Full Press Release Details
PacBio Announces Second Quarter 2022 Financial Results
Menlo Park, Calif. August 3, 2022 PacBio (NASDAQ: PACB) today announced financial results for the quarter ended June 30, 2022.
Second quarter results
Gross profit for the second quarter of 2022 was $16.2 million, representing an 18% increase compared with $13.8 million for the second quarter of 2021, and gross margin was 46% in the second quarter of 2022 compared to 45% for the second quarter of 2021. Excluding amortization of intangible assets, non-GAAP gross profit for the second quarter of 2022 was $16.4 million and represented a non-GAAP gross margin of 46% in the second quarter of 2022, compared to 45% for the second quarter of 2021 (see accompanying tables for reconciliations of GAAP and non-GAAP measures).
Operating expenses totaled $84.2 million for the second quarter of 2022, compared to $51.3 million for the second quarter of 2021. Excluding contingent consideration remeasurement and amortization of intangible assets, non-GAAP operating expenses totaled $89.6 million for the second quarter of 2022, compared to $51.3 million for the second quarter of 2021. Operating expenses for the second quarter of 2022 and the second quarter of 2021 included non-cash stock-based compensation of $18.0 million and $13.9 million, respectively.
Net loss for the second quarter of 2022 was $71.4 million, compared to a net loss of $41.0 million for the second quarter of 2021. Excluding contingent consideration remeasurement and amortization of intangible assets in the second quarter of 2022, non-GAAP net loss was $76.6 million, compared to $41.0 million for the second quarter of 2021.
GAAP net loss per share for the second quarter of 2022 was $0.32 compared to GAAP net loss per share of $0.21 for the second quarter of 2021. Non-GAAP net loss per share for the second quarter of 2022 was $0.34 compared to $0.21 for the second quarter of 2021.
Cash, cash equivalents, and investments, excluding short and long-term restricted cash, at June 30, 2022, totaled $899.2 million, compared to $1,044.4 million at December 31, 2021.
Recent company updates
We continued to make progress expanding our Sequel IIe installed base in the quarter. However, it's clear that macroeconomic factors such as COVID lockdowns, increased inflation, strengthening U.S. dollar, supply chain issues, and volatile capital markets are affecting our customers and particularly delaying instrument purchases, said Christian Henry, President and Chief Executive Officer. We believe the impact from these factors is transitory, and PacBio remains in a solid position to progress our product pipeline, serve our customers, and drive growth in 2022 and beyond. Our products address a vast and expanding sequencing market, and we look forward to sharing more about our strategies and business opportunities at an Analyst Day this November.
2022 Financial Guidance
As a result of macroeconomic factors discussed above, PacBio now expects 2022 revenue to be in the range of $138 million to $145 million. Management will provide more detail on financial guidance on the quarterly conference call today.
Quarterly Conference Call Information
Management will host a quarterly conference call to discuss its second quarter ended June 30, 2022, results today at 5:00 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 Q2 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 SBBTM 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.
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 purchase accounting last 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 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 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 may contain 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, including statements relating to our expectations for progress on the Company's product pipeline and ability to drive growth in 2022 and beyond, as well as expectations with respect to challenges related to the COVID-19 pandemic; our expectations with respect to our collaboration and partnership efforts, as well as the potential results of such collaborations; potential impacts to our business related to macroeconomic factors, as well as our belief that such impacts will be transitory; and other future events. Reported results 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; competition; unanticipated increases in costs or expenses; interruptions or delays in the supply of components or materials for, or manufacturing of, our 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 utilizing our products; intellectual property risks; 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 unaudited condensed consolidated financial statements that follow should be read in conjunction with the notes set forth in PacBio's Quarterly Report on Form 10-Q 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 | ||||||||
| June 30, | March 31, | June 30, | ||||||
| 2022 | 2022 | 2021 | ||||||
| Revenue: | ||||||||
| Product revenue | $ | 30,175 | $ | 28,244 | $ | 26,533 | ||
| Service and other revenue | 5,292 | 4,929 | 4,077 | |||||
| Total revenue | 35,467 | 33,173 | 30,610 | |||||
| Cost of revenue: | ||||||||
| Cost of product revenue | 15,499 | 14,820 | 13,222 | |||||
| Cost of service and other revenue | 3,592 | 4,015 | 3,635 | |||||
| Amortization of intangible assets | 183 | 183 | ||||||
| Total cost of revenue | 19,274 | 19,018 | 16,857 | |||||
| Gross profit | 16,193 | 14,155 | 13,753 | |||||
| Operating expense: | ||||||||
