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PacBio's (PACB) Q2 Earnings Match Estimates, Revenues Lag

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Pacific Biosciences of California, Inc. (PACB - Free Report) , popularly known as PacBio, delivered adjusted loss per share of 34 cents in the second quarter of 2022, wider than the year-ago loss of 21 cents per share. The figure was in line with the Zacks Consensus Estimate.

The company’s GAAP loss per share was 32 cents in the quarter, wider than the year-ago loss of 21 cents per share.

Revenues in Detail

PacBio registered revenues of $35.5 million in the second quarter, up 15.9% year over year. The figure missed the Zacks Consensus Estimate by 0.2%.

The year-over-year uptick was partly driven by robust consumable and instrument sales.

Sequentially, the top line improved 7% in the reported quarter.

Geographical Analysis

PacBio’s revenues from the Americas were $21.7million, up by 51% year over year. This was driven by the company shipping Sequel IIes to a growing and diverse set of customers in the quarter, including AnimalBiome. Also, human germline applications were the primary top-line driver in the region.

In the Asia-Pacific region, PacBio recorded revenues of $8 million, reflecting a 18% decline year over year primarily due to China, which was 30% lower compared to the second quarter of 2021. However, this was offset by revenue growth in other APAC countries.

EMEA region registered revenues of $5.8 million, which fell 12% year over year. This was primarily due to adverse impacts by broader macro dynamics, which slowed customers’ capital purchases. Additionally, the region’s forex headwind of approximately 7% pulled down the revenues in the region.

Segmental Analysis

Product revenues amounted to $30.2 million, up 13.7% from the prior-year quarter.

PacBio delivered 36 Sequel II/IIe systems during the second quarter of 2022 compared with 38 Sequel II systems placed in the year-ago quarter. This brings the total installed base of Sequel II/IIe systems to 460 as of Jun 30, 2022 compared with 282 as of Jun 30, 2021.

Instrument revenues for the second quarter of 2022 were $15.6 million, up 9.1% year over year.

Consumables revenues for the second quarter of 2022 were $14.6 million, up 19.7% from the prior-year quarter.

Service and other revenues came in at $5.3 million, up 29.8% year over year.

Margin Trend

In the quarter under review, PacBio’s adjusted gross profit rose 19.1% to $16.4 million. Adjusted gross margin expanded 124 basis points (bps) to 46.2%.

Sales, general and administrative expenses rose 35.1% to $39.3 million. Research and development expenses surged 126.1% year over year to $50.3 million. Adjusted total operating expenses of $89.6 million climbed 74.6% year over year.

Adjusted total operating loss totaled $73.2 million in the reported quarter compared with the prior-year quarter’s adjusted total operating loss of $37.6 million.

Financial Position

PacBio exited second-quarter 2022 with cash, cash equivalents and investments (excluding short and long-term restricted cash) of $899.2 million compared with $962.8 million at the end of the first quarter.

Guidance

PacBio has lowered its financial outlook for full-year 2022 due to broader macroeconomic factors like rising inflation, global supply-chain constraints, volatile capital markets and COVID-19-led lockdown restrictions. The company has also provided an insight into its expectations for the third quarter.

The company now expects its revenues for 2022 to be in the range of $138 million-$145 million, representing 8% growth at the mid-point from the comparable reported figure of 2021. The full-year revenues were earlier expected to be within $160-$170 million, representing 23-30% growth from the comparable reported figure of 2021. The Zacks Consensus Estimate for the same is currently pegged at $162.4 million.

For the third quarter, PacBio anticipates its revenue to be slightly higher sequentially as higher Sequel IIe placements and pull through are expected in the quarter. However, this will likely be partially offset with lower average selling prices.

Our Take

PacBio exited the second quarter of 2022 with in-line earnings. PacBio saw robust increases in its overall top line and both its Product, and Service and other revenues during the quarter. The company also gained from strength in its Instrument and Consumables revenues during the reported quarter. Robust performance in the Americas is also encouraging. PacBio continues to gain from its flagship Sequel system. The company’s slew of tie-ups over the past few months augurs well. Expansion of adjusted gross margin also bodes well for PacBio.

However, PacBio’s lower-than-expected revenues and wider-than-expected loss per share in the second quarter are disappointing. Lower revenues from China and EMEA are worrying. Continued adjusted loss per share incurred by the company does not bode well. The year-over-year operating loss for the company is another area of concern. PacBio lowering its full-year financial outlook also raises apprehensions.

Zacks Rank and Other Key Picks

PacBio currently carries a Zacks Rank #2 (Buy).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Humana Inc. (HUM - Free Report) and Alkermes plc (ALKS - Free Report) .

Quest Diagnostics, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 7% compared with the industry’s 3.2%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Humana, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $8.67, which beat the Zacks Consensus Estimate by 13%. Revenues of $23.7 billion outpaced the consensus mark by 1.2%.

Humana has an estimated long-term growth rate of 13.5%. HUM’s earnings surpassed estimates in all the trailing four quarters, the average being 9.1%.

Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.