Good day, and welcome to the Fourth Quarter and Full Year 2025 Harvard Bioscience Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Taylor Krafchik, Senior Vice President at Ellipsis TA. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining the Harvard Bioscience Fourth Quarter and Full Year 2025 Earnings Conference Call. Leading the call today will be John Duke, President and Chief Executive Officer; and Mark Frost, Chief Financial Officer. In conjunction with today's call, we have provided a presentation that will be referenced during our remarks that is posted to the Investor Relations section of our website at investor.harvardbioscience.com. Please note that statements made in today's discussion that are not historical facts, including statements on management, expectations or future events or future financial performance are forward-looking statements and are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the current views of Harvard Bioscience management and Harvard Bioscience assumes no obligation to update or revise any forward-looking statements. Actual results may differ materially from those expressed or implied. Please refer to today's press release, the Harvard Bioscience Form 10-K, which we expect will be filed within 24 hours of this call and other filings with the Securities and Exchange Commission for additional disclosures on forward-looking statements and the risks, uncertainties and contingencies associated therewith. During the call, management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations related to our financial condition and results. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered as a substitute. Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release. I will now turn the call over to John. John, please go ahead.

Thanks, Taylor, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings call. Today, I'll review our recent actions, provide a brief overview of our fourth quarter financial results, and discuss our priorities and outlook for 2026. 2025 was an important year for building a solid foundation. Over the past eight months, we enhanced our financial flexibility, took steps to reorganize our operations, and clarified our long-term strategic direction. To summarize, we implemented several key actions to improve the health of the business. In December, we completed our comprehensive refinancing, extending our debt maturity to 2021. We reduced our annual debt service to $5 million, resulting in $3 million in annual cash savings while strengthening our liquidity and financial flexibility. Shortly after, we announced a strategic consolidation of our manufacturing footprint with the phased closure of the Holliston facility and consolidation into our Minneapolis and European centers of excellence, which is anticipated to generate $3 million in savings in 2027 and $4 million in subsequent years. Since June, we have enhanced our governance by appointing four new Board members, and we are establishing a Scientific Advisory Board of experienced industry leaders. We also strengthened our executive leadership by officially naming Mark Frost as Chief Financial Officer. As many of you know, Mark is a seasoned CFO with previous experience at several public companies. While we still have work to do, these actions represent structural improvements aimed at simplifying our operating model and laying the foundation for scaling our business. These efforts were designed to drive improved financial results, which we achieved in the fourth quarter. Our revenue of $23.7 million exceeded the midpoint of our guidance range. We reported a gross margin of 60%, at the high end of our guidance, and adjusted EBITDA of $3.8 million, reflecting a 27% year-over-year growth. The key drivers of this performance included a favorable mix shift toward higher-margin product lines, benefits from cost reductions, disciplined expense management, and enhanced operational execution. We concluded the year as a leaner, more focused organization with a strengthened balance sheet and a clear path toward sustainable growth. Since I joined as CEO, I've actively engaged with customers, partners, and employees. It's become evident that the life science industry is undergoing a fundamental transformation. Drug development remains inefficient, with nearly 90% of candidates that succeed in animal models ultimately failing in human trials. Researchers, regulators, and biopharma companies increasingly adopt new approach methodologies to improve translational relevance. Harvard Bioscience is uniquely positioned to bridge this gap. We are evolving from a traditional life science tools provider into a leading enabler of translational science, linking in vivo and in vitro research and assisting customers in generating more predictive human-relevant data earlier in the development cycle. This evolution opens up access to the $10 billion translational science market. To seize this opportunity, we are focusing on four key priorities. First, we aim to lead the translational science bridge by strengthening our position between preclinical and organoid-based research. Our gold standard telemetry capabilities offer a natural extension into organoids and 3D biology platforms. Second, we are accelerating high-margin innovation. Our new product innovation pipeline centers on scalable, differentiated platforms that modernize preclinical and translational workflows and solidify our evolution into a platform-based technology provider. Third, we are expanding consumables and recurring revenue; currently, about 55% of our revenue is recurring. We are prioritizing higher-margin consumables, services, and software to improve revenue visibility, increase gross margins, and create a more resilient and predictable business model. This mix shift is already contributing to margin expansion as seen in our Q4 performance and our outlook for 2026. Finally, we are committed to operational excellence and disciplined growth. The manufacturing consolidation and refinancing have enabled us to enhance profitability, fund innovation, and continue to deleverage over time. Looking ahead, we are introducing guidance for 2026, forecasting low single-digit revenue growth and high single-digit adjusted EBITDA growth, driven by higher-margin new product innovation as we concentrate on the translational science market. We continue to keep an eye on NIH funding timing and global macroeconomic conditions. Our cost structure and diversified geographic presence position us to manage any volatility effectively. 2025 served as a strategic reset, and 2026 will focus on growth for both our top and bottom lines. With a talented global team, a refreshed board, enhanced financial flexibility, and a focused strategy in translational science, Harvard Bioscience is well-positioned to create long-term value for our shareholders. I want to express my gratitude to our employees for their dedication, to our customers for their trust, and to our shareholders for their ongoing support. Now I’ll turn the call over to Mark to delve into the financial results and outlook in further detail.

