Harvard Bioscience Announces Second Quarter 2022 Financial Results

August 3, 2022

HOLLISTON, Mass., Aug. 03, 2022 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the second quarter ended June 30, 2022.

Jim Green, Chairman and CEO, said, "Our second quarter revenues were essentially flat compared to the prior year quarter as growth in our cellular/molecular product revenues were offset by reductions in pre-clinical revenues and an unfavorable foreign currency impact. Adjusted operating income for Q2 was lower than prior year due primarily to incremental investments in R&D and increased marketing expenses. Gross margin improved to 58% from 57%. On a GAAP basis, operating income for Q2 includes a $4.9 million benefit recorded associated with resolution of litigation related to a former subsidiary. Cash payments by the company associated with the settlement of the litigation were completed in Q2.”

Green continued, “Subsequent to Q2, we completed identification of non-strategic products to discontinue, with shipments for affected products expected to cease in the next few quarters. This portfolio optimization and other cost actions taken is expected to result in a reduction of approximately 5% of the global workforce. We expect these changes to support our strategic long-term growth targets, and to underpin our targets for gross margin and operating margin expansion.”

Green concluded, “Looking at the full year 2022, considering significant currency impacts, volatility in Europe and continued Covid related impacts in China, we are taking a more conservative view on revenue and expect 1-to-5% reported revenue growth and adjusted operating margin for the year of 13-to-14%.”

Quarterly Financial Results Summary	Q2'22			Q2'21

Revenues	$	29.2	million	$	29.2		million

Operating Income (GAAP)	$	4.0	million	$	0.1		million
Adjusted Operating Income	$	3.1	million	$	4.3		million
Operating Margin (GAAP)		13.7	%		0.2		%
Adjusted Operating Margin		10.5	%		14.6		%

Diluted Income (Loss) Per Share (GAAP)	$	0.06		$	(0.01	)
Diluted Adjusted Earnings Per Share	$	0.05		$	0.06

Net Debt*	$	45.2	million	$	38.2		million

* Debt outstanding less cash and cash equivalents

For more details on performance for the three and six months ended June 30,2022, a slide presentation that will be referenced during the webcast referenced below will be posted to our Investor Relations website shortly before the webcast begins.

Please refer to the exhibits below for a reconciliation of certain non-GAAP to GAAP financial measures, including operating income, net income and loss, diluted earnings per share and adjusted EBITDA. Please see “Use of Non-GAAP Financial Information” for additional information regarding our use of such adjusted financial information.

Webcast and Conference Call Details

Harvard Bioscience will be hosting a conference call and webcast today at 8:00 a.m. Eastern Time.

Participants 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, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, and adjusted EBITDA. 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 primarily resulting from purchase accounting or events that we do not believe are related to the underlying operations of the business such as amortization of intangibles related to acquisitions, costs related to acquisition, disposition and integration initiatives, impairment charges, severance, restructuring and other business transformation expenses, and stock-based compensation expense. They also exclude the tax impact of the reconciling items. This non-GAAP financial information approximates information used by our management to internally evaluate the operating results of the Company. Any non-GAAP financial statement information included herein are accompanied by a reconciliation to the nearest corresponding GAAP measure which are included as exhibits below in this press release.

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 is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental research, discovery, and pre-clinical testing for drug 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 press release contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of such words as "will," "guidance," "objectives," "optimistic," "potential," "future," "expects," "plans," "estimates," "continue," "drive," "strategy," "potential," "potentially," "growth," "long-term," "projects," "projected," "intends," "believes," "goals," "sees," "seek," "develop" "possible" "new," "emerging," "opportunity," "pursue" and similar expressions that do not relate to historical matters. Forward-looking statements in this press release or that may be made during our conference call may include, but are not limited to, statements or inferences about the Company's or management's beliefs or expectations, the Company's anticipated future revenues and earnings, the strength of the Company's market position and business model, industry outlook, the impact of the COVID-19 pandemic and related supply chain disruptions on the Company’s business, the Company's business strategy, the positioning of the Company for growth, the market demand and opportunity for the Company's current products, or products it is developing or intends to develop, and the Company's plans, objectives and intentions that are not historical facts. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and in our other filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein may cause the Company's actual results to differ materially from those in the forward-looking statements. The forward-looking statements in this press release are qualified by these risk factors. The Company's results may also be affected by factors of which the Company is not currently aware. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the federal securities laws to update and disclose material developments related to previously disclosed information.

