HARVARD BIOSCIENCE INC Q1 FY2026 earnings call

Strategic Transformation Progress

• The company is progressing on its transformation from a traditional life science tools provider to a leading supplier for the emerging translational science market, centered on its NPI product portfolio aligned with the industry shift toward human-relevant predictive research models
• Sales to large pharma and biotech customers grew more than 20% year-over-year in Q1, as these customers increasingly adopt new approach methodologies to improve translational research relevance
• NPI portfolio growth, with a higher mix of high-margin consumables and software, is driving margin expansion; management targets long-term consistent gross margins above 60% and recurring revenue approaching 60%

Operational Updates

• The enhanced distribution agreement with Fisher North America, signed in August 2025, delivered high single-digit year-over-year sales growth in Q1
• Dave Panzarella, a 30-year veteran life science sales leader, was added as Senior Vice President of Commercial to support revenue expansion for translational science platforms, strengthening the company's leadership team
• Project Viking, the company's manufacturing consolidation initiative that will close the Holliston, Massachusetts facility and move operations to Minneapolis and European sites, remains on schedule: one product line was relocated in Q1, with multiple additional lines planned for Q2 relocation; the initiative is expected to generate $3 million in annual savings starting in 2027, rising to $4 million annually thereafter
• The Made in China localization initiative launched in Q1 2026 with BTX electroporation products, in response to domestic sourcing incentives in China; the company plans to expand the initiative to additional products later in 2026

Q1 2026 Financial Performance Highlights

• Adjusted gross margin hit 59%, up 300 basis points year-over-year, at the high end of the company's guidance range, driven by 2024-2025 cost reduction actions and the higher mix of high-margin NPI revenue
• Adjusted EBITDA came in at $0.8 million, flat year-over-year, slightly below expectations due to increased investments in sales and marketing activities
• GAAP operating loss was $1.2 million, a substantial improvement from the $49.7 million operating loss in Q1 2025 that included a $48 million goodwill impairment charge

Harvard Biosciences reports total Q1 2026 revenue of $20.8 million, a year-over-year decrease from $21.8 million in Q1 2025. The company's New Product Innovation (NPI) portfolio, consisting of MeSH-MEA, BTX, and SOHO telemetry products, generated revenue that accounted for over 12% of total revenue in Q1 2026, up from approximately 4% in the year-ago quarter. This high-margin segment is targeted to deliver double-digit full-year 2026 revenue growth. Geographically, Q1 2026 revenue decreased 9% year-over-year in the Americas, driven by lower academic and government sales; increased 7% year-over-year in Europe, supported by higher distribution partner and pharma customer sales; and decreased 9% year-over-year in the broader APAC region due to lower distributor sales, though China-specific revenue grew 3% year-over-year, led by increased CRO revenue.

• Q2 2026 guidance is set for revenue of $20.5 million to $22.5 million, adjusted gross margin of 57% to 59%, and adjusted EBITDA of $1 million to $2 million; the midpoint of these ranges implies 5% year-over-year revenue growth, 160 basis points of margin expansion, and flat year-over-year adjusted EBITDA
• The company reaffirms its full-year 2026 guidance, maintaining targets of 2% to 4% total revenue growth, 58% to 60% gross margin, and 6% to 10% adjusted EBITDA growth
• Management expects accelerating sales growth in the second half of 2026 driven by high-margin NPI revenue growth that will deliver bottom-line improvement, supporting confidence in the full-year outlook
• Q2 is expected to see improved U.S. academic sales following passage of the U.S. federal budget in early February, with unspent academic funds required to be committed by the end of the September federal fiscal year

The call notes that forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, with additional risk disclosures available in the company's SEC filings. Key near-term factors that could impact performance include delayed academic spending due to prior U.S. federal budget uncertainty, ongoing softness in distributor sales across most Asian markets outside of China, and higher near-term operating costs from investments in sales and marketing, and restructuring activities related to Project Viking. Inventory builds to support Project Viking and improve product lead times reduced operating cash flow in Q1.

Q: What is the current revenue contribution of the three core NPI product lines (MeSH-MEA, BTX, SOHO), which management expects to grow double digits this year? / A: Management confirmed the three products currently make up approximately 15% to 20% of the company's total revenue, in line with the segment growth trajectory the company is targeting for 2026.

Q: After the passage of the U.S. federal budget in February, are you seeing increased bidding activity for academic sales ahead of the September spending deadline? / A: Management stated there is a clear unthawing of academic spending, as budgets are now finalized after prior uncertainty. Increased orders have already begun coming in, and orders received in March are expected to translate to Q2 revenue across the company's North American academic sales footprint.

Q: What is the 2026 outlook for the APAC region, which has faced weakness in recent years? Will it return to growth or stay flat? / A: Management expects the APAC region to deliver flat to full-year growth in 2026, supported by the new Made in China initiative and growing adoption of the company's NPI products across the region. Current demand includes both restarted slowed projects and new purchases from clients expanding facilities or opening new locations.

Q: If revenue increases, can the improved gross margin the company reported in Q1 be sustained long-term? / A: Management confirmed improved margins are sustainable, because the higher margin levels are supported by the growing mix of high-margin NPI products, and a larger share of recurring revenue from consumables, services, and software. This mix shift is expected to drive gross margins above 60% over the next two years.