Genomics company Pacific Biosciences of California (NASDAQ: PACB) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 3.8% year on year to $38.44 million. Its non-GAAP loss of $0.12 per share was 14.2% above analysts’ consensus estimates.

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“While revenue came in slightly below our expectations this quarter, we achieved another all-time record for consumable revenue, expanded gross margins and continued to reduce our operating expenses,” said Christian Henry, President and Chief Executive Officer.

Company Overview

Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ: PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, PacBio’s 14.2% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. PacBio’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 4.5% over the last two years.

This quarter, PacBio missed Wall Street’s estimates and reported a rather uninspiring 3.8% year-on-year revenue decline, generating $38.44 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 14.6% over the next 12 months, an improvement versus the last two years. This projection is healthy and suggests its newer products and services will catalyze better top-line performance.

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Operating Margin

PacBio’s high expenses have contributed to an average operating margin of negative 246% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Analyzing the trend in its profitability, PacBio’s operating margin decreased significantly over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 232.8 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q3, PacBio generated a negative 101% operating margin.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

PacBio’s full-year EPS was flat over the last five years. This performance was underwhelming across the board.

In Q3, PacBio reported adjusted EPS of negative $0.12, up from negative $0.17 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects PacBio to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.60 will advance to negative $0.51.

Key Takeaways from PacBio’s Q3 Results

It was good to see PacBio beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed. Overall, this was a mixed quarter. The stock remained flat at $1.92 immediately following the results.

Is PacBio an attractive investment opportunity at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.