Harvard Bioscience Q3 2026 Earnings Call Transcript

Harvard Bioscience (NASDAQ:HBIO) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Harvard Bioscience reported 8% year-over-year revenue growth for Q3 2026, reaching $22.2 million, driven by strong sales in organoids, fluidics, and respiratory devices.

Adjusted gross margin was 57.1%, impacted by higher sales volume of lower-margin products, increased distribution sales, and growth in China.

Project Viking, the company’s manufacturing consolidation plan, is on track for completion in Q1 2027, expected to generate $3 million in cost savings in 2027 and $4 million annually thereafter.

The company reaffirmed its full-year 2026 revenue growth guidance of 3% to 5% but adjusted EBITDA growth guidance down to -1% to 4% due to product mix and channel sales impact.

Harvard Bioscience’s localization strategy in China resulted in a 31% revenue increase, with all BTX electroporation product lines now available in the market.

The company is focused on expanding its new product innovation portfolio, which contributed over 11% to total revenue.

Operational highlights include strong growth in sales to CRO customers and the establishment of a dedicated Key Accounts group to expand relationships with top-tier clients.

Future guidance indicates expected Q4 revenue between $23.7 million and $25.5 million, with adjusted EBITDA projected to grow 5% at the midpoint.

Full Transcript

OPERATOR

Good day and welcome to the third quarter 2026 Harvard Bioscience earnings conference call. At this time all participants are in listen-only mode. After the speaker’s presentation there will be a question-and-answer session. To ask a question you will need to press star 11 on your touchtone telephone. Please note this call may be recorded. I would like to turn the call over to Taylor Krafczyk, Senior Vice President at Ellipsis. Please go ahead.

Taylor Krafczyk (Senior Vice President)

Thank you, operator. Good morning, everyone. Thank you for joining the Harvard Bioscience third 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, 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, 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 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 (Chief Executive Officer)

Thank you, Taylor, and good morning, everyone. In the third quarter we delivered another solid quarter of top-line performance with 8% revenue growth driven by strength across key preclinical platforms and double-digit momentum in products for organoids, fluidics, and our new product innovation. To give a high-level summary before Mark dives into the detailed financials, our results were in line with our expectations. Revenue came in at 22.2 million, representing 8% growth year over year, marking our second consecutive quarter of strong revenue growth. Adjusted gross margin was 57.1% including higher volume in CMT products, increased sales through distribution partners, and growth in China, which carried lower gross margins. Adjusted EBITDA was 1.8 million, reflecting the same factors that impacted gross margin.

Strong sales to CRO customers were driven by sales of our telemetry, respiratory, and inhalation products. CRO sales are up meaningfully year to date, reflecting healthy demand as biopharma customers increasingly rely on external research partners. We also saw continued growth from our biopharma customers across the broader drug development landscape. Industry tailwinds remain supportive to drive future growth. Preclinical drug candidate pipelines are expanding as pharma and biotech companies prepare for the upcoming 2030 patent cliff, with industry forecasts projecting a 7% increase in clinical trial starts over the coming years.

This steady demand is reflected in our telemetry business, which is up mid-single digits year to date, demonstrating that in vivo safety and efficacy monitoring remains an indispensable step. Turning to our product portfolio, we saw robust customer demand for our preclinical technologies. Double-digit preclinical growth in the quarter was driven by exceptional performance in respiratory and inhalation. Looking at our CMT portfolio, we were pleased to see strong double-digit revenue gains in our MEA products for organoids both in Q3 and year to date. Our new product innovation portfolio continues to contribute meaningfully to our total revenue.

Researchers are adopting our organoid technologies to generate highly predictive, human-relevant data, directly aligning our innovation pipeline with the industry’s transition toward new approach methodologies. In China, our distribution partners and localization strategy are delivering results as revenue grew 31% in Q3. All three localized BTX electroporation product lines are now fully available and shipping in the Chinese market. Looking ahead, we continue to make progress in localizing new product lines to position us for continued regional momentum.

