Results

Pacific Biosciences of California Inc.

08/07/2025 | Press release | Distributed by Public on 08/07/2025 14:39

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with (i) our unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and (ii) our 2024 Annual Report filed with the U.S. Securities and Exchange Commission, or the SEC, on March 17, 2025. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. The words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "might," "plans," "potential," "predicts," "projects," "seeks," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q, and you should not place undue reliance on our forward-looking statements. We do not assume any obligation to update any forward-looking statements. In preparing this Management's Discussion and Analysis ("MD&A"), we presume that readers have access to and have read the MD&A in our 2024 Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.
Our MD&A is organized into the following sections:
•Overview and Outlook
•Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Policies and Estimates
•Recent Accounting Pronouncements
•Off Balance Sheet Arrangements
OVERVIEW AND OUTLOOK
About PacBio
We are a premier life science technology company that designs, develops, and manufactures advanced sequencing solutions that enable scientists and clinical researchers to improve their understanding of the genome and ultimately, resolve genetically complex problems.
Our products and technology, which include our HiFi long-read sequencing technology, address solutions across a broad set of applications including human germline sequencing, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications. Long-read sequencing was recognized by the journal Nature Methods as its "method of the year" for 2022 for its contributions to biological understanding and future potential. Long-read sequencinghas been applied to produce telomere-to-telomere genomes of humans, pangenome references, and has been recognized for its ability to provide more complete views of human variation.
We focus on creating some of the world's most advanced sequencing systems to provide our customers with the most complete and accurate view of genomes, transcriptomes, and epigenomes.
Our customers include academic and governmental research institutions, commercial testing and service laboratories, genome centers, public health labs, hospitals and clinical research institutes, contract research organizations ("CROs"), pharmaceutical companies, and agricultural companies.
Q2 Fiscal 2025 Form 10-Q
Strategic Objectives
Our 2025 strategic objectives are to grow revenue and expand gross margins through the following four activities:
•Enabling the full-scale release of the Vega benchtop platform to broaden our market reach.We believe this platform broadens the long-read market opportunity.
•Accelerating samples onto the Revio platform via SPRQ chemistry and application kits. The SPRQ chemistry enables the sub-$500 HiFi genome, improves methylation detection capabilities, and achieves a 75% reduction in DNA input requirements for human whole genome sequencing. These features can drive more samples onto HiFi sequencing than ever before.
•Investing in future product launches to diversify our offerings.We continue to develop sequencing systems designed to increase throughput and lower the cost to sequence a genome, which we believe will allow us to address an even larger part of the market. Additionally, we continue to develop kitted-solutions, like our Kinnex Full-length RNA kits and PureTarget, and enhance our on-market sequencers with products like SPRQ chemistry to drive more sequencing volume.
•Progressing our clinical strategy to improve outcomes and create durability.Revio is increasingly being used in laboratory developed tests ("LDT") and clinical research settings to consolidate multiple tests and address complex genetic challenges.
We continue to believe that with the capabilities of our HiFi chemistry and SMRT®technology, we can be a market leader in whole-genome clinical sequencing. Leading institutions have adopted our products to study rare and inherited disease. We believe the market opportunity for clinical sequencing is significant and could drive substantial revenue growth for the Company. We plan to continue to pursue partner collaborations where the technologies being developed or applications being considered extend beyond whole-genome clinical sequencing. Collaborative arrangements add to the awareness of our products and service offerings and may drive new applications for use of our technology.
Financial Overview
Key highlights of the six months ended June 30, 2025 consolidated financial results include the following:
Revenue of
Gross profit of
Operating loss of
Cash, cash equivalents, and investments of
$76.9 M $13.3 M
$473.8 M
$314.7 M
compared to $74.8 M during the same period of 2024
compared to $17.2 M during the same period of 2024
compared to $257.2 M during the same period of 2024
compared to $389.9 M at December 31, 2024
•Revenue was comprised of $25.2 million in instrument revenue, $39.0 million in consumables revenue and $12.7 million in service and other revenue during the six months ended June 30, 2025. Revenue was comprised of $33.7 million in instrument revenue, $33.0 million in consumables revenue and $8.1 million in service and other revenue during the six months ended June 30, 2024. The increase was primarily due to higher consumable sales, Vega unit sales, and service and other revenue, partially offset by lower Revio unit sales.
