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Pacific Biosciences Q1 Revenues Down 5 Percent

NEW YORK – Pacific Biosciences reported after the close of the market on Wednesday that its first quarter 2020 revenues declined 5 percent year over year, attributable to lower instrument revenues.

For the three months ended March 31, the Menlo Park, California-based company recognized total revenues of $15.6 million compared to $16.4 million in Q1 2019, missing analysts' average estimate of $20.1 million. Revenues included $12.3 million in product revenue and $3.3 million in service and other revenue.

"Financial results for the first quarter of 2020 were negatively impacted as our customers in multiple regions around the world shut down most of their operations in efforts to curb the spread of the COVID-19 pandemic," the firm said in a statement. "In particular, multiple customers postponed deliveries of systems they had previously ordered from us, resulting in lower instrument revenues for the first quarter of 2020 compared to the first quarter of 2019. Due to the uncertain scope and duration of the pandemic, we cannot reasonably estimate the future impact to our operations and financial results."

On a conference call following the release of results, PacBio CEO Mike Hunkapiller added that revenues generated in the last weeks of the quarter were "much weaker than usual."

The company installed 11 Sequel II systems in the quarter, bringing the total installed base to 125 instruments. Company officials noted that it typically does many installations at the end of the quarter, which the pandemic prevented from happening. Sequel II systems accounted for just over half of consumables sales during the quarter.

On a positive note, the firm has partnered with LabCorp on COVID-19 testing and the clinical laboratory testing giant is "expanding the use of our products for COVID-19 research," Hunkapiller said.

PacBio noted it received a $98 million reverse termination fee from Illumina following the abandonment of their merger agreement in early January, from which it paid $6 million to its financial advisor in April, recorded as a short-term liability for the quarter. PacBio also received $34 million in continuation advances from Illumina during the quarter.

PacBio's net income in the quarter was $1.3 million, or $.01 per share, driven by continuation payments from Illumina, compared to a loss of $30.3 million, or $.20 per share, in the year ago quarter, beating the Wall Street estimate of a $.16 loss per share.

The firm's R&D expenses in Q1 2020 were $15.3 million, down 2 percent from $15.5 million in Q1 2019. It's SG&A expenses climbed 26 percent year over year to $25.0 million from $19.8 million, attributable to the $6 million advisory fee.

In February, PacBio repaid the remaining outstanding principal of $16.0 million and interest owed to Deerfield Management under a debt agreement.

Hunkapiller said the firm was committed to continuing to improve its products and would try to meet original timelines for upgrades planned for later in the year.

As of March 31, 2020, the company had $142.6 million in cash, cash equivalents, and investments.

PacBio VP of Finance and Treasurer Ben Gong said the firm would not be providing a revenue forecast and expected to continue to experience COVID-19 headwinds. Revenues from China, which was first hit by the pandemic, have begun to climb again, PacBio officials said.

In morning trading on the Nasdaq, shares of PacBio were up 3 percent at $3.46.