When Pacific Biosciences of California (NASDAQ:PACB) reported its second-quarter results in August, the company had good news and bad news. The good news was that revenue jumped. The bad news was that revenue didn't increase as much as expected.

The gene-sequencing company also had good news and bad news when it announced its third-quarter results after the market closed on Thursday. This time around, the bad news showed up in nearly every aspect of PacBio's financial performance.

However, these dismal results were overshadowed by good news -- actually, it was great news -- for investors: Illumina (NASDAQ:ILMN) is acquiring PacBio. Here's what you need to know about the latest developments. 

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Pacific Biosciences of California results: The raw numbers

Metric 

Q3 2018 

Q3 2017 

Change (YOY)

Sales

$18.2 million $23.5 million

(22.9%)

Net income (loss) from continuing operations

($25 million) ($22 million)

N/A

Earnings (loss) per share (EPS)

($0.19) ($0.19)

N/A

Data source: Pacific Biosciences of California. YOY = year over year.

What happened with Pacific Biosciences of California this quarter?

Yes, PacBio's top line got worse in the third quarter, and its bottom line deteriorated, too. The company reported lower instrument sales and lower consumables revenue. Several factors were to blame.

Probably the biggest challenge for PacBio in the quarter was that customers appeared to be holding off on buying existing products while they waited on the company's new products. This also likely affected consumables purchases. The lower revenue trickled down to cause the company's net loss to widen from the prior-year period.

Fewer shipments of systems also meant that PacBio reduced its manufacturing output. That resulted in fixed costs associated with manufacturing pulling down gross profit for the systems that were built. In addition, gross profit was negatively affected by $2.4 million of product transition costs.  

There was a sliver of good news in the third quarter for PacBio, though. The company stated that usage of its installed Sequel gene-sequencing instruments increased significantly over the prior-year period.

However, all of these financial results were completely overshadowed by the huge news that Illumina plans to acquire PacBio for $1.2 billion. The highest market cap PacBio has ever had was close to $1 billion, a level the company briefly enjoyed in early 2016. Illumina's buyout is fantastic news for investors who have patiently held on to their PacBio shares. 

What management had to say

PacBio chairman and CEO Mike Hunkapiller stated:

Some of our customers held back in purchasing products during the third quarter in anticipation of the new products we recently launched or have announced we are planning to launch early next year. However, we have been very pleased with the enthusiastic response from our customers on the launch of our new 3.0 chemistry and 6.0 software in October. We are also looking forward to the launch of our new 8M SMRT Cell and platform, with early access scheduled to begin during the first quarter of 2019. We are also excited to announce the proposed merger with Illumina, which we believe will enable the combined company to provide SMRT Sequencing to a broader range of customers and at a much faster rate than we could have accomplished on our own.

Looking forward

Success for PacBio's recently launched products could begin showing up in the company's fourth-quarter results and gather more momentum in the first half of next year. It wouldn't be surprising for potential customers to have a lot more confidence in buying PacBio's long-read sequencing systems now that they know the company will be part of industry leader Illumina.

While investors watch PacBio's next few quarters, the main thing to look forward to is the finalization of the company's acquisition by Illumina. The transaction is expected to close by mid 2019. 

Keith Speights owns shares of Illumina. The Motley Fool owns shares of and recommends Illumina. The Motley Fool recommends Pacific Biosciences of California. The Motley Fool has a disclosure policy.