•Gross profit decreased during the six months ended June 30, 2025 compared to the same period of 2024. Restructuring-related charges of $12.4 million during the six months ended June 30, 2025 compared to $4.6 million for the same period of 2024 were partially offset by an increase in gross profit driven by growth in consumable revenue. See Note 5. Restructuringin Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Gross margins may be affected by product mix, manufacturing efficiencies, warranty cost improvements, average selling price fluctuations, future product launches, changes to inventory reserves, costs of raw materials, and tariffs.
Q2 Fiscal 2025 Form 10-Q
•Loss from operations increased $216.6 million during the six months ended June 30, 2025, compared with the same period of 2024, primarily due to a $212.7 million increase in operating expenses. This increase included $382.4 million of restructuring-related costs, comprised primarily of $359.3 million in accelerated amortization of acquired intangibles, $15.0 million of impairment charges, and $4.8 million of employee separation costs. By contrast, restructuring-related charges totaled $13.4 million in the prior-year period. These increases in restructuring-related costs were partially offset by a $78.2 million decrease in impairment charges, an $18.6 million change in fair value of contingent consideration, and reductions in research and development and sales, general and administrative expenses due to headcount and related cost savings from the restructuring.
•Cash, cash equivalents, and short-term investments were $314.7 million at June 30, 2025, which represents a 19% decrease compared to the balance at December 31, 2024.
The sales cycle for Revio instrument purchases continues to be elongated. We believe this has been caused by, among other reasons, the uncertainty surrounding the funding for new capital equipment, in particular, uncertainty in the United States related to the National Institutes of Health ("NIH") and academic funding; procurement delays; small-to-mid-size existing customers yet to increase their sample volumes to drive an upgrade to Revio; new customers, which have shown they have longer sales cycles compared to existing PacBio customers; and sample volumes materializing slower than expected for some potential Revio customers.
Macroeconomic dynamics impacting the Company in the future may include rising inflation, geopolitical tensions, volatile capital markets, tariffs, uncertainty in the United States related to NIH and academic funding, and fluctuating exchange rates. These factors could continue to impact our revenues and results of operations in future periods; however, the magnitude and duration of these impacts is highly uncertain and inherently unpredictable.
On an ongoing basis, we evaluate our significant estimates, including those related to the valuation of goodwill and finite-lived assets. However, these estimates could change in future periods based on events or changes in circumstances, which could result in material future impairment charges. We recorded $15.0 million of impairment charges during the six months ended June 30, 2025. See additional discussion below in Results of Operations, as well as Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Additionally, refer to the Critical Accounting Policies and Estimates section of our 2024 Annual Report for further discussion on the Company's asset impairment assessments.
See the Risk Factorssection for further discussion.
Q2 Fiscal 2025 Form 10-Q
RESULTS OF OPERATIONS
Comparison of the Three Months Ended June 30, 2025 and 2024
Three Months Ended June 30,
(In thousands, except percentages)
2025 2024 $ Change % Change
Revenue:
Product revenue $ 33,083 $ 31,746 $ 1,337 4 %
Service and other revenue 6,683 4,267 2,416 57 %
Total revenue 39,766 36,013 3,753 10 %
Cost of Revenue:
Cost of product revenue 20,022 23,083 (3,061) (13 %)
Cost of service and other revenue 4,853 3,366 1,487 44 %
Amortization of acquired intangible assets
183 2,628 (2,445) (93 %)
Loss on purchase commitment
24 998 (974) (98 %)
Total cost of revenue 25,082 30,075 (4,993) (17 %)
Gross profit 14,684 5,938 8,746 147 %
Operating Expense:
Research and development 22,529 38,485 (15,956) (41) %
Sales, general and administrative 36,175 45,877 (9,702) (21) %
Impairment charges - 93,200 (93,200) (100) %
Amortization of acquired intangible assets 833 4,222 (3,389) (80) %
Total operating expense 59,537 181,784 (122,247) (67 %)
Operating loss (44,853) (175,846) 130,993 (74) %
Interest expense (1,738) (3,542) 1,804 (51) %
Other income, net 4,696 6,069 (1,373) (23 %)
Loss before income taxes
(41,895) (173,319) 131,424 (76 %)
Income tax provision
35 - 35 -
Net loss $ (41,930) $ (173,319) $ 131,389 (76 %)
Q2 Fiscal 2025 Form 10-Q
Revenue
Total Revenue
Total revenue increased $3.8 million, or 10%, for the second quarter of 2025 compared with the same quarter of 2024.
