Harvard Bioscience, Inc. (NASDAQ:HBIO) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several negative indicators: a significant revenue decline, a $48 million goodwill impairment, and decreased margins. Despite cost reduction efforts, challenges in sales due to budget uncertainties and tariffs persist. While there is interest in new products, the impact of NIH funding cuts and unclear refinancing terms add to the uncertainty. The lack of a share repurchase program further dampens sentiment. These factors suggest a negative stock price reaction, potentially in the -2% to -8% range.
Key Financial Performance
Revenue $21.8 million, down from $24.5 million (down 11% year-over-year). The decline was attributed to a lack of budget clarity for academics and NIH funding, as well as lower CRO sales.
Gross Margin 56%, down from 60.3% (down 4.3 percentage points year-over-year). The decline was impacted by lower absorption of fixed manufacturing overhead and a change in accounting methods that benefited margins in the prior year.
Operating Loss $49.7 million, compared to a $2.3 million loss in Q1 2024. The significant increase in loss was primarily due to a non-cash goodwill impairment charge of $48 million.
Adjusted Operating Income $0.3 million, down from $1.2 million (down 75% year-over-year). The decrease was reflective of cost actions executed to offset anticipated lower revenue.
Adjusted EBITDA $0.8 million, down from $1.6 million (down 50% year-over-year). The decline was driven by lower revenue, partially offset by cost actions.
Cash Flow from Operations $3 million, up from $1.4 million (up 114% year-over-year). The improvement was primarily due to better working capital management.
Net Debt $30.8 million, down from $33.2 million (down $1 million year-over-year). The decrease reflects a quarterly principal payment of $1 million and improved operating cash flow.
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Operating Highlights
New Product Launches: Expanded capabilities of the SoHo family of implanted telemetry devices to include cardiac and neuromonitoring, with production shipments expected in Q3 2025. First delivery of the Viva Mars system, which automates neurobehavior monitoring, to Labcorp, with discussions for additional sites ongoing. Launch of the MeshMEA organoid platform, capable of long-term monitoring of neuro and cardiac organoids, with beta testing initiated and interest from leading academic sites.
Market Expansion: Exploring new opportunities for BTX systems in bioproduction applications, including a CAR-T therapy project with a large biotech. Focus on expanding adoption of the MeshMEA organoid systems in biopharma and government labs in the U.S., U.K., and Europe.
Operational Efficiencies: Operating expenses declined by $3.2 million year-over-year due to actions taken in 2024 and further actions in Q1 2025. Expected additional reduction in operating expenses by $1 million per quarter starting Q2 2025.
Strategic Shifts: Refinancing efforts for debt facility are in progress with multiple providers showing interest. Adjusting revenue expectations for Q2 2025 to $18 million to $20 million due to uncertainties in NIH funding and the China tariff situation.
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Risk or Challenges
Goodwill Impairment Charge: The company recorded a non-cash goodwill impairment charge of $48 million due to a decrease in market capitalization, which significantly impacted operating loss.
Revenue Decline: Revenue for Q1 2025 was $21.8 million, down from $24.5 million in Q1 2024, indicating challenges in maintaining sales levels.
Market Conditions: The company faced difficulties in the Americas and Europe, with revenue declines attributed to lack of budget clarity for academic and NIH funding, and a significant 29% sequential decline in European revenue.
China Tariff Impact: The company anticipates continued revenue softening in China following tariff announcements, which could affect future sales.
Regulatory Uncertainty: Uncertainty around NIH and academic research funding is expected to impact revenue projections for the second quarter.
Cost Management: While cost actions have been implemented to offset lower revenue, the company is still facing challenges in achieving profitability.
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Guidance & Outlook
New Product Launches: Harvard Bioscience is focusing on expanding adoption of new products, including the SoHo family of implanted telemetry devices and the Viva Mars system for neurobehavior monitoring.
Cost Reduction Initiatives: The company has implemented cost actions expected to reduce operating expenses by an additional $1 million per quarter starting in Q2 2025.
