MENLO PARK, Calif., Feb. 15, 2024 /PRNewswire/ -- PacBio (NASDAQ: PACB) today announced financial results for the quarter and fiscal year ended December 31, 2023.
Fourth quarter results
Gross profit for the fourth quarter of 2023 was $9.6 million, representing an 86% increase compared with $5.1 million for the fourth quarter of 2022 and a gross margin of 16% in the fourth quarter of 2023 compared to 19% for the fourth quarter of 2022. Non-GAAP gross profit for the fourth quarter of 2023 was $11.1 million and represented a non-GAAP gross margin of 19% in the fourth quarter of 2023, compared to a non-GAAP gross profit of $5.3 million in the fourth quarter of 2022, which represented a non-GAAP gross margin of 19% (see accompanying tables for reconciliations of GAAP and non-GAAP measures).
Operating expenses totaled $97.1 million for the fourth quarter of 2023, compared to $92.2 million for the fourth quarter of 2022. Non-GAAP operating expenses totaled $88.4 million for the fourth quarter of 2023, compared to $87.6 million for the fourth quarter of 2022. Operating expenses for the fourth quarter of 2023 and the fourth quarter of 2022 included non-cash share-based compensation of $15.4 million and $16.8 million, respectively.
Net loss for the fourth quarter of 2023 was $82.0 million, compared to a net loss of $84.4 million for the fourth quarter of 2022. Non-GAAP net loss was $72.5 million for the fourth quarter of 2023, compared to $79.6 million for the fourth quarter of 2022.
Net loss per share for the fourth quarter of 2023 was $0.31 compared to net loss per share of $0.37 for the fourth quarter of 2022. Non-GAAP net loss per share for the fourth quarter of 2023 was $0.27 compared to $0.35 for the fourth quarter of 2022.
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 $9.3 million compared to $7.1 million in the fourth quarter of 2022, primarily related to a higher-than-anticipated decline in demand for Sequel II and IIe due to a faster-than-expected ramp in Revio.
Cash, cash equivalents, and investments, excluding restricted cash, at December 31, 2023, totaled $631.4 million, compared to $772.3 million at December 31, 2022.
Fiscal year 2023 results
Gross profit for 2023 was $52.8 million, representing an 8% increase compared with $49.0 million for 2022 and a gross margin of 26% in 2023 compared to 38% for 2022. Non-GAAP gross profit for 2023 was $54.9 million and represented a non-GAAP gross margin of 27% in 2023, compared to a non-GAAP gross profit of $49.8 million in 2022, which represented a non-GAAP gross margin of 39% (see accompanying tables for reconciliations of GAAP and non-GAAP measures).
Operating expenses totaled $387.2 million for 2023, compared to $356.2 million for 2022. Non-GAAP operating expenses totaled $354.8 million for 2023, compared to $353.7 million for 2022. Operating expenses for 2023 and 2022 included non-cash share-based compensation of $66.7 million and $73.8 million, respectively.
Net loss for 2023 was $306.7 million, compared to a net loss of $314.2 million for 2022. Non-GAAP net loss was $281.6 million for 2023, compared to $311.0 million for 2022.
Net loss per share for 2023 was $1.21 compared to net loss per share of $1.40 for 2022. Non-GAAP net loss per share for 2023 was $1.11 compared to $1.38 for 2022.
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 $14.0 million compared to $9.7 million in 2022, primarily related to a higher-than-anticipated decline in demand for Sequel II and IIe due to a faster-than-expected ramp in Revio.
Updates since PacBio's last earnings release
"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 U.S., by dialing 1-412-317-0459, requesting to join the "PacBio Q4 Earnings Call". The call will be webcast live and available for replay at PacBio's website at https://investor.pacificbiosciences.com.
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 U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements, including statements relating to the availability, uses, accuracy, coverage, advantages, quality or performance of, or benefits or expected benefits of using, PacBio products or technologies; expectations with respect to commercialization, development and shipment of PacBio products; PacBio's financial guidance and expectations for future periods; and developments affecting our industry and the markets in which we compete, including the impact of new products and technologies. Reported results and orders for any instrument system should not be considered an indication of future performance. You should not place undue reliance on forward-looking statements because they are subject to assumptions, risks, and uncertainties and could cause actual outcomes and results to differ materially from currently anticipated results, including, challenges inherent in developing, manufacturing, launching, marketing and selling new products, and achieving anticipated new sales; potential cancellation of existing instrument orders; assumptions, risks and uncertainties related to the ability to attract new customers and retain and grow sales from existing customers; risks related to PacBio's ability to successfully execute and realize the benefits of acquisitions; the impact of U.S. export restrictions on the shipment of PacBio products to certain countries; rapidly changing technologies and extensive competition in genomic sequencing; unanticipated increases in costs or expenses; interruptions or delays in the supply of components or materials for, or manufacturing of, PacBio products and products under development; potential product performance and quality issues and potential delays in development timelines; the possible loss of key employees, customers, or suppliers; customers and prospective customers curtailing or suspending activities using PacBio's products; third-party claims alleging infringement of patents and proprietary rights or seeking to invalidate PacBio's patents or proprietary rights; risks associated with international operations; and other risks associated with general macroeconomic conditions and geopolitical instability. Additional factors that could materially affect actual results can be found in PacBio's most recent filings with the Securities and Exchange Commission, including PacBio's most recent reports on Forms 8-K, 10-K, and 10-Q, and include those listed under the caption "Risk Factors." These forward-looking statements are based on current expectations and speak only as of the date hereof; except as required by law, PacBio disclaims any obligation to revise or update these forward-looking statements to reflect events or circumstances in the future, even if new information becomes available.
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
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Media:
Lizelda Lopez
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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 $4.9 million of transaction costs arising from the acquisition of Apton, $2.8 million of compensation expense resulting from the liquidity event bonus plan in connection with the Apton merger, and $1.3 million of compensation expense resulting from the acceleration of certain equity awards in connection with the Apton merger. | ||||||
(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 $0.7 million and $10.7 million during the three months ended December 31, 2023 and September 30, 2023, respectively, due 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 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 $4.9 million of transaction costs arising from the acquisition of Apton, $2.8 million of compensation expense resulting from the liquidity event bonus plan in connection with the Apton merger, and $1.3 million of compensation expense resulting from the acceleration of certain equity awards in connection with the Apton merger. | ||||||
(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 1.50% Convertible Senior Notes due 2028 for PacBio's 1.375% Convertible Senior Notes due 2030. | ||||||
(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 1.50% Convertible Senior Notes due 2028 for PacBio's 1.375% Convertible Senior Notes due 2030. | ||||||
(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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