Harvard Bioscience(HBIO) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $21.8 million, down from $24.5 million in the prior year, aligning with the higher end of guidance [7][11] - Gross margin decreased to 56% from 60.3% in Q1 2024 [8][15] - Operating loss was $49.7 million compared to a loss of $2.3 million in Q1 2024, primarily due to a goodwill impairment charge [9][10] - Adjusted EBITDA was $800,000, down from $1.6 million in the previous year [10][16] - Cash flow from operations improved to $3 million from $1.4 million in Q1 2024 [17] Business Line Data and Key Metrics Changes - Revenue in The Americas declined 5.4% sequentially and 9.4% year-over-year [12] - European revenue decreased 29% sequentially and 9% year-over-year [13] - APAC revenue increased 6.6% sequentially but was down 17% compared to the prior year [14] Market Data and Key Metrics Changes - The Americas faced slow sales due to budget clarity issues in academic and NIH funding [12] - Europe experienced a decline in cellular and molecular sales, although growth was noted in cell-based testing [13] - APAC market showed signs of improvement but anticipated challenges due to tariff announcements [14] Company Strategy and Development Direction - The company is focusing on expanding adoption of new products while continuing to lower costs, with an expected reduction in operating expenses by an additional $1 million per quarter starting Q2 2025 [26] - New product introductions are categorized into base business, electroporation and bioproduction systems, and MEA/organoid systems, with a strong pipeline of industrial and academic customers [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about NIH funding and the impact of tariffs on revenue, particularly in China, which constitutes about 10% of total revenue [54] - The company expects Q2 revenue to be in the range of $18 million to $20 million, with gross margin projected between 55% and 57% [26] Other Important Information - A non-cash goodwill impairment charge of $48 million was recorded due to a decrease in market capitalization [10][30] - The company is in the process of refinancing its debt facility, with indications of interest from multiple providers [18][46] Q&A Session Summary Question: Can you elaborate on the impairment charge? - Management explained that the impairment was due to a drop in market capitalization, necessitating a reassessment of goodwill using a DCF approach, leading to a $48 million non-cash charge [30] Question: What about the bioproduction business and CAR T therapy? - Management confirmed that the BTX system is being used by a domestic customer for CAR T therapy development, indicating strong traction in the bioproduction space [31][32] Question: How is the MEA product line performing amid NIH funding uncertainties? - Management noted strong interest in the MEA product line, particularly from academic researchers, despite a slowdown in purchasing processes due to NIH budget cuts [34][35] Question: Will BTX technology compete with MaxSight? - Management indicated that while they could potentially compete, their strategy focuses on early adopters and a razor-razor blade model rather than high-volume applications [40][41] Question: Will animal testing slow down? - Management affirmed that animal testing will continue to be necessary for safety and efficacy verification, although organoids may reduce the need for large animal populations in early testing [43][45] Question: What are the refinancing terms? - Management stated that the refinancing will be more expensive than commercial debt, with a term likely around four to five years [46][49]