PacBio (PACB) Q4 Earnings Beat, Adjusted Gross Margin Down
Pacific Biosciences of California, Inc. PACB, popularly known as PacBio, delivered an adjusted loss per share of 27 cents in fourth-quarter 2023, narrower than the year-ago loss of 35 cents per share. The adjusted loss per share was also narrower than the Zacks Consensus Estimate of a loss of 31 cents.
The company’s GAAP loss per share was 31 cents in the quarter, narrower than the year-ago period’s loss of 37 cents.
Full-year adjusted loss per share was $1.11, narrower than the loss of $1.38 per share at the end of the comparable 2022 period. The figure was also narrower than the Zacks Consensus Estimate of a loss of $1.17.
Revenues in Detail
PacBio registered revenues of $58.4 million in the fourth quarter, up 113.3% year over year. The figure surpassed the Zacks Consensus Estimate by 0.2%.
The top line benefited from the year-over-year uptick in product revenues.
Full-year revenues were $200.5 million, reflecting a 56.3% uptick from the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 0.2%.
Geographical Analysis
PacBio’s revenues from the Americas were $33.9 million, up 182% year over year. The uptick was driven by continued growth in instruments and consumables from both new and existing customers.
In the Asia-Pacific region, PacBio recorded revenues of $13.4 million, reflecting a 31% uptick year over year. The Europe, the Middle East and Africa region registered revenues of $11.1 million, which grew 114% year over year.
Segmental Analysis
Product revenues amounted to $54 million, up 137.1% from the year-ago quarter.
PacBio shipped 44 Revio sequencing systems in the fourth quarter, which brought the company’s installed base to 173 Revio systems as of Dec 31, 2023.
Instrument revenues were $35.1 million, up 475.4% year over year. This primarily resulted from the continued adoption of the Revio platform.
Consumables revenues for the fourth quarter of 2023 were $18.9 million, up 13.2% from the prior-year quarter.
Service and other revenues totaled $4.4 million, down 4.9% year over year.
Pacific Biosciences of California, Inc. Price, Consensus and EPS Surprise
Pacific Biosciences of California, Inc. price-consensus-eps-surprise-chart | Pacific Biosciences of California, Inc. Quote
Margin Trend
In the quarter under review, PacBio’s adjusted gross profit increased 59.9% to $14.4 million. However, the adjusted gross margin contracted 826 basis points to 24.7%.
Sales, general and administrative expenses rose 2.2% to $45.9 million. Research and development expenses increased 4.5% year over year to $44.5 million. Adjusted total operating expenses of $90.5 million increased 3.3% year over year.
Total adjusted operating loss was $76.1 million in the reported quarter compared with the prior-year quarter’s $78.6 million.
Financial Position
PacBio exited 2023 with cash, cash equivalents and investments (excluding short-term and long-term restricted cash) of $631.4 million compared with $772.3 million at 2022-end.
Guidance
PacBio has initiated its revenue outlook for 2024.
The company expects to achieve revenues in the range of $230 million-$250 million (representing growth rate of 15-25% from 2023 figures). The Zacks Consensus Estimate is pegged at $247.6 million.
Management also confirmed that it expects first-quarter 2024 revenues to be lower compared to the fourth quarter of 2023, based on PacBio’s quarter-to-date performance.
Our Take
PacBio exited the fourth quarter of 2023 with better-than-expected results. PACB saw a robust increase in its overall top line, including strong Product revenues. Solid Consumables and Instrument revenues and strong geographical performances were also encouraging. Continued strong prospects in the Revio system, with customers placing orders for these, looked promising for the stock.
During the quarter, PacBio released SMRT Link 13.0 software on the Revio system and commenced the shipment of Kinnex RNA kits. The company also added two tertiary analysis partners to PacBio Compatible, Geneyx and Golden Helix, to enable customers to leverage PacBio HiFi data for disease research.
PacBio also announced the release of a versatile Nanobind DNA extraction kit, PanDNA, in January 2024. In February, the company announced two new high throughput library preparation kits and workflows optimized for its Revio sequencing system — HiFi Prep Kit 96 and HiFi Plex Prep Kit 96. These developments also raised optimism about the stock.
Yet, the continued loss per share reported by PacBio was disappointing. The year-over-year fall in Service and other revenues was concerning. The contraction of adjusted gross margin added to the woes. The year-over-year adjusted operating loss was another area of concern. The continued inflationary pressures and high interest rates also raise apprehension.
Zacks Rank and Key Picks
PacBio currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. COR, Elevance Health, Inc. ELV and Cardinal Health, Inc. CAH.
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cencora has a long-term estimated growth rate of 8.6%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Elevance Health reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 15.2%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.
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