HARVARD BIOSCIENCE INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
HBIO$8.36-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001171843-24-002618
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001171843-24-004564
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 46 previous paragraphs and 70 current paragraphs.
27 unchanged; 16 reworded; 23 added; 3 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Sales and marketing expenses decreased $0.8 million, or 12.7%, to $5.4 million for the three months ended June 30, 2024, compared with $6.2 million for the three months ended June 30, 2023. The decrease was primarily due to lower compensation and travel costs.
Current report
General and administrative expenses increased $0.3 million, or 6.2%, to $5.7 million for the three months ended June 30, 2024, compared with $5.4 million for the three months ended June 30, 2023. The increase was primarily due to higher stock-based compensation expense as a result of forfeitures during the prior year period.
Current report
Research and development expenses decreased $0.4 million, or 11.2%, to $2.6 million for the three months ended June 30, 2024, compared with $3.0 million for the three months ended June 30, 2023. The decrease was primarily due to lower compensation costs.
Current report
Other operating expenses for the three months ended June 30, 2024 was $0.2 million and included $0.4 million of restructuring costs in connection with headcount reductions in Europe and North America, which was partially offset by a credit of $0.1 million related to closure of an unclaimed property audit.
Current report
Income tax benefit
Current report
Six months ended June 30, 2024, compared to six months ended June 30, 2023
Current report
Revenues
Current report
Revenues decreased $11.1 million, or 18.9%, to $47.6 million for the six months ended June 30, 2024, compared to $58.7 million for the six months ended June 30, 2023. The decrease in revenue was primarily due to softening worldwide demand compared to a strong first half in 2023 as well as decreased sales of preclinical products from CRO’s.
Current report
Gross profit
Current report
Sales and marketing expenses
Current report
Sales and marketing expenses decreased $0.9 million, or 7.1%, to $11.3 million for the six months ended June 30, 2024, compared with $12.2 million for the six months ended June 30, 2023. The decrease was primarily due to lower compensation and travel costs.
Current report
General and administrative expenses
Current report
General and administrative expenses remained relatively unchanged and were $11.6 million for the six months ended June 30, 2024, compared with $11.7 million for the six months ended June 30, 2023. Decreases in compensation during the period were partially offset by increases in professional fees.
Current report
Research and development expenses
Current report
Amortization of intangible assets
Current report
Amortization of intangible assets included in operating expenses remained relatively unchanged and were $2.7 million for the six months ended June 30, 2024, compared with $2.8 million for the six months ended June 30, 2023.
Current report
Other operating expenses
Current report
Interest expense
Current report
Interest expense decreased $0.4 million, or 21.7%, to $1.5 million for the six months ended June 30, 2024, compared with $1.9 million for the six months ended June 30, 2023. The decrease was primarily due to lower average borrowings during the period.
Current report
Loss on equity securities
Current report
Income tax benefit
Current report
On August 6, 2024, we entered into an amendment to the Credit Agreement that, among other things, modifies the financial covenants relating to the consolidated net leverage ratio and consolidated fixed charge coverage ratio through the period ended December 31, 2024. The amendment also adds a net leverage ratio requirement with respect to additional borrowing under our revolving credit facility and restrictions on certain additional indebtedness and investments, in each case until we deliver to the Lenders our financial statements for the fiscal year ending December 31, 2024. In addition, until delivery of the financial statements, the applicable interest rate margin will be increased by 50bps during such time as the consolidated net leverage ratio is greater than 3.0. We paid fees of $0.2 million to the Lenders in connection with the amendment. As a result of the August 2024 Amendment, we are in compliance with the financial covenants of the Credit Agreement (see Note 8 to the Consolidated Condensed Financial Statements included in Part I, Item 1. of this report).
Current report
Currency exchange rate fluctuations included as a component of net loss resulted in currency losses of $(0.1) million for both the three months ended June 30, 2024 and 2023, respectively, and $(0.1) million for both the six months ended June 30, 2024 and 2023, respectively.
Removed paragraphs (3)
Previous report
Sales and marketing expenses of $5.9 million for the three months ended March 31, 2024, were comparable to the $6.0 million during the same period in 2023. Reduced variable compensation was offset by increased investments in personnel to support our growth strategy, product launches and travel costs related to industry trade shows.
Previous report
Research and development expenses were $2.9 million for both the three months ended March 31, 2024, and March 31, 2023.