For investor inquiries, please contact Michael A. Rossi, Chief Financial Officer at (508) 893-8999

													Exhibit 1
HARVARD BIOSCIENCE, INC.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)

				Three Months Ended					Six Months Ended
				June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021

	Revenues		$	29,208		$	29,197		$	57,986		$	56,186
	Cost of revenues			12,571			12,844			25,172			24,402
		Gross profit		16,637			16,353			32,814			31,784

	Operating expenses:
		Sales and marketing expenses		6,587			5,730			13,274			11,116
		General and administrative expenses		5,981			6,399			12,306			12,732
		Research and development expenses		3,497			2,701			6,717			5,188
		Amortization of intangible assets		1,454			1,465			2,920			2,929
		Settlement of litigation, net		(4,880	)		-			311			-
	Total operating expenses			12,639			16,295			35,528			31,965

	Operating income (loss)			3,998			58			(2,714	)		(181	)

	Other (expense) income:
		Interest expense		(515	)		(377	)		(899	)		(788	)
		Other (expense) income, net		(62	)		(313	)		16			(347	)
	Total other expense			(577	)		(690	)		(883	)		(1,135	)

	Income (loss) before income taxes			3,421			(632	)		(3,597	)		(1,316	)
	Income tax expense (benefit)			986			(222	)		848			(237	)
	Net income (loss)		$	2,435		$	(410	)	$	(4,445	)	$	(1,079	)

	Income (loss) per common share:
		Basic	$	0.06		$	(0.01	)	$	(0.11	)	$	(0.03	)
		Diluted	$	0.06		$	(0.01	)	$	(0.11	)	$	(0.03	)
	Weighted-average common shares:
		Basic		41,304			40,152			41,256			39,960
		Diluted		42,561			40,152			41,256			39,960

					Exhibit 2
HARVARD BIOSCIENCE, INC.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)

			June 30, 2022		December 31, 2021
	Assets
	Cash and cash equivalents	$	4,259	$	7,821
	Accounts receivables		17,847		21,834
	Inventories		29,336		27,587
	Other current assets		5,056		4,341
	Total current assets		56,498		61,583
	Property, plant and equipment		3,394		3,415
	Goodwill and other intangibles		80,451		85,074
	Other long-term assets		14,930		12,272
	Total assets	$	155,273	$	162,344

	Liabilities and Stockholders' Equity
	Current portion, long-term debt	$	2,720	$	3,235
	Other current liabilities		20,634		22,081
	Total current liabilities		23,354		25,316
	Long-term debt, net		45,764		45,095
	Other long-term liabilities		8,651		8,532
	Stockholders’ equity		77,504		83,401
	Total liabilities and stockholders’ equity	$	155,273	$	162,344

						Exhibit 3
HARVARD BIOSCIENCE, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

		Six Months Ended
			June 30, 2022			June 30, 2021
	Cash flows from operating activities:
	Net loss	$	(4,445	)	$	(1,079	)
	Adjustments to operating cash flows		3,220			5,789
	Changes in operating assets and liabilities		(951	)		(2,905	)
	Net cash (used in) provided by operating activities		(2,176	)		1,805

	Cash flows from investing activities:
	Additions to property, plant and equipment		(913	)		(357	)
	Additions to intangible assets		-			(150	)
	Net cash used in investing activities		(913	)		(507	)

	Cash flows from financing activities:
	Borrowing from revolving line of credit		5,300			-
	Repayment of revolving line of credit		(3,600	)		(4,000	)
	Repayment of term debt		(1,686	)		(1,000	)
	Payments of debt issuance costs		-			(102	)
	Proceeds from exercise of stock options and stock purchases		282			2,759
	Taxes related to net share settlement of equity awards		(780	)		(990	)
	Net cash used in financing activities		(484	)		(3,333	)

	Effect of exchange rate changes on cash		11			(45	)
	Decrease in cash and cash equivalents		(3,562	)		(2,080	)
	Cash and cash equivalents at the beginning of period		7,821			8,317
	Cash and cash equivalents at the end of period	$	4,259		$	6,237

