It'll be a 30-minute presentation. We should have a few minutes at the end for Q&A, so if you do have a question, you can type them into the Q&A tab at the bottom of your screen, and with that, it's all yours, Jennifer.
Thanks very much, Jim. Good day, everyone. It's my pleasure to be able to share our strategy and investor deck with you, and I'll be taking the first half and handing off to Jim about halfway through. So if you go to page two, we have our safe harbor statements around forward-looking statements and use of non-GAAP financials. This presentation is posted on our investor site, so please feel free to look at that at your leisure. So to start, Harvard Bioscience, we aspire to be a trusted partner for advancing life science tools and research, academic research institutions, tools to leading academic research institutions, excuse me, CROs, pharmaceuticals, and biotech companies.
Harvard has two major product segments: our cellular and molecular, and our preclinical systems, each of which make up about 50% of the business. We have three primary locations where we have manufacturing: in Boston area, Minneapolis, and Stuttgart, Germany. We have about 383 employees, and that includes a fairly high number of PhDs and master's degree. As our sales folks go out to the market, they often take with them their application scientific partners, and it's a very technical sale, and we have a strong workforce to help support that. In 2023, we had $112 million in revenue and improved our EBITDA to about 13%, which is up 34% from 2022. Approximately 35% of our revenue is recurring in nature.
If you look at the bottom right, it gives our geographic split, but what I'd like to highlight on the left-hand side is about half of our business today is with academic research, with the other half within the biotech, pharma, CRO, and government space. But our strategy, as you learn more about it, is to push more to this industrial side and grow from smaller sales to larger sales volume transactions. If you go on to page four. So a few key reasons from an investment perspective to focus on. We have very strong customer relations with a lot of blue-chip customers. This includes the academics as well as our pharmaceutical relationships. These are sticky sales.
When we have our product, we have very innovative technologies with high barriers, and once folks start using our systems, they wanna stick with them. Particularly in the use of our. We'll use the example of our Ponemah software. It is something that we use with our telemetry systems, and as folks get used to using that for their data and their experiments, they will wanna stick with that software solution. We have a strong pipeline of products, and Jim's gonna talk a bit more about those with a goal of penetrating these, and in some cases, products that have been used on the academic side will now be translated over into larger volume use on the industrial side. We are continuing to focus on a lean operating platform.
We'll talk about that in a minute. We have long-term targets of double-digit revenue growth, 60% gross margin, and 20% EBITDA margin. From a financial perspective, I just wanna highlight that we are in a quiet period, so we are not reiterating our guidance from the second quarter, which we provided on August 8th. The next time you'll hear from us is with the Q3 earnings release. There are a couple of things that we also include here is. We've talked about this in the past. Our first half of the year was very challenging. In particular, last Q1 and Q2 were very strong. In Q3, we started to see degradation within the Asia-Pacific markets, and overall, the macroeconomic environment for life science companies is quite challenging right now.
So we do wanna just highlight that, and we have this view where you can see, on an illustrative basis, the expectations for H2 Obviously, we have a range here, so please take this as just illustrative in nature. But we do wanna highlight that, you know, this was a challenging first half of the year in the macro environment. We talked about, if we go to slide six, we talked about the three primary sites that we have. We also have a few sales sites that are located in other parts of Europe and then in China.
On the bottom right is a table where we highlight the consolidation and synthesis of the business that has taken place over the last five years, and a lot of this work was primarily completed at the end of 2022. But we do continue to look for opportunities to become more efficient in rationalizing the costs of the business so that we can continue to move towards those targeted margin and gross margin and EBITDA margin targets. If we go on to page seven, our products are used by strong and market segments and when we think about these areas, while the short-term may be challenged, the long-term outlook in these markets continue to stay strong.
There's a rising incidence of disease and in treatment of those diseases, and there continue to be increased funding in the research and development space.b Particularly, you think about cell and gene therapy solutions. This is an area where our products would support that development and potential production. This is an area where we stay optimistic. With that, I'm going to hand off in a minute to Jim Green. We're having a little bit of technical... I'm just gonna be transparent, so I'm gonna turn my camera off and turn it back on with Jim, and he's gonna talk you through our customer base and some of our exciting new products. Hang on one second.
All right, see if I can operate this now. Moving to the next slide. Do I need to move this?
Yeah, just keep down.
