HARVARD BIOSCIENCE INC Q4 FY2024 earnings call

• Harvard Bioscience is working with large distributors like Fisher and VWR to extend distribution agreements to North America and offer more products through them, including new MEA systems.
• The business is divided into base business and expanding areas. Expanding areas include electroporation, bioproduction, and organoid - related technologies. New product launches: Late in 2024, production shipments of the SoHo family of telemetry devices began; the VivaMARS neurobehavioral monitoring system had its first delivery to Labcorp; the BTX electroporation system for bioproduction had consumable revenue growing to approximately $1 million annual run rate; a cGMP - compliant amino acid analysis system was shipped to pharma companies; the MeshMEA organoid platform initiated five beta sites in 2024 and had early adopters like Stanford and the Mayo Clinic purchase systems in Q4.

In the fourth quarter, revenue was $24.6 million, which is 13% below Q4 last year but up 12% sequentially with a positive book - to - bill ratio. Gross margin was $14 million or 57% of revenue. On an adjusted basis, operating income was $2.5 million or 10% of revenue, and adjusted EBITDA was $3 million or 12% of revenue. By region: The Americas' revenue grew 3% sequentially in Q4 but was down 11% year - over - year; Europe's revenue grew 28% sequentially in Q4 but was down 7% year - over - year; APAC's revenue was up 8% sequentially in Q4 but down 24% year - over - year. For the full year, revenue was $94 million compared to $112 million last year.

• Expect Q1 2025 revenue to range from $19 million to $21 million.
• Expect Q4 2024 gross margin to be in the 56% to 58% range.
• Expect unusually high professional fees related to audit and debt - related refinance activities in Q1, but absent these, with strong gross margins and continued cost reduction, expect sufficient positive EBITDA to support operations and debt servicing while working to refinance the credit agreement by June 30, 2025.

• Not in compliance with the consolidated net leverage ratio covenant in the existing credit agreement, but lenders waived Q4 non - compliance and require refinancing by June 30, 2025, and no further borrowings under the credit facility are allowed.
• Uncertainty in academic research funding, such as NIH funding and university budget changes, which may impact revenue.
• Inefficiencies in the initial stage of ERP system implementation in the Boston facility.

Q: How was the debt financing metric busted?

A: With three or four quarters of reducing revenue starting in early 2024, it impacted the net leverage ratio which looks at current debt divided by trailing 12 - month EBITDA. Even with positive EBITDA, the ratio got ahead due to lower EBITDA over three quarters.

Q: What was the debt rate and what would a new transaction look like?

A: Sitting at SOFR plus 3.75%, likely around 8%. New transactions will range based on various setups, expected to be higher on interest rate but provide more flexibility for new product launches and capacity expansion.

Q: What part of revenue are new products like MeshMEA and BTX and what was their growth in 4Q?

A: MeshMEA systems saw strong growth with 10 systems purchased by early adopters in Q4. MEA business grew from around 5% to 7% of revenue. BTX electroporation for bioproduction had consumable revenue growing to approximately $1 million annual run rate.

Q: What about the $1.4 million cost in the quarter?

A: It was related to FX.

Q: What about NIH exposures?

A: About half of the business is academic research worldwide, with NIH being around 30% of academic research revenue in the US, and there is lack of visibility causing potential revenue impact.

Q: Will there be operational efficiencies from the ERP system during 2025?

A: Yes, initial quarters may be noisy but later will help with inventory management, supply chain, and shipping, leading to improved gross margin.

Q: How does the CAR - T therapy business with the large biotech unfold?

A: It's a longer cycle as it involves new drugs and preclinical testing, but BTX electroporation is key for gene - edited drugs and more drugs in the pipeline is good for business.

Q: Are MeshMEA projects fully funded and stable?

A: Initial adopters are academics and some pharma companies, and the technology is being proven with academics and moving into pharma research departments, with potential for more adoption.

Q: About new distributor arrangements for MeshMEA products?

A: Working with large distributors to expand into North America through distribution, which generates more leads and potential sales as MeshMEA is a unique product