Hi, this is Paul Knight, the life science analyst at KeyBanc Capital Markets. Thank you, John Duke, CEO of Harvard Bio, for being here, Mark Frost, CFO. A lot of changes recently at Harvard, John. I think it'd be great to get a background on yourself and kind of the strategy you're going forward with at Harvard Bio, and then we'll jump to Mark as well.
I appreciate, Paul, for the invitation and for the question. I've spent over 10 years in the life science industry, and a bulk of that is in Corning Incorporated. They have a billion-dollar life science business. Prior to joining the board of Harvard Bioscience, I was the CEO of a PE-owned company and then became the CEO in July of 2025. In terms of what I noticed, I mean, one of the first things we had to get fixed last year is we had some short-term debt which needed to get refinanced.
And working with Mark, we were able to get that refinanced in December of last year, which is significant to us, and Mark can provide more details if you have questions on that.
One of the things I was able to understand in meeting with customers, supply partners, distribution, partners and others, is that we have a really nice portfolio. About 54% of our products are recurring, meaning that they're consumables, software, service agreements, and we have a couple areas where we have high growth. We have some products which I'm happy to talk some more about in the fast-growing organoid market, as well as some products in the bioproduction area.
Mark?
Sure. Yeah. Thanks, Paul, again, and thanks to KeyBanc for having us here today. A quick background on me, and then I'll talk a little bit why I have come to Harvard Bioscience. My background, first half of my career was at GE, notably at GE Capital, GE HealthCare, and then I pivoted out of GE into the healthcare world, and I've been both a private and a public CFO in the biotech, CDMO, med tech, diagnostic imaging, and now the life science. I joined as a permanent CFO last week. You know, I'm excited to be at Harvard Bioscience, and John's gonna talk about this, is our focus on introducing new products.
I think we're in some very exciting areas like electroporation and organoids, as John discussed, and I'm sure we'll talk more about that today. Thank you again, Paul, for having myself and John here and the company. I'll turn it back to you, Paul.
Well, John, you know, having had a long history with Harvard Bio, you, the board and management had done a lot of work, getting rid of non-core businesses. Are you done with that? What are the core drivers in your view now?
Thanks for the question, Paul. I think it always behooves, you know, the board of directors and management to continue to look at your portfolio and determine whether there's areas where we want to bulk up or where maybe we should prune a little bit. In areas where we see significant growth, both organically and potentially inorganically, is in the as been previously mentioned, in the area of organoids. That is a market which is growing, you know, 15%-20%, and as well as, we have our BTX product with a product line which goes into bioprocess, which is growing nicely.
Another area where we want to continue to be sure that we maintain our strong leadership position is in our social housing platform in terms of our telemetry business. Anything else you want to add to that, Mark?
No, I think, building on John's point, there is one point that we are clearly, from a strategy standpoint, Paul, focusing to increase our presence in bioproduction. We have products in the BTX. We're gonna launch a cGMP product in the second half. John mentioned, you know, we already have a product there. We have a Tripple A (AAA) product. So that's a clear focus of the business as we move forward.
The organoid business, who would you say competition is with, this Mesh MEA product?
Yeah, there are several competitors. I think the ones which, in addition to Harvard Bioscience, which have some brand recognition, would be Axion BioSystems, MaxWell and 3Brain. Let me emphasize what we believe is very unique about what we offer, and that is a Mesh MEA system. What that is it's a microelectrode array on a mesh, which is on the micron scale. You deposit organoids, and there the organoid actually grows around the mesh, which enables you to get a true-to-life signal rather than on a three—like a two-dimensional surface.
The other thing about our product is you're able to use it in an incubator. Feeling really good about the uptake. I guess one other point I would mention is, last year, a lot of the emphasis for our organoid products was in the research institutes. You know, happy to report that as of this year, we've actually sold and had systems installed in pharma. It's nice to see that growth.
