Full Press Release Details
PacBio Announces Fourth Quarter and Fiscal Year 2022 Financial Results
Menlo Park, Calif. February 16, 2023 PacBio (NASDAQ: PACB) today announced financial results for the quarter and fiscal year ended December 31, 2022.
Fourth quarter results
Gross profit for the fourth quarter of 2022 was $5.1 million, representing a 69% decrease compared with $16.8 million for the fourth quarter of 2021 and a gross margin of 19% in the fourth quarter of 2022 compared to 47% for the fourth quarter of 2021. Non-GAAP gross profit for the fourth quarter of 2022 was $5.3 million and represented a non-GAAP gross margin of 19% in the fourth quarter of 2022, compared to 47% for the fourth quarter of 2021 (see accompanying tables for reconciliations of GAAP and non-GAAP measures).
Operating expenses totaled $92.2 million for the fourth quarter of 2022, compared to $81.4 million for the fourth quarter of 2021. Non-GAAP operating expenses totaled $87.6 million for the fourth quarter of 2022, compared to $79.9 million for the fourth quarter of 2021. Operating expenses for the fourth quarter of 2022 and the fourth quarter of 2021 included non-cash share-based compensation of $16.8 million and $17.5 million, respectively.
Net loss for the fourth quarter of 2022 was $84.4 million, compared to a net loss of $69.3 million for the fourth quarter of 2021. Non-GAAP net loss was $79.6 million for the fourth quarter of 2022, compared to $66.4 million for the prior-year period.
Net loss per share for the fourth quarter of 2022 was $0.37 compared to net loss per share of $0.31 for the fourth quarter of 2021. Non-GAAP net loss per share for the fourth quarter of 2022 was $0.35 compared to $0.30 for the fourth quarter of 2021.
GAAP and non-GAAP gross profit, net loss, and net loss per share in the fourth quarter reflect loss on purchase commitments and adjustments for excess inventory totaling approximately $7.1 million primarily related to a faster-than-expected ramp in Revio demand, which resulted in a faster-than-expected decline in Sequel II/IIe demand upon the launch of Revio.
Cash, cash equivalents, and investments, excluding short- and long-term restricted cash, at December 31, 2022, totaled $772.3 million, compared to $1,044.4 million at December 31, 2021.
Fiscal year 2022 results
Gross profit for 2022 was $49.0 million, representing a 17% decrease compared with $58.9 million for 2021 and gross margin of 38% compared to 45% for 2021. Non-GAAP gross profit for 2022 was $49.8 million and represented a non-GAAP gross margin of 39%, compared to 45% for 2021.
Operating expenses totaled $356.2 million, compared to $269.3 million for 2021. Non-GAAP operating expenses totaled $353.7 million, compared to $236.9 million for 2021. Operating expenses for 2022 and 2021 included non-cash share-based compensation of $73.8 million and $67.2 million, respectively. Excluding merger-related expenses, non-GAAP operating expenses included non-cash share-based compensation of $73.8 million in 2022 compared to $55.7 million in 2021.
Net loss for 2022 was $314.2 million, compared to a net loss of $181.2 million for 2021. Non-GAAP net loss was $311.0 million, compared to $190.0 million for 2021.
Net loss per share for 2022 was $1.40, compared to net loss per share of $0.89 for 2021. Non-GAAP net loss per share for 2022 was $1.38 compared to $0.93 for 2021.
Updates since our last earnings release
"The year is off to an excellent start with a strong Revio order book and continued customer enthusiasm for the new product," said Christian Henry, President, and Chief Executive Officer. "Momentum is clearly building for highly accurate, long-read solutions, with Nature Methods naming long-read sequencing its 'Method of the Year' and studies like the preprint from All of Us researchers concluding that we should continue developing population-scale cohorts sequenced with long-reads only."
Quarterly Conference Call Information
Management will host a quarterly conference call to discuss its fourth quarter ended December 31, 2022, results today at 4:30 p.m. Eastern Time. Investors may listen to the call by dialing 866-652-5200, or if outside the U.S., by dialing 412-317-6060, and request to join the "PacBio Q4 Earnings Call." The call will be webcast live and will be available for replay at PacBio's website at https://investor.pacificbiosciences.com.