Oh, here we go. Yes, I got it. Just taking a quick look at our customers. You know, we typically talk about three big areas of groups of customers. Academic research, where we've been, you know, well-known and selling in academic research to the top sites around the world for years. That's where, you know, science, scientific research takes place, large government labs. And much of our technology is really targeted to early discovery of some of these new novel drugs, these new compounds, the new therapies. And then also, our technologies are heavily used in the initial testing of these compounds and how they operate on how they affect human cells and other mammalian cells.
And so any of the new drugs that are involved with anything from gene editing to mRNA-type technologies, you'll find this is a key area of using our technologies, if not for developing of the compound, then often for testing, initial cell-level testing of the compound. We also sell very, very heavily into the research departments of biopharma and biotech companies. That's where we're well-known, again, with these same types of technologies, some of our technologies that are used for creating these new novel drugs and compounds, and our cellular-based testing systems that are used for testing how they operate at the cellular level. Our contract research organization customers, which is also a large part of our customer base, primarily use our technologies for the in vivo testing.
Once a drug has gone far enough through the pre-clinical cycle, where they've tested at the cell level, they've tested at the level with large populations of small animals that have not been implanted, then they'll move to using our implants in small animals up through non-human primates, for collecting the information that's critical for the FDA and the regulatory agencies to prove safety and effectiveness of the drug. And that's what has to happen before, at that point, if that is successful, then they'll get approval to move on to human clinical use. So if I move to slide eight, this is... I like to show this as where we fit into the development cycle into the drug development cycle.
So starting with compound creation, that's where you're creating the new novel compound. Again, whether it's something that's an mRNA-type drug, or something where you're editing various parts of the cells, or editing, you know, stem cells from humans to create a new targeted therapy. That's where you'll see the use of our electroporation technology, our BTX systems. We've been very well known in this space for many years. Academic researchers, researchers in biopharma companies, they know this technology. They know, and it's one of the heavily used electroporation for transfecting and creating these new cell lines. If the compound creation works well, the first set of tests that have to take place is at the cell level. That's where you'll see customers using our patch clamp technology.
That's what's used for initial, like, single-cell testing. How does this particular cell function when it's been exposed to this compound? And if that goes well, they'll move to using our electrophysiology systems, our microelectrode array systems. You'll hear a lot about that, MEAs. That's where you're now testing groups of cells, maybe a single layer of cells, and it might be acting like a proxy for an organ. Typically, you'll see this done for brain and heart. If that goes well, then... And that, this is where you're now testing to see electrically, how do the cells operate when they're exposed to these various compounds? So today, we're not really involved with the large population animal testing that takes place, that where there's not an implant used.
If that is successful, and they get through these large populations with testing of these compounds, and this is where most of the new compounds fail. The yield, once you get to this point, is about 10%. Now, that means that 90% of new compounds fail before they get to the point where you're doing safety model testing. So if they reach the point where they're actually implanting small animals and then large animals, then they're using our equipment. They're using our implanted telemetry technology to collect information like temperature, heart rate, EKG, blood pressure, activity. Those kind of things are really critical in collecting the data that proves that the drug is safe and effective.
If it works with the small animals, and then they'll go to the large animal, human primates, that's the final sets of population testing that's required with the data collected usually in our systems. We are the leading provider of these types of systems, using our implants, and then are into human use. That's when there'll be the use of our BTX, potentially use of our BTX technology for bioproduction. We also added a new system, a new capability called a system we call VivaMARS. This is for use in testing the behavior, the neural behavior of animals. So again, this type of system is designed to go in blocks of 10, so you could have from 10- 100 animals that you're testing.
You're testing their neural behavior when they're exposed to these compounds, and it's designed as a semi-automatic version, a system that's highly... Again, it's highly automated, where you can lights out type of testing on populations of animals that are under this particular type of new compound. If that goes well, the thing that we've now introduced. You'll notice in the past, we really weren't involved with the non-implanted small animals that were used for large populations of testing. We've now introduced a breakthrough system called the Mesh MEA Organoid Platform. What this is, is an adaptation of our MEA systems, and it's adapted to actually work with organoids.