The administration and the FDA were making moves to promote cell-based research in lieu of, or eventually in lieu of animal model work, probably mice. Where do you think that or how do you think that develops over time? A, well, first question is it helping the business grow faster now? B, how do you think it develops over time?
Clearly this is complementary to our business. If I just go back and talk about the presence we have today in the animal testing, our DSI branded products, our telemetry, they have been the number one product in that animal testing for over 30 years. In my discussions with numerous contract research organizations as well as pharmaceutical and biotechs, not one of them has said in the next three to five years they expect to do less animal testing.
What they do expect is they want to ramp up new approach methodologies, which will then they want to be able to correlate data, whether that data be generated from organoid testing or others, to be able to .....
.... With their animal generated data, with the intent in the, you know, 10 to 20-year horizon that they would be able to now rely more heavily on those New Approach Methodologies and rely less on animal-based testing. I guess as a consumer, you should feel great that nothing that you're going to put into your body in the near future will be strictly based upon, let's say, what AI tells you. It actually will have been tested on animals.
Yeah. Is this recent [inaudible] the Mesh MEA business?
Yes, it is. We're off to a good start this year, and we expect to grow at least at the market growth rate, if not more this year.
Okay. The other big market, of course, is academia. Harvard's exposure there, after probably the worst headline year and maybe even spending year in a decade. What's the market been like, and what's the market like now? Or what are you thinking it'll be like based on your guidance?
I'll go first, Mark, and then you can chime in. In 2025, 50% of our global revenue were to academic institutions, 28% were to pharma and biotech, and 22% were to contract research organizations. Yes, 2025 was a difficult macro environment selling into research institutes, particularly those in the United States. If you look at our global revenue, roughly 10% of our sales went to institutes which received NIH funding. Part of our strategy moving forward is to emphasize new products which are targeted more to the pharma and biotech, which are not reliant on NIH funding.
In terms of, as you know, the reconciliation bill, the NIH, I think, passed around January 30th of this year, and as a result, the, what I would call the release of funds has occurred. Now then there's the sales cycle, the translation of the release of those funds to academic institutes to when then we can ship product and turn it into revenue. We'll start to see more of that benefit in Q2 rather than Q1.
Yeah.
Mark, anything you'd like to add there?
Yeah. Just building on what John said from a guidance standpoint. Yeah, we saw, you know, the bill get approved, and because of the way we build the order, orders coming in in March are going to be shipped in second quarter. We've reflected that, NIH implication in our first quarter guidance. If you look at our full year, we are reflecting growth and reflecting NIH to at least come in at flat 1% for the year. Then, as John has been talking about, we're expecting a larger contribution of our new products, and in fact, actually expecting it to double from a contribution from about 5% of revenue to double to 10%.
That's what gives us a lot of confidence that you'll see a ramp over the year of our growth and that you'll see, you know, low single digits and we'll see. You know, obviously we'd like to overachieve that, but that's what we're thinking right now, Paul.
When you say new products, what are those specifically?
I'll kick it back to John to talk about all the new products.
A couple of the new products which, you know, we want to highlight, are the ones which were introduced last year. We introduced the Mesh MEA, the IncuB8 platform, which are both for organoid research. We're gonna, as I mentioned earlier, we're expanding those into other customers such as large pharma. The social housing or SoHO system for animal telemetry. We're introducing new implants this year, so that will grow the install base.
Then later this year, we're gonna be introducing a BTX system, which will be both GLP and cGMP compliant, and that will drive some growth in the second half of this year. Those are the, like, what I would call the three areas which are gonna drive that new product growth.
The BTX product that'll be GP M compliant. I've noticed that Lonza and Thermo have seemed to have their own competitive boxes out there to MaxCyte.
Yes.
Where do you fit amongst that trio?
I mean, they are formidable competitors, and they have good systems. The good news by being a, we'll call a follower, is we know the specifications that we need to achieve to be competitive and w e have customers. What's happened is they've used our BTX in for research only purposes, and then they've said to us, "We'd like to be able to continue to use that as we....