Market Expansion: The company is targeting high growth opportunities in bioproduction applications and exploring new opportunities with large biotech firms.
Regulatory Changes: Recent policy changes in Washington are encouraging the use of human-derived organoids, which is expected to drive interest in the MeshMEA organoid systems.
Q2 Revenue Guidance: Harvard Bioscience expects second quarter revenue in the range of $18 million to $20 million.
Gross Margin Guidance: The company expects gross margin to be in the range of 55% to 57% for Q2 2025.
Operating Expense Reduction: Cost actions already implemented are expected to reduce operating expenses by an additional $1 million per quarter starting in Q2 2025.
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Shareholder Return Plan
Share Repurchase Program: None
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Key Q&A
Q:Can you tell us a little bit more about the impairment charge?
A:This is a normal process of assessing your goodwill. We selected a DCF approach which led to the $48 million charge, which is non-cash.
Q:Is the bioproduction business and CAR-T being considered for a domestic location or is it international?
A:This particular customer is domestic, and we are working with them toward adopting the system for bioproduction of CAR-T therapy in the U.S.
Q:How do you see the inbound interest on the product given the unpredictable NIH funding?
A:Interest has been strong, especially from academic researchers, but the purchasing process has slowed due to reductions at NIH.
Q:When will BTX technology be able to compete in the sector that MaxSight participates in?
A:We believe we could compete, but it would require significant work to enter high volume applications.
Q:Would you not agree that there’s no way animal testing really slows down for a long time?
A:We believe animal testing will continue, especially for safety and tox verification.
Q:What kind of rate are you looking at for refinancing?
A:It will be higher than a commercial rate, but we are still negotiating.
Q:What’s the structure of the refinancing?
A:We are still in the process of negotiating all that, so I can’t share details at this point.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific terms of the refinancing and the exact rate, stating they are still in negotiations.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Analogic Harvard
Bioscience Inc
Bioscience result
Bioscience support
Bioscience tomorrow
CFO Harvard
CFO company
CMT bump
CRO sale
Capital Healthcare
China tariff
Electric variety
Europe end
Frost CFO
Frost Interim
GE Capital
GE healthcare
General Electric
Green President
Healthcare GE
Inc expectation
Instructions event
Interim Chief
Officer Frost
Slide end
Slide margin
Transcript Harvard
academic NIH
accounting method
action driver
conference
cost action
goodwill impairment
impairment charge
HBIO Transcript
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The earnings call presents a mixed picture. Financial performance shows positive elements like high gross margins and improved EBITDA, yet revenue declined YoY. Challenges such as NIH funding delays, China market struggles, and tariff impacts create uncertainties. However, optimistic guidance and product development initiatives provide potential upside. The Q&A reveals cautious optimism but highlights risks like NIH funding delays. Overall, the sentiment is neutral due to balanced positive and negative factors, with no strong catalysts to drive significant stock price movement in the short term.
Harvard Bioscience, Inc. (HBIO) Q2 2025 Earnings Call Transcript
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Despite some positive elements like cost reduction and improved cash flow, the overall sentiment is negative due to the revenue decline, gross margin pressure, debt risks, and macroeconomic uncertainties, including tariffs and NIH funding delays. The Q&A section highlighted concerns about debt refinancing and unclear guidance on NIH budget impacts. Given these factors, along with the lack of a clear positive catalyst, the stock price is likely to experience a negative movement in the next two weeks.
Harvard Bioscience, Inc. (NASDAQ:HBIO) Q1 2025 Earnings Call Transcript
Unknown5-13
The earnings call reveals several negative indicators: a significant revenue decline, a $48 million goodwill impairment, and decreased margins. Despite cost reduction efforts, challenges in sales due to budget uncertainties and tariffs persist. While there is interest in new products, the impact of NIH funding cuts and unclear refinancing terms add to the uncertainty. The lack of a share repurchase program further dampens sentiment. These factors suggest a negative stock price reaction, potentially in the -2% to -8% range.
HBIO Slides
HBIO Report
Frequently Asked Questions
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