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Pacific Biosciences Q3 Revenues Fall 13 Percent

NEW YORK – Pacific Biosciences said after the close of the market on Monday that its third quarter revenues decreased 13 percent, driven by lower instrument sales due to the COVID-19 pandemic, partially offset by increased consumables sales.

In response, Piper Sandler downgraded shares of PacBio to a Neutral rating while maintaining a $12 price target. "All in, we continue to like the long-term growth opportunities in sequencing and PacBio's differentiated products, but COVID-19 uncertainties and valuation give us pause and make us step to the sidelines," Piper Sandler senior research analyst Steven Mah wrote in a research note. Meanwhile, JP Morgan reiterated its Overweight rating and Cowen reiterated its Market Perform rating on PacBio's stock.

For the three months ended Sept. 30, PacBio reported total revenues of $19.1 million, down from $21.9 million during the same quarter last year, and missing the average Wall Street estimate of $20.4 million.

Of those total sales, product revenues were $15.7 million, down 15 percent from $18.5 million a year ago, and service and other revenues were $3.3 million, down 3 percent from $3.4 million a year ago.

Product revenue consisted of $7.7 million in instrument revenue, down approximately 33 percent from $11.6 million last year, and $8 million in consumables revenue, up 16 percent from $6.9 million in Q3 2019.

PacBio installed 20 Sequel II systems during Q3, growing the installed base to 168 as of Sept. 30, 2020.

"Notwithstanding capital sales being impacted in the near term as a result of the COVID-19 pandemic, we continue to be enthusiastic about the long-term growth opportunity for the business," PacBio CEO Christian Henry said in a statement.

On a conference call following the release of results, Henry said total revenues were in line with internal forecasts. "Many instrument sales opportunities have been delayed as some capital budgets were put on hold in Q2. This impacted new bookings, and of course, instrument revenue in Q3," he added. "We believe these delayed system purchases continue to be opportunities, and we've recently seen instrument bookings improving."

PacBio CFO Susan Kim noted that instrument utilization "has returned to levels prior to the pandemic." Sequel II consumables accounted for approximately 70 percent of shipments in Q3.

PacBio's R&D expenses for the quarter totaled $16.5 million, up 12 percent from $15.0 million a year ago and SG&A costs were $14.8 million, down 26 percent from $20.1 million in Q3 of 2019.

The company's net loss in Q3 was $23.7 million, or $.14 per share, compared to a loss of $29.1 million, or $.19 per share, during the year-ago quarter and missing the Wall Street estimate of a $.13 loss per share.

PacBio finished the quarter with $208.6 million in cash and investments. The firm noted it received $93.6 million in net proceeds from a public offering of common stock in August.

"With the positive customer momentum building around PacBio HiFi sequencing, we expect sequential growth for Q4," Henry said.

Kim cautioned that the firm is "closely monitoring the impact of lockdowns in countries like France and the UK to see how this latest wave of infections may impact our consumable sales."

In morning trading on the Nasdaq, shares of PacBio were down 10 percent at $11.91.