Yeah
... you know, transition." Clearly for drugs which are already in production, that would not be a play. For compounds which are still in research, we want to be able to scale with the customers as they scale them.
Okay. The telemetry product, I've heard about it. Could you explain to us your telemetry product versus what else is in the market?
Absolutely. Transgenic mice and rats, those are the workhorses of testing new compounds, and the way our SOHO stands for Social Housing System works is you have one transmitter and receiver, a piece of hardware, and then its associated software, our Ponemah software. You're now able to monitor up to 16 different implants or 16 different animals with just that one piece of hardware.
The challenge you have today, let's say you're at Labcorp or a Charles River Lab, is you're testing one animal per container or cage, and that takes up a lot of space, as well as the animals like to be just like humans, we like to live among other humans.
Yeah.
They would like to be able to monitor those animals in a cage with, could be five, eight or 10. It allows the end customer or the CRO to be able to save money and get better quality data by using our Social Housing or SOHO technology.
Okay.
Is that helpful, Paul?
Yeah. How long has SOHO been out?
It was launched early last year, and over the next 18 months, we will continue to offer new implants which work with this Bluetooth system. I mean, we have several dozen legacy implants, and what we've had to do, which are based on a different frequency, and we're in the process of introducing a Bluetooth frequency-based implant to be similar to our legacy implants. That just takes some time to do that.
Okay. The other big picture, of course, is DSI or the preclinical systems business obviously exposed to the preclinical market, such as the CROs. What is the status or the health of, A, contract research marketplace and, B, the internal biopharma preclinical research market?
Because they're significant customer, big pharma and the large contract research organizations, we have quarterly reviews with them, so we have a good understanding of the amount of animal testing they plan to do in the near future. Consistently, they've said, this year they expect that to be flat to low single digits. You know, I'd love for them to say double digits, but that's not in the forecast for this year.
One of the areas I do wanna emphasize as part of our preclinical portfolio is we have products which are used in both respiratory and inhalation, and we saw some really nice growth in that last year. We expect that could be a growth driver for us this year as well.
Is it inhalation because it's just a new delivery technique?
Well, what we've noticed is since COVID occurred, many pharma and biotechs have become much more interested in diseases which are, you know, transmitted, if you will....
Yeah
.... In a respiratory manner. As a result, they've increased their research on, you know, inhalation and respiration.
Okay. The other hot topic, of course, is funding for biotech collapsed last year. It was really a big rally at 68%-90% recovery in January, February. Are you seeing that in some of the biotechnology customer marketplace?
Mark, do you wanna comment or should I?
Yeah. Yeah, no, I can comment. We've certainly seen an increase in large pharma as well as, Paul, large biotech. We're starting to see some green shoots in small biotech but, you know, obviously the order process, you got to get the orders in, so that's probably a quarter two, quarter three implication for our business.
Okay. Thank you. Where are you? I know you had to do the debt refinance late last year. Mark, could you just talk about the highlights of where you are now?
Sure. You know, that was an effort. We found a partner who's focused on the life science space, which I think was helpful in getting the deal done. It has a couple facets that we think will be helpful. You know, it's a $40 million term, but three pieces, and there's a couple deleverage opportunities. The first is Term Loan A, which is $10 million. We have the ability that the provider allowed us to take a first position if we want to do an ABL loan, which will give us more flexibility with the debt and lower the interest rate. We're working on that as we speak, and obviously, as we come to anything, we'll announce something.
The second piece is Term Loan C, which is $7.5 million, [inaudible] points, it can be converted to equity, which is $10 on the decision of the lender and $15 that's mandatory. That both those actions will allow us to hopefully deleverage faster, as we go forward. It's a four-year deal, and we can actually, at EBITDA thresholds, lengthen it to five years if we so choose. There's a number of aspects of it that make it more flexible for us and allow us hopefully to drive even more investment in innovation, Paul.
Mark, maybe do you wanna share about how much we're having to pay to service the debt this year versus we did in the prior years?
