Harvard Bioscience reported its first-quarter financial results on Tuesday and reaffirmed its full-year guidance. Despite a slight year-over-year decline in Q1 revenue, the company maintains its expectation for 2% to 4% revenue growth for the full year 2026. Concurrently, its "Project Viking" manufacturing consolidation initiative is projected to achieve annual cost savings of approximately $4 million starting in 2028.
First Quarter Performance: Revenue Meets Expectations, Gross Margin Improves Significantly The financial report shows first-quarter revenue was $20.8 million, a 5% decrease from $21.8 million in the same period last year, but in line with the company's prior expectations. The gross margin improved by approximately 300 basis points year-over-year to 59%, at the high end of the company's guidance range. Adjusted EBITDA was $0.8 million, flat compared to the prior year period.
John Duke, the company's new President and Chief Executive Officer, stated: "First-quarter revenue met expectations, gross margin expanded year-over-year, and we maintained profitability on an adjusted EBITDA basis. We are reaffirming our full-year guidance, anticipating that revenue growth from higher-margin new products will drive earnings growth in the second half of the year."
By region, the Europe, Middle East, and Africa markets performed strongly with a 7% revenue increase. The China market also achieved 3% growth, primarily driven by increased sales to CRO clients. The Americas market saw a 9% revenue decline due to soft academic and government demand stemming from delayed NIH funding.
"Project Viking": Manufacturing Consolidation for Cost Reduction and Efficiency "Project Viking" is one of the company's most critical strategic initiatives. The plan aims to close the facility in Holliston, Massachusetts, and migrate production to Centers of Excellence in Minneapolis, Minnesota, as well as in Germany, Sweden, and the United Kingdom.
The manufacturing consolidation is progressing on schedule and is expected to be substantially complete by the first quarter of 2027. The project is anticipated to deliver approximately $3 million in cost savings in 2027, with ongoing annual savings of about $4 million commencing in 2028. The company will incur pre-tax restructuring charges of approximately $3.4 million to $4.4 million related to this initiative.
Full-Year Outlook and Strategic Transformation The company reaffirmed its full-year 2026 targets of 2% to 4% revenue growth and 6% to 10% growth in adjusted EBITDA. For the second quarter, the company expects revenue in the range of $20.5 million to $22.5 million, with adjusted EBITDA projected between $1 million and $2 million.
From a strategic perspective, Harvard Bioscience is transitioning from a traditional tools supplier to the "Translational Science" market, focusing on providing technical tools for drug development that align with "New Approach Methodologies" promoted by regulatory bodies like the FDA and EMA. The new product innovation pipeline currently represents 12% to 20% of company revenue, with Mesh MEA, BTX electroporation, and SoHo telemetry products being the primary growth drivers.
As of the end of the first quarter, the company completed a debt refinancing, extending its loan maturity to 2029, which is expected to save approximately $3 million in annual interest expense.
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