Thank you, John. I'll start my comments with our fourth quarter 2025 financial results. The details of which can be found in our Form 10-K, which we expect to be filed within the next 24 hours and in the earnings presentation that we posted to our IR site. Starting on Slide 4 of the presentation. Revenue was $23.7 million, just above the midpoint of our $22.5 million to $24.5 million guidance and below the $24.6 million we reported in the fourth quarter of 2024. The government shutdown of 43 days impacted our ability to overachieve within the quarter. Gross margin of 59.7% was at the high end of our 58% to 60% guidance range and is up 260 basis points from 57.1% in the fourth quarter of 2024. This is the highest gross margin we recorded over the last 7 quarters. We continue to improve our gross margin returns based on cost actions we took at the end of 2024 and in 2025 as well. Additionally, the increasing benefit we are receiving from higher-margin NPI revenue. Operating income of $1.7 million was up from flat last year, and adjusted operating income of $3.3 million was up from $2.5 million last year. The improvement in GAAP and adjusted operating income was primarily from cost reductions in manufacturing and SG&A. Now adjusted EBITDA was up 27% year-over-year to $3.8 million in the fourth quarter driven by cost reductions, including decreased costs related to manufacturing and SG&A headcount as well as expense management. Now moving to Slide 5 for full year results. Revenue of $86.6 million was down from $94.1 million, primarily from the impact of tariffs and the delayed NIH funding. The tariff impact started to subside later in the year while NIH funding delays continued to impact timing of some orders, in particular, our preclinical telemetry products. Gross margin of 57.7% was down from 58.2% last year due to lower revenue in 2025; however, a larger margin impact was partially offset by our cost actions in manufacturing. Operating income of negative $48.6 million was down from negative $6.2 million last year, and adjusted operating income of $6.2 million was up from $5.3 million last year. The GAAP difference stems from the goodwill impairment we took earlier in the year, and the improvement in adjusted operating income was due to cost reductions, improved expense management, and favorable mix of higher-margin products. Now adjusted EBITDA increased 12.5% to $8.1 million from $7.2 million in 2024, as mentioned, due to cost reductions, improved expense management, and strong execution throughout the year. Now looking at Slide 6, I will outline the revenue results for the quarter and year by product family and region. Overall revenues in the fourth quarter were up 15% sequentially and down 3% year-over-year. Full year revenue was down 8% year-over-year. Geographically, quarter 4 revenues in the Americas were down 2%, year-over-year, driven by lower pharma sales for preclinical and lower academic sales in CMT. Full year revenues in the Americas were down 7% year-over-year, driven primarily by academic sales. In Europe, quarter 4 revenues were down 12% year-over-year due to lower academic sales. Full year revenues in Europe were down 6% year-over-year due to distribution and academic sales. And in China and the Asia Pacific, Quarter 4 revenues were up 10% year-over-year, thanks to growth in preclinical distribution. Full year revenues in China and Asia Pacific were down due to lower distribution revenue. And I'll now move to Slide 7 to discuss further financial metrics. GAAP EPS in quarter 4 was negative $0.06 compared to flat last year, and quarter 4 adjusted EPS was flat compared to $0.06 last year. As I've mentioned in the past, the differences between GAAP EPS and adjusted EPS are typically the impact of stock compensation, amortization, and depreciation. These differences between net loss and adjusted EBITDA are highlighted in the reconciliation tables on Slide 10 and are all non-cash items. For the full year, GAAP loss per share was $1.28 compared to negative $0.28 in 2024. Adjusted loss per share was negative $0.02 compared to adjusted earnings per share of $0.03 in 2024. The majority of the higher GAAP loss was from the goodwill charge we took in the first quarter. Now cash flow from operations ended the year at $6.7 million, up from $1.4 million at the end of 2024. The significant improvement in the year is due to disciplined working capital management, improved operating income, and our efforts on payroll tax refunds. Net debt is down $1.8 million from last year to $31.4 million reflecting payments made on our prior syndicated debt facility as well as additional liquidity we gained as part of the new agreement. Now as John discussed in the fourth quarter, we were pleased to announce the completion of our debt refinancing with a structured deal. The deal completed repayment of our prior credit facility, extended the maturity of our debt, and enhanced our financial flexibility as we work to position the company for growth, including reducing our debt service in the first 2 years by $3 million. Full details on the deal can be found in our December 17 press release and accompanying SEC filing. Now another significant accomplishment during 2025 was the successful remediation of material weaknesses in one significant deficiency. This is another step in building the foundation of a healthier business. I'll now move to Slide 9 to discuss our outlook for the first quarter and full year 2026. Now first, a few call-outs. We are introducing full year guidance as we are taking a more long-term oriented view of the business and helping us manage our broader expectations as we go through the year. We are also introducing adjusted EBITDA guidance on both a quarterly and a full year basis. This is a key metric for us and helps demonstrate our core operating performance. This metric is also linked to a key covenant in our recently structured debt agreement that we thought would be helpful for investors to have visibility. We will be reporting GAAP and adjusted gross margin in 2026 due to the restructuring impact from our manufacturing consolidation. Now lastly, with the expected growth in the business in 2026, we have reinstated bonuses and merit-based compensation for our employees, which was suspended in 2025 due to macro headwind impacts. This reinstatement will have an impact on our year-over-year adjusted EBITDA comparison, which is already built into our full year guidance. We appreciate our employees and all their hard work as they have supported us through a difficult time for the business. With that, let's dive into the outlook. In the first quarter, we expect revenue between $20 million and $22 million, adjusted gross margin between 57% and 59%, and adjusted EBITDA between $1 million and $2.2 million. I would note that Q1 of last year only saw minimal impact from NIH challenges. For the full year 2026, we expect revenue growth of 2% to 4%, gross margin of 58% to 60%, and adjusted EBITDA growth of 6% to 10%. Additional color is we expect revenue to ramp throughout the year on a year-over-year percentage basis, supported by stronger NPI revenue. Now to sum up the performance, we're pleased with the fourth quarter and believe the improvements we've made to date with our operational efficiency set us up well for the future with streamlined costs and a focus on high-margin products in an emerging market. We expect to realize increased profitability going forward, and we're proud to have been able to demonstrate a glimpse of that in the year where macro conditions were challenging. Lastly, I'm excited to have been appointed CFO on a permanent basis and look forward to continuing to work with John, the Harvard Bioscience team, our board, engaging further with our customers and investors. To that point, we will be attending the KeyBanc Healthcare Forum next week, and I look forward to seeing some of you there. I'll now turn the call back to our operator to take questions.

