PacBio Announces Fourth Quarter and Fiscal Year 2023 Financial Results
- Strong revenue growth in the fourth quarter with a 113% increase year-over-year.
- Significant increase in instrument revenue, reaching $35.1 million compared to $6.1 million in the prior year.
- Introduction of new products like the Kinnex RNA kits and PanDNA extraction kit to expand sequencing capabilities.
- Collaboration with research institutions through the HiFi Solves consortium for genetic disease studies.
- Launch of SMRT Link 13.0 software with enhanced features for improved sequencing performance.
- Development of high throughput library preparation kits offering cost and time efficiency benefits.
- Cash, cash equivalents, and investments at $631.4 million as of December 31, 2023.
- Positive feedback from the President and CEO regarding the company's performance and trajectory in 2023.
- Net loss of $82.0 million for the fourth quarter, reflecting a financial challenge.
- Decrease in gross margin for the fourth quarter compared to the previous year.
- Higher operating expenses in the fourth quarter despite revenue growth.
- Significant net loss of $306.7 million for fiscal year 2023.
- Charges related to inventory reserves and loss on purchase commitments impacting financial results.
- Decline in demand for Sequel II and IIe affecting gross profit and margins.
- Non-GAAP net loss for both the fourth quarter and fiscal year, indicating financial struggles.
- Negative impact of non-cash share-based compensation on operating expenses.
Insights
The reported revenue growth of 113% in Q4 and 56% for the fiscal year by PacBio indicates a strong uptick in demand for their products, particularly the RevioTM sequencing systems. The significant increase in instrument revenue, from $6.1 million to $35.1 million, underscores a successful launch and market acceptance of the new product. However, the decline in gross margin from 19% to 16% in Q4 and from 38% to 26% for the full year, raises concerns about cost management and pricing strategies. The substantial net losses, although slightly improved year-over-year, suggest that the company is still in a heavy investment phase, which is common in the biotech industry. Investors will need to assess whether the growth trajectory can sustain and lead to profitability, considering the high operating expenses and the cash reserves decrease from $772.3 million to $631.4 million.
The impressive shipment of 44 RevioTM systems in Q4, contributing to a total installed base of 173, indicates a robust product cycle and potential for future consumables revenue. However, the reported higher-than-anticipated decline in demand for Sequel II and IIe systems due to the rapid adoption of Revio may concern investors about product cannibalization and inventory management. The introduction of new products like Kinnex RNA kits and PanDNA extraction kit, as well as software updates and partnerships, reflect PacBio's commitment to innovation and market expansion. These developments could enhance the company's competitive edge in the genomics space, but their impact on the bottom line will be closely monitored in subsequent quarters.
The creation of the HiFi Solves consortium and the release of SMRT Link 13.0 software demonstrate PacBio's strategic focus on advancing genomics research and improving lab efficiency. The transition to high-throughput library preparation kits and the addition of tertiary analysis partners signify a move towards comprehensive workflow solutions, which could improve customer retention and expand market share. The strategic shift towards scalable, cost-effective solutions may be in response to the industry's demand for affordability and speed in next-generation sequencing. However, the long-term success of these initiatives will depend on their adoption and the ability to maintain a high level of accuracy and quality that PacBio's HiFi sequencing is known for.
Fourth quarter results
- Revenue of
$58.4 million 113% increase compared with$27.4 million - Instrument revenue of
$35.1 million $6.1 million - Consumables revenue of
$18.9 million $16.7 million - Service and other revenue of
$4.4 million $4.6 million - Shipped 44 RevioTM sequencing systems in the fourth quarter of 2023, bringing the installed base as of December 31, 2023, to 173 systems.
