hboi20240331

hboi20240331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 001-33957

HARVARD BIOSCIENCE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	04-3306140
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

84 October Hill Road, Holliston, Massachusetts 01746

(Address of Principal Executive Offices, including zip code)

(508) 893-8999

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HBIO	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S- T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2024, there were 43,429,626 shares of the registrant’s common stock issued and outstanding.

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HARVARD BIOSCIENCE, INC.

FORM 10-Q

INDEX

	Page

PART I - FINANCIAL INFORMATION	3

Item 1. Condensed Consolidated Financial Statements (unaudited)	3

Consolidated Balance Sheets	3

Consolidated Statements of Operations	4

Consolidated Statements of Comprehensive Income (Loss)	5

Consolidated Statements of Stockholders' Equity	6

Consolidated Statements of Cash Flows	7

Notes to Unaudited Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3. Quantitative and Qualitative Disclosures about Market Risk	22

Item 4. Controls and Procedures	22

PART II - OTHER INFORMATION	23

Item 1. Legal Proceedings	23

Item1A. Risk Factors	23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	23

Item 3. Defaults Upon Senior Securities	23

Item 4. Mine Safety Disclosures	23

Item 5. Other Information	23

Item 6. Exhibits	23

SIGNATURES	24

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HARVARD BIOSCIENCE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudied, in thousands, except share and per share data)

	*March 31,*			*December 31,*
	*2024*			*2023*
Assets
Current assets:
Cash and cash equivalents	$	4,255		$	4,283
Accounts receivable, net		15,309			16,099
Inventories		24,136			24,716
Other current assets		4,448			3,940
Total current assets		48,148			49,038
Property, plant and equipment, net		4,492			3,981
Operating lease right-of-use assets		4,359			4,773
Goodwill		56,699			57,065
Intangible assets, net		14,678			16,036
Other long-term assets		4,785			6,473
Total assets	$	133,161		$	137,366
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	3,720		$	5,859
Current portion of operating lease liabilities		1,197			1,416
Accounts payable		6,044			5,554
Contract liabilities		4,388			4,508
Other current liabilities		10,328			9,205
Total current liabilities		25,677			26,542
Long-term debt, net		31,890			30,704
Deferred tax liability		772			776
Operating lease liabilities		4,557			4,794
Other long-term liabilities		1,453			1,476
Total liabilities		64,349			64,292
Commitments and contingencies - Note 13
Stockholders' equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized		-			-
Common stock, par value $0.01 per share, 80,000,000 shares authorized: 43,421,251 shares issued and outstanding at March 31, 2024; 43,394,509 shares issued and outstanding at December 31, 2023		434			434
Additional paid-in-capital		233,451			232,435
Accumulated deficit		(150,299	)		(145,605	)
Accumulated other comprehensive loss		(14,774	)		(14,190	)
Total stockholders' equity		68,812			73,074
Total liabilities and stockholders' equity	$	133,161		$	137,366

See accompanying notes to condensed consolidated financial statements.

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HARVARD BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

	Three Months Ended March 31,
	2024			2023

Revenues	$	24,512		$	29,975
Cost of revenues		9,740			11,629
Gross profit		14,772			18,346

Sales and marketing expenses		5,904			5,978
General and administrative expenses		5,963			6,334
Research and development expenses		2,885			2,897
Amortization of intangible assets		1,333			1,388
Other operating expenses		966			-
Total operating expenses		17,051			16,597

Operating (loss) income		(2,279	)		1,749

Other (expense) income:
Interest expense		(751	)		(974	)
Loss on equity securities - Note 6		(1,312	)		-
Other (expense) income, net		(142	)		432
Total other (expense) income		(2,205	)		(542	)

(Loss) income before income taxes		(4,484	)		1,207
Income tax expense		210			585
Net (loss) income	$	(4,694	)	$	622

(Loss) income per share:
Basic (loss) income per share	$	(0.11	)	$	0.01

Diluted (loss) income per share	$	(0.11	)	$	0.01

Weighted-average common shares:
Basic		43,402			42,119

Diluted		43,402			42,783

See accompanying notes to condensed consolidated financial statements.

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HARVARD BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)

	Three Months Ended March 31,
	2024			2023

Net (loss) income	$	(4,694	)	$	622
Other comprehensive (loss) income:
Foreign currency translation adjustments		(783	)		837
Derivative instruments qualifying as cash flow hedges, net of tax of $-0-		199			(440	)
Other comprehensive (loss) income		(584	)		397
Comprehensive (loss) income	$	(5,278	)	$	1,019

See accompanying notes to condensed consolidated financial statements.

