PacBio Cuts Outlook as SPRQ-Nx Transition Slows, Targets 2028 Cash-Flow Positivity

Key Points

• PacBio lowered its revenue outlook as customers transition more slowly than expected to the lower-priced SPRQ-Nx chemistry and academic and government demand for Vega systems weakens. The company expects many customers to complete the inventory transition by late 2026.
• PacBio is restructuring to reduce costs, targeting $15 million to $20 million in annual compensation and benefits savings, with a further potential $30 million to $40 million reduction in spending in 2027 as major platform investments wind down.
• The company is targeting cash-flow positivity in 2028, dependent on launching its ultra-high-throughput platform, improving compute and memory economics, converting customers to SPRQ-Nx and reaching gross margins near 50%.

Pacific Biosciences of California NASDAQ: PACB reported second-quarter revenue of $39 million, including $20 million in consumables revenue, $13 million in instrument revenue and $6 million in services revenue, CFO Jim Gibson said during the Canaccord Genuity Growth Conference.

Revenue increased sequentially, Gibson said, while services revenue declined slightly year over year following the completion of a large population genetics study in Asia. The company highlighted 67% growth in its clinical business and said clinical consumables represented a mid-teens percentage of total consumables revenue.

Leadership transition and restructuring

PacBio recently completed the transition to Mark Van Oene as chief executive officer. Gibson said Van Oene, who joined PacBio about five years ago, previously led research and development and operations and was involved in the launches of the Revio and Vega sequencing systems as well as the company’s SPRQ-Nx and original SPRQ chemistry products.

According to Gibson, Van Oene’s priorities include expanding PacBio’s clinical presence and building on growth in Europe, the Middle East and Africa, or EMEA, as well as other international markets.

The company also announced a targeted reduction in force as it manages higher compute and memory costs and a slower-than-expected transition to its SPRQ-Nx chemistry. Gibson said the restructuring substantially reduced marketing functions and removed management layers, with marketing efforts becoming more focused on clinical markets and integrated with the commercial organization.

PacBio expects the actions to reduce compensation and benefits expenses by $15 million to $20 million. Gibson also said the company expects to be past much of its major spending for a new high-throughput sequencing platform by 2027, potentially reducing spending by another $30 million to $40 million that year.

SPRQ-Nx transition affects consumables

PacBio commercially launched SPRQ-Nx in May. The chemistry supports three uses per chip and carries an average selling price roughly 35% below the prior offering, Gibson said. While approximately one-third of customers had converted their software to enable the multi-use workflow, some larger service providers have continued using existing inventory before placing more orders for the new chemistry.

“We did see a slight lull in Q2” as customers worked through inventory, Gibson said, adding that usage rates remained high even when customers were not replenishing supplies.

The company expects many customers to complete that inventory transition by the latter part of 2026. PacBio also expects that lower pricing could drive increased sample volumes, though Gibson said it was too early to draw conclusions from order data. He estimated each Revio system would need to run roughly 10 to 15 more samples per month to return to revenue parity after the price reduction.

PacBio lowered its revenue outlook, with Gibson citing the slower SPRQ-Nx conversion and reduced expectations for a second-half pickup in academic and government demand for Vega systems. He said demand for Revio remains strong and that the company continues to see solid Vega placements.

Population studies and clinical opportunity

Gibson said PacBio signed two notable fleet-expansion agreements with existing customers and secured a large new population genomics initiative that received five Revio systems. The company expects to provide additional details about that initiative during the third quarter.

He said large projects enabled by SPRQ-Nx are expected to become more meaningful contributors to revenue in 2027, as installations and project ramps generally take four to six months. PacBio previously announced a 100,000-sample GeneDx project, which Gibson described as the company’s largest project to date. He said the GeneDx program and the newly announced population genetics initiative are not expected to contribute substantially in 2026.

Gibson said PacBio won the GeneDx business through a competitive process in which customers prioritized data depth, coverage and reproducibility. He said researchers and clinical-oriented organizations are increasingly interested in generating more complete genomic data sets at the outset rather than potentially enriching short-read data sets years later.

In EMEA, PacBio reported more than 50% year-over-year growth, supported by rare-disease testing, favorable reimbursement conditions for whole-genome sequencing and the fit of Revio throughput at smaller hospitals and within single-payer healthcare systems. In the U.S., Gibson said larger centralized testing labs are seeking higher-throughput systems and favorable reimbursement conditions for whole-genome sequencing.

Path toward cash-flow positivity

PacBio is developing an ultra-high-throughput platform that Gibson said is intended to improve price parity with short-read sequencing, support larger data sets and provide customers with more flexibility over compute requirements. The company is also working to optimize its existing systems’ use of GPUs and memory, after buying inventory to secure supply for the remainder of the year.

Gibson said PacBio’s path to cash-flow positivity in 2028 depends on successfully launching the new platform as a portfolio addition, improving compute and DRAM economics, and converting a majority of customers to SPRQ-Nx. He said the company would need to be “knocking on the door of 50%” gross margin to support that objective.

About Pacific Biosciences of California (NASDAQ:PACB)

Pacific Biosciences of California, Inc develops, manufactures and sells high-performance DNA sequencing systems for genetic and genomic analysis. The company's proprietary single-molecule, real-time (SMRT) sequencing technology is designed to enable long-read sequencing, offering high accuracy for applications such as de novo genome assembly, transcriptome characterization and structural variation analysis. Pacific Biosciences markets a suite of instruments, including the Sequel and Sequel IIe systems, alongside reagents, consumables and data analysis software to support a range of life science research.

Founded in 2004 and headquartered in Menlo Park, California, Pacific Biosciences has expanded its global reach by serving academic institutions, biotechnology and pharmaceutical companies, and government research centers across North America, Europe and Asia.

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