Previous report
Income tax expense
Reworded paragraphs (16)
Previous wording
Revenues decreased $5.5 million, or 18.2%, to $24.5 million for the three months ended March 31, 2024, compared to $30.0 million for the three months ended March 31, 2023. The decrease in revenue was primarily due to the softening of worldwide demand, in particular in the Asia-Pacific region compared to a strong first quarter in 2023.
Current wording
Revenues decreased $5.7 million, or 19.7%, to $23.1 million for the three months ended June 30, 2024, compared to $28.8 million for the three months ended June 30, 2023. The decrease in revenue was primarily due to softening of worldwide demand compared to a strong second quarter in 2023 as well as decreased sales of preclinical products from contract research organizations (CRO’s).
Previous wording
Gross profit decreased $3.5 million, or 19.5%, to $14.8 million for the three months ended March 31, 2024 compared with $18.3 million for the three months ended March 31, 2023, primarily due to the decrease in revenues. Gross margin decreased to 60.3% for the three months ended March 31, 2024, compared with 61.2% for the three months ended March 31, 2023. The decrease in gross margin was primarily the result of under-absorption of manufacturing overhead costs due to the decrease in revenues.
Current wording
Gross profit decreased $3.5 million, or 20.7%, to $13.2 million for the three months ended June 30, 2024, compared with $16.7 million for the three months ended June 30, 2023, primarily due to the decrease in revenues. Gross margin decreased to 57.2% for the three months ended June 30, 2024, compared with 58.0% for the three months ended June 30, 2023. The decrease in gross margin was primarily the result of under-absorption of fixed manufacturing overhead costs due to the decrease in revenues and lower mix of high margin products.
Previous wording
Amortization of intangible assets included in operating expenses remained relatively unchanged and decreased to $1.3 million for the three months ended March 31, 2024, compared with $1.4 million for the three months ended March 31, 2023.
Current wording
Amortization of intangible assets included in operating expenses was $1.3 million for the three months ended June 30, 2024, compared with $1.4 million for the three months ended June 30, 2023.
Previous wording
Interest expense decreased $0.2 million, or 22.9%, to $0.8 million for the three months ended March 31, 2024, compared with $1.0 million for the three months ended March 31, 2023. The decrease was primarily due to lower average borrowings during the period.
Current wording
Interest expense decreased $0.2 million, or 20.4%, to $0.7 million for the three months ended June 30, 2024, compared with $0.9 million for the three months ended June 30, 2023. The decrease was primarily due to lower average borrowings during the period.
Previous wording
As of March 31, 2024 and December 31, 2023 we held shares of common stock of HRGN with an estimated fair value of $1.7 million and $3.5 million, respectively. These shares were received in April 2023 in connection with settlement of indemnification obligations related to litigation which occurred during the year ended December 31, 2022. During the three months ended March 31, 2024, we recorded a loss of $1.3 million consisting of a realized loss of $0.3 million for shares sold and an unrealized loss of $1.0 million for shares held. We determine the fair value of our HRGN common stock based on the closing price as quoted on the OTCQB Marketplace at the reporting date. Due to HRGN’s limited operating history, its overall financial condition and the limited trading volumes and liquidity of its common stock, the value of our investment in this common stock could fluctuate considerably or become worthless.
Current wording
As of March 31, 2024, we held shares of common stock of HRGN with an estimated fair value of $1.7 million. These shares were received in April 2023 in connection with settlement of indemnification obligations related to litigation which was resolved during the year ended December 31, 2022. During the three months ended June 30, 2024, we sold all of our remaining HRGN shares for $1.4 million and recorded a loss of $0.3 million.
Previous wording
Income tax expense was $0.2 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively. The effective tax rates for the three months ended March 31, 2024 and 2023 were (4.7)% and 48.5%, respectively. The effective tax rate decreased in the first quarter of 2024 compared to 2023 due to a decrease in the GILTI inclusion. The effective tax rate for both the first quarters of 2024 and 2023 differed from the U.S. statutory rate primarily due to the inclusion of non-deductible executive compensation and changes in valuation allowances associated with our assessment of the likelihood of the recoverability of deferred tax assets.
Current wording
The income tax benefit was $0.4 million and $1.1 million for the three months ended June 30, 2024 and 2023, respectively. The effective tax rates for the three months ended June 30, 2024 and 2023 were 10.8% and 53.3%, respectively. The lower effective tax rate during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was related to a decrease in the Global Intangible Low Tax Income (“GILTI”) inclusion. The effective tax rate for both the second quarters of 2024 and 2023 differed from the U.S. statutory rate primarily due to the inclusion of non-deductible executive compensation and changes in valuation allowances associated with our assessment of the likelihood of the recoverability of deferred tax assets.
