Earnings call transcript: Harvard Bioscience Q3 2025 misses EPS forecast

Harvard Bioscience reported its third-quarter 2025 earnings, revealing a shortfall in earnings per share (EPS) compared to analyst expectations, despite revenue exceeding forecasts. The company posted an EPS of -$0.03, falling short of the anticipated $0.01, resulting in a negative surprise of 400%. Revenue, however, reached $20.6 million, surpassing the forecasted $19 million. The stock reacted negatively to the earnings miss, with a premarket decline of 2.77%.

Key Takeaways

• Harvard Bioscience’s EPS missed expectations by 400%.
• Revenue exceeded forecasts, reaching $20.6 million.
• The stock dropped 2.77% in premarket trading following the earnings release.
• Gross margin improved to 58.4% from 58.1% a year earlier.
• Strong cash flow from operations and reduced net debt were reported.

Company Performance

Harvard Bioscience demonstrated mixed performance in Q3 2025. While the company achieved revenue growth, marking the first year-over-year order growth in over a year, it struggled with profitability, as reflected in the EPS miss. The company’s operational improvements included a significant reduction in net debt and enhanced cash flow from operations. Despite these gains, challenges in specific regional markets, notably China/APAC, impacted overall performance.

Financial Highlights

• Revenue: $20.6 million, above the $19 million forecast.
• EPS: -$0.03, compared to a forecast of $0.01.
• Gross Margin: 58.4%, up from 58.1% in Q3 2024.
• Adjusted EBITDA: $2 million, up from $1.3 million in Q3 2024.
• Net Debt: Reduced by over $6 million to $27.5 million.

Earnings vs. Forecast

Harvard Bioscience’s EPS of -$0.03 was a significant miss against the forecasted $0.01, representing a negative surprise of 400%. This miss contrasts with the revenue surprise, where actual revenue of $20.6 million exceeded expectations by 8.42%. The magnitude of the EPS miss overshadowed the positive revenue performance, impacting investor sentiment.

Market Reaction

Following the earnings announcement, Harvard Bioscience’s stock fell 2.77% in premarket trading. The stock’s performance was influenced by the EPS miss, despite revenue beating expectations. The stock traded at $0.572, down from its previous close of $0.589, and remains near its 52-week low of $0.281, highlighting ongoing investor concerns.

Outlook & Guidance

Looking forward, Harvard Bioscience has set a revenue guidance range of $22.5 million to $24.5 million for Q4 2025, with an expected gross margin between 58% and 60%. The company anticipates continued momentum into 2026, although it noted potential impacts from a U.S. government shutdown affecting NIH funding.

Executive Commentary

CEO John Duke stated, "Harvard Bioscience is a fundamentally stronger company today than it was to start the year: leaner, more focused, and better aligned with long-term growth opportunities." CFO Mark Frost added, "We have built into the lower range that if it does go to the year-end, that would be the potential benchmark we would get to in the quarter."

Risks and Challenges

• Potential disruptions from a U.S. government shutdown affecting NIH funding.
• Continued revenue challenges in the China/APAC region.
• Market volatility impacting stock performance.
• Competitive pressures in the electrophysiology and cell culture markets.
• Execution risks related to new product launches and operational changes.

Q&A

During the earnings call, analysts inquired about the impact of preclinical demand, backlog growth, and the timing of NIH funding. CFO Mark Frost addressed concerns, highlighting uniform backlog growth across geographies and products and the uncertainty surrounding NIH funding due to the government shutdown.

Full transcript - Harvard Bioscience Inc (HBIO) Q3 2025:

Conference Operator: Welcome to the third quarter 2025 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. To ask a question, please press star 11. If your question has been answered and you would like to remove yourself from the queue, please press star 11 again. Please note this event is being recorded. I’m now going to turn the conference over to Taylor Krawczyk, Senior Vice President at ELLIPSIS TA. Please go ahead.

Taylor Krawczyk, Senior Vice President at ELLIPSIS TA, ELLIPSIS TA: Thank you, Operator, and good morning, everyone. Thank you for joining the Harvard Bioscience third quarter 2025 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 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, 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’s 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, 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 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 John. John, please go ahead.