Gross profit for the fourth quarter of 2023 was
Operating expenses totaled
Net loss for the fourth quarter of 2023 was
Net loss per share for the fourth quarter of 2023 was
GAAP and non-GAAP gross profit, gross margin, net loss and net loss per share for the fourth quarter of 2023 reflect charges related to inventory reserves and loss on purchase commitments totaling approximately
Cash, cash equivalents, and investments, excluding restricted cash, at December 31, 2023, totaled
Fiscal year 2023 results
- Revenue of
$200.5 million 56% increase compared with$128.3 million - Instrument revenue of
$120.5 million $48.7 million - Consumables revenue of
$63.4 million $60.0 million - Service and other revenue of
$16.6 million $19.6 million
Gross profit for 2023 was
Operating expenses totaled
Net loss for 2023 was
Net loss per share for 2023 was
GAAP and non-GAAP gross profit, gross margin, net loss and net loss per share for 2023 reflect charges related to inventory reserves and loss on purchase commitments totaling approximately
Updates since PacBio's last earnings release
- Announced the creation of the HiFi Solves consortium, which brings together researchers from 15 leading genomics research institutions across 10 countries to study the value that HiFi-based human genome sequencing may have in clinical research applications and to further our understanding of genetic diseases.
- Released SMRT Link 13.0 software on the Revio system which includes the adaptive loading feature for consistent run performance, run preview for improved lab efficiency, and expanded application support with functionality to sequence shorter and longer fragments of DNA.
- Commenced shipment of Kinnex RNA kits, enabling scalable, cost-effective, full-length RNA sequencing on PacBio Revio and Sequel IIe.
- Announced PanDNA, a versatile Nanobind DNA extraction kit, designed to efficiently extract high-quality, high molecular weight DNA across a wide range of sample types, including cells, bacteria, blood, tissue, plant nuclei, and insects.
- Developed two new high throughput library preparation kits and workflows - HiFi Prep Kit 96 and HiFi Plex Prep Kit 96 - offering customers automated, scalable, and high-performance library preparation solutions and the potential for an up to 40 percent reduction in costs and up to 60 percent decrease in workflow time.
- Added two tertiary analysis partners to PacBio Compatible - Geneyx and Golden Helix - further enabling customers to leverage PacBio HiFi data for disease research.
"Our team successfully executed its goals in 2023 and launched PacBio on a trajectory this company has never seen before," said Christian Henry, President and CEO of PacBio. "We continue to build solutions across the workflow, allowing our customers to further scale on HiFi, and we are encouraged to see how researchers are already making discoveries and shifting paradigms with the power and economics of Revio and the extraordinary accuracy of Onso."
Quarterly Conference Call Information
Management will host a quarterly conference call to discuss its fourth quarter ended December 31, 2023, results today at 5:00 p.m. Eastern Time. Investors may listen to the call by dialing 1-888-349-0136 if outside the
About PacBio
Pacific Biosciences of California, Inc. (NASDAQ: PACB) is a premier life science technology company that designs, develops, and manufactures advanced sequencing solutions that enable scientists and clinical researchers to improve their understanding of the genome and, ultimately, resolve genetically complex problems. Our products and technology under development stem from two highly differentiated core technologies focused on accuracy, quality, and completeness, which include our HiFi long-read sequencing technology and our short-read Sequencing by Binding (SBBTM) technology. Our products address solutions across a broad set of applications, including human genetics, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications. For more information, please visit www.pacb.com and follow @PacBio.
PacBio products are provided for research use only. Not for use in diagnostic procedures.
Statement regarding use of non‐GAAP financial measures
PacBio reports non‐GAAP results for basic and diluted net income and loss per share, net income, net loss, gross margins, gross profit and operating expenses in addition to, and not as a substitute for, or because it believes that such information is superior to, financial measures calculated in accordance with GAAP. PacBio believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of PacBio's non-GAAP financial measures as tools for comparison.
PacBio's financial measures under GAAP include substantial charges that are listed in the itemized reconciliations between GAAP and non‐GAAP financial measures included in this press release. The amortization of acquired intangible assets excluded from GAAP financial measures relates to acquired intangible assets. The amortization related to these intangible assets will occur in future periods until they are fully amortized. Management has excluded the effects of these items in non‐GAAP measures to assist investors in analyzing and assessing past and future operating performance. In addition, management uses non-GAAP measures to compare PacBio's performance relative to forecasts and strategic plans and to benchmark its performance externally against competitors.
