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Pacific Biosciences Shares Crash on Q1 Revenue Shortfall as Firm Reveals Cost Cutting Plans

This story has been updated to include revised guidance from Pacific Biosciences and additional information from an analyst report.

NEW YORK – Pacific Biosciences said on Tuesday that its preliminary revenues for the first quarter were flat year over year, missing expectations, and announced plans to cut operating costs by $50 million to $75 million by the end of this year, triggering a 40 percent drop in share price. The firm also lowered its guidance for 2024 revenues and placements.

In the last few weeks of the quarter, PacBio "saw an increasing number of customers delay instrument purchases, and we experienced some unexpected softness in consumable shipments," CEO Christian Henry said in a statement. "As a result, the first quarter came in below our original expectations," he added, noting that he expects these factors to impact the firm's full-year performance.

Cutting operating expenses was one of several strategic priorities for the firm, he said, along with "improving commercial execution" regarding sales of the Revio and Onso platforms, developing benchtop long-read and short-read instruments, and improving business efficiency.

PacBio did not immediately respond to a request for information about potential layoffs. However, Canaccord Genuity Analyst Kyle Mikson wrote in a note to investors that "PacBio commented to us that it may reduce its headcount by triple digits to generate these expense reductions."

"[Macroeconomics] seemed to be the biggest culprit in driving the miss as funding remains tight for genomics across the board and was exacerbated by an inherently longer sales cycle associated with new product launches," Barclays analyst Luke Sergott wrote in a note to investors on Tuesday. "None of this is good for the already soft genomics market, and we expect this dynamic to weigh on the rest of the market."

For the three months ended March 31, preliminary revenues were $38.8 million, down slightly from $38.9 million a year ago and well below the consensus Wall Street estimate of $50.3 million. Instrument revenues were $19.0 million, down from $20.7 million a year ago. Consumables revenues were $16.0 million, up from $14.0 million a year ago, with Revio consumables totaling around $11.0 million. Service and other revenues were $3.8 million, down from $4.2 million a year ago.

PacBio sold 28 Revio sequencers in the quarter, bringing the installed base to 201 as of March 31, including 16 to new customers. Onso short-read instrument shipments increased sequentially.

PacBio suggested that several market trends influenced the quarter and the shortfall in sequencer sales, including "uncertainty surrounding the funding for new capital equipment, particularly in the US and China; procurement delays … sample delays impacting sequencing volume in the quarter at certain large customers"; and slow uptake from small- to mid-sized customers.

The firm ended the quarter with cash, cash equivalents, and investments of approximately $562 million.

PacBio also lowered its revenue guidance and now expects 2024 revenue to be in the range of $170 million to $200 million. At the midpoint of $185 million, the company believes that total Revio shipments for 2024 will be around 120 systems and consumable revenue will be around $80 million.

Previously, the firm had expected revenues in the range of $230 million to $250 million with the midpoint of $240 million representing 173 Revio shipments.

Moreover, PacBio said in a statement that it is "unlikely to achieve its long-term revenue guidance of at least $500 million in 2026 and is reevaluating the timing of achieving it."

In Tuesday afternoon trading on the Nasdaq, shares of PacBio were down 50 percent at $1.42.