Harvard Bioscience Announces Second Quarter 2023 Financial Results

Harvard Bioscience, Inc.

• Q2 Revenues of $28.8 million

• Q2 GAAP operating income $0.8 million, adjusted operating income $3.6 million

• Strong H1 operating cash flow drove net debt reduction of $5.4 million
  
  

HOLLISTON, Mass., Aug. 08, 2023 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the second quarter ended June 30, 2023.

Jim Green, Chairman and CEO said, “We are encouraged by the continuation of a strong start to the fiscal year, with growth from new products and our improved portfolio largely offsetting the revenue from discontinued low margin products that we obsoleted last year.”

Green continued, “New products launched in 2022 demonstrate our ability to leverage our recognized technical leadership in academic research and discovery into industrial applications for CRO, pharma and biotech customers, as shown by our initial success in bio-production and in high-capacity behavioral systems. In addition, in the first half of 2023, we began shipping our innovative second-generation MEA (multi electrode array) systems designed for testing at the cell and developing organoid level.”

	Financial Results Summary
	($ in millions except per share data)		Q2 2023						Q2 2022							H1 2023						H1 2022
	Revenues		$	28.8					$	29.2						$	58.7					$	58.0
	Gross Margin			58.0	%					57.0	%						59.6	%					56.6	%
	Operating Income (GAAP)		$	0.8					$	4.0						$	2.5					$	(2.7	)
	Adjusted Operating Income		$	3.6					$	3.1						$	8.0					$	5.4
	Net (Loss) Income (GAAP)		$	(1.0	)				$	2.4						$	(0.4	)				$	(4.4	)
	Diluted (Loss) Earnings Per Share (GAAP)		$	(0.02	)				$	0.06						$	(0.01	)				$	(0.11	)
	Diluted Adjusted Earnings Per Share		$	0.04					$	0.05						$	0.09					$	0.08
	Adjusted EBITDA		$	3.9					$	3.4						$	8.7					$	6.1
	Adjusted EBITDA Margin			13.6	%					11.6	%						14.7	%					10.5	%
	Cash Flow provided by (used in) Operations		$	3.6					$	(0.2	)					$	5.4					$	(2.2	)
	Net Debt*		$	37.8					$	45.2						$	37.8					$	45.2

 

* Debt outstanding plus unamortized deferred financing costs, less cash and cash equivalents as of period end.

Second Quarter 2023 Highlights

For the second quarter of fiscal 2023, the Company reported revenues of $28.8 million, compared to $29.2 million in the second quarter of fiscal 2022. Second quarter revenues include a net reduction of $1.6 million from discontinued products compared to the second quarter of last year. Gross margin for the three months ended June 30, 2023 was 58.0% compared with 57.0% in the comparable quarter of the prior year.

Operating income for the second quarter of fiscal 2023 was $0.8 million, compared to $4.0 million in the same prior year quarter, which included a favorable reversal of litigation reserves of $4.9 million. Adjusted operating income for the second quarter of 2023 was $3.6 million compared to $3.1 million in the prior year period.

Net loss for the second quarter of 2023 was ($1.0) million, including a $1.6 million mark to market reduction of marketable securities, compared to net income of $2.4 million in Q2 2022 which included the aforementioned reversal.   Adjusted EBITDA for the second quarter of 2023 was $3.9 million, compared to adjusted EBITDA of $3.4 million in Q2 2022.

Cash provided by operations for the second quarter of 2023 was $3.6 million and net debt was reduced by $3.2 million.

First Half 2023 Highlights

For the six months ended June 30, 2023, revenues were $58.7 million, compared to $58.0 million in the same period a year ago. First half 2023 revenues include a net reduction of $2.8 million from discontinued products compared to the first half of last year. Gross margin for the six months ended June 30, 2023 was 59.6% compared with 56.6% in the comparable period of the prior year.

