PACB

Leadership Transition

• Long-time company leader Christian Henry stepped down as CEO; Mark Van Oene (who previously led R&D, operations and commercial teams at PacBio) became CEO effective immediately. Henry will remain on the Board of Directors and serve as an advisor to Van Oene.

Restructuring Announcement

• The company implemented a targeted reorganization to create a leaner, more focused organization aligned with top growth priorities. The marketing organization is being integrated more closely with commercial teams to sharpen focus on clinical customers, and management layers have been reduced.
• The restructuring will reduce headcount by approximately 40 employees, with no impact to key R&D platform projects.

Spark Next Chemistry Launch

• The full global commercial rollout of Spark Next multi-use chemistry for Revio was completed in Q2. Early customer demand and feedback have been overwhelmingly positive: over one-third of the Revio install base has already upgraded to the required new software.
• Spark Next reduces per-genome list price by 30% to $345 per 30X HiFi human genome (without sacrificing accuracy) by allowing smart cells to be reused up to three times, delivering improved customer economics. HIFI yield is nearly identical across the first two uses, with only a small decline on the third use.
• Spark Next chemistry will launch for the Vega platform in August 2026, enabling up to 90 gigabases of throughput per run, lower DNA input requirements, and harmonized operations across both instruments.

Scientific and Clinical Validation Progress

• Two high-impact peer-reviewed publications in top journals reinforced the clinical utility of PacBio's HiFi long-read sequencing. A New England Journal of Medicine study found HiFi sequencing had 96.4% concordance with standard of care for rare disease diagnosis, improved or refined diagnoses in 3.4% of cases (compared to just 0.2% for standard of care), and is an effective first-tier clinical test that simplifies workflows and improves diagnostic yield. A Nature Genetics paper supports the adoption of long-read HiFi as part of a unified 'one-test' diagnostic paradigm for multiple clinical settings.
• A preprint from the APAC HiFiSolves Subfertility Consortium demonstrated that HiFi whole genome sequencing can deliver comprehensive reproductive genetic insights in a single workflow, opening a large new long-term clinical opportunity.
• Collaboration on the Basecamp population genomics research project is progressing well, with hundreds of samples processed per week; meaningful revenue contribution from Basecamp is expected in 2027.

• Full year 2026 revenue guidance is lowered to $155 million to $165 million, from prior higher guidance. The revised outlook assumes progressive adoption of Spark Next through the second half of 2026 as customers complete workflow validation and work through existing reagent inventory, no meaningful recovery in academic/government funding (particularly in the Americas), and a more gradual recovery in China than previously expected.
• Full year 2026 non-GAAP gross margin guidance is 35% to 37%, revised downward to reflect temporary Vega manufacturing transition costs, elevated compute and memory component costs, the gradual Spark Next adoption curve, and margin impact of lower-priced strategic Revio placements.
• Full year 2026 non-GAAP operating expense guidance is reduced by $5 million to a range of $215 million to $220 million, below 2025 levels.
• End-of-2026 cash, cash equivalents and investments are projected to be $175 million to $185 million.
• Cash burn is expected to decline meaningfully in 2027: annual cost savings of $15 million to $20 million from restructuring, plus an additional $15 million to $20 million in savings from completion of high-throughput platform development.
• The company now expects to reach cash flow breakeven in 2028, pushed back from the prior expectation of end-of-2027, due to persistent elevated compute costs and slower than previously expected gross margin improvement. Management believes existing cash resources are sufficient to fund operations through cash flow breakeven and execute all strategic priorities.

Total company revenue for Q2 2026 was $39 million, flat year-over-year compared to $39.8 million in Q2 2025.