John Duke, President and Chief Executive Officer, Harvard Bioscience: Thanks, Taylor, and good morning, everyone. I’m pleased to speak with you again as we report our third quarter results and continue to execute on our 2025 priorities. This quarter reflects operational progress, consistent execution, and tangible improvement in several key areas of our business. After being appointed CEO in late July, I outlined three priorities for 2025. Number one, maintain financial discipline and positive cash generation. Two, accelerate product adoption across our core growth platforms. Three, strengthen our capital structure through a successful debt refinancing. I’m encouraged to report that we’ve advanced meaningfully on each front. First, the financial results. We delivered revenue of $20.6 million, at the high end of our guidance range and with a slight sequential increase in what historically is a cyclically soft quarter. Gross margin of 58.4% improved sequentially and exceeded our guidance range.

This margin expansion reflects disciplined execution, operational efficiency, and an improved mix towards higher margin products. Adjusted EBITDA was also up sequentially to $2 million. Our cost structure remains lean, and we generated another quarter of positive operating cash flow. Customer engagement remains high across our platforms. Q3 marked the first time in more than 12 months that we saw quarterly order growth on a year-over-year basis. Going into the fourth quarter, our backlog has reached its highest level in nearly two years, as demand has picked up considerably heading into the end of the year. Turning to our products, the Soho telemetry rollout has expanded into additional key accounts, and we’ve begun to see increased recurring consumable demand. Our Biochrome amino acid analyzer for bioproduction continues to perform well, and we remain on pace to exceed last year’s consumable revenue.

This quarter, we announced the launch of the Incubate MultiWell system, our new smart microelectrode array platform designed to bring real-time monitoring to organoid and cell culture workflows with precise environmental control. Incubate further strengthens the growth of our existing electrophysiology portfolio by expanding our reach into high-throughput applications, including drug screening, safety pharmacology, and disease research modeling research. Initial customer response has been positive, as we have already received orders and shipped our first system. In addition, we expanded our distribution agreement with Fisher Scientific, significantly broadening access to Harvard Bioscience products across North America. This partnership deepens our commercial reach within academic and pharmaceutical research markets and enhances visibility for our full portfolio, particularly our cellular and molecular technology products, through one of the most trusted laboratory distribution channels in the world.

Adoption of our MeshMEA organoid platform continues to build momentum, supported by regulatory initiatives promoting new approach methodologies. On our capital structure, we continue to make constructive progress and remain in active discussions with our lenders and advisors regarding our assessment of the potential options and proposals that we have received. The process remains on track to complete the refinancing or repayment of the existing credit agreement in the fourth quarter. Our operating performance and consistent cash generation have improved our position as we move toward completion. The management team and the board of directors are aligned and remain committed to strengthening the balance sheet and positioning the business for long-term success. NIH funding for the 2025-2026 budget is taking shape. We’re also monitoring the ongoing government shutdown, which may impact the timing of NIH funding distribution. In the coming weeks, we’ll have more clarity.

In China, orders were flat sequentially. The most recent developments in trade talks late last week give us optimism that the worst of the tariff disruption is behind us, and we’ll see increased activity moving forward. We also saw a strong uptick in order volume in Europe, contributing to our increased backlog heading into the fourth quarter. Looking ahead, we anticipate continued momentum in the fourth quarter, as product adoption and the demand uptick support revenues into the end of the year. Our priorities continue to be financial discipline, driving demand in our high-value products, and strengthening our capital structure. Harvard Bioscience is a fundamentally stronger company today than it was to start the year: leaner, more focused, and better aligned with long-term growth opportunities. Our third quarter results demonstrate solid improvement over the first half of the year, and we look forward to continued improvement heading into 2026.

I’m proud of our team’s progress and grateful for the continued partnership of our customers, shareholders, and employees. We appreciate your support as we continue to execute our plan. With that, I’ll turn it over to Mark, who will go into more detail on the financials. Mark.

