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Pacific Biosciences (PACB) Reports Q3 Loss, Revenues Fall Y/Y

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Pacific Biosciences of California (PACB - Free Report) reported third-quarter adjusted loss of 19 cents per share, wider than the Zacks Consensus Estimate of a loss of 16 cents. The company reported a loss of 19 cents in the year-ago quarter.

The Menlo Park, CA-based manufacturer of sequencing systems posted revenues of $18.2 million, which missed the Zacks Consensus Estimate by 17.3%. Revenues fell 22.9% from the year-ago quarter’s tally. Revenues declined because of lower instrument shipments and consumables sales.

Segmental Analysis

Product revenues totaled $15.2 million, down 25.5% from the prior-year quarter’s tally.

Meanwhile, service and other revenues came in at $3 million, down 6% year over year.

Pacific Biosciences of California, Inc. Price and Consensus

 

Margin Analysis

Gross profit in the third quarter of 2018 was $3.2 million, down 61.2% on a year-over-year basis.

Gross margin was 17.6% of total revenues, significantly lower than 34.9% of net revenues as reported in the year-ago quarter.

Research and Development expenses fell 8.3% to $14.4 million in the quarter. Sales, general and administrative expenses declined 3.2% to $13.5 million.

Operating expenses totaled $27.9 million, down 6.5% year over year.

Illumina to Acquire Pacific Biosciences

Illumina (ILMN - Free Report) recently announced that it is acquiring Pacific Biosciences at a price of $8 per Pacific Biosciences share in an all-cash transaction. Per management, the total value of the deal is approximately $1.2 billion. The agreement is expected to close by mid-2019.

For investors’ notice, the DNA sequencing market is highly competitive owing to the presence of other established bigwigs like Thermo Fisher Scientific Inc. (TMO - Free Report) . Various analysts opine that QIAGEN N.V. (QGEN - Free Report) currently offers one of the broadest portfolios of molecular technologies for human healthcare. The company also provides services in pharmacogenomics.

Wrapping Up

Pacific Biosciences exited the third quarter on a dreary note. Product and service revenues fell on a year-over-year basis due to lower instrument revenues. However, this was partially offset by a strong Sequel performance, which witnessed record bookings in the quarter.

Constant instrument orders from BGI and China are encouraging. Furthermore, the company is well poised on expansion of SMRT Sequencing and product development activities.

On the flipside, dull performance in the service and other revenue segment stemming from lower instrument revenues is a headwind. The DNA sequencing market is rife with competition. Sales in Europe declined considerably. Also, higher operating expenses are likely to mar prospects.

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