Third quarter 2026 earnings call, November 4, 2026
Strategic wins are real, but revenue has yet to follow
PacBio used its third quarter call to argue that its cheaper SPRQ-Nx chemistry is opening larger programs than its revenue base can yet show. The most important new item is GeneDx's plan to add long-read whole genome sequencing to its rare disease testing portfolio. GeneDx is one of the largest U.S. clinical genomics operators, and the decision is the first major U.S. clinical endorsement of HiFi at scale. Management gave no volume or timing, and the revenue contribution remains unquantified. CEO Mark Van Oene said the company drew "significant interest from attendees" at ASHG after the announcement.
Clinical is now PacBio's growth engine. In response to a question from TD Cowen, Van Oene said clinical consumable revenue is growing "over 20% year-over-year" and now exceeds 20% of the overall business, up from the mid-teens percentage management cited recently. He called it "the growth driver of PacBio right now." EMEA remains the clinical leader, though Van Oene noted clinical is still less than half of the business even in Europe. Europe's consolidated health systems and labs that see a few thousand rare disease patients a year make the single-workflow economics easier to justify. The company says it is now bringing that argument to U.S. labs, but described the effort as "early days."
Biological AI becomes a second leg of the story
Management gave more weight than before to its positioning as a data layer for biological AI. The multiyear Verily collaboration puts HiFi whole genome workflows inside Verily's Workbench, which serves more than 20,000 researchers. The goal is to combine long-read data with real-world clinical records into AI-ready datasets. Van Oene said biobanks, biopharma companies, health systems and AI model developers have expressed interest since the announcement. No financial terms were disclosed. He said the value lies in "connecting genomics, medical records and AI" rather than in an infrastructure license.
PacBio also announced a collaboration with TychoBio to run HiFi and Kinnex full-length RNA sequencing across more than 10,000 samples to train models predicting RNA therapy efficacy and off-target effects. The Basecamp Research Trillion Gene Atlas work continues, with hundreds of samples sequenced and delivered weekly. Basecamp raised $140 million in the quarter, which management cited as external validation. These programs did not exist a year ago. They are also pre-revenue in any meaningful sense, and investors should treat the AI narrative as an option on volume rather than a near-term earnings driver.
SPRQ-Nx adoption is strong, but it is depressing consumables for now
More than half of Revio consumable revenue came from SPRQ-Nx in the quarter, and two-thirds of the installed base has upgraded its software. Management expects the vast majority to opt in by year-end. The $345 list price for a 20x human genome is central to the deal pipeline, and some customers are running the same sample pool three times to take advantage of it.
The financial result is mixed. Consumables revenue of $20.8 million rose about 3% sequentially from $20.1 million but fell from $21.3 million a year earlier. Chief Accounting Officer Bill Meyer attributed this to customers working through existing reagent inventory and moving to multi-use workflows, with "sequencing activity growing faster than consumable purchases." Revio pull-through was about $204,000 annualized. Management held the 2026 range of $200,000 to $225,000, which now means landing at the lower half. Van Oene said the company expects to exit the year having absorbed the roughly 30% price reduction and to return to a $225,000 to $250,000 pull-through range in 2027. That is a forecast that depends on elasticity still to be proven, and the first wave of SPRQ-Nx reorders only began this quarter.
Instruments recover, led by Europe and China
Total revenue was $40.6 million, up 6% from $38.4 million a year ago and ahead of $39 million in the second quarter. Instrument revenue reached $13.2 million, up 16%. PacBio placed 15 Revio systems, up from 13, and 35 Vega systems, up 9% year-over-year and 35% sequentially, following the August SPRQ-Nx launch on Vega that raised output from 60 to 90 gigabases. Berry Genomics is building a multi-system Revio fleet for a five-year Chinese national birth defects program that management says could extend to 40 hospitals. Over half of Revio placements went to new customers, and over 90% of Vega shipments did.
Regional performance was uneven. EMEA revenue rose 30% to $14 million, helped by favorable pricing. Americas revenue of $18.2 million was roughly flat, with instrument revenue down about 24% on NIH and academic funding uncertainty. Asia Pacific revenue of $8.3 million fell 13% year-over-year but rose 19% sequentially. Management assumes no meaningful recovery in academic and government funding in the Americas and only a gradual recovery in China.
One competitive setback came up in Q&A. In Singapore's PRECISE program, the first 200,000 of 400,000 samples in the current phase were awarded to Illumina, with a subset going to Ultima Genomics. Van Oene said he remains "optimistic that there will be a long-read component for DNA, RNA or both" in the remainder, but nothing has been awarded to PacBio.
Margins deteriorate, cash burn is high, and the CFO leaves
Non-GAAP gross margin was 36%, down from 42% a year ago. Meyer cited higher memory costs and Vega manufacturing transition costs. Full-year guidance of 35% to 37% implies no near-term improvement. Non-GAAP operating expenses fell 13% to $47 million, and full-year opex guidance was cut to $203 million to $207 million from $215 million to $220 million on restructuring savings. Headcount is 445, versus 491 a year ago. The non-GAAP net loss was $32.8 million, or $0.11 per share.
Cash and investments ended the quarter at $199.4 million, down from $279.5 million at year-end 2025. UBS calculated a Q3 burn of about $37 million. Meyer attributed part of it to working capital timing, including payables and "a couple of extended receivables" granted late in Q2. Guidance for year-end cash of $175 million to $185 million implies a Q4 burn of roughly $15 million to $25 million. That is a sharp step down that depends heavily on working capital reversing.
The company also announced that CFO Jim Gibson, in the role for about 1.5 years, has stepped down. A search is under way, and Meyer will serve as principal accounting officer in the interim. A CFO exit while the company carries $200 million of convertible notes due 2029 and $400 million due 2030 is notable. Van Oene said there is "no immediate need to address the maturity prematurely" and that the holders have shown flexibility. Management still targets cash flow breakeven in 2028, supported by $15 million to $20 million of compensation savings and a further $15 million to $20 million as development spending on the high-throughput platform winds down.
High-throughput platform timing is a key variable
Van Oene said development of the high-throughput system is "on track" with commercial launch expected by the end of next year, and that the team remains fully resourced after the restructuring. He framed the platform as the natural fit for projects like the Berry program, and said PacBio is "strategically pricing some of these large-scale programs right now in anticipation for it." That implies some current deals carry thin economics on Revio. Combined with a 36% gross margin, this raises the question of how much margin the large programs add before the new platform arrives. Delivery of the platform matters for margin, pull-through and the AI thesis, and the 2028 breakeven target leaves little room for a delay.