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Thank you, John. I’ll start my remarks with our third quarter 2025 financial results, the details of which can be found on slide four of the earnings presentation that we posted to our IR site. Revenue was $20.6 million at the high end of our $19-$21 million guidance and below the $22 million we reported in the prior year’s third quarter. Gross margin was 58.4% versus 58.1% in the third quarter of 2024 and exceeded our guidance of 56-58%. Operating expenses declined $1.4 million from prior year, driven by actions taken in 2024 and the first quarter of 2025 to: one, move to one U.S. ERP system, two, lean out our SG&A organization, and three, reprioritize NPI projects. These actions led to an improvement in adjusted operating income of $1.5 million versus $0.8 million in quarter three 2024.

Adjusted EBITDA was $2 million versus $1.3 million in quarter three 2024, 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 five, I will outline the revenue results for the quarter by product family and region. Overall revenues in the third quarter showed a slight increase from quarter two, finishing at $20.6 million compared to $20.5 million in the prior quarter. Notably, this is a positive trend as we historically see a decline from quarter two to quarter three. Now, turning to the geographical results, starting with the Americas, revenue in the third quarter increased sequentially by 3.6% and was down 4.4% versus the third quarter of last year. As shown in the light blue on the slide, CMT saw a sequential and year-over-year decline.

Our preclinical sales increased sequentially and year-over-year due to increases in telemetry and respiratory product lines. Now, moving on to Europe, overall revenue in Europe in the third quarter increased 0.3% sequentially, reflecting stronger preclinical academic shipments. Compared to quarter three last year, European revenues were essentially flat. Cellular and molecular sales decreased sequentially 0.7% and year-over-year 13%. Now, our quarter three preclinical sales increased sequentially and year-over-year. Now, moving to China and the Asia-Pacific, in the third quarter, we saw improvement in APAC, excluding China. With China, revenue was down sequentially 6.3% and year-over-year 19.6%. With last week’s news, we expect tariff headwinds to subside going forward. Now, cellular and molecular APAC products were flat sequentially and decreased year-over-year. Preclinical APAC products also declined sequentially and year-over-year. Now, I’ll move to slide six to discuss further financial metrics.

Looking at gross margin first, gross margin during quarter three 2025 was 58.4% compared to 58.1% in quarter three 2024, and up 200 basis points sequentially from 56.4% in quarter two 2025, despite the flat revenue. The gross margin expansion compared to last year quarter three was mainly due to better absorption of fixed manufacturing overhead costs and the leaning out of our manufacturing cost structure. The sequential margin increase was due to improved mix of higher margin revenue, in particular telemetry, as well as better absorption of fixed manufacturing overhead costs. Now, if you refer to the top right graph, our adjusted EBITDA during quarter three increased to $2 million versus $1.3 million last year’s third quarter. Compared to the prior year, lower gross profit of $0.7 million was fully offset by the $1.4 million reduction in operating expense.

Now, moving to the bottom left, where we show both reported and adjusted loss earnings per share, as I’ve mentioned in the past, typically the difference between GAAP EPS and adjusted EPS are 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 non-cash items. Now, moving to the bottom middle graph, year-to-date cash flow from operations was strong at $6.8 million compared to negative $0.3 million in the same period, with $1.1 million of operating cash generated in the third quarter. The primary drivers for the improved cash flow from operations were working capital management and operating expense reductions. We expect to see positive operating cash again in the fourth quarter. Now, net debt was down over $6 million from year-end 2024 to $27.5 million from $33.8 million.

This reflects our quarterly principal payment of $1 million and improved operating cash flow. Now, with respect to our credit facility, as John noted, we have made progress. We are in the process of reviewing the multiple proposals we have received. We are negotiating towards the most favorable deal for our company and our shareholders, and we expect to have resolution within the fourth quarter. We will provide more information when we are able to. Now, I’ll move to slide eight to discuss our outlook for quarter four. A key factor supporting our guidance is mid-single-digit order growth in the third quarter year-over-year and four consecutive months of year-on-year growth. This result has positioned the company with our strongest backlog since the first quarter of 2023.

We are guiding to a range of $22.5 million-$24.5 million revenue, resulting in potentially flat revenue for the fourth quarter at the high end of the range. The lower end of the range reflects the potential risk of a prolonged U.S. government shutdown lasting through year-end. Now, we expect a corresponding improvement in gross margin quarter four from the higher volume and are guiding to a gross margin range of 58%-60%. Improved demand and a strong backlog support our confidence to project continued sequential improvement in the fourth quarter. Now, I’ll turn the call back to our operator to take questions.