Yeah, sure. Thank you, John. Last year on debt service between interest and amortization, we spent about $8 million, and we will go down in the next two years to $5 million. We'll generate $3 million of additional cash, which we will use to continue to invest in ourselves or potentially continue the deleverage process.
That'll be how much over the next what period of time, Mark?
$6 million over the next two years.
Okay.
It goes down further, obviously, if we put an ABL in place or if Term Loan C is converted.
Okay. You signed an agreement with Fisher Scientific last fall for distribution. Is that coming into effect now? What are you looking for out of that?
Yeah. Yes. Good memory, Paul. Yes, we signed it last fall. As you're aware, Fisher Scientific is one of the largest life science distributors in North America, and they had their North America sales meeting the last week of January, where we had an opportunity for our salespeople and product managers to train their 900 sales reps. There's a time from when we're able to get those salespeople trained at Fisher to when orders come to when we're able to ship the orders. We're starting to see the we'll see those orders flow through beginning now and into Q2, but then that will translate into revenue starting in Q2.
Okay. How would you describe the distribution of your product now? Is half catalog, is half direct? What's the split of that?
Globally, 39% is through distribution and 61% is direct. We have 45 technical salespeople who support the sales of our products around the world, and it's roughly of the 45, about 40% are in North America, 40% of our salespeople are in EMEA, and then 20% are in Asia-Pacific.
Okay. What are you seeing out of the Asian market, specifically China?
Mark, do you wanna comment or should I?
Yeah, I can comment. I think, Paul, as you're aware, we had retaliatory tariffs happen last year, which ground their China business to a halt. We started to see it improve. In fact, if you look at our fourth quarter results, we had a nice jump in China in the fourth quarter. We think we're on our way to recovery there. We did talk about on the call that there was a strange cultural implication in the first quarter that China's Lunar New Year was later in February, so academics don't buy before Chinese New Year.
Now we're starting to get the orders. We expect to see the China and Asia market improve as we go into quarter two.
That's interesting. They wanna get the celebration over with, then they order.
Yes. Yes.
Okay. How much revenue do you think you've shed as non-core over the last five years, John?
That's an excellent question. Mark, do you wanna talk about that?
Yeah. I'll talk to it. Yeah. We began that process, Paul, back in 2021 through 2023, and if we sort of prorate it back, I would say it's about $8 million-$10 million from our base in 2021 has been taken out. Now, it has resulted in an improved gross margin. I'll validate again, but it was at, like, 2%-3% at the gross margin line. There has been a benefit in the returns, but obviously, the revenue base shrink a bit.
That was how much? $5 million, you said?
It was, if you prorate it was about $5 million-$8 million came out.
Okay. I mean, you really operate at a pretty impressive gross margin for your size of business. I mean, you're running at, what, 58%-60% on the gross margin line?
Yeah, absolutely. You know, our expectation is that we're going to build on that and sustain it, based on, I think, Paul, two things. One is we continue to introduce new products which have higher gross margins, and secondly, they have stronger consumable service software bases which are at higher margins. Some of our consumables are actually in the 70%-80% range.
Yeah.
That's the first driver on why our gross margins will continue to build from that level. Then secondly, you know, we took out costs last year, and Project Viking will bring $4 million when we're done, primarily at the COGS line. Two big elements driving, I think, future gross margin and EBITDA improvements.
Viking is the project where you're moving some manufacturing out of Massachusetts, is that right?
Yeah. It's twofold. One, you know, we took a look, and it didn't make sense to have two large U.S. sites for an $87 million business. We're consolidating a lot of the products to Minneapolis. We're also moving a couple back to their center of excellence. We had both in Stuttgart and Cambridge, U.K., they were made in both places, so we're moving those products back to those two locations to where we think the center of excellence is.
Okay. That's $3 million in 2027, and then another $1 million?