Our revamped commercial team is delivering encouraging results. Building on the sales realignment led by our new head of Commercial, we established a dedicated Key Accounts group which is focused on managing and expanding relationships with our largest customers, specifically our top-tier pharmaceutical, CRO, and biotech customers. Sales through Fisher Scientific North America have more than doubled year to date following the expansion of our distribution agreement last year, reinforcing the strength of our diversified channel strategy.

Turning to our operational initiatives, we continue to make steady progress on Project Viking, our manufacturing consolidation plan, which remains on target for completion in the first quarter of 2027. During the third quarter, we successfully completed the relocation of our amino acid analyzer product line to our Cambridge, UK facility. We began shipping fluidics products out of our Minneapolis facility using a parallel build approach to ensure uninterrupted delivery to our customers.

As a reminder, we remain on track for Project Viking to generate $3 million in cost savings in 2027 and $4 million annually thereafter. These savings will contribute directly to adjusted EBITDA. Additionally, our newly formed Scientific Advisory Board held its inaugural meeting in August. We will hold quarterly meetings going forward. The input from this group of industry leaders will help guide our technology roadmap. Since its creation, the members of the Scientific Advisory Board have already provided me and our executive team with excellent industry insight and counsel.

Turning to our outlook, based on our year-to-date performance and our commercial momentum, we are reaffirming our full year 2026 revenue guidance of 3% to 5% growth as well as our adjusted gross margin target of 57% to 59%. As noted in our earnings release, we’ve updated our full year adjusted EBITDA range. This adjustment directly reflects the effect from higher sales volume of lower-margin legacy products and of shipments in China and through our distribution partners.

While the product mix carries a lower gross margin, our operating expense remains disciplined and we are guiding to EBITDA growth in Q4 at the midpoint of our outlook. In summary, Harvard Bioscience delivered solid top-line performance in the third quarter. Our core platforms are performing well, our commercial initiatives are driving volume, and our operational milestones under Project Viking remain firmly on schedule. We are confident in the trajectory of the business and our positioning for 2027. With that, I will turn the call over to Mark for a detailed review of our financials. Mark.

Mark Frost (Chief Financial Officer)

Thank you, John. I’ll start my comments with our third quarter 2026 financial results, the details of which can be found starting on slide 4 of the earnings presentation posted to our IR site. Slide 4: Revenue of 22.2 million was up 8% year over year and towards the high end of our guidance range, and the second quarter in a row of strong revenue growth. The growth was primarily attributable to continued demand from CROs and robust sales from our distribution partners. By product, we had a strong quarter in organoids, fluidics, and respiratory devices. We’re encouraged by the strong demand for organoid-related products, with our broader new product innovation (NPI) portfolio attributing over 11% of total revenue as we work to expand our NPI contribution.

In addition, we continue to see growth in telemetry in our preclinical platform. Adjusted gross margin of 57.1% was at the low end of our outlook range as we continue to see greater demand for some of our lower-margin legacy products, had a higher contribution from our distribution channel, and saw continued strength in China where we generate a lower margin. Now, as we stated last quarter, driving sales of our higher-margin NPI products is a priority, but we’re not going to miss opportunities to sell any of our products as we drive scale, and we expect to realize significant benefits once our manufacturing consolidation is complete in early 2027.

As a reminder, we have provided an adjusted gross margin reconciliation in the release to show the impact of restructuring, which is in the other line. Now, a point for our investors as we operate our business assuming the impact of depreciation, amortization, and stock compensation costs. In addition, as we expand our Made in China initiative, we expect to improve our margins in that market. OPEX increased 0.8 million in the quarter. As we have mentioned, we restored salaries, merit, and bonus potential this year which is the primary reason for higher OPEX and reflects a normalized cost structure. This investment is offsetting our improvements from higher revenue, but we will see improved leverage in our returns. In 2026, operating loss was 1.2 million compared to income of 0.2 million in Q3 2025.

