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DATE
Mar. 12, 2026 at 8 a.m. ET
CALL PARTICIPANTS
- President and Chief Executive Officer — John Duke
- Chief Financial Officer — Mark Frost
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TAKEAWAYS
- Revenue -- $23.7 million, representing a 3% year-over-year decline and a 15% sequential increase from the prior quarter.
- Gross Margin -- 59.7%, up 260 basis points year over year, reaching the highest level in the past seven quarters.
- Adjusted EBITDA -- $3.8 million, an increase of 27% year over year, supported by cost reductions in manufacturing and SG&A.
- Operating Income -- $1.7 million on a GAAP basis (up from flat last year) and $3.3 million adjusted (up from $2.5 million last year).
- Net Loss per Share -- GAAP EPS of negative $0.06 compared to flat last year; adjusted EPS was flat compared to $0.06 last year.
- Full-year Revenue -- $86.6 million, an 8% decline primarily attributable to tariffs and delayed NIH funding.
- Full-year Adjusted EBITDA -- $8.1 million, up 12.5% year over year, attributed to cost controls and product mix improvement.
- Backlog -- Highest level in more than two years at period end, with management highlighting sustained strength.
- Asia Pacific Revenue -- 10% year-over-year growth for the quarter, driven by improved preclinical distribution orders and partial catch-up from prior tariff-related declines.
- Americas and Europe Revenue -- Americas revenue down 2% and Europe down 12% year over year in the quarter, reflecting ongoing weakness in academic sales and pharmaceuticals.
- Recurring Revenue Mix -- Recurring sources account for approximately 55% of total revenue, reflecting a shift toward higher-margin consumables, service, and software.
- Debt Refinancing -- Debt maturity extended with a new facility; annual debt service reduced to $5 million, generating $3 million in annual cash savings and providing increased financial flexibility.
- Manufacturing Consolidation -- Holliston facility phased closure expected to yield $3 million in savings in 2027 and $4 million per year thereafter.
- NIH Funding Exposure -- NIH represents about 20% of U.S. revenue; management expects order flow to recover starting in the second quarter due to the resolution of funding delays.
- Product Innovation -- Management expects double-digit revenue growth in key new product lines BTX and Mesh MEA in 2026.
- 2026 Guidance -- Revenue growth forecast of 2%-4%, gross margin of 58%-60%, and adjusted EBITDA growth of 6%-10% year over year.
SUMMARY
Harvard Bioscience (HBIO 4.97%) highlighted improving operational results with margin expansion driven by cost efficiencies and product mix. The management emphasized a strategic transformation toward higher-margin consumables, software, and platform innovations targeting the translational science market. The debt refinancing and facility consolidation transactions were positioned as enhancing liquidity and enabling future profitability. A significant order backlog was reported, providing increased visibility into near-term revenues. Forward-looking guidance was introduced, with anticipated revenue and EBITDA growth based on recovery in NIH-related orders and continued momentum in product innovation.
- Management stated new manufacturing and board appointments were “structural improvements” intended to scale the business.
- Gross margin expansion was specifically tied to cost actions taken at the end of 2024 and early 2025, and to the contribution of new product innovation (“NPI”) revenue.
- The company reinstated employee bonuses and merit-based compensation for 2026 due to “expected growth in the business,” a practice suspended in 2025.
- CFO Frost said, “ended up the year, Bruce, with the highest backlog we've had in over 2 years.”
- Mark Frost indicated that the company’s debt structure was designed for flexibility, noting, “no amortization in the first 2 years of the deal.”
- Asia Pacific results reflected a “catch-up” in orders but management cautioned future tariff developments could affect that region’s performance.
- New board members and the formation of a Scientific Advisory Board were presented as part of ongoing corporate governance improvements.
INDUSTRY GLOSSARY
- NPI (New Product Innovation): Refers to recently introduced or in-development company products expected to drive future growth, especially those advancing platform capabilities in life science research.