PacBio encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business. A reconciliation of PacBio's non-GAAP financial measures to their most directly comparable financial measure stated in accordance with GAAP has been provided in the financial statement tables included in this press release.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the
The unaudited condensed consolidated financial statements that follow should be read in conjunction with the notes set forth in PacBio's Annual Report on Form 10-K when filed with the Securities and Exchange Commission.
Contacts
Investors:
Todd Friedman
650.521.8450
ir@pacb.com
Media:
Lizelda Lopez
pr@pacb.com
Pacific Biosciences of California, Inc. Unaudited Condensed Consolidated Statement of Operations (in thousands, except per share amounts) | |||||
Three Months Ended | |||||
December 31, | September 30, | December 31, | |||
Revenue: | |||||
Product revenue | $ 54,001 | $ 51,562 | $ 22,771 | ||
Service and other revenue | 4,356 | 4,129 | 4,582 | ||
Total revenue | 58,357 | 55,691 | 27,353 | ||
Cost of Revenue: | |||||
Cost of product revenue | 40,421 | 33,551 | 15,045 | ||
Cost of service and other revenue | 3,496 | 4,054 | 3,280 | ||
Amortization of acquired intangibles | 1,433 | 184 | 183 | ||
Loss on purchase commitment | 3,436 | — | 3,705 | ||
Total cost of revenue | 48,786 | 37,789 | 22,213 | ||
Gross profit | 9,571 | 17,902 | 5,140 | ||
Operating Expense: | |||||
Research and development | 44,544 | 47,514 | 42,623 | ||
Sales, general and administrative | 45,996 | 43,431 | 45,003 | ||
Merger-related expenses (1) | 63 | 8,979 | — | ||
Change in fair value of contingent consideration (2) | 1,100 | (271) | 4,598 | ||
Amortization of acquired intangibles | 5,416 | 741 | — | ||
Total operating expense | 97,119 | 100,394 | 92,224 | ||
Operating loss | (87,548) | (82,492) | (87,084) | ||
Interest expense | (3,571) | (3,588) | (3,648) | ||
Other income, net | 8,383 | 8,505 | 6,348 | ||
Loss before benefit from income taxes | (82,736) | (77,575) | (84,384) | ||
Benefit from income taxes (3) | (718) | (10,706) | — | ||
Net loss | (82,018) | (66,869) | (84,384) | ||
Net loss per share: | |||||
Basic | $ (0.31) | $ (0.26) | $ (0.37) | ||
Diluted | $ (0.31) | $ (0.26) | $ (0.37) | ||
Weighted average shares outstanding used in calculating net loss per share | |||||
Basic | 267,121 | 255,001 | 226,241 | ||
Diluted | 267,121 | 255,001 | 226,241 | ||
(1) | Merger-related expenses for the three months ended December 31, 2023 consisted of transaction costs arising from the acquisition of Apton. Merger-related expenses for the three months ended September 30, 2023 consisted of | ||||||
(2) | Change in fair value of contingent consideration during the three months ended December 31, 2023, September 30, 2023, and December 31, 2022 was due to fair value adjustments of milestone payments payable upon the achievement of the respective milestone event. | ||||||
(3) | Deferred income tax benefit was | ||||||
Pacific Biosciences of California, Inc. Unaudited Condensed Consolidated Statement of Operations (in thousands, except per share amounts) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenue: | |||||||
Product revenue | $ 54,001 | $ 22,771 | $ 183,872 | $ 108,699 | |||
Service and other revenue | 4,356 | 4,582 | 16,649 | 19,605 | |||
Total revenue | 58,357 | 27,353 | 200,521 | 128,304 | |||
Cost of Revenue: | |||||||
Cost of product revenue | 40,421 | 15,045 | 127,568 | 60,932 | |||
Cost of service and other revenue | 3,496 | 3,280 | 14,754 | 13,899 | |||
