Harvard Bioscience's Q3 2025: Contradictions Emerge on NIH Funding Timing, Academic Funding Visibility, Preclinical Sales Growth, and Government Shutdown Impact

Date of Call: November 6, 2025

Financials Results

• Revenue: $20.6M, at high end of guidance ($19M-$21M), down from $22.0M in Q3 2024
• Gross Margin: 58.4%, versus 58.1% in Q3 2024; up 200 bps sequentially from 56.4% in Q2 2025

Guidance:

• Revenue for Q4 2025 guided to $22.5M–$24.5M (potentially flat at high end vs. Q4 prior year).
• Gross margin guided to 58%–60% in Q4 2025.
• Q3 mid-single-digit order growth and strongest backlog since Q1 2023 support Q4 momentum.
• Expect positive operating cash flow again in Q4 2025.
• Credit-refinancing/repayment process targeted for completion in Q4 2025.
• Guidance factors in potential NIH funding timing risk from a U.S. government shutdown; delays could shift orders into Q1/Q2 2026.

Business Commentary:

* Revenue Performance and Margin Expansion: - Harvard Bioscience reported $20.6 million in revenue for Q3, reaching the high end of the guidance range and achieving a slight sequential increase. - The gross margin improved sequentially to 58.4% and exceeded the guidance range, driven by disciplined execution, improved operational efficiency, and an increased mix of higher-margin products.

• Backlog and Order Growth:
• The company's backlog reached its highest level in nearly two years, with Q3 marking the first quarterly order growth on a year-over-year basis.

• This growth was broad-based across geographies and products, benefiting from an uptick in demand for telemetry products and the success of new product introductions.

• Capital Structure and Refinancing Progress:

• Harvard Bioscience remains in active discussions with lenders regarding the assessment of potential options for its capital structure.
• The process is on track to complete the refinancing or repayment of the existing credit agreement in the fourth quarter, supported by consistent cash generation and improved operating performance.

• Regional Sales Dynamics:
• In China, orders were flat sequentially, but recent developments in trade talks indicate optimism for increased activity moving forward.
• There was a strong uptick in order volume in Europe, contributing to the increased backlog heading into the fourth quarter.

• Product and Market Development:
• The launch of the Incub8 Multiwell System and the expanded distribution agreement with Fisher Scientific have broadened access to Harvard Bioscience products, strengthening market reach and visibility.
• These strategic initiatives support the adoption of existing and new products, particularly in academic and pharmaceutical research markets.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted $20.6M revenue at the high end of guidance, gross margin expansion to 58.4% (above guidance), adjusted EBITDA up to $2.0M, 'backlog highest in nearly 2 years,' and stated they 'anticipate continued momentum in the fourth quarter.'

Q&A:

• Question from Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division): When we look at the uptick that was seen in preclinical systems during the quarter, was that primarily driven by CROs gearing up to run more studies? Or was it some other factor that was driving the uptick?
  Response: Uptick was broad-based demand for telemetry across regions and customer groups, not driven solely by CROs.

• Question from Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division): When you look at that backlog, would you say the mix is similar to your existing product mix? Or is there a product like, say, Mesh MEA that's a disproportionate percentage of it?
  Response: Backlog increase was uniform across geographies and products—no single product or region disproportionately drove it.

• Question from Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division): Some of the larger tools companies have noted that they're seeing early signs of improvement in the academic and government market. What are you seeing on that front?
  Response: Seeing improvement in academic/government demand reflected in Q3 and backlog, but visibility depends on NIH funding and shutdown timing (factored into guidance).

• Question from Bruce Jackson (The Benchmark Company, LLC, Research Division): The guidance, do you -- are you contemplating an end of the government shutdown during the fourth quarter?
  Response: Guidance incorporates the possibility of a shutdown through year-end—lower end of the range reflects that assumed impact.

• Question from Bruce Jackson (The Benchmark Company, LLC, Research Division): If the funds don't get released in the fourth quarter, then would you anticipate getting that -- those funds flowing through sales in the first quarter of next year?
  Response: Yes—delayed NIH funds are a timing issue and would likely shift orders into Q1 or Q2 2026.

• Question from Bruce Jackson (The Benchmark Company, LLC, Research Division): Do the customers have visibility on the funding? So do you feel like you've got good line of sight on the projects and that the customers also have line of sight on the funding?
  Response: Customer visibility varies: some customers have clarity and are awaiting funds, others currently have no one to contact at NIH and lack visibility.

