improves would be extending into early next year. What are your thoughts around how a better budget could unfold at NIH?

John Duke, President and Chief Executive Officer, Harvard Bioscience: I think there’s a lot of different scenarios how things could unfold at NIH. What we have seen in them is that the academic purchasing cycles have been extended, but the budgets remain in place. I mean, sales to government NIH are a significant or a reasonable portion of our business in The United States. And, if, if things were to improve into 2026, that would, clearly benefit our business. But we have a cost structure in place today, which we feel good about, such that if there were no significant changes, we would be able to manage our business well.

Paul Knight, Analyst, KeyBanc: And last would be, what’s your China exposure today? And again, what did China do in the quarter? Thanks.

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Sure. Yes. The China business is about 10% of our revenue. As I indicated on the call, it did go almost to zero in April, but we’re now back to more normal run rate as we saw in 2025. And if we stay at the 10% tariff, that would be our continued expectation.

Taylor Krafchick, Senior Vice President of Ellipsis TA, Harvard Bioscience: Okay. Thanks.

Conference Operator: Thank you. Our next question comes from Bruce Jackson with The Benchmark Company. Your line is open.

Bruce Jackson, Analyst, The Benchmark Company: Hi, good morning and thank you for taking my questions. Just to follow-up on the NIH questions, do you have any sense of whether or not there could be any changes to the types of projects getting funded in higher positions? So for example, you’ve got a neuroscience platform that looks really interesting. And do you think that that could get a boost under the new budget in 2026?

John Duke, President and Chief Executive Officer, Harvard Bioscience: We do have a strong neuroscience platform and specifically our MeSH MEA towards organoids. We would be encouraged clearly if the NIH budget when it is released for 2026, if there’s an emphasis in that there, that would definitely enhance some of our products which are in the new product portfolio.

Bruce Jackson, Analyst, The Benchmark Company: Okay. And then also to follow-up on China. So you said we’ve got some sense of clarity on the macro and some stability with regard to tariffs. Are there any other macro factors that you’re watching right now in order to gain a higher sense of confidence in the forward macro?

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Sure. I’ll take that, Bruce. It’s Mark. It’s a good question. The one open area is the European tariffs.

And right now, we can all see we’re at 15%, but we are seeing some volatility still in some of the other countries. I think we have to see if that settles out. I think the one thing for our business is we do have a number of European operations. So we do have additional options to move country of origin if that holds true or if there’s further volatility on the European side.

Bruce Jackson, Analyst, The Benchmark Company: Okay, great. And then last question, getting back to the mesh MEA products. You’ve been working with some academic institutions, hoping maybe to get some publications going. Anything to look forward to in the next couple quarters?

John Duke, President and Chief Executive Officer, Harvard Bioscience: Well, is a big show, the Society of Neuroscience in November. And at that show, you’ll see some information which we’re going to be sharing and look forward to those academic results.

Bruce Jackson, Analyst, The Benchmark Company: Okay, great. That’s it for me. Thank you.

Conference Operator: Thank you. I’m showing no further questions at this time. This does conclude the program. You may now disconnect. Everyone have a great day.

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