Now, the difference between using a group of cells and using an organoid, and a group of cells will typically live a day or two, so you're really limited in what kind of testing you can do. You're not gonna do longitudinal testing, you're not gonna look for, you know, latent issues with a drug on a group of cells. But once you get to an organoid, and you grow these organoids on our mesh, these organoids, we're finding with neural organoids and with heart organoids, they live a long time. We have neural organoids working with some of our researchers that are living up to a year. With this, we can tell how they affect effectively how the brain is operating when it's exposed to this compound.
So again, this is a—it's a highly efficient way to do longitudinal-level testing on brains over time. So this is a new type of technology we've just recently introduced. In a minute, I'll tell you a little bit about how that's rolling out. If we go to the next slide. So again, this is just to give you a feel for how we fit into the portfolio. Our portfolio fits into the drug development world, and this probably accounts for 80+% of our business fits into these core product lines. If you go to slide 11, I'm not gonna dwell this, but the way I like to think about the business is our core business, which is all of our implants and the systems that we've been...
That actually run with the market. We've designed our core business to be able to grow at, we believe, better than the market growth. Wherever the market's at, we expect to outperform the market, and that's because we're introducing new products at the same time into this core. In a minute, you'll see what are a couple of those new products that we've just recently introduced to help us feel confident that our core base business, which is about 85% of our revenue, should be growing at better than market growth. And then we're specifically investing into two new areas. One is now we're starting to expand into the high-growth opportunity of bioproduction.
Again, that's the case where if someone used our systems, our BTX systems, for a particular development of a new compound, we're now offering them the bridge to bioproduction. If they use our technology to develop it, they can now use it to create much higher volumes for production-level volumes in a cGMP environment, which is required for bioproduction. The other area of extensive growth that we're investing in is the use of MEAs and MEA organoid, this, our MEA organoid platform. Again, I'll tell you a little bit more about that in a minute.
Again, these two areas we see growing much faster than the market, and this is how we think about how we're gonna underpin a strong double-digit growth business, with our core business growing at or better than the market, are expanding into bioproduction, adding multiple points of growth to the business, and then expansion into organoid testing with our MEA organoid systems, and that also adding multiple points of growth to our core business. If you move to slide 12, just to give you a little highlight on where we are with new systems. Again, in our base business, we're offering; now we just introduced into production our SoHo shared housing systems.
This is a new expanded capability of our implanted devices, and these are used where, you know, historically, you'll have one implant, one animal in one type of an environment. What we're being asked to do is to find a way to be able to implant multiple animals and have them all live in a shared housing environment, 'cause that's really how animals typically live. They tend to live in groups, so this allows us to expand the kind of testing that's done for the data collection in preclinical. We, the Safety Pharmacology Society show, which is later this month, we'll be introducing this technology and showing what's happening with it there. We've started production shipments here in Q3 with the SoHo new implants.
That's part of why we're comfortable in saying that we expect to grow faster than the market in our core base business. The other technology that we've recently introduced is the VivaMARS system. VivaMARS is designed for offering our customers the ability to do high-volume multi-animal testing for neural behavior testing. We're also gonna be showing this at the Safety Pharmacology Society show here later this month, and we're actually gonna be showing it alongside of one of our very large CRO customers, who's gonna be presenting data using first sets of data using this technology. Which, you know, having a very large, well-known customer adopt this for their first lab, and we expect them to start installing more of these systems into multiple of their labs.
You'll see this introduced, and you'll see the customer specifically that we're working with here at the Safety Pharmacology Society, again, at the end of this month. This is another product that as I think of as part of our base business, and why we believe our base business, which is, again, 85% of our business, should be expected to grow at better than the market growth in the long run. In electroporation and bridge to bioproduction, you know, here's where we've introduced our new BTX system for bioproduction. I've mentioned in the past that the first large customer we expected to reach $1 million of annual consumable with this system in bioproduction.
We've already reached those levels of consumable today, at over $1 million a year of consumables for the use of BTX in bioproduction, and we're expecting. And we're working with that same customer to adapt this to another new drug that will come out from one of their other facilities. And also, we think this could be also a very large opportunity, bigger as big or bigger than the current one with this one customer. So you think about one customer, one drug, something that can add $1 million of consumable revenue, you know, recurring revenue to our business. For us, that moves the needle. We're also at the same time expanding and working with a number of smaller companies, biotechs that are introducing new drugs.