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HARVARD BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudied, in thousands)

												*Accumulated*
Three Months Ended	*Number*					*Additional*						*Other*			*Total*
March 31, 2024	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Stockholders’*
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Equity*
Balance at December 31, 2023		43,395		$	434	$	232,435		$	(145,605	)	$	(14,190	)	$	73,074
Stock option exercises		4			-		15			-			-			15
Vesting of restricted stock units		34			-		-			-			-			-
Shares withheld for taxes		(12	)		-		(47	)		-			-			(47	)
Stock-based compensation expense		-			-		1,048			-			-			1,048
Net loss		-			-		-			(4,694	)		-			(4,694	)
Other comprehensive loss		-			-		-			-			(584	)		(584	)
Balance at March 31, 2024		43,421		$	434	$	233,451		$	(150,299	)	$	(14,774	)	$	68,812

												Accumulated
Three Months Ended	*Number*					*Additional*						*Other*			*Total*
March 31, 2023	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Stockholders’*
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Equity*
Balance at December 31, 2022		42,082		$	454	$	229,008		$	(142,190	)	$	(15,052	)	$	72,220
Stock option exercises		39			1		103			-			-			104
Vesting of restricted stock units		125			-		-			-			-			-
Shares withheld for taxes		(56	)		-		(156	)		-			-			(156	)
Stock-based compensation expense		-			-		1,153			-			-			1,153
Net income		-			-		-			622			-			622
Other comprehensive income		-			-		-			-			397			397
Balance at March 31, 2023		42,190		$	455	$	230,108		$	(141,568	)	$	(14,655	)	$	74,340

See accompanying notes to condensed consolidated financial statements.

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HARVARD BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)

	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net (loss) income	$	(4,694	)	$	622
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		404			333
Amortization of intangible assets		1,377			1,388
Amortization of deferred financing costs		70			70
Stock-based compensation expense		1,048			1,153
Deferred income taxes and other		178			(55	)
Loss on equity securities - Note 6		1,312			-
Gain on sale of product line - Note 14		-			(403	)
Changes in operating assets and liabilities:
Accounts receivable		704			(923	)
Inventories		(617	)		(292	)
Other assets		(298	)		(308	)
Accounts payable and other current liabilities		2,469			(150	)
Contract liabilities		(120	)		741
Other liabilities		(430	)		(364	)
Net cash provided by operating activities		1,403			1,812
Cash flows from investing activities:
Additions to property, plant and equipment		(645	)		(224	)
Capitalized software development costs		(75	)		-
Proceeds from sale of product line		-			512
Proceeds from sale of marketable equity securities		495			-
Net cash (used in) provided by investing activities		(225	)		288
Cash flows from financing activities:
Borrowing from revolving line of credit		2,500			1,500
Repayment of revolving line of credit		(500	)		(2,500	)
Repayment of term debt		(3,023	)		(1,841	)
Proceeds from exercise of stock options and employee stock purchase plan		15			104
Taxes paid related to net share settlement of equity awards		(47	)		(156	)
Net cash used in financing activities		(1,055	)		(2,893	)
Effect of exchange rate changes on cash		(151	)		74
Decrease in cash and cash equivalents		(28	)		(719	)
Cash and cash equivalents at beginning of period		4,283			4,508
Cash and cash equivalents at end of period	$	4,255		$	3,789
Supplemental disclosures of cash flow information:
Cash paid for interest	$	768		$	1,172
Cash paid for income taxes, net of refunds	$	26		$	(134	)

See accompanying notes to condensed consolidated financial statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

The unaudited consolidated financial statements of Harvard Bioscience, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2023 consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

In the opinion of management, all adjustments, which include normal recurring adjustments necessary to present a fair statement of financial position as of March 31, 2024, results of operations and comprehensive income (loss) and cash flows for the three months ended March 31, 2024 and 2023, as applicable, have been made. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies underlying the accompanying unaudited consolidated financial statements are set forth in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the use of management estimates. Such estimates include the determination and establishment of certain accruals and provisions, including those for income taxes, credit losses on receivables, and defined benefit pension obligations. Estimates are also required to evaluate the value for inventories reported at lower of cost or net realizable value, stock-based compensation expense, and the recoverability of long-lived and intangible assets, including goodwill. On an ongoing basis, the Company reviews its estimates based upon currently available information. Actual results could differ materially from those estimates.

Other Operating Expenses

Other operating expenses for the three months ended March 31, 2024 included a fee of $0.5 million in connection with the receipt of employee retention credits (See Note 5) and an estimated loss of $0.5 million related to an unclaimed property audit (See Note 13).

Recently Issued Accounting Pronouncements Yet to Be Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax, which enhances disclosures related to the effective tax rate reconciliation, income taxes paid, as well as other disclosures. The new standard impacts footnote disclosures and is effective for the Company’s annual financial statements for the year ended December 31, 2025. The Company is currently evaluating the potential impact of adopting ASU No. 2023-09 will have on the disclosures in its consolidated financial statements.

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2.	Earnings (Loss) per Share

Basic earnings (loss) per share (EPS) is calculated by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. The calculation of diluted earnings per share assumes conversion of stock options and restricted stock units into common stock using the treasury method.

The following table summarizes the calculation of basic and diluted net income (loss) per share of common stock:

	Three Months Ended March 31,
(in thousands, except per share data)	2024			2023
Net (loss) income	$	(4,694	)	$	622
Weighted average shares outstanding - basic		43,402			42,119
Dilutive effect of equity awards		-			664
Weighted average shares outstanding - diluted		43,402			42,783
Basic (loss) income per share	$	(0.11	)	$	0.01
Diluted (loss) income per share	$	(0.11	)	$	0.01
Shares excluded from diluted (loss) income per share due to their anti-dilutive effect		3,207			1,167

3.	Revenues

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2024 and 2023:

Revenues by type were as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Instruments, equipment, software and accessories	$	22,759	$	28,493
Service, maintenance and warranty contracts		1,753		1,482
Total revenues	$	24,512	$	29,975

Revenues by timing of recognition were as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Goods and services transferred at a point in time	$	23,743	$	29,306
Goods and services transferred over time		769		669
Total revenues	$	24,512	$	29,975

Revenue by geographic destination were as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
United States	$	10,983	$	12,302
Europe		6,578		7,441
Greater China		4,382		6,505
Rest of the world		2,569		3,727
Total revenues	$	24,512	$	29,975

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Contract Liabilities

The following table provides details of contract liabilities as of the periods indicated:

(dollars in thousands)	March 31, 2024		December 31, 2023		Change			Percentage
Service, maintenance and warranty contracts	$	2,748	$	2,849	$	(101	)		-3.5	%
Customer advances		1,640		1,659		(19	)		-1.1	%
Total contract liabilities	$	4,388	$	4,508	$	(120	)		-2.7	%

Changes in the Company’s contract liabilities are primarily due to the timing of receipt of payments under service, maintenance and warranty contracts. During the three months ended March 31, 2024 and 2023, the Company recognized revenue of $1.6 million and $1.0 million from contract liabilities existing at December 31, 2023 and 2022, respectively.

Provision for Expected Credit Losses on Receivables

Activity in the provision for expected losses on receivables was as follows:

	Three Months Ended March 31,
(in thousands)	2024			2023
Balance, beginning of period	$	160		$	191
Provision for expected credit losses		1			(3	)
Charge-offs and other		(34	)		(21	)
Balance, end of period	$	127		$	167

Concentrations

No customer accounted for more than 10% of revenues for the three months ended March 31, 2024 and 2023. At March 31, 2024 and December 31, 2023, no customer accounted for more than 10% of net accounts receivable.

Warranties

Activity in the product warranty accrual was as follows:

	Three Months Ended March 31,
(in thousands)	2024			2023
Balance, beginning of period	$	336		$	268
Expense		105			83
Warranty claims		(82	)		(72	)
Balance, end of period	$	359		$	279

4.	Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended March 31, 2024 was as follows:

(in thousands)
Carrying amount at December 31, 2023	$	57,065
Effect of change in currency translation		(366	)
Carrying amount at March 31, 2024	$	56,699

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Intangible assets at March 31, 2024 and December 31, 2023 consisted of the following:

	March 31, 2024							December 31, 2023
(in thousands)			Accumulated							Accumulated
Amortizable intangible assets:	Gross		Amortization			Net		Gross		Amortization			Net
Distribution agreements/customer relationships	$	15,816	$	(9,798	)	$	6,018	$	16,038	$	(9,706	)	$	6,332
Technology and software development		34,987		(27,891	)		7,096		35,007		(27,029	)		7,978
Trade names and patents		7,530		(6,166	)		1,364		7,613		(6,094	)		1,519
Total amortizable intangible assets	$	58,333	$	(43,855	)	$	14,478	$	58,658	$	(42,829	)	$	15,829

SEC Form 10-Q filed by Harvard Bioscience Inc.