																	Exhibit 4
HARVARD BIOSCIENCE, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
Three Months Ended June 30, 2022
(in thousands, except per share data)

											Settlement,
					Stock-Based			Acquired Assets			Restructuring,			Income
	Statement of Operations	GAAP			Compensation			Amortization			Transformation			Taxes				ADJUSTED

	Revenues	$	29,208			-			-			-			-			$	29,208
	Cost of revenues		12,571			(52	)		(9	)		(82	)		-				12,428
	Gross profit		16,637			52			9			82			-				16,780

	Gross Margin		57.0	%															57.5	%

	Operating expenses:
	Sales and marketing expenses		6,587			(192	)		(1	)		(255	)		-				6,139
	General and administrative expenses		5,981			(923	)		(15	)		(825	)		-				4,218
	Research and development expenses		3,497			(72	)		(9	)		(50	)		-				3,366
	Amortization of intangible assets		1,454			-			(1,454	)		-			-				-
	Settlement of litigation, net		(4,880	)		-			-			4,880			-				-
	Total operating expenses		12,639			(1,187	)		(1,479	)		3,750			-				13,723

	Operating Expenses - % of Revenues		43.3	%															47.0	%

	Operating income (loss)		3,998			1,239			1,488			(3,668	)		-				3,057

	Operating Margin		13.7	%															10.5	%

	Other expense:
	Interest expense		(515	)		-			-			-			-				(515	)
	Other expense, net		(62	)		-			-			-			-				(62	)
	Total other expense		(577	)		-			-			-			-				(577	)

	Income before income taxes		3,421			1,239			1,488			(3,668	)		-				2,480
	Income tax expense (benefit)		986			-			-			-			(517	)			469
	Net income (loss)	$	2,435		$	1,239		$	1,488		$	(3,668	)	$	517			$	2,011

	Income per share	$	0.06															$	0.05

	Diluted weighted average common shares		41,304																42,561

																	Exhibit 4.1
HARVARD BIOSCIENCE, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
Three Months Ended June 30, 2021
(in thousands, except per share data)

					Stock-Based			Acquired Assets			Restructuring,			Income
	Statement of Operations	GAAP			Compensation			Amortization			Transformation			Taxes				ADJUSTED

	Revenues	$	29,197			-			-			-			-			$	29,197
	Cost of revenues		12,844			(31	)		(17	)		(100	)		-				12,696
	Gross profit		16,353			31			17			100			-				16,501

	Gross Margin		56.0	%															56.5	%

	Operating expenses:
	Sales and marketing expenses		5,730			(131	)		(2	)		(73	)		-				5,524
	General and administrative expenses		6,399			(969	)		(16	)		(1,108	)		-				4,306
	Research and development expenses		2,701			(33	)		(11	)		(249	)		-				2,408
	Amortization of intangible assets		1,465			-			(1,465	)		-			-				-
	Total operating expenses		16,295			(1,133	)		(1,494	)		(1,430	)		-				12,238

	Operating Expenses - % of Revenues		55.8	%															41.9	%

	Operating income		58			1,164			1,511			1,530			-				4,263

	Operating Margin		0.2	%															14.6	%

	Other expense:
	Interest expense		(377	)		-			-			-			-				(377	)
	Other expense, net		(313	)		-			-			-			-				(313	)
	Total other expense		(690	)		-			-			-			-				(690	)

	(Loss) income before income taxes		(632	)		1,164			1,511			1,530			-				3,573
	Income tax (benefit) expense		(222	)		-			-			-			1,040				818
	Net (loss) income	$	(410	)	$	1,164		$	1,511		$	1,530		$	(1,040	)		$	2,755


	(Loss) income per share	$	(0.01	)														$	0.06

	Diluted weighted average common shares		40,152																43,425

																	Exhibit 4.2
HARVARD BIOSCIENCE, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
Six Months Ended June 30, 2022
(in thousands, except per share data)

											Settlement,
					Stock-Based			Acquired Assets			Restructuring,			Income
	Statement of Operations	GAAP			Compensation			Amortization			Transformation			Taxes				ADJUSTED