Product revenue increased $1.3 million, or 4%, primarily due to an increase of $1.9 million, or 11%, in consumable revenue, partially offset by a decrease of $0.5 million, or 4%, in instrument revenue.
Service and other revenue increased $2.4 million, or 57%, primarily driven by an increase in Revio service contracts.
Instrument Revenue
Instrument revenue decreased for the second quarter of 2025, primarily due to a lower number of Revio systems sold-15 units compared to 24 units in the same quarter of 2024. This decline primarily reflects variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.
The decrease was partially offset by sales of the Vega system, with 38 units sold during the second quarter of 2025 following its commercial launch in the fourth quarter of 2024.
We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, and funding dynamics.
Consumables Revenue
The increase in consumables revenue for the second quarter of 2025 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base.
Initial shipments of Vega consumables also contributed modestly during the period, and we anticipate increased contributions as customers begin ramping usage of the Vega platform and the installed base expands.
Looking ahead, we expect continued growth in consumables revenue as adoption of the Revio and Vega platforms expands. This anticipated growth reflects increasing instrument placements, improving consumable utilization, and broadening addressable application for our platforms.
Q2 Fiscal 2025 Form 10-Q
Cost of Revenue and Gross Profit
Total cost of revenue decreased $5.0 million, or 17%, in the second quarter of 2025 compared to the same quarter of 2024 due to a decrease in cost of product revenue and a decrease of $2.4 million in amortization attributable to acquired intangible assets that are related to sales generating activities. Total cost of revenue included share-based compensation expense of $0.9 million and $1.1 million during the second quarter of 2025 and 2024, respectively.
Cost of product revenue decreased $3.1 million, or 13%, in the second quarter of 2025 compared to the same quarter of 2024 primarily due to lower restructuring-related charges. Restructuring charges during the three months ended June 30, 2025 were not significant. During the three months ended June 30, 2024 we incurred restructuring-related charges of $4.6 million, which included charges for excess inventory due to a decrease in internal demand relating to the expense reduction initiatives.
Gross profit increased $8.7 million, or 147%, in the second quarter of 2025 compared to the same quarter of 2024 driven by lower cost of revenue and higher consumables sales. See Note 5. Restructuringin Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about restructuring activities. Gross margins may be affected by product mix, manufacturing efficiencies, warranty cost improvements, average selling price fluctuations, future product launches, changes to inventory reserves, costs of raw materials and tariffs.
Research and Development Expense
Research and development expense decreased by $16.0 million, or 41%, for the second quarter of 2025, compared to the same quarter of 2024. The decrease was primarily driven by a decrease in personnel and related expenses due to restructuring activities, as well as the transition of launched products from development to commercialization. Research and development expense included share-based compensation expense of $3.3 million and $4.6 million during the second quarter of 2025 and 2024, respectively.
Sales, General, and Administrative Expense
Sales, general and administrative expense decreased by $9.7 million, or 21%, for the second quarter of 2025, compared to the same quarter of 2024. The decrease was primarily due to a net decrease in personnel and related expenses due to restructuring activities. Sales, general, and administrative expense included share-based compensation expense of $7.7 million and $11.5 million during the second quarter of 2025 and 2024, respectively.
Impairment Charges
We recognized no impairment charge during the second quarter of 2025 and a goodwill impairment charge of $93.2 million during the second quarter of 2024. This charge was primarily attributable to a sustained decline in our stock price and revisions to the timing of expected future cash flows relative to our initial long-term plan, reflecting the continued impact of longer-than-anticipated median sales cycles and other contributing factors. These developments indicated that the fair value of the reporting unit may have been less than its carrying amount, prompting the performance of an interim goodwill impairment test. The results of the test confirmed that the carrying amount of the reporting unit exceeded its estimated fair value.
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets included in operating expenses for the second quarter of 2025 and 2024 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.
Q2 Fiscal 2025 Form 10-Q
Interest Expense
Interest expense for the second quarter of 2025 and 2024 was primarily comprised of interest on the convertible senior notes. The decrease was due to lower convertible notes balances as a result of the notes exchange transaction in November 2024. See Note 4. Convertible Senior Notesin Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Other Income, Net
Other income, net for the second quarter of 2025 decreased compared to the same quarter of 2024 primarily driven by lower investment income due to lower cash and investment balances.