Operating income for the first half of 2023 was $2.5 million, compared to an operating loss of ($2.7) million in the first half of 2022, which included a litigation reserve of $0.3 million. Adjusted operating income for the first six months of 2023 was $8.0 million compared to $5.4 million in the prior year period.

Net loss for the first half of 2023 was ($0.4) million, including a $1.6 million mark to market reduction of marketable securities, compared to a net loss of ($4.4) million for the comparable period of 2022, including the aforementioned reserve.   Adjusted EBITDA for the six months ended June 30, 2023 was $8.7 million, compared to adjusted EBITDA of $6.1 million for the comparable period of 2022.

Cash provided by operations was $5.4 million and net debt was reduced by $5.4 million in the first half of 2023.

2023 Guidance

We expect revenues of approximately $116 million to $120 million for the full year 2023. This expected growth anticipates an approximate 4 percentage point headwind from discontinued products. For the year 2023, we expect gross margins of approximately 60% and adjusted EBITDA margins in the 15% to 17% range. We also remain on the path to reduce our net leverage ratio to approximately 2X by the end of this year.

This press release includes certain financial information presented on an adjusted, or non-GAAP, basis. For additional information on the non-GAAP financial measures included in this press release, please see “Use of Non-GAAP Financial Information” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

Net leverage ratio is defined under our credit agreement as our net debt divided by our trailing twelve months adjusted EBITDA.

Webcast and Conference Call Details

In conjunction with this announcement, Harvard Bioscience will be hosting a conference call and webcast today at 8:00 a.m. Eastern Time. A presentation that will be referenced during the webcast will be posted to our Investor Relations website shortly before the webcast begins.

Analysts who want to join the call and ask a question must register here. Once registered, you will receive the dial-in numbers and a unique PIN number.

Participants who want to join the audio-only webcast should go to our events and presentations on the investor website here.

Use of Non-GAAP Financial Information

In this press release, we have included non-GAAP financial information, including adjusted operating income (loss), adjusted net income (loss), adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings (loss) per share and net leverage ratio. We believe that this non-GAAP financial information provides investors with an enhanced understanding of the underlying operations of the business. For the periods presented, these non-GAAP financial measures have excluded certain expenses and income resulting from items that we do not believe are representative of the underlying operations of the business. Items excluded include stock-based compensation, amortization of intangibles related to acquisitions, litigation settlement, restructuring and other costs, unrealized gain/loss on equity securities and income taxes. They also exclude the tax impact of the reconciling items. Management believes that this non-GAAP financial information is important in comparing current results with prior period results and is useful to investors and financial analysts in assessing the Company’s operating performance. Non-GAAP historical financial statement information included herein is accompanied by a reconciliation to the nearest corresponding GAAP measure which is included as exhibits below in this press release.

With respect to forward-looking measures, we provide an outlook for adjusted EBITDA margin and net leverage ratio. Many of the items that we exclude from these forward-looking measure calculations are less capable of being controlled or reliably predicted by management. These items could cause the forward-looking measures presented in our outlook statements to vary materially from our GAAP results.

The non-GAAP financial information provided in this press release should be considered in addition to, not as a substitute for, the financial information provided and presented in accordance with GAAP and may be different than other companies’ non-GAAP financial information.

About Harvard Bioscience

Harvard Bioscience, Inc. is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental advances in life science applications, including research, pharmaceutical and therapy discovery, bio-production and preclinical testing for pharmaceutical and therapy development. Our customers range from renowned academic institutions and government laboratories to the world’s leading pharmaceutical, biotechnology and contract research organizations. With operations in North America, Europe, and China, we sell through a combination of direct and distribution channels to customers around the world.
For more information, please visit our website at www.harvardbioscience.com.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “plan,” “anticipate,” “estimate,” “intend” and similar expressions or statements that do not relate to historical matters. Forward-looking statements include, but are not limited to, information concerning expected future financial and operational performance including revenues, gross margins, earnings, cash and debt position, growth and the introduction of new products, and the strength of the Company’s market position and business model. Forward-looking statements are not guarantees of future performance and involve known and unknown uncertainties, risks, assumptions, and contingencies, many of which are outside the Company’s control. Risks and other factors that could cause the Company’s actual results to differ materially from those described its forward-looking statements include those described in the “Risk Factors” section of the Company’s most recently filed Annual Report on Form 10-K as well as in the Company’s other filings with the Securities and Exchange Commission. Forward-looking statements are based on the Company’s expectations and assumptions as of the date of this document. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect any change in expectations, even as new information becomes available.

