Harvard Bioscience targets $22.5M–$24.5M Q4 revenue as backlog reaches two-year high, expanding product rollouts and distribution

Earnings Call Insights: Harvard Bioscience (HBIO) Q3 2025

MANAGEMENT VIEW

* John Duke, President and CEO, reported operational progress and improvements across key areas, stating the company delivered revenue of $20.6 million, which was at the high end of guidance and a slight sequential increase in a typically soft quarter. Duke highlighted, "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." He emphasized continued positive operating cash flow and noted, "Q3 marked the first time in more than 12 months that we saw a quarterly order growth on a year-over-year basis."
* Duke announced the launch of the Incub8 Multiwell System, describing it as "our new smart microelectrode array platform designed to bring real-time monitoring to organoid and cell culture workflows with precise environmental control." He reported initial customer response as positive with shipped orders.
* The CEO pointed to product adoption momentum: "The SoHo Telemetry rollout has expanded into additional key accounts, and we've begun to see increased recurring consumable demand," and noted the Biochrom amino acid analyzer's strong performance.
* Duke discussed an expanded distribution agreement with Fisher Scientific, stating this "significantly broaden[s] access to Harvard Bioscience products across North America" and enhances commercial reach in academic and pharmaceutical markets.
* On capital structure initiatives, Duke explained, "We continue to make constructive progress and remain in active discussions with our lenders and advisers... The process remains on track to complete the refinancing or repayment of the existing credit agreement in the fourth quarter."
* Mark Frost, Interim CFO, stated, "Revenue was $20.6 million at the high end of our $19 million to $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% to 58%. Operating expenses declined $1.4 million from prior year, driven by actions taken in 2024 and the first quarter of 2025." Frost also added, "Adjusted EBITDA was $2 million versus $1.3 million in quarter 3 '24, with the major driver being the reduction in operating expenses, which more than offset the volume impact from the lower year-over-year revenue."

OUTLOOK

* The company is guiding to a revenue range of $22.5 million to $24.5 million for Q4 2025, with Frost noting, "The lower end of the range reflects the potential risk of a prolonged U.S. government shutdown lasting through year-end."
* Gross margin guidance for Q4 is projected at 58% to 60%. Frost stated, "Improved demand and a strong backlog support our confidence to project continued sequential improvement in the fourth quarter."
* Management anticipates continued momentum, with Duke emphasizing priorities of financial discipline, demand generation in high-value products, and capital structure strengthening into 2026.

FINANCIAL RESULTS

* Revenue for Q3 2025 was $20.6 million, compared to $20.5 million in the prior quarter and $22 million in Q3 2024.
* Gross margin was 58.4%, compared to 58.1% in Q3 2024 and up from 56.4% in Q2 2025.
* Adjusted EBITDA reached $2 million, up from $1.3 million in Q3 2024 and $1.5 million in Q2 2025.
* Operating expenses declined by $1.4 million from the prior year.
* Year-to-date cash flow from operations was $6.8 million, with $1.1 million generated in Q3.
* Net debt reduced to $27.5 million from $33.8 million at year-end 2024.

Q&A

* Lucas Baranowski, KeyBanc, asked if the uptick in preclinical systems was driven by CROs. Duke replied, "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."
* Baranowski inquired about backlog mix. Frost responded, "We had broad-based increase in orders across geographies and products... it wasn't one specific product or region that drove the backlog."
* Baranowski asked about trends in the academic and government market. Duke noted, "We have seen improvement, which is reflected in our Q3 results as well as in our strong backlog going into Q4."
* Bruce Jackson, Benchmark Company, asked about NIH funding assumptions. Frost said, "We have built in to the lower range that if it does go to the year-end, that would be the potential benchmark... So we have assumed some impact from that in our guidance."
* Jackson asked about the impact of funding delays into Q1 2026. Frost replied, "The funds are not lost. It's a timing impact that it just moves out of quarter 4 into '26."
* Jackson asked if customers have funding visibility. Duke explained, "Some customers have shared with us that there's no one even to talk to at the NIH right now... whereas others do have visibility and they're just waiting for their funds to be released."
* Jackson questioned the ERP project. Frost stated, "We actually finished the project in quarter 4 and moved to one U.S. platform... benefits have started to roll through both our manufacturing side and our G&A side in '25, and it's contributing to why we've been able to reduce the expenses this year."

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly positive, focused on backlog, preclinical demand, and NIH funding risks, reflecting interest in underlying order trends and operational execution.
* Management maintained a confident, constructive tone throughout, with Duke stating, "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."
* Compared to the previous quarter, analyst tone was less concerned with China tariffs and more interested in demand drivers and NIH risks. Management's tone was more confident in operational progress and product momentum.

QUARTER-OVER-QUARTER COMPARISON

* Q3 guidance increased, with a projected revenue range of $22.5 million to $24.5 million for Q4, compared to Q3's $19 million to $21 million guidance from Q2.
* Gross margin guidance increased to 58%–60% for Q4, up from 56%–58% previously.
* Backlog reached its highest level in nearly two years, with sequential and year-over-year order growth, compared to order softness in the previous quarter.
* Strategic focus shifted toward new product launches (Incub8), expanded distribution agreements, and progress on refinancing, while confidence in operational execution and cash flow improved.
* Management's confidence increased, with more positive language around demand trends and backlog.

RISKS AND CONCERNS

* NIH funding delays and the potential impact of a prolonged U.S. government shutdown remain key risks, with management building this uncertainty into the lower end of guidance.
* China revenue was flat sequentially, but management noted optimism due to recent trade talks and expects tariff headwinds to subside.
* Management continues to monitor government budget developments and is actively addressing refinancing needs, with progress reported on credit facility discussions.

FINAL TAKEAWAY

Harvard Bioscience management emphasized strengthened operational execution, margin expansion, and a robust backlog heading into the final quarter of 2025. Product innovation, expanded distribution, and disciplined financial management have positioned the company to deliver sequential improvement and capitalize on demand recovery. While external risks such as NIH funding timing and macro uncertainties persist, the business remains focused on driving adoption of high-value platforms, generating cash, and completing a favorable refinancing to support long-term growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hbio/earnings/transcripts]

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