Pacific Biosciences of California, Inc. (NASDAQ: PACB) is a premier life science technology company that is designing, developing, and manufacturing advanced sequencing solutions to help scientists and clinical researchers 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 existing HiFi long-read sequencing and our emerging SBB short-read sequencing technologies. Our products address solutions across a broad set of research applications, including human germline sequencing, 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
The Company 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. The Company 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 the Company's non-GAAP financial measures as tools for comparison.
The Company's financial measures under GAAP include substantial charges such as merger related expenses, and others that are listed in the itemized reconciliations between GAAP and non GAAP financial measures included in this press release. The amortization of intangible assets excluded from GAAP financial measures relates to acquired intangible assets that were recorded as part of the purchase accounting this year. Such intangible assets contribute to revenue generation and its amortization will recur 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 the Company's performance relative to forecasts and strategic plans and to benchmark its performance externally against competitors.
The Company has not reconciled the forward-looking non-GAAP gross margin and non-GAAP operating expenses to the most directly comparable GAAP measures because we cannot predict with reasonable certainty and without unreasonable effort certain costs, the most significant of which are certain fair value measurements, acquisition-related items, including future amortization of developed technology, and others that may arise during the year, each of which are potential adjustments to future earnings. The Company expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
The Company 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 the Company's historical 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 future availability, uses, accuracy, coverage, advantages, quality or performance of, or benefits or expected benefits of using, PacBio products or technologies, including Revio and Onso; expectations with respect to development and shipment timeframes or the fulfillment of customer orders; expectations with respect to our collaborations, and other future events. Reported results and orders for Revio 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 that could cause actual outcomes and results to differ materially from currently anticipated results. These risks include, but are not limited to, challenges inherent in developing, manufacturing, launching, marketing and selling new products, and achieving anticipated new sales; Onso is in beta testing; neither Revio nor Onso are commercially available yet and remain subject to additional development and validation; potential cancellation of existing instrument orders; potential product performance and quality issues and potential delays in development and commercialization timelines; assumptions, risks and uncertainties related to the ability to attract new customers and retain and grow sales from existing customers; rapidly changing technologies and extensive competition in genomic sequencing that could make the products PacBio is developing obsolete or non-competitive; supply chain risks; successfully completing development of a product that is not yet commercially available; customers and prospective customers curtailing or suspending activities utilizing PacBio's products; the impact of U.S. export restrictions on the shipment of PacBio products to certain countries; the possible loss of key employees, customers, or suppliers; third-party claims alleging infringement of patents and proprietary rights or seeking to invalidate PacBio's patents or proprietary rights; and other risks associated with macroeconomic conditions such as uncertain capital markets, pandemic-related lockdowns, heightened inflation, war in Europe, and international operations. 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 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.
Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenue: | ||||||||||||
| Product revenue | $ | 22,771 | $ | 31,167 | $ | 108,699 | $ | 113,505 | ||||
| Service and other revenue | 4,582 | 4,852 | 19,605 | 17,008 | ||||||||
| Total revenue | 27,353 | 36,019 | 128,304 | 130,513 | ||||||||
| Cost of revenue: | ||||||||||||
| Cost of product revenue | 15,045 | 14,909 | 60,932 | 56,358 | ||||||||
| Cost of service and other revenue | 3,280 | 4,161 | 13,899 | 14,989 | ||||||||
| Amortization of intangible assets | 183 | 183 | 733 | 306 | ||||||||
| Loss on purchase commitment | 3,705 | 3,705 | ||||||||||
| Total cost of revenue | 22,213 | 19,253 | 79,269 | 71,653 | ||||||||
| Gross profit | 5,140 | 16,766 | 49,035 | 58,860 | ||||||||
| Operating expense: | ||||||||||||
| Research and development | 42,623 | 42,576 | 193,000 | 112,899 | ||||||||
| Sales, general and administrative | 45,003 | 37,320 | 160,854 | 124,124 | ||||||||
| Merger-related expenses (1) | 403 | 31,129 | ||||||||||
| Change in fair value of contingent consideration (2) | 4,598 | 1,143 | 2,377 | 1,143 | ||||||||
| Total operating expense | 92,224 | 81,442 | 356,231 | 269,295 | ||||||||
| Operating loss | (87,084) | (64,676) | (307,196) | (210,435) | ||||||||
| Loss from Continuation Advances from Illumina | (52,000) | |||||||||||
| Interest expense | (3,648) | (3,479) | (14,690) | (12,530) | ||||||||
| Other income, net | 6,348 | 1 | 7,638 | 93 | ||||||||
| Loss before expense (benefit) from income taxes | (84,384) | (68,154) | (314,248) | (274,872) | ||||||||
| Expense ( b enefit) from income taxes (3) | 1,175 | (93,649) | ||||||||||
| Net loss | $ | (84,384) | $ | (69,329) | $ | (314,248) | $ | (181,223) | ||||
| Net loss per share: | ||||||||||||
| Basic | $ | (0.37) | $ | (0.31) | $ | (1.40) | $ | (0.89) | ||||
| Diluted | $ | (0.37) | $ | (0.31) | $ | (1.40) | $ | (0.89) | ||||
| Shares used in computing net loss per share: | ||||||||||||
| Basic | 226,241 | 220,730 | 224,550 | 204,136 | ||||||||
| Diluted | 226,241 | 220,730 | 224,550 | 204,136 |
Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
| Three Months Ended | |||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | |||||||
| Revenue: | |||||||||
| Product revenue | $ | 22,771 | $ | 27,509 | $ | 31,167 | |||
| Service and other revenue | 4,582 | 4,802 | 4,852 | ||||||
| Total revenue | 27,353 | 32,311 | 36,019 | ||||||
| Cost of revenue: | |||||||||
| Cost of product revenue | 15,045 | 15,568 | 14,909 | ||||||
| Cost of service and other revenue | 3,280 | 3,012 | 4,161 | ||||||
| Amortization of intangible assets | 183 | 184 | 183 | ||||||
| Loss on purchase commitment | 3,705 | ||||||||
| Total cost of revenue | 22,213 | 18,764 | 19,253 | ||||||
| Gross profit | 5,140 | 13,547 | 16,766 | ||||||
| Operating expense: | |||||||||
| Research and development | 42,623 | 47,092 | 42,576 | ||||||
| Sales, general and administrative | 45,003 | 36,795 | 37,320 | ||||||
| Merger-related expenses (1) | 403 | ||||||||
| Change in fair value of contingent consideration (2) | 4,598 | 4,280 | 1,143 | ||||||
| Total operating expense | 92,224 | 88,167 | 81,442 | ||||||
| Operating loss | (87,084) | (74,620) | (64,676) | ||||||
| Interest expense | (3,648) | (3,664) | (3,479) | ||||||
| Other income, net | 6,348 | 1,313 | 1 | ||||||
| Loss before expense from income taxes | (84,384) | (76,971) | (68,154) | ||||||
| Expense from income taxes (3) | 1,175 | ||||||||
| Net loss | $ | (84,384) | $ | (76,971) | $ | (69,329) | |||
| Net loss per share: | |||||||||
| Basic | $ | (0.37) | $ | (0.34) | $ | (0.31) | |||