Q2 Fiscal 2025 Form 10-Q
Comparison of the Six Months Ended June 30, 2025 and 2024
Six Months Ended June 30,
(In thousands, except percentages)
2025 2024 $ Change % Change
Revenue:
Product revenue $ 64,196 $ 66,755 $ (2,559) (4 %)
Service and other revenue 12,723 8,068 4,655 58 %
Total revenue 76,919 74,823 2,096 3 %
Cost of Revenue:
Cost of product revenue 46,355 45,530 825 2 %
Cost of service and other revenue 8,631 7,104 1,527 21 %
Amortization of acquired intangible assets
4,528 3,971 557 14 %
Loss on purchase commitment
4,092 998 3,094 310 %
Total cost of revenue 63,606 57,603 6,003 10 %
Gross profit 13,313 17,220 (3,907) (23 %)
Operating Expense:
Research and development 51,582 81,940 (30,358) (37 %)
Sales, general and administrative 76,343 89,630 (13,287) (15 %)
Impairment charges 15,000 93,200 (78,200) (84 %)
Amortization of acquired intangible assets 362,875 9,728 353,147 3630 %
Change in fair value of contingent consideration (18,700) (70) (18,630) 26614 %
Total operating expense 487,100 274,428 212,672 77 %
Operating loss (473,787) (257,208) (216,579) 84 %
Interest expense (3,475) (7,117) 3,642 (51 %)
Other income, net 8,990 12,828 (3,838) (30 %)
Loss before income taxes
(468,272) (251,497) (216,775) 86 %
Income tax benefit (267) - (267) -
Net loss $ (468,005) $ (251,497) $ (216,508) 86 %
Q2 Fiscal 2025 Form 10-Q
Revenue
Total Revenue
Total revenue increased $2.1 million, or 3%, during the six months ended June 30, 2025 compared with the same period of 2024.
Product revenue decreased $2.6 million, or 4%, primarily due to a decrease of $8.5 million, or 25%, in instrument revenue, partially offset by an increase of $6.0 million, or 18%, in consumable revenue.
Service and other revenue increased $4.7 million, or 58%, primarily driven by an increase in Revio service contracts.
Instrument Revenue
Instrument revenue decreased during the six months ended June 30, 2025, primarily due a lower number of Revio systems sold-27 units compared to 52 units in the same period of 2024. This decline primarily reflects variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.
The decrease was partially offset by sales of the Vega system, with 66 units sold during the six months ended June 30, 2025 following its commercial launch in the fourth quarter of 2024.
We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, and funding dynamics.
Consumables Revenue
The increase in consumables revenue during the six months ended June 30, 2025 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base.
Initial shipments of Vega consumables also contributed modestly during the period, and we anticipate increased contributions as customers begin ramping usage of the Vega platform and the installed base expands.
Looking ahead, we expect continued growth in consumables revenue as adoption of the Revio and Vega platforms expands. This anticipated growth reflects increasing instrument placements, improving consumable utilization, and broadening addressable application for our platforms.
Q2 Fiscal 2025 Form 10-Q
Cost of Revenue and Gross Profit
Total cost of revenue increased $6.0 million, or 10%, during the six months ended June 30, 2025, compared to the same period of 2024 primarily due to an increase in restructuring-related charges. These charges were $12.4 million during the six months ended June 30, 2025, which included $3.8 million relating to loss on purchase commitments which is based on an estimate of future excess inventory related to supply agreements for which we do not expect to have related sales. Restructuring-related charges were $4.6 million for the same period of 2024. Total cost of revenue included share-based compensation expense of $2.1 million and $3.2 million during the six months ended June 30, 2025 and 2024, respectively.
Gross profit decreased $3.9 million, or 23%, during the six months ended June 30, 2025, compared to the same period of 2024 driven by the increase in cost of revenue from restructuring activities partially offset by an increase in gross profit driven by growth in consumable revenue. See Note 5. Restructuringin Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about restructuring activities. Gross margins may be affected by product mix, manufacturing efficiencies, warranty cost improvements, average selling price fluctuations, future product launches, changes to inventory reserves, costs of raw materials and tariffs.
Research and Development Expense
Research and development expense decreased by $30.4 million, or 37%, during the six months ended June 30, 2025, compared to the same period of 2024. The decrease was primarily driven by a decrease in personnel and related expenses due to restructuring activities, as well as the transition of launched products from development to commercialization. Research and development expense included share-based compensation expense of $5.9 million and $10.4 million during the six months ended June 30, 2025 and 2024, respectively.
