PacBio (PACB) Tops on Q3 Earnings, Raises FY23 Revenue View
Pacific Biosciences of California, Inc. PACB, popularly known as PacBio, delivered an adjusted loss per share of 27 cents in third-quarter 2023, narrower than the year-ago loss of 32 cents per share. The adjusted loss per share was also narrower than the Zacks Consensus Estimate of a loss of 30 cents.
The company’s GAAP loss per share was 26 cents in the quarter, narrower than the year-ago loss of 34 cents.
Revenues in Detail
PacBio registered revenues of $55.7 million in the third quarter, up 72.4% year over year. The figure surpassed the Zacks Consensus Estimate by 15.3%.
The top line benefited from the year-over-year uptick in product revenues.
Geographical Analysis
PacBio’s revenues from the Americas were $29 million, up 73% year over year, with year-over-year growth across instruments and consumables. This figure outpaced our third-quarter projection of $23.4 million.
In the Asia-Pacific region, PacBio recorded revenues of $15.7 million, reflecting a 64% uptick year over year. Although China recorded year-over-year growth, it was lower in the second quarter as customers in the region slowed their capital expenditure purchases. However, per management, it was encouraging to see sequential consumables as customers ramp up their Revio usage in the country with healthy levels of utilization. This figure compares to our third-quarter projection of $14.9 million.
Europe, the Middle East and Africa region registered revenues of $11 million, which grew 83% year over year, driven by both instrument and consumable growth. This figure compares to our third-quarter projection of $9.6 million.
Segmental Analysis
Product revenues amounted to $ 51.6 million, up 87.4% from the year-ago quarter. The figure outperformed our estimate of $43.5 million.
PacBio shipped 52 Revio sequencing systems in the third quarter, which brought the company’s installed base to 129 Revio systems as of Sep 30, 2023. The company also shipped the first Onso system during the reported quarter.
Instrument revenues were $34.7 million, up 204.4% year over year. This primarily resulted from the continued momentum of Revio systems in the quarter. Our model estimated $29.9 million for this metric.
Consumables revenues for the third quarter of 2023 were $16.9 million, up 4.9% from the prior-year quarter. Our projection was $13.6 million.
Service and other revenues totaled $4.1 million, down 14% year over year. This figure lagged our projection of $4.4 million.
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 gross profit increased 32.1% to $17.9 million. However, the gross margin contracted 978 basis points to 32.1%.
Sales, general and administrative expenses rose 18% to $43.4 million. Research and development expenses increased 0.9% year over year to $47.5 million. Adjusted total operating expenses of $90.9 million increased 8.4% year over year.
Adjusted total operating loss was $73 million in the reported quarter compared with the prior-year quarter’s $70.3 million.
Financial Position
PacBio exited third-quarter 2023 with cash, cash equivalents and investments (excluding short-term and long-term restricted cash) of $767.8 million compared with $829.9 million at the second-quarter end.
Guidance
PacBio has raised its revenue outlook for 2023.
The company now expects to achieve revenues in the range of $195 million-$200 million (representing growth rate of 52-56% from 2022 figures), up from the earlier guided range of $185 million-$190 million (indicating growth of 44-48% from 2022 numbers). The Zacks Consensus Estimate is pegged at $187.4 million.
Our Take
PacBio exited the third 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 and Onso systems, with customers placing orders for these, looked promising for the stock.
PacBio agreement to acquire Apton Biosystems with plans to integrate its Sequencing by Binding short-read chemistry with Apton's high throughput instrument (announced in August) 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 gross margin added to the woes. The year-over-year operating loss was another area of concern. The continued inflationary pressures and higher energy costs also raise apprehension.
Zacks Rank and Stocks to Consider
PacBio currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories ABT, Boston Scientific Corporation BSX and Integer Holdings Corporation ITGR.
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted earnings per share (EPS) of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
Boston Scientific reported third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 4.2%. Revenues of $3.53 billion surpassed the Zacks Consensus Estimate by 1.8%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.3%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.
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