Also, this kind of these new types of transfected drugs that you'll see this starting to be adopted in those areas, too, and then, of course, very exciting, the MeshMEA Organoid system we will be introducing this also. Again, we're going into sales now. We'll be showing this as one of the highlights at the Safety Pharmacology Society here at the end of the month. This system sells into neuroresearch, cardiac research, and also for us very exciting opportunity is to have this sell into as an in vitro safety pharmacology and toxicology opportunity. That's where you start to see biopharma and CRO-type companies start to adopt this technology.
What I've said in the past is we expected to have four or five beta sites up and running in the first half of the year, which we have now. And I expected to ship up to another 10 systems to early adopters here in the second half of the year, that means between now and the end of the year, and you're gonna start to see some pretty impressive names here. So it's not just academic researchers, but it's also... You'll start to see CRO and advanced biopharma companies starting to adopt this into their development area. And I expect to be into full production in the first half of next year. Certainly by late Q1, we'll be into higher volumes.
And then as we get through the first half, I expect to be able to ramp up production very nicely to meet the new developing demand. So you're gonna see, you know, new customers coming in here, customers like, you know, University of Michigan is one of our newer customers in this area. Penn State, NIH is gonna be adopting a unit. And then, I'll also be able to tell you about some of the biotech and large pharma companies starting to buy into this. I have to be a little careful there. They often don't like me to say their names in public until I have a contract in place.
But as that starts to happen, some of these will certainly be very positive in being able to talk about it publicly. Moving to the last slide, again, we're working on the long-term growth of this business to be the fundamental growth. The fundamental sustained growth is about the new products, and the new products which are much more heavily oriented toward recurring revenue streams, consumables, recurring revenues, and services. It really changes the way this company has been. In the past, we've tended to sell in mostly academic research with very little recurring revenue. You see that changing dramatically here with us now. If you look at the kind of customers we have, you know, large, very loyal customer base.
When they adopt our technologies, we send in our researchers and our engineers and scientists to help train them on how to use it. As Jen said, our company's about... I don't know, I think we're in the neighborhood of 380 people or so total. Over half our people are engineers and scientists. I think we have 35, close to 40 PhDs. This is a very technical business, a very technical sale, and in an area that's really growing. We see great opportunity with the company, great customers, and we're focused on long-term double-digit growth. That's our long-term goal. We're already at the range of 60% of our gross margin, and we're targeting 20-plus, 20%-plus adjusted EBITDA margins.
And with our costs and our gross margins where they are, the operating leverage is substantial. So a $1 of growth in this business should drop down somewhere close to $0.50 to the EBITDA line, and that helps us really expand our new development, our R&D into these new areas. But anyway, we feel like this is a great business, and we're pretty excited about it. So with that, I think I'll just turn it back over to Jim. I think you maybe had some questions.
Yep. Yeah. Thank you very much. Thank you for the detailed presentation. So, you talked about how you expect even the core business to outperform the market. You know, is that through new products, and which new products get you that incremental growth?
Yeah, that's a great question, Jim. Yeah, definitely. To me, when I think about expanding in our core business, that's areas primarily in our preclinical area. So you'll see that we've now expanded our implantables to offer a shared housing version of the product. We see that as a way to expand our growth, expand growth in our core business. And then VivaMARS, with expanding into the ability to do high-volume automated neurobehavioral-type testing, that's one of the main sets of tests that the big CROs have to perform. So this we expect to do really well now offering it, and it's new for us, selling into CROs. We expect to see this do well in large government labs.
We also think this is gonna be adopted more into large academic sites, where they have a core group or a shared in vivo type of building for that they share with all of their research groups.
And just sticking on that core business, I know the first half of the year was a little rough. You know, the markets for, you know, some of the CROs, the life science companies, were weak. Do you see that changing at all in the second half of the year in 2025? And I know, in particular in China, they've invested some money to stabilize things there. Any impact from that yet?
Yeah, well, I guess first of all, you know, on the question of CROs, we certainly saw in Q2 a pretty steep slowdown in CRO purchases, and we heard from the CROs, you know, we've heard them talk publicly, that they were being careful about new drug starts, about investing for new drug starts coming from the pharma companies, but we also heard that the expectation was that they would start to move back toward kind of a normal demand for new drug starts. They felt like their pipelines were getting better for safety pharmacology, and for toxicology testing in the second half of the year, probably more tailored, moving more toward the second half or later in the second half, but we've again, overall, we've heard pretty good, you know, an improving story.
