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Pacific Biosciences (PACB) Reports Break-Even Earnings in Q4

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Pacific Biosciences of California, Inc. (PACB - Free Report) reported fourth-quarter 2019 break-even earnings per share (EPS) versus the Zacks Consensus Estimate of a loss of 16 cents. The company had reported a loss of 21 cents in the year-ago quarter.

Revenues of this Zacks Rank #3 (Hold) company totaled $27.93 million, which outpaced the Zacks Consensus Estimate by 9.8%. Revenues improved 43% from the year-ago quarter’s tally.

FY19 at a Glance

Pacific Biosciences’ 2019 revenues totaled $77.7 million, up 17.2% but below the Zacks Consensus Estimate of $88.4 million.

Adjusted loss per share was 55 cents, narrower than the Zacks Consensus Estimate of a loss of 71 cents. The company had reported a loss of 76 cents in 2018.

Segmental Analysis

Product Revenues: At this segment, revenues amounted to $24.6. million, up 49.4% from the prior-year quarter’s tally.

Service and Other Revenues: At this segment, revenues came in at $3.4 million, up 9.4% year over year.

Margins

Gross profit in the fourth quarter of 2019 was $12.9 million, up significantly from the year-ago $5.7 million. Gross margin was 46.3% of total revenues, improving significantly from the year-ago quarter’s 29.4%.

Research and development expenses increased 12.2% to $14.3 million in the quarter. Further, sales, general and administrative expenses dropped 17.6% to $16.6 million.

Operating expenses totaled $30.8 million, down 15.2% year over year.

Merger Termination With Illumina

On Jan 2, 2020, Pacific Biosciences and Illumina (ILMN - Free Report) agreed to terminate their merger agreement, which was announced in 2019. Per the terms of the agreement, Pacific Biosciences has received $98 million in reverse termination fees.

Our Take

Pacific Biosciences ended the fiscal fourth quarter on a strong note. The company continues to gain from its flagship Sequel system. Massive gross margin expansion was also noted in the quarter. Additionally, the company received termination fee from Illumina, which got reflected on the results. Though management did not issue any guidance, the company foresees overall revenue growth in the first quarter of 2020 on strength in Sequel II consumables.

On the flip side, management expects consumable sales decline owing to the coronavirus outbreak in China.

Earnings of MedTech Majors at a Glance

Some better-ranked stocks, which reported solid results this earnings season, are Stryker Corporation (SYK - Free Report) and Accuray Incorporated (ARAY - Free Report) .

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Fourth-quarter reported revenues of $4.13 billion surpassed the Zacks Consensus Estimate by 0.7%. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny, comparing favorably with the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

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