Previous wording
General and administrative expenses decreased $0.3 million, or 5.9%, to $6.0 million for the three months ended March 31, 2024, compared with $6.3 million for the three months ended March 31, 2023. The decrease was primarily due to reduced variable compensation.
Current wording
Research and development expenses decreased $0.4 million, or 5.9%, to $5.5 million for the six months ended June 30, 2024, compared with $5.9 million for the six months ended June 30, 2023. The decrease was primarily due to lower compensation costs.
Previous wording
Other operating expenses for the three months ended March 31, 2023 included a fee of $0.5 million in connection with the receipt of employee retention credits and an estimated loss of $0.5 million related to an unclaimed property audit.
Current wording
Other operating expenses for the six months ended June 30, 2024, were $1.2 million and included a fee of $0.5 million in connection with the receipt of employee retention credits, $0.3 million related to settlement of an unclaimed property audit, and restructuring costs of $0.4 million in connection with headcount reductions in Europe and North America.
Previous wording
Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our revolving credit facility. Our expected cash outlays relate primarily to cash payments due under our Credit Agreement described below as well as capital expenditures, salaries, inventory, and capital expenditures.
Current wording
Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our revolving credit facility. Our expected cash outlays relate primarily to cash payments due under our Credit Agreement described below as well salaries, inventory, and capital expenditures.
Previous wording
We held cash and cash equivalents of $4.3 million at both March 31, 2024, and December 31, 2023. Borrowings outstanding were $36.1 million and $37.1 million as of March 31, 2024 and December 31, 2023, respectively.
Current wording
We held cash and cash equivalents of $4.0 million and $4.3 million as of June 30, 2024 and December 31, 2023, respectively. Borrowings outstanding were $36.1 million and $37.1 million as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
We maintain a Credit Agreement which provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility both maturing on December 22, 2025. On March 28, 2024, we entered into an amendment to the Credit Agreement pursuant to which the Lenders and administrative agent modified the definition of Consolidated EBITDA used in the calculation of certain financial covenants to adjust for charges related to the ongoing abandoned property audit and commission fees expected to be paid in connection with our employee retention credit filings. We were in compliance with the covenants of the Credit Agreement, as amended, as of March 31, 2024. (See Note 8 to the Consolidated Condensed Financial Statements included in Part I, Item 1. of this report).
Current wording
We maintain a Credit Agreement which provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility both maturing on December 22, 2025. On March 28, 2024, we entered into an amendment to the Credit Agreement pursuant to which the Lenders and administrative agent modified the definition of Consolidated EBITDA used in the calculation of certain financial covenants to adjust for charges related to the ongoing abandoned property audit and commission fees expected to be paid in connection with our employee retention credit filings.
Previous wording
As of March 31, 2024, the weighted average interest rate on our borrowings, net of the effect of the interest rate swaps, was 7.4%, and the available and unused borrowing capacity was $4.4 million. Total revolver borrowing capacity is limited by our consolidated net leverage ratio as defined under the Credit Agreement, as amended.
Current wording
As of June 30, 2024, the weighted average interest rate on our borrowings, net of the effect of the interest rate swaps, was 7.7%, and the available and unused borrowing capacity was $5.4 million. Total revolver borrowing capacity is limited by our consolidated net leverage ratio as defined under the Credit Agreement, as amended on August 6, 2024.
Previous wording
Cash provided by operating activities was $1.4 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively. Cash flow from operations for the three months ended March 31, 2024 was negatively impacted as a result of the decline in net income for the period adjusted for non-cash items and was positively impacted by the receipt of $3.2 million of employee retention credits.
Current wording
Cash provided by operating activities was $0.6 million and $5.4 million for the six months ended June 30, 2024 and 2023, respectively. Cash flow from operations for the six months ended June 31, 2024 was negatively impacted as a result of the decline in net income for the period adjusted for non-cash items and was positively impacted by the receipt of $3.2 million of employee retention credits.
Previous wording
Cash used in investing activities was $0.2 million for the three months ended March 31, 2024 and primarily consisted of capital expenditures in manufacturing and information technology infrastructure of $0.7 million partially offset by $0.5 million from the proceeds from the sale of marketable equity securities. Cash provided by investing activities was $0.3 million for the three months ended March 31, 2023 and primarily consisted of $0.5 million from proceeds of the sale our Hoefer product line partially offset by $0.2 million of capital expenditures.