- Telemetry: Technology enabling remote collection and measurement of physiological data in research models, often used in preclinical drug testing.
- Mesh MEA: Microelectrode array technology utilized for high-throughput electrophysiological recording, supporting organoid and in vitro research.
- BTX: A proprietary HBIO product line supporting advanced bioproduction applications in translational science workflows.
- Translational Science: Research approach bridging basic and clinical science, with the aim of increasing the relevance and likelihood of success for new therapies in development.
- In Vivo / In Vitro: Terms referring to research conducted within live organisms (in vivo) versus outside living bodies in controlled environments (in vitro).
- SG&A: Selling, General, and Administrative expenses; non-production operating costs for the company.
- ABL (Asset-Based Lending): A form of secured borrowing tied to company assets, referenced as a possible future component of HBIO’s debt structure.
Full Conference Call Transcript
John Duke, President and Chief Executive Officer; and Mark Frost, Chief Financial Officer. In conjunction with today's 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.harvordbioscience.com. Please note that statements made in today's discussion that are not historical facts, including statements on management, expectations or future events or future financial performance are forward-looking statements and are made pursuant to 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-K, which we expect will be filed within 24 hours of this call 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 as a substitute. Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release. I will now turn 8: 03 AM the call over to John. John, please go ahead.
John Duke: Thanks, Taylor, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings call. On today's call, I'll review our recent actions, provide a brief overview of our fourth quarter financial results and then discuss our priorities and outlook for 2026. 2025 was a pivotal year of foundation building. Over the past 8 months, we improved our financial flexibility, took action to reorganize operations and clarified our long-term strategic direction. To recap, we took several key actions to improve the health of the business. In December, we completed our comprehensive refinancing. This transaction extended our debt maturity to 2021.
We reduced annual debt service to $5 million, generating $3 million in annual cash savings and strengthen liquidity and financial flexibility. Shortly thereafter, we announced a strategic consolidation of our manufacturing footprint with the phased closure of the Holliston facility and consolidation into Minneapolis and European centers of excellence. This is expected to generate $3 million in savings in 2027 and $4 million of savings thereafter. Since June, we have strengthened our governance by appointing 4 new Board members and we are in the process of establishing a product and Scientific Advisory Board of experienced industry leaders. We also further solidified our executive leadership as we officially named Mark Frost as Chief Financial Officer.
As many of you know, Mark is an experienced CFO and has held that role with several public companies. While we have more work to do, these actions are structural improvements to simplify our operating model and provide the foundation required to scale our business. All of these actions were driven to take -- to drive improved financial results, which is what we saw in the fourth quarter. Revenue of $23.7 million was above the midpoint of our guidance range. Gross margin of 60% at the high end of guidance and adjusted EBITDA of $3.8 million, reflecting 27% year-over-year growth.
The drivers of this performance were favorable mix shift toward higher-margin product lines, benefits from cost reductions, disciplined expense management and sharpened operational execution. We exited the year a leaner and more focused organization with a fortified balance sheet and a clear path to drive sustainable growth. Since I joined as CEO, I've spent considerable time engaging with customers, partners and employees. What became clear is the life science industry is undergoing a fundamental shift. Drug development remains inefficient, nearly 90% of candidates that succeed in animal models ultimately fail in human trials. Researchers, regulators and biopharma customers -- companies are increasingly embracing new approach methodologies or NAMS to improve translational relevance.
Harvard Bioscience is uniquely positioned to bridge this gap. We're evolving from a traditional life science tools provider into a leading enabler of translational science, connecting in vivo and in vitro research and helping customers generate more predictive human relevant data earlier in the development cycle. This represents an evolution for a company's products into the $10 billion translational science market. To capitalize on this opportunity, we are focused on executing against our 4 priorities. First, leading the translational science bridge. We are strengthening our position at the intersection of preclinical and organoid-based research. Our gold standard telemetry capabilities provide a natural extension into organoids and 3D biology platforms; second, accelerating high-margin innovation.