| Diluted | $ | (0.37) | $ | (0.34) | $ | (0.31) | |||
| Shares used in computing net loss per share: | |||||||||
| Basic | 226,241 | 225,123 | 220,730 | ||||||
| Diluted | 226,241 | 225,123 | 220,730 |
Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Balance Sheets
| December 31, | December 31, | |||||
| 2022 | 2021 | |||||
| Assets | ||||||
| Cash and investments | $ | 772,318 | $ | 1,044,400 | ||
| Accounts receivable, net | 18,786 | 24,241 | ||||
| Inventory , net | 50,381 | 24,599 | ||||
| Prepaid and other current assets | 10,289 | 7,394 | ||||
| Property and equipment, net | 41,580 | 32,504 | ||||
| Operating lease right-of-use assets, net | 39,763 | 46,617 | ||||
| Restricted cash | 3,222 | 5,092 | ||||
| Intangible assets, net | 410,245 | 410,979 | ||||
| Goodwill | 409,974 | 409,974 | ||||
| Other long-term assets | 10,528 | 1,170 | ||||
| Total Assets | $ | 1,767,086 | $ | 2,006,970 | ||
| Liabilities and Stockholders' Equity | ||||||
| Accounts payable | $ | 12,028 | $ | 11,002 | ||
| Accrued expenses | 32,596 | 36,261 | ||||
| Deferred revenue | 32,292 | 36,026 | ||||
| Operating lease liabilities | 49,956 | 57,680 | ||||
| Contingent consideration liability | 172,094 | 169,717 | ||||
| Convertible senior notes, net | 896,683 | 896,067 | ||||
| Other liabilities | 8,533 | 9,230 | ||||
| Stockholders' equity | 562,904 | 790,987 | ||||
| Total Liabilities and Stockholders' Equity | $ | 1,767,086 | $ | 2,006,970 |
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, | |||||||||||
| 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||
| GAAP net loss | $ | (84,384) | $ | (76,971) | $ | (69,329) | $ | (314,248) | $ | (181,223) | |||||
| Merger-related expenses (1) | 403 | 31,129 | |||||||||||||
| Income tax expense (benefit) resulting from acquisitions (2) | 1,175 | (93,649) | |||||||||||||
| Fair value adjustment to Circulomics inventory at acquisition date | 183 | ||||||||||||||
| Change in fair value of contingent consideration (3) | 4,598 | 4,280 | 1,143 | 2,377 | 1,143 | ||||||||||
| Amortization of intangible assets | 228 | 228 | 226 | 913 | 380 | ||||||||||
| Loss from Continuation Advances from Illumina | 52,000 | ||||||||||||||
| Non-GAAP net loss | $ | (79,558) | $ | (72,463) | $ | (66,382) | $ | (310,958) | $ | (190,037) | |||||
| GAAP net loss per share | $ | (0.37) | $ | (0.34) | $ | (0.31) | $ | (1.40) | $ | (0.89) | |||||
| Merger-related expenses (1) | 0.15 | ||||||||||||||
| Income tax benefit resulting from acquisitions (2) | 0.01 | (0.46) | |||||||||||||
| Change in fair value of contingent consideration (3) | 0.02 | 0.02 | 0.01 | 0.01 | 0.01 | ||||||||||
| Amortization of intangible assets | |||||||||||||||
| Loss from Continuation Advances from Illumina | 0.25 | ||||||||||||||
| Other adjustments and rounding differences | (0.01) | 0.01 | 0.01 | ||||||||||||
| Non-GAAP net loss per share | $ | (0.35) | $ | (0.32) | $ | (0.30) | $ | (1.38) | $ | (0.93) | |||||
| GAAP gross profit | $ | 5,140 | $ | 13,547 | $ | 16,766 | $ | 49,035 | $ | 58,860 | |||||
| Fair value adjustment to Circulomics inventory at acquisition date | 183 | ||||||||||||||
| Amortization of intangible assets | 183 | 184 | 183 | 733 | 306 | ||||||||||
| Non-GAAP gross profit | $ | 5,323 | $ | 13,731 | $ | 16,949 | $ | 49,768 | $ | 59,349 | |||||
| GAAP gross profit % | 19% | 42% | 47% | 38% | 45% | ||||||||||
| Non-GAAP gross profit % | 19% | 42% | 47% | 39% | 45% | ||||||||||
| GAAP total operating expense | $ | 92,224 | $ | 88,167 | $ | 81,442 | $ | 356,231 | $ | 269,295 | |||||
| Merger-related expenses (1) | (403) | (31,129) | |||||||||||||
| Change in fair value of contingent consideration (3) | (4,598) | (4,280) | (1,143) | (2,377) | (1,143) | ||||||||||
| Amortization of intangible assets | (45) | (44) | (43) | (180) | (74) | ||||||||||
| Non-GAAP total operating expense | $ | 87,581 | $ | 83,843 | $ | 79,853 | $ | 353,674 | $ | 236,949 |