Current wording
Cash provided by investing activities was $0.2 million for the six months ended June 30, 2024, and consisted of $1.9 million in proceeds from the sale of marketable equity securities, offset by $1.7 million of capital expenditures in manufacturing and information technology infrastructure, and software development. Cash used in investing activities was $0.3 million for the six months ended June 30, 2023, and consisted of $0.8 million of capital expenditures in manufacturing, information technology infrastructure, and software development, partially offset by $0.5 million from proceeds of the sale our Hoefer product line.
Previous wording
Cash used in financing activities was $1.1 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, debt outstanding under our credit facility decreased by $1.0 million, consisting of net borrowings under our revolver of $2.0 million, and payments of $3.0 million against the term loan. During the three months ended March 31, 2023, debt outstanding under our credit facility decreased by $2.8 million, consisting of net payments against our revolver of $1.0 million, and payments of $1.8 million against the term loan.
Current wording
Cash used in financing activities was $0.9 million and $5.3 million for the six months ended June 30, 2024 and 2023, respectively. During the six months ended June 30, 2024, debt outstanding under our credit facility decreased by $1.0 million, consisting of net borrowings under our revolver of $3.0 million, and payments of $4.0 million against the term loan. We also received proceeds of $0.2 million from the exercise of stock options and employee stock purchases and paid $0.1 million for taxes related to net share settlement of equity awards. During the six months ended June 30, 2023, debt outstanding under our credit facility decreased by $5.5 million, consisting of net payments against our revolver of $2.9 million and payments of $2.6 million against the term loan. During the six months ended June 30, 2023, we also received proceeds of $0.7 million from the exercise of stock options and employee stock purchases and paid $0.5 million for taxes related to net share settlement of equity awards.
Previous wording
During the three months ended March 31, 2024, changes in foreign currency exchange rates had an insignificant effect on our revenues and expenses. The gain (loss) associated with the translation of our foreign equity into U.S. dollars included as a component of other comprehensive income (loss) during the three months ended March 31, 2024 was a loss of $(0.8) million, compared to a gain of $0.8 million for the three months ended March 31, 2023. Currency exchange rate fluctuations included as a component of net income (loss) during the three months ended March 31, 2024, and March 31, 2023 were not significant.
Current wording
During the three months ended June 30, 2024 changes in foreign currency exchange rates had an insignificant effect on our revenues and expenses. During the six months ended June 30, 2024, changes in foreign currency exchange rates resulted in an unfavorable effect on our revenue of approximately $0.1 million and a favorable effect on expenses of approximately $0.1 million.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Gross profit decreased $7.0 million, or 20.1%, to $28.0 million for the six months ended June 30, 2024 compared with $35.0 million for the six months ended June 30, 2023, primarily due to the decrease in revenues. Gross margin decreased to 58.8% for the six months ended June 30, 2024, compared with 59.6% for the six months ended June 30, 2023. The decrease in gross margin was primarily the result of under-absorption of manufacturing overhead costs due to the decrease in revenues.
Current report — wording carried from elsewhere
As of December 31, 2023, we held shares of common stock of HRGN with an estimated fair value of $3.5 million. These shares were received in April 2023 in connection with settlement of indemnification obligations related to litigation which was resolved during the year ended December 31, 2022. During the six months ended June 30, 2024, we sold all of our remaining HRGN shares for $1.9 million and recorded a loss of $1.6 million.
Current report — wording carried from elsewhere
The income tax benefit was $0.1 million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively. The effective tax rates for the six months ended June 30, 2024 and 2023 were 1.8% and 59.8%, respectively. The lower effective tax rate during the six months ended June 30, 2024, compared to the six months ended June 30, 2023 related to a decrease in the GILTI inclusion and changes to reserves for uncertain tax positions. The effective tax rate for both the second quarters of 2024 and 2023 differed from the U.S. statutory rate primarily due to the inclusion of non-deductible executive compensation and changes in valuation allowances associated with our assessment of the likelihood of the recoverability of deferred tax assets.
Current report — wording carried from elsewhere
The gain (loss) associated with the translation of our foreign equity into U.S. dollars included as a component of other comprehensive income (loss) was $(0.1) million and $0.2 million for the three months ended June 30, 2024 and June 30, 2023, respectively, and $(0.9) million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively.