Harvard Bioscience (HBIO) 8 Aug 24 2024 Q2 Earnings call transcript

In the recent earnings call for Q2 2024, Harvard Bioscience Inc. provided insights into its financial performance and strategic initiatives. The call, led by Jim Green, President and CEO, and Jennifer Cote, CFO, highlighted both challenges and opportunities for the company.

Market Challenges and Impact on Revenue

Harvard Bioscience faced a tough first half of the year, with revenue for Q2 2024 coming in at $23.1 million, a decrease of $5.7 million compared to the previous year. The market environment was a significant factor, with reduced capital spending by CROs and biopharma customers in Europe and the US affecting preclinical product shipments. The company also mentioned ongoing supply chain issues, which are expected to be resolved by the end of the second half of the year.

Operating Costs and New Product Initiatives

Despite the challenges, Harvard Bioscience remains focused on its operating cost structure and new product initiatives. The company has taken advantage of operating synergies to reduce its operating cost structure and support ongoing investments in new products. These investments are expected to add new revenue streams starting in the second half of the year and contribute to the company's long-term double-digit revenue growth goal.

New Product Commercializations

Harvard Bioscience's new product commercializations were a key topic of discussion. The company announced the beginning of production shipments of its new SoHo family of telemetry devices, which are expected to lead to additional demand, particularly in Europe. Late last year, Harvard Bioscience also announced the initial delivery of its groundbreaking VivaMARS neurobehavioral monitoring system to a large CRO customer, which has adopted the system as part of their preclinical testing offering. The company also began shipping its new CGMP-compliant amino acid analysis system for bioprocessing applications.

Outlook for the Rest of the Year

Looking ahead, Harvard Bioscience has reduced its full-year 2024 revenue outlook to approximately $97 million to $102 million due to the weaker second quarter and the expected delay in market recovery. However, the company expects sequential growth in the second half of the year, supported by new product shipments. The company also expects a full production launch of its MeshMEA Organoid platform in Q1 of 2025.

Investor Questions and Answers

During the Q&A session, investors expressed concern about the company's exposure to the APAC market, particularly China, and the potential for market recovery. Harvard Bioscience acknowledged the challenges in the industrial side of the business in China but expressed optimism about the academic side, which is starting to recover. The company also discussed its strategy for building the market for its organoid products, focusing on academic researchers and then moving into safety pharmacology and tox applications.

Conclusion

Harvard Bioscience's Q2 2024 earnings call provided a comprehensive overview of the company's financial performance and strategic initiatives. Despite the challenges, the company remains focused on its long-term growth goals, with a particular emphasis on new product initiatives and cost savings. The outlook for the rest of the year is cautiously optimistic, with potential for sequential growth in the second half of the year. Investors will be watching closely to see how the company navigates the market challenges and leverages its new product offerings to drive growth.