Adjusted operating income was 1.2 million, 5.3% operating margin, down from 1.5 million, 7.4% operating margin in Q3 last year. Adjusted operating income was lower primarily because of expenses being normalized. Now, adjusted EBITDA came in within our guidance range at 1.8 million, 7.9% EBITDA margin, down from 2 million, 9.6% EBITDA margin in Q3 2025. The lower EBITDA was directly attributable to mix from products, channel, and China as discussed earlier in relation to gross margin.

Now, moving to slide 5 for results by geography. Geographically, Q3 revenues in the Americas were 11.3 million, up 9% year over year, driven by strong growth from our Fisher contract and CRO customers. In Europe, Q3 revenues were 6.3 million, down 5% year over year and 3% lower on a constant currency basis, as the academic environment in Europe continues to be weak. And in APAC, Q3 revenues were 4.6 million, up 29% year over year, primarily driven by distribution sales of respiratory, organoid, and fluidics products.

Within APAC, China revenues were 2.8 million, up 31% year over year. Our Made in China localization initiative also continues to progress nicely as we continue to work on rolling out additional localized product lines. Now, on the academic front, while the funding environment has been slower to recover than anticipated, that softness has been more than offset by robust demand across our CRO and distribution channels. Pharma and biotech revenue also continue to grow well through both our direct and distribution channels.

Now move to slide 6 to discuss further financial metrics. GAAP diluted EPS in Q3 was negative $0.58 compared to negative $0.28 in Q3 2025. Q3 adjusted EPS was negative $0.06 compared to negative $0.04 in Q3 2025. All per share numbers retroactively reflect the 1-for-10 reverse stock split completed in March. 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 our restructuring charges related to Project Viking.

These differences between net loss and adjusted EBITDA are highlighted in the reconciliation tables on slides 12 and 13 and are all non-cash items except Project Viking costs. Now, cash used in operations through nine months was 0.6 million compared to cash generated of 6.8 million in the same period in 2025. This change was primarily driven by increased inventory to improve product lead times and support manufacturing pre-build requirements for Project Viking, as well as Project Viking restructuring charges and higher interest costs from our debt deal. We closed the quarter with 4.9 million in cash and cash equivalents.

Net debt stood at 35.1 million, up roughly 7.6 million year over year. Total debt was 37,000 reduced by 2.8 million in unamortized deferred financing costs associated with our December 2025 debt refinance, which will be amortized over the life of the facility. Non-cash deferred financing amortization was 0.3 million each quarter, with non-cash exit fee accruals running at 0.2 million per quarter. Now, to provide some context on our debt structure, we face no near-term principal obligations as amortization does not commence until late December 2027 and the facility matures in December 2029. As we complete Project Viking in Q1 2027, the sunsetting transition costs alongside our expected 3 million in net savings will significantly improve our cash generation and balance sheet in 2027. In addition, our debt deal provides Harvard Bioscience the ability to refinance term loan A debt of 10 million with an asset-based revolver.

We have made progress and hope to announce news pertaining to putting a revolver in place. The conversion will provide interest savings, a reduction of our term loan B exit fee, and further flexibility to manage our working capital. I’ll now move to slide 8 to discuss our outlook for the close of the year. In the fourth quarter we expect revenue between 23.7 million and 25.5 million, at the midpoint of 24.6 million. This represents mid-single-digit year-over-year revenue growth, adjusted gross margin between 59% and 61%, and adjusted EBITDA between 3.8 million and 4.2 million, which represents 5% growth at the midpoint.

Now turning to the full year, we are maintaining our full-year revenue growth guidance of 3% to 5% and our full-year adjusted gross margin target of 57% to 59%. We are lowering our full-year adjusted EBITDA growth guidance from 6% to 10% to negative 1% to 4% to reflect the greater-than-expected demand of certain lower-margin legacy products and increased sales through our distribution channels into China customers. We’re encouraged by our performance so far this year and confident in the trajectory of the business.

We’ve seen a return to sales growth that we believe is sustainable, and once our manufacturing consolidation is complete, we’ll see meaningful benefits to our bottom line and cash generation. Demand for our legacy products is strong, demand for our NPI portfolio is growing, and we’ll continue to operate the business with discipline. We want to thank all of our shareholders for their support, and we look forward to updating you on our finish to the year.