Our first question comes from Paul Knight with KeyBanc Capital Markets.

Regarding the NIH, that was finally approved February 3 or so. How quickly do you think that approval turns into a better academic environment for you?

Yes, Paul, thanks for the question. As you could imagine, I would love for it to turn into a better academic environment in one day. We have, as you know, about 20 salespeople in North America who call on biopharma as well as academic customers. From what we have heard, there were a lot of grant submissions waiting to be approved. We expect to start to see a positive impact both towards the end of Q1 as well as going into Q2.

And NIH is what about 40% of the company now?

No, I'll clarify. NIH revenue is about 20% of our U.S. revenue, Paul. And one point I'll just build on John's point is we are a build-to-order business. So we're starting to see improvement in orders, but in order to get the revenue, it actually needs to come in the first half of the quarter. Most of the benefit will start to be seen probably in Q2 from the NIH release.

Yes. Okay. And then I know BTX and Mesh MEA are some of your key products. Could you talk about your growth there? And specifically, what's your expected growth for these focused businesses in 2026?

Yes. So you are correct. They are a key part of our NPI, and we expect both of them to grow in double digits this year.

Okay. And then that schedule, is there a quarterly paydown you're targeting? Or what do you want to do?

A quarterly pay down. Could you clarify, Paul?

Yes. No, the structure of the deck was structured in a couple of ways. One, to allow us flexibility that there's no amortization in the first 2 years of the deal. We also, Paul, have the ability to convert term loan A to an ABL, which will give us likely a lower interest rate and more flexibility. And then the Term Loan C is structured that potentially could be converted to equity, which will deleverage us in the future.

Our next question comes from Bruce Jackson with StoneX.

We experienced a significant increase in our Asia Pacific revenue this quarter. Given your previous challenges in that region, do you see this as a sign of recovery? Could you share your expectations for 2026?

Yes. It's a good question, Bruce. You're well aware last year when the tariffs hit, the China business ground to a halt. We started to see improvement. Those orders came in and were filled in the fourth quarter. We had a fair amount of catch-up, but not fully. Our expectation is that we will get back to a normal cadence in Asia, notwithstanding, obviously, if there's further news on the tariff front that changes that situation.

Okay. Got it. And then last quarter, you spoke about a backlog. Have you seen any changes in that during the fourth quarter?

Yes. We actually ended up the year, Bruce, with the highest backlog we've had in over 2 years, and we've continued to maintain that. So yes, we're pretty positive about where we are on our backlog.

Okay. And then last question around the pharmaceutical biotech CRO side of the business. How would you characterize that business? We've been hearing that, for example, some of the large cap pharma companies are kind of back to normal while some of the smaller biotech type companies are not due to the uncertainty around pharmaceutical reimbursement. Where are you seeing the demand right now for your products on the pharmaceutical drug development side of the business?

So Bruce, thanks for asking that. Year-to-date, we are seeing that portion of the market, the pharma and biotech, that business is up. We expect that to continue, which clearly factored into our guidance for the year.

I'm showing no further questions. This does conclude the question-and-answer session, and you may now disconnect. Everyone, have a great day.