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Pacific Biosciences Q3 Revenues Grow 21 Percent, Miss Expectations

NEW YORK – Pacific Biosciences said after the close of the market on Thursday that its third quarter revenues increased 21 percent, driven by strong demand for its Sequel II sequencing system, but the firm missed expectations.

The company provided no update on its ongoing merger with Illumina, which agreed to acquire PacBio a year ago for approximately $1.2 billion in cash.

The deal has been under review by the US Federal Trade Commission (FTC) and the UK's Competition and Markets Authority (CMA). CMA proposed last month to block the deal and invited stakeholders to provide comments by Nov. 14.  PacBio and Illumina "continue to work cooperatively with the FTC and the CMA," according to the company.

For the quarter ended Sept. 30, PacBio booked $21.9 million in revenue, up from $18.2 million during the same quarter last year but short of the average Wall Street estimate of $27 million.

Of those total sales, $18.5 million were product revenue, up 22 percent from $15.2 million last year, and $3.4 million were service and other revenue, up 13 percent from $3.0 million a year ago.

Product revenue consisted of $11.6 million in instrument revenue, up 84 percent from $6.3 million last year, and $6.9 million in consumable revenue, down 22 percent from $8.9 million last year.

PacBio said the strong growth in instrument revenue was driven by sales of the Sequel II system. As of Sept. 30, the firm had installed 75 Sequel II instruments, including at several sites that have multiple instruments. The decrease in consumable revenue resulted from lower utilization of Sequel instruments as customers transitioned from the Sequel to the Sequel II, according to the firm.

Its R&D expenses for the quarter totaled $15.0 million, up 4 percent from 14.4 million last year, and SG&A costs came in at $20.1 million, up 49 percent from $13.5 million in Q3 of 2018. Approximately $3.6 million of operating expenses were related to the proposed acquisition by Illumina.

The company's net loss in Q3 totaled $29.1 million, or $.19 per share, compared to $25.0 million, or $.19 per share, during the year-ago quarter and missed the Wall Street estimate of a $.15 loss per share.

PacBio finished the quarter with $49.2 million in cash and investments.

The company's stock price was down 3 percent, at $4.70, in Friday morning trading on the Nasdaq.