Sales, General, and Administrative Expense
Sales, general and administrative expense decreased by $13.3 million, or 15%, during the six months ended June 30, 2025, compared to the same period of 2024. The decrease was primarily due to a net decrease in personnel and related expenses due to restructuring activities. Sales, general, and administrative expense included share-based compensation expense of $13.1 million and $23.1 million during the six months ended June 30, 2025 and 2024, respectively.
Impairment Charges
We recorded impairment charges of $15.0 million during the six months ended June 30, 2025, related to in-process research and development ("IPR&D"). These charges resulted from an interim impairment assessment performed in response to identified indicators of impairment during the period. The impairment test concluded that the carrying amount of our IPR&D assets exceeded their estimated fair value. See Note 3. Balance Sheet Componentsin Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
We recognized a goodwill impairment charge of $93.2 million during the six months ended June 30, 2024. This charge was primarily driven by a sustained decrease in our stock price and changes in the timing of expected future cash flows relative to our initial long-term plan, reflecting the ongoing impact of longer-than-anticipated median sales cycles and other contributing factors. These conditions indicated that the fair value of the reporting unit may have been less than its carrying amount, prompting the performance of an interim goodwill impairment test. The results of the test confirmed that the reporting unit's carrying amount exceeded its estimated fair value.
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets during the six months ended June 30, 2025 included $359.3 million of accelerated amortization related to developed technology from the 2021 Omniome acquisition, reflecting our revised estimate that the asset will no longer generate economic benefit beyond March 31, 2025. We expect significantly lower amortization expense in future periods.
Q2 Fiscal 2025 Form 10-Q
Change in Fair Value of Contingent Consideration
We recognized a change in fair value of contingent consideration of $18.7 million during the six months ended June 30, 2025, resulting in a contingent consideration liability of $0. This was primarily due to management's decision to cease development of the high-throughput short-read system, the associated changes in expected future revenues, and the requirement that the milestone event occur prior to the five-year anniversary of the acquisition closing date.
Interest Expense
Interest expense during the six months ended June 30, 2025 and 2024 was primarily comprised of interest on the convertible senior notes. The decrease was due to lower convertible notes balances as a result of the notes exchange transaction in November 2024. See Note 4. Convertible Senior Notesin Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Other Income, Net
Other income, net during the six months ended June 30, 2025 decreased compared to the same period of 2024 primarily driven by lower investment income due to lower cash and investment balances.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2025, we had cash, cash equivalents and investments of $314.7 million compared to $389.9 million as of December 31, 2024. We believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements beyond the next 12 months from the date of filing of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.
Our primary sources of liquidity, other than our holdings of cash, cash equivalents, and investments, have primarily been through the issuance of debt or equity securities, together with cash flow from operating activities. We have historically incurred, and expect to continue to incur, operating losses and generate negative cash flows from operations on an annual basis, and as a result, we may require additional capital resources to execute our strategic initiatives to grow our business.
We began implementing expense reduction initiatives in the second quarter of 2024, including workforce reductions, facility downsizing, and a streamlined development pipeline, with the goal of lowering annualized run-rate operating expenses by year-end. In the first quarter of 2025, we implemented additional actions, including further workforce reductions, to support continued cost savings.
Factors that may affect our capital needs include, but are not limited to, the pace of adoption of our products, which affects the sales of our products and services; our ability to efficiently manage our operations; the effectiveness of our expense reduction initiatives; our ability to obtain new collaboration and customer arrangements and maintain existing collaborations and arrangements; the progress of our research and development programs; initiation, expansion, or funding of research programs and collaborations; the purchase of patent licenses; the impact of product quality; litigation costs, including the costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; costs of developing new and enhanced products; acquisitions of complementary businesses, technologies or assets; achievement of milestones in connection with acquisitions; and other factors. There can be no assurance that funds will be available on favorable terms, or at all.
Contingent Consideration
Under the terms of our 2023 acquisition of Apton, we agreed to pay $25.0 million to former Apton equity holders if a high-throughput sequencer incorporating Apton's technology generates $50.0 million in revenue within five years of the closing. Payment may be made in cash, stock, or a combination. As of June 30, 2025, due primarily to the decision to discontinue development of the system and revised revenue expectations, the fair value of the contingent consideration liability was estimated at $0.