Our new product innovation or NPI pipeline is centered on scalable, differentiated platforms such as SoHo telemetry, BTX for bioproduction, Mesh MEA and Incub8. These platforms modernize preclinical and translational workflows and reinforce our evolution into a platform-based technology provider. Third, expanding consumables and recurring revenue. Today, approximately 55% of revenue is recurring. We are intentionally prioritizing higher-margin consumables, service and software to improve revenue visibility, increase gross margins and create a more durable and predictable business model. This mix shift is already contributing to margin expansion as evidenced by our Q4 performance and our outlook for 2026. And fourth, operational excellence and disciplined growth. Finally, we remain laser-focused on cost discipline and operational efficiency.
The manufacturing consolidation and refinancing enabled us to improve profitability, fund innovation and continued deleveraging over time. Looking ahead, we are introducing full year guidance for 2026 that forecast low single-digit growth in revenue and high single-digit growth in adjusted EBITDA, which will be driven by higher-margin NPI growth as we focus on the translational science market. We continue to monitor NIH funding timing and global macro conditions. We believe our cost structure and diversified geographic footprint put us in a position to manage volatility. 2025 was a strategic reset and 2026 will be a year of top and bottom line growth.
With a technically deep global team, a refreshed board, improved financial flexibility and a focused translational science strategy, Harvard Bioscience is well positioned to create long-term shareholder value. I want to thank our employees for their dedication, our customers for their trust and our shareholders for their continued support. With that, I'll turn the call over to Mark to review the financial results and outlook in more detail.
Mark Frost: Thank you, John. I'll start my comments with our fourth quarter 2025 financial results. The details of which can be found in our Form 10-K, which we expect to be filed within the next 24 hours and in the earnings presentation that we posted to our IR site. Starting on Slide 4 of the presentation. Revenue was $23.7 million, just above the midpoint of our $22.5 million to $24.5 million guidance and below the $24.6 million we reported in the fourth quarter of 2024. The government shutdown of 43 days impacted our ability to overachieve within the quarter.
Gross margin of 59.7% was at the high end of our 58% to 60% guidance range and is up 260 basis points from 57.1% in the fourth quarter of 2024. This is the highest gross margin we recorded over the last 7 quarters. We continue to improve our gross margin returns based on cost actions we took at the end of 2024 and in 2025 as well. As well As the increasing benefit we are receiving from higher-margin NPI revenue. Operating income of $1.7 million was up from flat last year, and adjusted operating income of $3.3 million was up from $2.5 million last year.
The improvement in GAAP and adjusted operating income was primarily from cost reductions in manufacturing and SG&A. Now adjusted EBITDA was up 27% year-over-year to $3.8 million in the fourth quarter driven by cost reductions, including decreased costs related to manufacturing and SG&A headcount as well as expense management. Now moving to Slide 5 for full year results. Revenue of $86.6 million was down from $94.1 million, primarily from the impact of tariffs and the delayed NIH funding. Tariff impact started to subside later in the year while NIH funding delays continued to impact timing of some orders, in particular, our preclinical telemetry products.
Gross margin of 57.7% was down from 58.2% last year due to lower revenue in 2025, but a larger margin impact was partially offset by our cost actions in manufacturing. Operating income of negative $48.6 million was down from negative $6.2 million last year, adjusted operating income of $6.2 million was up from $5.3 million last year. The GAAP difference stems from the goodwill impairment we took earlier in the year and the improvement in adjusted operating income was due to cost reductions improved expense management and favorable mix of higher-margin products. Now adjusted EBITDA increased 12.5% to $8.1 million from $7.2 million in 2024, as mentioned, due to cost reductions, improved expense management and strong execution throughout the year.