Investor Inquiries:

Harvard Bioscience, Inc.
Investor Relations
investors@harvardbioscience.com
(508) 893-3120

 

HARVARD BIOSCIENCE, INC.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
									Three Months Ended							Six Months Ended
									June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
	Revenues							$	28,759			$	29,208			$	58,734			$	57,986
	Cost of revenues								12,086				12,571				23,715				25,172
		Gross profit							16,673				16,637				35,019				32,814
	Operating expenses:
		Sales and marketing expenses							6,178				6,587				12,156				13,274
		General and administrative expenses							5,353				5,981				11,687				12,306
		Research and development expenses							2,957				3,497				5,854				6,717
		Amortization of intangible assets							1,389				1,454				2,777				2,920
		Litigation settlement							-				(4,880	)			-				311
	Total operating expenses								15,877				12,639				32,474				35,528
	Operating income (loss)								796				3,998				2,545				(2,714	)
	Other (expense) income:
		Unrealized loss on equity securities							(1,581	)			-				(1,581	)			-
		Interest expense							(941	)			(515	)			(1,915	)			(899	)
		Other (expense) income, net							(372	)			(62	)			60				16
	Total other expense								(2,894	)			(577	)			(3,436	)			(883	)
	(Loss) income before income taxes								(2,098	)			3,421				(891	)			(3,597	)
	Income tax (benefit) expense								(1,118	)			986				(533	)			848
	Net (loss) income							$	(980	)		$	2,435			$	(358	)		$	(4,445	)
	(Loss) income per common share:
		Basic						$	(0.02	)		$	0.06			$	(0.01	)		$	(0.11	)
		Diluted						$	(0.02	)		$	0.06			$	(0.01	)		$	(0.11	)
	Weighted-average common shares:
		Basic							42,354				41,304				42,204				41,256
		Diluted							42,354				42,560				42,204				41,256

		HARVARD BIOSCIENCE, INC.
		Condensed Consolidated Balance Sheets
		(unaudited, in thousands)
				June 30, 2023			December 31, 2022
			Assets
			Cash and cash equivalents	$	4,324		$	4,508
			Accounts receivable, net		16,903			16,705
			Inventories		26,089			26,439
			Other current assets		5,301			3,472
			Total current assets		52,617			51,124
			Property, plant and equipment		3,491			3,366
			Goodwill and other intangibles		75,127			77,274
			Other long-term assets		11,664			13,596
			Total assets	$	142,899		$	145,360
			Liabilities and Stockholders' Equity
			Current portion, long-term debt	$	3,220		$	3,811
			Other current liabilities		19,722			19,438
			Total current liabilities		22,942			23,249
			Long-term debt, net		38,203			43,013
			Other long-term liabilities		6,366			6,878
			Stockholders’ equity		75,388			72,220
			Total liabilities and stockholders’ equity	$	142,899		$	145,360