With that, I’ll turn the call back to our operator to take questions.

OPERATOR

Thank you. And as a reminder, to ask a question, please press star 11. If your question has been answered and you’d like to remove yourself from the queue, press star 11 again. Our first question comes from Paul Knight with KeyBanc. Your line is open.

Paul Knight (Analyst)

Thank you. Congrats on the quarter. Can you talk to electroporation and BTX? How did the business grow in the quarter, please?

John Duke (Chief Executive Officer)

Yeah, absolutely. Thanks, Paul. In terms of how BTX electroporation grew year to date, we are strong double digits, and as you know, much of it is due to both hardware as well as our consumables, and we’re seeing growth really across the globe for those products.

Paul Knight (Analyst)

And that is obviously competing against Thermo and Lonza and MaxCyte. Are you taking share as the market growing?

John Duke (Chief Executive Officer)

You know, I think it’s hard to tell if we’re taking share. Clearly the market is growing. We are. We really like our approach, and you know, our BTX technology has been in the industry for decades, and we believe that we might be taking some share. But I don’t want to comment relative to those big players. But as I said, we saw growth in all regions for our product portfolio.

Mark Frost (Chief Financial Officer)

Yeah, and I’ll just build on that, Paul. I mean as you’re aware, we haven’t launched our bioproduction version. So we operate primarily in the research area. So to John’s point, we might be taking a little share, but the companies you mentioned are stronger on the bioproduction side of things. So we’re not really playing against them today.

Paul Knight (Analyst)

Correct. When will you have that GMP, I guess approval to be in production?

John Duke (Chief Executive Officer)

We expect probably by mid-year next year we will be fully launching that product.

Paul Knight (Analyst)

Okay, and then Project Viking, you mentioned that the amino acid production is now in Cambridge. Correct? And then I missed the other aspect of Viking that you’ve implemented. Could you talk to that again please?

Mark Frost (Chief Financial Officer)

Sure. So we have moved now five of the eight product lines, including we actually started doing parallel build of our fluidics platform of some of the major SKUs. So we’re feeling pretty good that, you know, over the next five months we will finish that transition, and then that will start leading to savings of basically a million a quarter. So 3 million in ’27 starting in quarter two, Paul.

Paul Knight (Analyst)

Okay. And then lastly, you know, of course a major market for you is academia. Is that still growing zero, or what’s happening with the academic market?

John Duke (Chief Executive Officer)

Yeah, you are spot on, Paul. The academic, both just in the U.S. as well as Europe, continues to face challenges, and those the academic environment being challenging, we, you know, demonstrated good growth in Q3, and you know, if the academic environment changes in the future, then that will be a really nice tailwind for us.

Paul Knight (Analyst)

It’s still what, 40% of Harvard Bio revenue or is that kind of in the ballpark?

Mark Frost (Chief Financial Officer)

Yeah, it was 50%. It’s dropped to a lower portion towards that 40% of our direct business. Paul, what I would say is in Europe, lower academics is part of the reason we had negative growth in EMEA. So as John said, if we can get even modest growth in academics, that will become a tailwind for us.

Paul Knight (Analyst)

Okay. And then last, I know there’s only a couple of us in line. So the China comments that you made, all three product lines available in China now—where was that a year ago? What product lines were available then? Or could you kind of give us a little chronological color on what you’ve done in China?

John Duke (Chief Executive Officer)

Sure. So it’s BTX. So all three versions of BTX, we started that in the first quarter, and as we enter ’27, Paul, and we’ll have more color—probably we will have more color on our next call—we are going to be localizing other product lines in China in 2027 to drive both revenue and margin improvement.

Mark Frost (Chief Financial Officer)

And I’ll just add to that, the demand for our products, not just the localized, but all of our products, continues to be very strong. And we want to be able to capitalize on that growth in China by having more of our product portfolio localized.

Paul Knight (Analyst)

Okay, thank you.

OPERATOR

Thank you. Our next question comes from Bruce Jackson with StoneX. Your line is open.