Now looking at Slide 6, I will outline the revenue results for the quarter and year by product family and region. Overall revenues in the fourth quarter were up 15% sequentially and down 3% year-over-year. Full year revenue was down 8% year-over-year. Geographically, quarter 4 revenues in the Americas were down 2%, year-over-year, driven by lower pharma sales for preclinical and lower academic sales in CMT. Full year revenues in the Americas were down 7% year-over-year, driven primarily by academic sales. In Europe, quarter 4 revenues were down 12% year-over-year due to lower academic sales. Full year revenues in Europe were down 6% year-over-year due to distribution and academic sales.
And in China and the Asia Pacific, Quarter 4 revenues were up 10% year-over-year, thanks to growth in preclinical distribution. Full year revenues in China and Asia Pacific were down to lower distribution revenue. And I'll now move to Slide 7 to discuss further financial metrics. GAAP EPS in quarter 4 was negative $0.06 compared to flat last year and quarter 4 adjusted EPS was flat compared to $0.06 last year. 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. These differences between net loss and adjusted EBITDA are highlighted in the reconciliation tables on Slide 10 and are all noncash items.
For the full year, GAAP loss per share was $1.28 compared to negative $0.28 in 2024. Adjusted loss per share was negative $0.02 compared to adjusted earnings per share of $0.03 in 2024. The majority of the higher GAAP loss was from the goodwill charge we took in the first quarter. Now cash flow from operations ended the year at $6.7 million, up from $1.4 million at the end of 2024. The significant improvement in the year is due to disciplined working capital management improved operating income and our efforts on payroll tax refunds.
Net debt is down $1.8 million from last year to $31.4 million reflecting payments made on our prior syndicated debt facility as well as additional liquidity we gained as part of the new agreement. Now as John discussed in the fourth quarter, we were pleased to announce the completion of our debt refinancing with a structured deal. The deal completed repayment of our prior credit facility, extended the maturity of our debt and enhance our financial flexibility as we work to position the company for growth, including reducing our debt service in the first 2 years by $3 million. Full details on the deal can be found in our December 17 press release and accompanying SEC filing.
Now another significant accomplishment during 2025 was the successful remediation of material weaknesses in the one significant deficiency. This is another step in building the foundation of a healthier business. I'll now move to Slide 9 to discuss our outlook for the first quarter and full year 2026. Now first, a few call-outs. We are introducing full year guidance as we are taking a more long-term oriented view of the business and helping us manage our broader expectations as we go through the year. We are also introducing adjusted EBITDA guidance on both a quarterly and a full year basis. This is a key metric for us and is one that we believe helps demonstrate our core operating performance.
This metric is also linked to a key covenant in our recently structured debt agreement that we thought would be helpful for investors to have visibility. We were reporting GAAP and adjusted gross margin in 2026 due to the restructuring impact from our manufacturing consolidation. Now lastly, 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. This reinstatement will have an impact on our year-over-year adjusted EBITDA comparison, which is already built into our full year guidance. We appreciate our employees and all their hard work as they have supported us through a difficult time for the business.
With that, let's dive into the outlook. In the first quarter, we expect revenue between $20 million and $22 million, adjusted gross margin between 57% and 59% and adjusted EBITDA between $1 million and $2.2 million. I would note that Q1 of last year only saw minimal impact from NIH challenges. For the full year 2026, we expect revenue growth of 2% to 4%, gross margin of 58% to 60% and adjusted EBITDA growth of 6% to 10%. Additional color is we expect revenue to ramp throughout the year on a year-over-year percentage basis, supported by stronger NPI revenue.
Now to sum up the performance, we're pleased with the fourth quarter and believe the improvements we've made to date with our operational efficiency sets us up well for the future with streamlined costs and a focus on high-margin products in an emerging market. We expect to realize increased profitability going forward, and we're proud to have been able to demonstrate a glimpse of that in the year where macro conditions were challenging. Lastly, I'm excited to have been appointed CFO on a permanent basis and look forward to continuing to work with John, the Harvard Bioscience team, our board, engaging further with our customers and investors.