| Research and development | 50,348 | 52,937 | 22,266 | |||||
| Sales, general and administrative | 39,252 | 39,804 | 29,060 | |||||
| Change in fair value of contingent consideration (1) | (5,438) | (1,063) | ||||||
| Total operating expense | 84,162 | 91,678 | 51,326 | |||||
| Operating loss | (67,969) | (77,523) | (37,573) | |||||
| Interest expense | (3,681) | (3,697) | (3,589) | |||||
| Other income (expense), net | 256 | (279) | 161 | |||||
| Loss before expense from income taxes | (71,394) | (81,499) | (41,001) | |||||
| Expense from income taxes | ||||||||
| Net loss | $ | (71,394) | $ | (81,499) | $ | (41,001) | ||
| Net loss per share: | ||||||||
| Basic | $ | (0.32) | $ | (0.37) | $ | (0.21) | ||
| Diluted | $ | (0.32) | $ | (0.37) | $ | (0.21) | ||
| Shares used in computing net loss per share: | ||||||||
| Basic | 224,499 | 222,289 | 198,568 | |||||
| Diluted | 224,499 | 222,289 | 198,568 |
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Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||
| Revenue: | |||||||||||
| Product revenue | $ | 30,175 | $ | 26,533 | $ | 58,419 | $ | 51,836 | |||
| Service and other revenue | 5,292 | 4,077 | 10,221 | 7,771 | |||||||
| Total revenue | 35,467 | 30,610 | 68,640 | 59,607 | |||||||
| Cost of revenue: | |||||||||||
| Cost of product revenue | 15,499 | 13,222 | 30,319 | 25,919 | |||||||
| Cost of service and other revenue | 3,592 | 3,635 | 7,607 | 6,958 | |||||||
| Amortization of intangible assets | 183 | 366 | |||||||||
| Total cost of revenue | 19,274 | 16,857 | 38,292 | 32,877 | |||||||
| Gross profit | 16,193 | 13,753 | 30,348 | 26,730 | |||||||
| Operating expense: | |||||||||||
| Research and development | 50,348 | 22,266 | 103,285 | 42,815 | |||||||
| Sales, general and administrative | 39,252 | 29,060 | 79,056 | 55,198 | |||||||
| Change in fair value of contingent consideration (1) | (5,438) | (6,501) | |||||||||
| Total operating expense | 84,162 | 51,326 | 175,840 | 98,013 | |||||||
| Operating loss | (67,969) | (37,573) | (145,492) | (71,283) | |||||||
| Loss from Continuation Advances from Illumina | (52,000) | ||||||||||
| Interest expense | (3,681) | (3,589) | (7,378) | (5,378) | |||||||
| Other income (expense), net | 256 | 161 | (23) | 225 | |||||||
| Net loss | $ | (71,394) | (41,001) | (152,893) | (128,436) | ||||||
| Net loss per share: | |||||||||||
| Basic | $ | (0.32) | $ | (0.21) | $ | (0.68) | $ | (0.65) | |||
| Diluted | $ | (0.32) | $ | (0.21) | $ | (0.68) | $ | (0.65) | |||
| Shares used in computing net loss per share: | |||||||||||
| Basic | 224,499 | 198,568 | 223,400 | 196,690 | |||||||
| Diluted | 224,499 | 198,568 | 223,400 | 196,690 |
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Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Balance Sheets
| June 30, | December 31, | ||||
| 2022 | 2021 | ||||
| Assets | |||||
| Cash and investments | $ | 899,151 | $ | 1,044,400 | |
| Accounts receivable, net | 27,058 | 24,241 | |||
| Inventory, net | 36,121 | 24,599 | |||
| Prepaid and other current assets | 7,657 | 7,394 | |||
| Property and equipment, net | 37,957 | 32,504 | |||
| Operating lease right-of-use assets, net | 43,274 | 46,617 | |||
| Restricted cash | 3,222 | 5,092 | |||
| Intangible assets, net | 410,523 | 410,979 | |||
| Goodwill | 409,974 | 409,974 | |||
| Other long-term assets | 1,205 | 1,170 | |||
| Total Assets | $ | 1,876,142 | $ | 2,006,970 | |
| Liabilities and Stockholders' Equity | |||||
| Accounts payable | $ | 12,883 | $ | 11,002 | |
| Accrued expenses | 25,174 | 36,261 | |||
| Deferred revenue | 33,911 | 36,026 | |||
| Operating lease liabilities | 53,847 | 57,680 | |||
| Contingent consideration liability | 163,216 | 169,717 | |||
| Convertible senior notes, net | 896,374 | 896,067 | |||
| Other liabilities | 8,851 | 9,230 | |||
| Stockholders' equity | 681,886 | 790,987 | |||
| Total Liabilities and Stockholders' Equity | $ | 1,876,142 | $ | 2,006,970 |
Pacific Biosciences of California, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||
| 2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||
| GAAP net loss | $ | (71,394) | $ | (81,499) | $ | (41,001) | $ | (152,893) | $ | (128,436) | ||||
| Change in fair value of contingent consideration (1) | (5,438) | (1,063) | (6,501) | |||||||||||
| Amortization of intangible assets | 228 | 228 | 457 | |||||||||||
| Non-GAAP net loss | $ | (76,604) | $ | (82,334) | $ | (41,001) | $ | (158,937) | $ | (128,436) | ||||
| GAAP net loss per share | $ | (0.32) | $ | (0.37) | $ | (0.21) | $ | (0.68) | $ | (0.65) | ||||
| Change in fair value of contingent consideration (1) | (0.02) | (0.03) | ||||||||||||
| Amortization of intangible assets | ||||||||||||||
| Non-GAAP net loss per share | $ | (0.34) | $ | (0.37) | $ | (0.21) | $ | (0.71) | $ | (0.65) | ||||
| GAAP gross profit | $ | 16,193 | $ | 14,155 | $ | 13,753 | $ | 30,348 | $ | 26,730 | ||||
| Amortization of intangible assets | 183 | 183 | 366 | |||||||||||
| Non-GAAP gross profit | $ | 16,376 | $ | 14,338 | $ | 13,753 | $ | 30,714 | $ | 26,730 | ||||
| GAAP gross profit % | 46% | 43% | 45% | 44% | 45% | |||||||||
| Non-GAAP gross profit % | 46% | 43% | 45% | 45% | 45% | |||||||||
| GAAP total operating expense | $ | 84,162 | $ | 91,678 | $ | 51,326 | $ | 175,840 | $ | 98,013 | ||||
| Change in fair value of contingent consideration (1) | 5,438 | 1,063 | 6,501 | |||||||||||
| Amortization of intangible assets | (45) | (45) | (91) | |||||||||||
| Non-GAAP total operating expense | $ | 89,555 | $ | 92,696 | $ | 51,326 | $ | 182,250 | $ | 98,013 |
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