		HARVARD BIOSCIENCE, INC.
		Condensed Consolidated Statements of Cash Flows
		(unaudited, in thousands)
					Three Months Ended								Six Months Ended
						June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
			Cash flows from operating activities:
			Net (loss) income		$	(980	)		$	2,435			$	(358	)		$	(4,445	)
			Adjustments to operating cash flows			4,615				4,302				7,101				7,120
			Changes in operating assets and liabilities			(83	)			(6,927	)			(1,379	)			(4,851	)
			Net cash provided by (used in) operating activities			3,552				(190	)			5,364				(2,176	)
			Cash flows from investing activities:
			Additions to property, plant and equipment			(517	)			(442	)			(741	)			(913	)
			Acquisition of intangible assets			(108	)			-				(108	)			-
			Proceeds from sale of product line			-				-				512				-
			Net cash used in investing activities			(625	)			(442	)			(337	)			(913	)
			Cash flows from financing activities:
			Borrowing from revolving line of credit			1,000				3,800				2,500				5,300
			Repayment of revolving line of credit			(2,950	)			(3,600	)			(5,450	)			(3,600	)
			Repayment of term debt			(750	)			(750	)			(2,591	)			(1,686	)
			Proceeds from exercise of employee stock options and stock purchases			620				251				724				282
			Taxes paid related to net share settlement of equity awards			(295	)			(279	)			(451	)			(780	)
			Net cash used in financing activities			(2,375	)			(578	)			(5,268	)			(484	)
			Effect of exchange rate changes on cash			(17	)			36				57				11
			Increase (decrease) in cash and cash equivalents			535				(1,174	)			(184	)			(3,562	)
			Cash and cash equivalents at the beginning of period			3,789				5,433				4,508				7,821
			Cash and cash equivalents at the end of period		$	4,324			$	4,259			$	4,324			$	4,259

	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	(in thousands, except per share data)
								Three Months Ended										Six Months Ended
								June 30, 2023				June 30, 2022						June 30, 2023				June 30, 2022
	GAAP operating income (loss)							$	796			$	3,998					$	2,545			$	(2,714	)
		Stock-based compensation							1,102				1,239						2,255				2,262
		Acquired asset amortization							1,398				1,488						2,798				2,992
		Restructuring & other							276				1,212						408				2,573
		Settlement							-				(4,880	)					-				311
	Adjusted operating income							$	3,572			$	3,057					$	8,006			$	5,424
	Operating margin								2.8	%			13.7	%					4.3	%			-4.7	%
	Adjusted operating margin								12.4	%			10.5	%					13.6	%			9.4	%
	GAAP net (loss) income							$	(980	)		$	2,435					$	(358	)		$	(4,445	)
		Stock-based compensation							1,102				1,239						2,255				2,262
		Acquired asset amortization							1,398				1,488						2,798				2,992
		Restructuring & other							367				1,212						4				2,573
		Settlement							-				(4,880	)					-				311
		Unrealized loss on equity securities							1,581				-						1,581				-
		Income taxes							(1,776	)			517						(2,115	)			(165	)
	Adjusted net income								1,692				2,011						4,165				3,528
		Depreciation							328				340						649				683
		Interest and other expense, net							1,222				576						2,258				882
		Adjusted income taxes (1)							658				469						1,582				1,013
	Adjusted EBITDA							$	3,900			$	3,396					$	8,654			$	6,106
	Adjusted EBITDA margin								13.6	%			11.6	%					14.7	%			10.5	%
	Diluted (loss) earnings per share (GAAP)							$	(0.02	)		$	0.06					$	(0.01	)		$	(0.11	)
	Diluted adjusted earnings per share							$	0.04			$	0.05					$	0.09			$	0.08
	Weighted-average common shares:
		Diluted GAAP							42,354				41,304						42,204				41,256
		Diluted Adjusted							44,656				42,560						44,020				42,696
								June 30, 2023				December 31, 2022						June 30, 2022
		Total debt						$	41,423			$	46,824					$	48,485
		Unamortized deferred financing costs							700				840						979
		Cash and cash equivalents							(4,324	)			(4,508	)					(4,259	)
		Net Debt						$	37,799			$	43,156					$	45,205
		(1) Adjusted income taxes includes the tax effect of adjusting for the reconciling items using the tax rates in the jurisdictions in which the reconciling items arise.
		Net leverage ratio is defined under our credit agreement as our net divided by our trailing twelve months adjusted EBITDA.