Another $1 million. Yeah, we'll go from, you know, with no change in revenue, which I'll comment on in a second, an $8 million business to a $12 million business, i.e., returning 15% at the bottom line. If you get revenue growth, you potentially get towards that 20% in three to five years for this business. You know, it's one of the reasons John and I are so excited about where we can take this business.
Would you ever acquire again?
John...
Yes
.... I'll defer to you on that one.
Yes, we would. I mean, we are working with the board on decision criteria on what those would be. Clearly, they would need to, you know, align with what we're doing today, such as. They would be in growth areas, and they would be in areas that have a high recurring revenue stream.
Right. I mean, ultimately, it seems like you've got a pretty good tech force and a tech/sales force that could be leveraged, right?
Correct.
What would you like to carry over from Corning to Harvard Bioscience, John?
I guess there's two things I'd like to carry over, and that is, one is ensuring that we continue to bring out differentiated new products, and then once they are brought out, that you sell them, you sell them, and you sell them. The second is just really strong operating of a business. Like, we have some really good assets here, and we look forward to being able to operate them tightly and, you know, drive EBITDA improvement as Mark had outlined.
Mark, you're very familiar with the peers in life science, ranging from Thermo to GE. In the years ahead, what would your EBITDA margin be, goal be? If we were in a normalized market, which we aren't now, what could a growth rate be?
Yeah. I think from today we're a little less than 10. With Viking, that gets us to mid-teens. With revenue and continued cost discipline and continued new product introductions, it is realistic to get towards that low 20% level for this business. We have done a lot of things to position us well to leverage new revenue as it comes in and get greater than a 60% benefit at the bottom line. We're pretty excited about that, Paul.
Mid- to high single-digit growth?
Probably higher than that. It probably could get to, notwithstanding this year, as we get better traction, we could be in the low teens for EBITDA growth.
Right. I know we've done a lot of work, even on myself. We break out electroporation and MEA hoping that, you know, these continue to grow rapidly.
Right.
You know, the market's been pretty choppy obviously. What do you hear regarding the FDA activity? Is it a stable environment, or is there any visibility from your customer base on what's emanating out of approvals at FDA?
I wish I could say we had good visibility in the FDA, Paul. I would have to turn to people in the pharma and biotechs....
Yeah
.... Who have much better resources in Washington, D.C., than we do.
Yeah. I guess the last couple of questions I would have would be what do you do with currency in this environment? Are you a hedger or are you naturally hedged?
Mark?
Yeah. I mean, we have not historically engaged in natural , in hedges, so we've taken a natural hedge approach. It goes to our mix of revenue where, you know, 50% U.S., 30% EMEA, 20% Asia. It provides us a bit of a natural hedge in the business.
I think the makeup of the catalog business right now is Fisher and Avantor seem to have about half of it, and at least 100 good ones in the other half. What would be the Harvard Bio, you know, strength in that catalog market? Is it you have your very strong niche in the preclinical test market?
Our cellular and molecular technology portfolio are the ones which those products, whether that be electroporation, or pumps, or spectrophotometers, those are sold to hundreds and hundreds of customers, if not thousands. That's where, you know, the reach of someone like Fisher Scientific is very beneficial. The preclinical telemetry products which we have, that is really where we're relying upon our direct sales force. I will tell you, as organoids and NAMs becomes more prevalent, there's the potential for, you know, some benefit upside, if you will, through the distribution channel.
It seems like it's a fairly stable end market if you're in the right niche, isn't it?
Yes, that's correct.
Great. Well, with that, I don't see any questions from the field, but we really appreciate your time today, John and Mark. Congrats on the refinancing and, you know, like most, it looks like, pretty realistic guidance set out by you and peers here regarding, 2026. There seems to be, you know, in our opinion, some green shoots like financing that's starting to pick up and maybe a more normalized big pharma environment as we get away from tariffs and pricing, right?
Yes. Paul, thank you very much for the invitation today. We appreciate it.
Okay. Thank you.
Thanks, Paul.
Thanks.