• Question from Bruce Jackson (The Benchmark Company, LLC, Research Division): Where are you in the ERP project right now? And how should we be thinking about either the spending for additional ERP work or the flow-through from the benefits?
  Response: ERP consolidation completed in Q4 (U.S. and Europe); benefits are already flowing through manufacturing and G&A, contributing to expense reductions.

Contradiction Point 1

NIH Funding Impact on Sales Timing

It involves the impact of NIH funding on sales and the timing of when those sales are expected to occur, which is crucial for revenue forecasting and investor expectations.

What are you seeing in the academic and government markets? - Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division)

2025Q3: We have seen improvement, which is reflected in our Q3 results as well as in our strong backlog going into Q4. Now as we -- as Mark has stated regarding our guidance for the fourth quarter, some academic institutions are dependent upon NIH funding. And we have planned in our guidance depending upon how long the government shutdown goes and how that will flow through to our Q4 results. - John Duke(CEO)

Will NIH funding see a similar reprieve as in the first year of the Trump administration, and could the budget increase by 80 bps as the Senate committee proposes? - Paul Knight (KeyBanc)

2025Q2: There's a lot of different scenarios how things could unfold at NIH. We -- what we have seen is that the academic purchasing cycles have been extended, but the budgets remain in place. - John Duke(CEO)

Contradiction Point 2

Funding Visibility for Academic Institutions

It affects the clarity and predictability of sales cycles for academic institutions, impacting revenue forecasting and strategic planning.

Do customers have visibility into the funding for the projects? - Bruce Jackson (The Benchmark Company, LLC, Research Division)

2025Q3: Some customers have shared with us that there's no one even to talk to at the NIH right now. And so they're still trying to get visibility, whereas others do have visibility and they're just waiting for their funds to be released. - John Duke(CEO)

Regarding NIH, will there be a reprieve similar to the Trump administration's first year, and will the Senate committee's proposed 80-basis-point budget increase be realized? - Paul Knight (KeyBanc)

2025Q2: There's a lot of different scenarios how things could unfold at NIH. We -- what we have seen is that the academic purchasing cycles have been extended, but the budgets remain in place. - John Duke(CEO)

Contradiction Point 3

Growth in Preclinical Systems Sales

It involves differing explanations for the growth in preclinical systems sales, which is a significant revenue driver for the company.

What drove the preclinical systems growth this quarter—was it increased CRO study activity or another factor? - Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division)

2025Q3: 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. - John Duke(CEO)

What's driving the increase in preclinical systems—CROs, pharma, or a resurgence in domestic animal testing? - Paul Knight (KeyBanc)

2025Q1: We are beginning to see early signs of the growth we anticipated in our preclinical systems, driven by continued adoption of our telemetry products and the increased activity from CROs. - Jim Green(CEO)

Contradiction Point 4

Impact of Government Shutdown on Sales

It involves differing expectations regarding the impact of the government shutdown on sales, which could significantly affect the company's financial performance.

Have you observed early signs of improvement in the academic and government market? - Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division)

2025Q3: We have seen improvement, which is reflected in our Q3 results as well as in our strong backlog going into Q4. Now as we -- as Mark has stated regarding our guidance for the fourth quarter, some academic institutions are dependent upon NIH funding. And we have planned in our guidance depending upon how long the government shutdown goes and how that will flow through to our Q4 results. - John Duke(CEO)

How do you view the interactions between HHS, NIH funding, and market interest in the product? - Bruce Jackson (The Benchmark Company, LLC, Research Division)

2025Q1: So we have products that are either operating in or transitioning to our expanded product portfolio. They are expected to deliver improved performance and are anticipated to significantly offset the impact of the softened academic market and a very recent decline in CRO activity. - Jim Green(CEO)

Contradiction Point 5

NIH Funding Impact on Revenue

It involves the impact of NIH funding on company revenue, which is crucial for assessing financial performance and stability.

Are you seeing early signs of improvement in the academic and government markets? - Lucas Baranowski (KeyBanc Capital Markets Inc., Research Division)

2025Q3: Now as we -- as Mark has stated regarding our guidance for the fourth quarter, some academic institutions are dependent upon NIH funding. And we have planned in our guidance depending upon how long the government shutdown goes and how that will flow through to our Q4 results. - John Duke(CEO)

What portion of revenue do MeshMEA and BTX represent, and what was their 4Q growth rate? - Paul Knight (KeyBanc)

2024Q4: Half of our business is academic research worldwide, with about 40% in the U.S. NIH accounts for around 30% of U.S. academic research revenue. There is some lack of visibility due to unknowns around NIH funding. - Jim Green(CEO)