Amortization of acquired intangibles | 1,433 | 183 | 1,983 | 733 | |||
Loss on purchase commitment | 3,436 | 3,705 | 3,436 | 3,705 | |||
Total cost of revenue | 48,786 | 22,213 | 147,741 | 79,269 | |||
Gross profit | 9,571 | 5,140 | 52,780 | 49,035 | |||
Operating Expense: | |||||||
Research and development | 44,544 | 42,623 | 187,170 | 193,000 | |||
Sales, general and administrative | 45,996 | 45,003 | 169,818 | 160,854 | |||
Merger-related expenses (1) | 63 | — | 9,042 | — | |||
Change in fair value of contingent consideration (2) | 1,100 | 4,598 | 15,060 | 2,377 | |||
Amortization of acquired intangibles | 5,416 | — | 6,157 | — | |||
Total operating expense | 97,119 | 92,224 | 387,247 | 356,231 | |||
Operating loss | (87,548) | (87,084) | (334,467) | (307,196) | |||
Loss on extinguishment of debt (3) | — | — | (2,033) | — | |||
Interest expense | (3,571) | (3,648) | (14,343) | (14,690) | |||
Other income, net | 8,383 | 6,348 | 32,684 | 7,638 | |||
Loss before benefit from income taxes | (82,736) | (84,384) | (318,159) | (314,248) | |||
Benefit from income taxes (4) | (718) | — | (11,424) | — | |||
Net loss | (82,018) | (84,384) | (306,735) | (314,248) | |||
Net loss per share: | |||||||
Basic | $ (0.31) | $ (0.37) | $ (1.21) | $ (1.40) | |||
Diluted | $ (0.31) | $ (0.37) | $ (1.21) | $ (1.40) | |||
Weighted average shares outstanding used in calculating net loss per share | |||||||
Basic | 267,121 | 226,241 | 253,629 | 224,550 | |||
Diluted | 267,121 | 226,241 | 253,629 | 224,550 | |||
(1) | Merger-related expenses for the three months ended December 31, 2023 consisted of transaction costs arising from the acquisition of Apton. Merger-related expenses for the twelve months ended December 31, 2023 consisted of | ||||||
(2) | Change in fair value of contingent consideration during the three and twelve months ended December 31, 2023 and December 31, 2022 was due to fair value adjustments of milestone payments payable upon the achievement of the respective milestone event. | ||||||
(3) | Loss on extinguishment of debt during the twelve months ended December 31, 2023 is related to the exchange of a portion of PacBio's | ||||||
(4) | A deferred income tax benefit during the three and twelve months ended December 31, 2023 is related to the release of the valuation allowance for deferred tax assets due to the recognition of deferred tax liabilities in connection with the Apton acquisition. | ||||||
Pacific Biosciences of California, Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands) | ||||
December 31, | December 31, | |||
Assets | ||||
Cash and investments | $ 631,416 | $ 772,318 | ||
Accounts receivable, net | 36,615 | 18,786 | ||
Inventory, net | 56,676 | 50,381 | ||
Prepaid and other current assets | 17,040 | 10,289 | ||
Property and equipment, net | 36,432 | 41,580 | ||
Operating lease right-of-use assets, net | 32,593 | 39,763 | ||
Restricted cash | 2,722 | 3,222 | ||
Intangible assets, net | 456,984 | 410,245 | ||
Goodwill | 462,261 | 409,974 | ||
Other long-term assets | 13,274 | 10,528 | ||
Total Assets | $ 1,746,013 | $ 1,767,086 | ||
Liabilities and Stockholders' Equity | ||||
Accounts payable | $ 15,062 | $ 12,028 | ||
Accrued expenses | 45,708 | 32,596 | ||
Deferred revenue | 21,872 | 32,292 | ||
Operating lease liabilities | 41,197 | 49,956 | ||
Contingent consideration liability | 19,550 | 172,094 | ||
Convertible senior notes, net | 892,243 | 896,683 | ||
Other liabilities | 9,077 | 8,533 | ||
Stockholders' equity | 701,304 | 562,904 | ||
Total Liabilities and Stockholders' Equity | $ 1,746,013 | $ 1,767,086 | ||