Conference Operator: Thank you. Our first question comes from Lucas Baranowski with KeyBank Capital Markets. Your line is open.

Lucas Baranowski, Analyst (representing Paul Knight), KeyBank Capital Markets: Hi, this is Lucas. For Paul Knight at KeyBank. First off, when we look at the uptick that was seen in preclinical systems during the quarter, was that primarily driven by CROs gearing up to run more studies, or was it some other factor that was driving the uptick?

John Duke, President and Chief Executive Officer, Harvard Bioscience: Thank you for the question. We benefited from broad uptick in demand for our telemetry products, and it was not just in one region. It was across regions as well as across different customer groups.

Lucas Baranowski, Analyst (representing Paul Knight), KeyBank Capital Markets: Excellent. In the press release, you had a comment about backlog being the highest in two years. When you look at that backlog, would you say the mix is similar to your existing product mix, or is there a product like, say, MeshMEA that’s a disproportionate percentage of it?

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Yeah, Lucas. As John indicated, we had broad-based increase in orders across geographies and products, and we did see an improved benefit from all the NPIs we’ve launched in this year, but it wasn’t one specific product or region that drove the backlog. It was just uniform increase across our geographies and products.

Lucas Baranowski, Analyst (representing Paul Knight), KeyBank Capital Markets: Excellent. Maybe just one final question. Some of the larger tools companies have noted that they’re seeing early signs of improvement in the academic and government market. What are you seeing on that front?

John Duke, President and Chief Executive Officer, Harvard Bioscience: Yes, we have seen improvement, which is reflected in our Q3 results as well as in our strong backlog going into Q4. Now, as Mark has stated regarding our guidance for the fourth quarter, some academic institutions are dependent upon NIH funding, and we have planned in our guidance depending upon how long the government shutdown goes and how that will flow through to our Q4 results.

Lucas Baranowski, Analyst (representing Paul Knight), KeyBank Capital Markets: Excellent. That’s all I had. Thank you.

John Duke, President and Chief Executive Officer, Harvard Bioscience: Thanks, Lucas.

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, thank you for taking my questions. If we could just dive into the NIH funding a little bit more. The guidance, are you contemplating an end-of-the-government shutdown during the fourth quarter?

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Yeah, Bruce, this is Mark. We have built into the lower range that if it does go to the year-end, that would be the potential. Benchmark, no pun intended, benchmark we would get to in the quarter. We have assumed some impact from that in our guidance, Bruce.

Bruce Jackson, Analyst, The Benchmark Company: Okay. If the funds don’t get released in the fourth quarter, would you anticipate getting those funds flowing through sales in the first quarter of next year?

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Yeah, Bruce. Yeah, as you probably well know, the funds are not lost. It’s a timing impact that it just moves out of quarter four into 2026. So we would expect the orders, and depending when the orders come in, it would come in in first quarter or second quarter next year.

Bruce Jackson, Analyst, The Benchmark Company: Last question on NIH. Do the customers have visibility on the funding? Do you feel like you’ve got good line of sight on the projects and that the customers also have line of sight on the funding?

John Duke, President and Chief Executive Officer, Harvard Bioscience: It’s customer-dependent. I mean, some customers have shared with us that there’s no one even to talk to at the NIH right now, and so they’re still trying to get visibility, whereas others do have visibility, and they’re just waiting for their funds to be released.

Bruce Jackson, Analyst, The Benchmark Company: Okay, great. If I may, just one question on the ERP project. Where are you in that project right now? How should we be thinking about either the spending for additional ERP work or the flow through from the benefits?

Mark Frost, Interim Chief Financial Officer, Harvard Bioscience: Yeah, we actually finished the project in quarter four. We moved to one US platform. We actually did the same thing in Europe, which I did not mention, and that was completed in quarter four. The benefits have started to roll through. Both our manufacturing side and our G&A side in 2025, and it is contributing to why we have been able to reduce the expenses this year, Bruce.

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

John Duke, President and Chief Executive Officer, Harvard Bioscience: Thanks for the questions.

Conference Operator: Thank you. There are no further questions at this time. This concludes our question-and-answer session. You may now disconnect. Everyone, have a great day.

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