1. Instrument segment: Revenue was $12.8 million, a 9% year-over-year decrease from $14.2 million in Q2 2025, representing 32.8% of total Q2 2026 revenue. The segment sold 20 Revio systems (up from 15 YoY) bringing cumulative Revio shipments to 366 units, and 26 Vega systems (down from 38 YoY) bringing cumulative Vega shipments to 200 units. 60% of Q2 Revio placements went to new customers, 45% were multi-unit orders; 81% of Q2 Vega shipments went to new customers.
2. Consumables segment: Revenue was $20.1 million, a 6% year-over-year increase from $18.9 million in Q2 2025, representing 51.5% of total Q2 2026 revenue. Clinical customer shipments grew 67% YoY and accounted for a mid-teens percentage of total consumables shipments. Annualized Revio consumables pull-through per system was approximately $202,000.
3. Service and other segment: Revenue was $6.1 million, a decrease from $6.7 million in Q2 2025, representing 15.6% of total Q2 2026 revenue. Growth in service contract revenue from the expanding installed base was offset by completion of a large population sequencing program.

By region: Americas revenue was $17.6 million (slight YoY decline, 45.1% of total), Asia Pacific revenue was $7 million (45% YoY decline, 17.9% of total), EMEA revenue was $14.4 million (52% YoY increase, 37.0% of total).

Non-GAAP gross profit was $13.9 million with a 36% gross margin, down from 38% in Q2 2025. Non-GAAP operating expenses were $56.1 million, a 3% YoY decrease. Non-GAAP net loss was $41.9 million ($0.14 per share), up from $40 million ($0.13 per share) YoY. Ending unrestricted cash, cash equivalents and investments totaled $236.9 million.

• Ongoing uncertainty around academic and government research funding, particularly in the U.S. and Americas, is constraining capital purchases of instruments and limiting overall demand.
• Recovery of demand in the China market is expected to be more gradual than previously anticipated.
• Elevated compute and memory component costs are currently pressuring gross margins, with limited visibility into when these costs will stabilize for 2027.
• The multi-month transition to Spark Next chemistry is currently suppressing consumables revenue as customers work through existing legacy reagent inventory and complete workflow validation, creating near-term revenue headwinds.
• Unanticipated one-time transition costs associated with bringing Vega manufacturing in-house from a contract manufacturer are pressuring 2026 gross margins, though these costs are expected to conclude by the end of the year.

Q: What share of new Revio and Vega instrument placements in Q2 went to clinical customers, and what is the adoption trend? / A: The majority of the 20 Revio systems shipped in Q2 went to clinical customers, demonstrating clear momentum in clinical adoption of the platform, both for instrument placements and consumables usage. For Vega, while most shipments were to new-to-PacBio customers (aligned with the platform's goal of expanding decentralized HiFi access globally, the company is also seeing growing adoption by U.S. public health labs for non-traditional applications including wastewater testing, which is an encouraging new growth area. (267 chars)

Q: Why did the company lower full-year guidance despite positive signals from the Spark Next launch, new population-scale customers, and accelerating Revio placements? / A: The guidance adjustment reflects a balanced approach that properly accounts for near-term headwinds alongside the positive long-term traction. The multi-month Spark Next adoption transition creates temporary revenue headwinds as customers validate workflows and burn through existing inventory. Additionally, the impact of elevated compute costs is material, and there is ongoing uncertainty around this factor, which led the company to adjust gross margin guidance and extend the timeline to cash flow breakeven. (334 chars)

Q: What drove the commercial reorganization, and what is the new structure focus for different customer segments? / A: The restructuring was spurred by the early success of the company's clinical go-to-market motion in EMEA, and the goal is to replicate that success globally by integrating marketing and sales into a unified, focused commercial effort targeting the clinical opportunity. The reorganization primarily refocuses the marketing organization on clinical workflow and clinical education, while continuing to support existing research (plant/animal biology) customers if research budgets unlock. Biopharma and large population-scale deals will continue to be handled by dedicated business development teams, with no change to that structure. (394 chars)

Q: How should we think about sequential consumables pull-through trends through the second half of 2026 following the Spark Next launch? / A: The large population-scale customer order closed in Q2 will not contribute meaningful volume until Q3, and clinical demand is expected to scale progressively through the back half of 2026. The transition period will keep consumables revenue relatively flat in Q3, as customers optimize multi-use workflows and validate the new chemistry. After that, consumables revenue is expected to begin scaling up in the second half of the year as adoption ramps. (296 chars)