Pacific Biosciences of California, Inc. Reconciliation of Non-GAAP Financial Measures (in thousands, except per share amounts) | ||||||||||
Three Months Ended | Twelve Months Ended | |||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||
GAAP net loss | $ (82,018) | $ (66,869) | $ (84,384) | $ (306,735) | $ (314,248) | |||||
Change in fair value of contingent consideration (1) | 1,100 | (271) | 4,598 | 15,060 | 2,377 | |||||
Loss on extinguishment of debt (2) | — | — | — | 2,033 | — | |||||
Amortization of acquired intangible assets | 6,849 | 939 | 228 | 8,244 | 913 | |||||
Merger-related expenses (3) | 63 | 8,979 | — | 9,042 | — | |||||
Income tax benefit (4) | (718) | (10,706) | — | (11,424) | — | |||||
Restructuring (5) | 2,224 | — | — | 2,224 | — | |||||
Non-GAAP net loss | $ (72,500) | $ (67,928) | $ (79,558) | $ (281,556) | $ (310,958) | |||||
GAAP net loss per share | $ (0.31) | $ (0.26) | $ (0.37) | $ (1.21) | $ (1.40) | |||||
Change in fair value of contingent consideration (1) | — | — | 0.02 | 0.06 | 0.01 | |||||
Loss on extinguishment of debt (2) | — | — | — | 0.01 | — | |||||
Amortization of acquired intangible assets | 0.03 | — | — | 0.03 | — | |||||
Merger-related expenses (3) | — | 0.04 | — | 0.04 | — | |||||
Income tax benefit (4) | — | (0.04) | — | (0.05) | — | |||||
Restructuring (5) | 0.01 | — | — | 0.01 | — | |||||
Other adjustments and rounding differences | — | (0.01) | — | — | 0.01 | |||||
Non-GAAP net loss per share | $ (0.27) | $ (0.27) | $ (0.35) | $ (1.11) | $ (1.38) | |||||
GAAP gross profit | $ 9,571 | $ 17,902 | $ 5,140 | $ 52,780 | $ 49,035 | |||||
Amortization of acquired intangible assets | 1,433 | 184 | 183 | 1,983 | 733 | |||||
Restructuring (5) | 112 | — | — | 112 | — | |||||
Non-GAAP gross profit | $ 11,116 | $ 18,086 | $ 5,323 | $ 54,875 | $ 49,768 | |||||
GAAP gross profit % | 16 % | 32 % | 19 % | 26 % | 38 % | |||||
Non-GAAP gross profit % | 19 % | 32 % | 19 % | 27 % | 39 % | |||||
GAAP total operating expense | $ 97,119 | $ 100,394 | $ 92,224 | $ 387,247 | $ 356,231 | |||||
Change in fair value of contingent consideration (1) | (1,100) | 271 | (4,598) | (15,060) | (2,377) | |||||
Amortization of acquired intangible assets | (5,416) | (755) | (45) | (6,261) | (180) | |||||
Merger-related expenses (3) | (63) | (8,979) | — | (9,042) | — | |||||
Restructuring (5) | (2,112) | — | — | (2,112) | — | |||||
Non-GAAP total operating expense | $ 88,428 | $ 90,931 | $ 87,581 | $ 354,772 | $ 353,674 | |||||
(1) | Change in fair value of contingent consideration was due to fair value adjustments of milestone payments payable upon the achievement of the respective milestone event. | ||||||
(2) | Loss on extinguishment of debt is related to the exchange of a portion of PacBio's | ||||||
(3) | Merger-related expenses consisted of transaction costs arising from the acquisition of Apton, compensation expense resulting from the liquidity event bonus plan in connection with the Apton merger, and compensation expense resulting from the acceleration of certain equity awards in connection with the Apton merger. | ||||||
(4) | A deferred income tax benefit was related to the release of the valuation allowance for deferred tax assets due to the recognition of deferred tax liabilities in connection with the Apton acquisition. | ||||||
(5) | Amounts consist primarily of employee severance costs related to restructuring activities. | ||||||
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SOURCE Pacific Biosciences of California, Inc.
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