NEW YORK (GenomeWeb) – Pacific Biosciences reported after the close of the market on Wednesday that its first quarter revenues dropped 22 percent year over year, thanks to a 23 percent decline in product sales.
For the three months ended March 31, the Menlo Park, California-based single-molecule sequencing company recognized total Q1 2018 revenues of $19.4 million, compared to $24.9 million in Q1 2017, falling short of analysts' average estimate of $24.5 million.
Product revenue fell to $16.3 million from $21.3 million in the prior year period, and service and other revenues fell 14 percent to $3.1 million from $3.6 million. On a conference call with analysts following the release of the earnings, PacBio CEO Mike Hunkapiller said the decline was primarily due to a drop in instrument revenues, which fell to $7.2 million from $12.6 million in Q1 2017. Consumable revenues, on the other hand, were up to $9.1 million from $8.7 million in Q1 2017.
William Blair Analyst Amanda Murphy wrote in a note to investors following the call that PacBio's consumable revenues were below the investment bank's forecast of $14.0 million. Hunkapiller attributed that in part to the Lunar New Year in China. Around 30 percent of PacBio's customers are based in China, several of whom are multi-unit customers, and they stopped using their systems for several weeks in February over the Lunar New Year, he said.
Hunkapiller said that although total instrument revenues dropped, orders for the firm's Sequel systems were up. However, the firm did not install a majority of those systems for China-based customers BGI and Annoroad — which ordered 10 instruments each in Q1 — due to the customers' facilities not being ready, Hunkapiller said. PacBio does not recognize revenue on instruments until they are installed.
As previously reported, PacBio is looking for a partner to expand into the diagnostics market. Hunkapiller said on the call that the firm is currently in discussions with several interested parties in China.
Looking ahead to the full year, Ben Gong, PacBio's treasurer and vice president of finance, said that the firm would not be providing revenue guidance. "The timing of customer site readiness for installing new systems, particularly for multi-unit orders, and variable customer ordering patterns for consumables have made it difficult for us to predict revenue timing," he said.
PacBio's net loss for the quarter widened to $24.2 million from $23.9 million in the prior-year period. Its net loss per share narrowed to $.20 on 123.8 million shares of common stock outstanding from a net loss of $.26 per share on 93 million shares of common stock outstanding in Q1 2017. Wall Street analysts had expected a loss of $.19 per share.
The firm's Q1 R&D expenses fell 4 percent to $16.3 million from $17.0 million in Q1 2017, while SG&A expenses dropped 3 percent year over year to $14.9 million compared to $15.3 million.
At the end of the quarter, PacBio had $79.3 million in cash, cash equivalents, and investments, and $4.5 million in long-term restricted cash.
The firm's shares dropped 14 percent to $2.30 in Thursday morning trading on the Nasdaq.