	Revenues	$	57,986			-			-			-			-			$	57,986
	Cost of revenues		25,172			(88	)		(20	)		(157	)		-				24,907
	Gross profit		32,814			88			20			157			-				33,079

	Gross Margin		56.6	%															57.0	%

	Operating expenses:
	Sales and marketing expenses		13,274			(346	)		(3	)		(370	)		-				12,555
	General and administrative expenses		12,306			(1,714	)		(30	)		(1,919	)		-				8,643
	Research and development expenses		6,717			(114	)		(19	)		(127	)		-				6,457
	Amortization of intangible assets		2,920			-			(2,920	)		-			-				-
	Settlement of litigation, net		311			-			-			(311	)		-				-
	Total operating expenses		35,528			(2,174	)		(2,972	)		(2,727	)		-				27,655

	Operating Expenses - % of Revenues		61.3	%															47.7	%

	Operating (loss) income		(2,714	)		2,262			2,992			2,884			-				5,424

	Operating Margin		-4.7	%															9.4	%

	Other (expense) income:
	Interest expense		(899	)		-			-			-			-				(899	)
	Other income, net		16			-			-			-			-				16
	Total other expense		(883	)		-			-			-			-				(883	)

	(Loss) income before income taxes		(3,597	)		2,262			2,992			2,884			-				4,541
	Income tax expense		848			-			-			-			165				1,013
	Net (loss) income	$	(4,445	)	$	2,262		$	2,992		$	2,884		$	(165	)		$	3,528

	(Loss) income per share	$	(0.11	)														$	0.08

	Diluted weighted average common shares		41,256																42,696

																	Exhibit 4.3
HARVARD BIOSCIENCE, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
Six Months Ended June 30, 2021
(in thousands, except per share data)

					Stock-Based			Acquired Assets			Restructuring,			Income
	Statement of Operations	GAAP			Compensation			Amortization			Transformation			Taxes					ADJUSTED
	Revenues	$	56,186			-			-			-			-			$	56,186
	Cost of revenues		24,402			(51	)		(36	)		(153	)		-				24,162
	Gross profit		31,784			51			36			153			-				32,024

	Gross Margin		56.6	%															57.0	%

	Operating expenses:
	Sales and marketing expenses		11,116			(224	)		(4	)		(114	)		-				10,774
	General and administrative expenses		12,732			(1,803	)		(33	)		(1,954	)		-				8,942
	Research and development expenses		5,188			(54	)		(22	)		(294	)		-				4,818
	Amortization of intangible assets		2,929			-			(2,929	)		-			-				-
	Total operating expenses		31,965			(2,081	)		(2,988	)		(2,362	)		-				24,534

	Operating Expenses - % of Revenues		56.9	%															43.7	%

	Operating income		(181	)		2,132			3,024			2,515			-				7,490

	Operating Margin		-0.3	%															13.3	%

	Other expense:
	Interest expense		(788	)		-			-			-			-				(788	)
	Other expense, net		(347	)		-			-			-			-				(347	)
	Total other expense		(1,135	)		-			-			-			-				(1,135	)

	(Loss) income before income taxes		(1,316	)		2,132			3,024			2,515			-				6,355
	Income tax (benefit) expense		(237	)		-			-			-			1,784				1,547
	Net (loss) income	$	(1,079	)	$	2,132		$	3,024		$	2,515		$	(1,784	)		$	4,808


	(Loss) income per share	$	(0.03	)														$	0.11

	Diluted weighted average common shares		39,960																42,954

											Exhibit 5
HARVARD BIOSCIENCE, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
(in thousands)

		Three Months Ended					Six Months Ended
			June 30, 2022			June 30, 2021		June 30, 2022			June 30, 2021
	Operating income	$	3,998		$	58	$	(2,714	)	$	(181	)
	Stock-based compensation expense		1,239			1,164		2,262			2,132
	Acquired asset amortization		1,488			1,511		2,992			3,024
	Settlements, restructuring and transformation costs		(3,668	)		1,530		2,884			2,515
	Adjusted operating income		3,057			4,263		5,424			7,490
	Depreciation expense		376			446		758			891
	Adjusted EBITDA	$	3,433		$	4,709	$	6,182		$	8,381

Press Release

Harvard Bioscience Announces Second Quarter 2022 Financial Results