Q2 Fiscal 2025 Form 10-Q
Cash Flow Summary
Six Months Ended June 30,
(In thousands) 2025 2024
Net cash used in operating activities $ (73,433) $ (129,945)
Net cash provided by investing activities 70,517 42,701
Net cash provided by financing activities 1,959 6,401
Net decrease in cash, cash equivalents, and restricted cash $ (957) $ (80,843)
Operating Activities
Our primary uses of cash in operating activities include the development of future products and product enhancements, manufacturing, and support functions related to our sales, general and administrative activities.
Cash used in operating activities during the six months ended June 30, 2025 of $73.4 million was due primarily to a $468.0 million net loss that included non-cash items such as amortization of acquired intangible assets of $367.4 million, an impairment charge of $15.0 million, share-based compensation of $21.1 million, $8.5 million of inventory adjustments, depreciation expense of $7.8 million, and $6.3 million in net changes to operating assets and liabilities, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration. Cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable and inventory, as well as decreases in accrued expenses and operating lease liabilities. These uses of cash were partially offset by a decrease in prepaid expenses and other assets.
Cash used in operating activities during the six months ended June 30, 2024 of $129.9 million was due primarily to a $251.5 million net loss that included non-cash items such as a goodwill impairment charge of $93.2 million, share-based compensation of $36.7 million, amortization of acquired intangible assets of $13.7 million, depreciation expense of $6.7 million and amortization of right-of-use assets of $5.9 million. This was offset by the accretion of discount and amortization of premium on marketable securities, net of $7.6 million and $31.7 million in net changes to operating assets and liabilities. Cash flow impact from changes in net operating assets and liabilities was primarily driven by an increase in inventory, as well as decreases in accrued expenses and operating lease liabilities. These uses of cash were partially offset by decreases in accounts receivable and prepaid expenses and other assets and increases in accounts payable and deferred revenue.
Investing Activities
Our investing activities consist primarily of capital expenditures and investment purchases, sales, and maturities.
Cash provided by investing activities during the six months ended June 30, 2025, was primarily from $195.4 million of maturities of investments partially offset by $118.0 million of purchases of investments and $5.0 million in purchases of intangible assets.
Cash provided by investing activities during the six months ended June 30, 2024, was primarily from $351.6 million of maturities of investments partially offset by $303.6 million in purchases of investments and $5.4 million in purchases of property and equipment.
Financing Activities
Cash provided by financing activities during the six months ended June 30, 2025 resulted from $2.0 million from the issuance of common stock through our equity compensation plans.
Cash provided by financing activities during the six months ended June 30, 2024 resulted primarily from $6.9 million of proceeds from the issuance of common stock through our equity compensation plans.
Q2 Fiscal 2025 Form 10-Q
Contractual Obligations
We presented our contractual obligations at December 31, 2024 in our 2024 Annual Report. There were no material changes outside the ordinary course of business to our contractual obligations during the six months ended June 30, 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with the rules and regulations of the SEC. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our critical accounting policies and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no changes to our significant accounting policies as disclosed in our 2024 Annual Report.
RECENT ACCOUNTING PRONOUNCEMENTS
Please see Note 1. Organization and Significant Accounting Policies, subsection titled "Recent Accounting Pronouncements", in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding applicable recent accounting pronouncements.
OFF-BALANCE SHEET ARRANGEMENTS
As of June 30, 2025, we did not have any off-balance sheet arrangements.
In the ordinary course of business, we enter into standard indemnification arrangements. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology, or from claims relating to our performance or non-performance under a contract, any defective products supplied by us, or any acts or omissions, or willful misconduct, committed by us or any of our employees, agents or representatives. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these agreements is not determinable because it involves claims that may be made against us in future periods but have not yet been made. To date, we have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.
We also enter and have entered into indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law. In addition, we may have obligations to hold harmless and indemnify third parties involved with our fundraising efforts and their respective affiliates, directors, officers, employees, agents or other representatives against any and all losses, claims, damages and liabilities related to claims arising against such parties pursuant to the terms of agreements entered into between us and such third parties in connection with such fundraising efforts. To the extent that such indemnification obligations apply to the lawsuits described in Note 6. Commitments and Contingenciesin Part I, Item 1 of this Quarterly Report on Form 10-Q, any associated expenses incurred are included within the related accrued litigation expense amounts. No additional liability associated with such indemnification agreements has been recorded as of June 30, 2025.
Q2 Fiscal 2025 Form 10-Q
Pacific Biosciences of California Inc. published this content on August 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 07, 2025 at 20:39 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]