To that point, we will be attending the KeyBanc Healthcare Forum next week and I look forward to seeing some of you there. I'll now turn the call back to our operator to take questions. Operator?
Operator: [Operator Instructions] Our first question comes from Paul Knight with KeyBanc Capital Markets.
Paul Knight: Regarding the NIH, that was finally approved February 3 or so. How quickly do you think that approval turns into a better academic environment for you?
John Duke: Yes, Paul, thanks for the question. As you could imagine, it would love for it to turn into a better academic environment in 1 day. We have, as you know, about 20 salespeople in North America who call on biopharma as well as academic customers. And from what we have heard is there was a lot of grant submissions, which were waiting to be approved. And we expect to start to see a positive impact both towards the end of Q1 as well as going into Q2.
Paul Knight: And NIH is what about 40% of the company now? .
Mark Frost: No, I'll clarify. It is about -- NIH revenue is about 20% of our U.S. revenue, Paul. And one point I'll just build on John's point is we are a build-to-order business. So we're starting to see improvement in orders, but in order to get the revenue, it actually needs to come in, in the first half of the quarter. So most of the benefit will start seeing probably in second quarter from the NIH release.
Paul Knight: Yes. Okay. And then I know BTX and Mesh MEA or some of your key products. Could you talk about your growth there? And specifically, what's your expected growth for these focused businesses in 2026.
John Duke: Yes. So you are correct. They are a key part of our NPI, and we expect both of them to grow in double digits this year.
Paul Knight: Okay. And then that schedule, is there a quarterly paydown you're targeting? Or what do you want to do? .
John Duke: A quarterly pay down. Could you clarify, Paul?
Paul Knight: Pay down your debt this year? Or are you...
Mark Frost: Yes. No, the structure of the deck was structured in a couple of ways. One, to allow us flexibility that there's no amortization in the first 2 years of the deal. We also, Paul, have the ability to convert term loan A to an ABL, which will give us likely a lower interest rate and more flexibility. And then the Term Loan C is structure that potentially could be converted to equity, which will reduce -- which would deleverage us in the future.
Operator: Our next question comes from Bruce Jackson with StoneX.
Bruce Jackson: We got a nice pop in the Asia Pac revenue this quarter. I was wondering if -- and you've had some issues in the past with Asia Pac. Is this the sign of a turnaround? Can you tell us a little bit about what your expectations are for 2026?
Mark Frost: Yes. It's a good question, Bruce. You're well aware last year when the tariffs hit, the China business ground to a halt. And we started to definitely see improvement. And those orders came in and were filled in, in the fourth quarter. So we had a fair amount of catch-up, not fully. So our expectation is we will get back to a normal cadence in Asia, notwithstanding, obviously, if there's further news on the tariff front that changes that situation, Bruce. .
Bruce Jackson: Okay. Got it. And then last quarter, you spoke about a backlog. Have you seen any changes in that during the fourth quarter?
Mark Frost: Yes. We actually ended up the year, Bruce, with the highest backlog we've had in over 2 years, and we've continued to maintain that. So yes, we're pretty positive of where we are on our backlog.
Bruce Jackson: Okay. And then last question around the pharmaceutical biotech CRO side of the business. How would you characterize that business? We've been hearing that, for example, some of the large cap pharma companies are kind of back to normal while some of the smaller biotech type companies are not due to the uncertainty around the pharmaceutical reimbursement. Where are you seeing the demand right now for your products on the pharmaceutical drug development side of the business?
John Duke: So Bruce, thanks for asking that. year-to-date, we are seeing that portion of the market, the pharma and biotech, that business is up. And we expect that to continue which clearly factored into our guidance for the year.
Operator: I'm showing no further questions. This does conclude the question-and-answer session, and you may now disconnect. Everyone, have a great day.