Not saying a great growth story for the CROs, but certainly we expect to see that at least getting back to a decent demand flow, as we get to later in the second half. As for China, what we saw coming out of Asia Pacific, with the improved budgets in Asia Pacific, we did see start to see a recovery on the academic research side. So we did record, in even last quarter, some improvement and some sequential growth in academic research into the Asia Pacific areas. Now, we haven't seen much growth yet in the past, coming into this for some of the industrial, the CROs and biopharmas. But there we do think that that's gonna we believe it's stabilized.
We don't think it's gonna be going down further. We think it's stabilized, it's annualized, and we do think we'll start to see growth off of that in Asia-Pacific, but again, probably not until late in the second half, maybe into 2025 . But it was good news to see the academic research purchasing starting to pick back up. And again, we'll, I think as we get further into the year, as we get through the election, we get some stability with the pharma companies, hopefully we start to see interest rates start to, you know, come down here. That'll help us out a lot. You know, a small company like us, there's a lot of exposure to interest rates.
A lot of our investors or a lot of our customers, you know, and we know sometimes they'll hold off and they'll say... Just like I'll tell the CFO, "Look, if we could wait and not make that purchase till next quarter, that's great. Let's try and push that out to the quarter." We saw that in Q2, but we think with interest rates starting to come down, that that'll start to soften that up. We'll start to see that start to pick up. So yeah, it's a great, great question, Jim.
Right. You know, and one of the things I've noticed, after, you know, following you guys for a while, is, you know, you were primarily always involved in drug development and the initial R&D, but now it sounds like you're starting to get more involved in the production, the bioproduction of drugs. You know, can you talk about your entry into that market, how that's going, and do you have capacity to meet demand there?
Yeah, that, that's a great question. We know, when I first took over as CEO, that was one of my first questions, was, "Well, hey, these biotechs and pharma companies, they know us. They use our technology, our transfection technology to create compounds. Why don't we offer this in a way that they can go to bioproduction with it?" We never expected to be able to do super high volumes. That's not something I would want to do, even, at least not for a while. But for that, the value proposition to have a low-cost, low-risk bridge to bioproduction is really valuable.
And as I've said, with, we know, you know, surprisingly, we got one of one of our large customers that's now buying $1 million a year of consumables, and that's just for one of their i t's an mRNA type of vaccine, and we expect them to expand that to another drug. So if I can pop on $1 million of new growth, you know, with one drug and one customer, that's significant. But I don't see that happening all the time. To me, the sweet spot is to really provide a low-risk bridge to bioproduction and really target some of the new starts, some of the biotechs that are working on a new drug.
They want to be able to have, you know, clear bioproduction to get through their preclinical phases, and hopefully to get through certain levels of, you know, phase one, two, and three clinical. At that point, a lot of these biotechs are thinking about selling off or licensing off to a large player. You know, at that point, I'll either have an opportunity to ramp up, depending on what the volume needs are, or they may have to reformulate and go to another technology for a higher volume. Either way, the value of just being able to get them to bioproduction quantities is really good. It's a great value for them and a good value proposition, but it does take a little more time.
That's why, you know, I think, but, you know, we're seeing nice growth there. We do think that's gonna add a couple points of growth, you know, to our overall business and growing going forward. But when we think about Mesh MEA and the organoids, that's happening now, and that's something we're just incredibly excited about. And that's a new space for us, where we're very well, you know, fitted to do this. Very small number of competitors. Nobody really has the ability today to do organoid-level longevity-type testing.
With what we're doing, you know, with brain and heart, and now applying and moving toward this being an opportunity to provide an in vitro filtering capability to pre-test compounds before they go to these large in vivo model testing, that's a big opportunity for us, and we see this adopting very fast and in very, very interesting areas, and we're gonna help grow this, and we're gonna be prepared for the growth as it comes. At some point, we'll see some competition in there, but at that point, you know, I'm not gonna worry about it. If ever another big player that gets into that at some point, well, that'll help us prove that it's a real market, and that'll be a good, great place for us to be.
All right. Well, we are out of time, but I just wanna say thank you for presenting. I mean, the new product pipeline seems stronger than it ever has since I've followed the name. So it seems like there's a lot of potential in the near term here. So appreciate your time, and hopefully we'll get an update from you in an upcoming conference.
Thank you, Jim. Thanks, everybody.