Bruce Jackson (Analyst)

Hi, good morning, and thanks for taking my questions. Just to round out the discussion on Europe, what were some of the other factors that contributed to their performance?

John Duke (Chief Executive Officer)

Europe, you want to take that?

Mark Frost (Chief Financial Officer)

Sure, I can take that. So in terms of Europe, the academic demand was light, as was mentioned. And if I look specifically at our product portfolio, there were several areas in our CMT product category where demand was lighter than expected.

Bruce Jackson (Analyst)

Okay. Okay. And I didn’t catch the recurring revenue percentage. What was that this quarter?

Mark Frost (Chief Financial Officer)

So the recurring revenue for the quarter was similar to the past level of about 54%, Bruce.

Bruce Jackson (Analyst)

Okay, super. All right. And I just wanted to go back to China real quick. How’s telemetry doing? It was a strong contributor last quarter. Is that still continuing to be strong?

Mark Frost (Chief Financial Officer)

Yes, telemetry for the quarter, we were in the mid-single-digit growth.

Bruce Jackson (Analyst)

Okay, then, last question for me. As the reorganization expenses roll off in 2027, what would you expect the effect to be on gross margins as we move through the year?

Mark Frost (Chief Financial Officer)

Yeah, I’ll answer that. Our expectation is about 75% of Viking is gross margin related. Most of that should flow through, as well as increasing NPI and recurring. So we’re still—we’re feeling very good, Bruce, that we’ll be in the 60% range for gross margin in 2027.

Bruce Jackson (Analyst)

Okay. All right, great. That’s it for me. Thank you.

Mark Frost (Chief Financial Officer)

Thanks, Bruce.

OPERATOR

Thank you. Our next question comes from Jim Sidoti with Sidoti and Company. Your line is open.

Jim Sidoti (Analyst)

Hi, good morning. Thanks for taking the questions. I’m going to start off with kind of a big picture question. With the elections from last week and the change in Congress, do you expect any impact on NIH spending or academic spending over the next couple years?

John Duke (Chief Executive Officer)

Thanks, Jim. Now, you can never predict what politicians are going to do. However, if you look historically, typically when Democrats have been in control of the House, there has been a more positive funding environment for NIH, which would be beneficial to our business. But once again, you can’t—you know, past performance is not necessarily indicative of future performance.

Mark Frost (Chief Financial Officer)

Yeah. And Jim, as far as our guidance, we are not assuming that benefit. So if that happens, that would be an upside to our numbers.

Jim Sidoti (Analyst)

Okay, now a more specific question. Inventory’s gone up about 3 million this year. Is that related to Project Viking, and where do you think they level off?

Mark Frost (Chief Financial Officer)

Yeah, it is primarily related to Project Viking, as well as we’ve done some things with lead times. We expect that to start dropping significantly as we finish the transition in first quarter. And it’ll be one of the reasons why cash generation will significantly improve in 2027, Jim.

Jim Sidoti (Analyst)

Okay, now you put up two very good quarters, you know, low double-digit, high single-digit growth. You know, is this a trend you see continuing for the next several quarters?

John Duke (Chief Executive Officer)

Thanks, Jim. We’re really happy with our performance in Q2 and Q3. You know, Mark provided guidance. The midpoint of the range is 4% growth for Q4. We’re feeling really good about our commercial execution, and we’re not providing guidance for 2027, but we’re confident in our growth for the business.

Jim Sidoti (Analyst)

Okay, and then last one. Were there any one-time sales in the quarter, or is this all continuing sales you can expect to continue at this pace?

Mark Frost (Chief Financial Officer)

Yeah, it’s all run rate. We don’t tend to have one-off orders or shipments in our business. And there wasn’t really any in quarter three.

Jim Sidoti (Analyst)

And there’s no pipeline fill type sales to Fisher or anything like that?

Mark Frost (Chief Financial Officer)

No, that’s all run rate, Jim. We don’t tend to get big blocks of shipments to any of the distributors.

Jim Sidoti (Analyst)

All right, thank you.

OPERATOR

Thank you. This concludes the question and answer session. Thank you for your participation. You may now disconnect. Good day.

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