Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Harvard Bioscience Inc (HBIO, Financial) is focusing on new product initiatives, which are expected to add new revenue streams starting in the second half of the year.
- The company has implemented cost-saving measures, realizing savings of approximately $700,000 in Q2 and expecting annual run rate savings of approximately $4 million.
- New product launches, such as the SoHo telemetry devices and VivaMARS neurobehavioral monitoring system, are expected to drive growth in the second half of 2024 and beyond.
- The company is seeing increased quoting activity in China, indicating potential future growth as market conditions stabilize.
- Harvard Bioscience Inc (HBIO) is targeting long-term double-digit revenue growth through new high-growth applications like bioproduction and MEA Organoid platforms.
Negative Points
- Revenue in Q2 2024 was down $5.7 million from the previous year, primarily due to slower sales in China and reduced capital spending by CRO and biopharma customers in Europe and the US.
- The company reported an operating loss of $2.1 million on a GAAP basis for the quarter.
- Gross margin decreased to 57.2% from 58% in the previous year, driven by lower absorption of fixed manufacturing costs and a lower mix of higher-margin products.
- Adjusted EBITDA declined significantly from $3.9 million last year to $1.3 million this year, primarily due to lower gross margin dollars.
- The market recovery is expected to be delayed to later in the second half of the year, leading to a reduction in the full-year 2024 revenue outlook to approximately $97 million to $102 million.
Q & A Highlights
Q: What is the total APAC exposure as a percentage of revenue, and what is the outlook for China?
A: Historically, Asia Pacific has accounted for about one-quarter of our total revenue, predominantly from China. We believe we've reached the bottom in China, with growing funnels and increased quoting activity. We expect academic markets to stabilize and begin to grow, while industrial sectors like biopharma and CROs may take longer to recover, potentially moving into 2025 for growth.
Q: Are the new products on slide 7 being introduced in the second half of 2024 and early 2025? Are you receiving orders now?
A: Yes, we introduced these products to the market starting at the end of last year, and we are actively selling and working toward orders in each segment. We expect the new SoHo implantable devices and VivaMARS systems to support growth in our base business, with expanding revenue in the second half of this year.
Q: If the market grows at 5% next year, what would Harvard Bioscience's growth be?
A: We expect our new product development to drive roughly double-digit growth. If the market grows at 5%, we should achieve low double-digit growth. Even if the market remains flat, our new products should drive growth towards double digits independently.
Q: Can you elaborate on the organoid marketing strategy and how you plan to build this business?
A: We are leveraging our strong presence with academic researchers to prove the technology through beta units, leading to peer-reviewed papers and posters. We are also targeting CROs and biopharma companies for safety pharmacology and toxicology applications, aiming to penetrate a multibillion-dollar market currently reliant on animal testing.
Q: Is academic research in China recovering as expected?
A: Yes, we are seeing recovery in the academic sector in China, with increased quoting activity. The commercial side, including CROs and pharma companies, is taking longer to recover, with revenue growth expected later in the second half or into 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
