It's been pretty much nothing but bad news from Pacific Biosciences of California (NASDAQ:PACB) (PacBio) so far in 2020. Even after rebounding from its March lows, the stock is still down more than 20% year to date.

Unfortunately, things could get worse for PacBio before they get better. The gene-sequencing systems maker announced its second-quarter results after the market closed on Monday. Here are the highlights from PacBio's Q2 update.

Magnifying glass showing DNA helix with color-coded DNA map in the background

Image source: Getty Images.

By the numbers

PacBio reported revenue in the second quarter of $17.1 million, a 30% year-over-year drop. There was a little bit of good news with the company's top-line performance, though: It still beat the average analysts' estimate of $13.7 million. 

Gross profit for Q2 totaled $6.6 million, down from $9.6 million in the prior-year period. PacBio's gross margin also slid to 38.7% in the second quarter of 2020 from 39% in the same period in 2019.

The company announced a Q2 net loss of $23.1 million, or $0.15 per share, based on generally accepted accounting principles (GAAP). This reflected deterioration from the GAAP net loss of $24.6 million, or $0.16 per share, posted in the prior-year period. However, PacBio's net loss in Q2 wasn't quite as bad as the consensus Wall Street estimate of a net loss of $0.18 per share.

PacBio's cash, cash equivalents, and investments totaled $120 million as of June 30, 2020. This was a big jump from the $49.1 million on hand as of Dec. 31, 2019.

Behind the numbers

PacBio attributed its revenue decline largely to the negative impact of the COVID-19 pandemic. Instrument revenue fell nearly 30% year over year in Q2 to $8.9 million. Consumables revenue plunged 44% to $4.8 million. Service and other revenue totaled $3.3 million, slightly lower than the $3.4 million recorded in the prior-year period.

It helped somewhat, though, that the company's spending also decreased. PacBio's operating expenses in the second quarter totaled $30.1 million, down from $34 million in the same period of 2019. 

The gene-sequencing systems maker's improved cash position at the end of the second quarter mainly stemmed from the termination of the planned merger with Illumina. In January, Illumina paid PacBio a $98 million reverse termination fee. The company paid $6 million to its financial advisor in fees in April, which was less than originally expected. In addition, Illumina paid PacBio $34 million in the first quarter of 2020 as part of the initial merger agreement.

Looking ahead

Like many healthcare stocks. PacBio's future fortunes hinge largely on what happens with the COVID-19 outbreak. The company said that it can't estimate what the future impact from the pandemic will be on its operations and financial results.

It seems probable, though, that PacBio's revenue will increase going forward as business recovers. Wall Street appears to be counting on it, with a consensus Q3 revenue estimate of nearly $23.4 million.

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