Pacific Biosciences Navigates Long-Read Sequencing Growth Amid Mixed Q3 2025 Results

PacBio's Q3 2025 revenue of $38.4 million, according to PacBio's Q3 press release, missed the $40.13 million forecast, per an Investing.com transcript, driven by a 33% year-over-year drop in instrument sales to $11.3 million. The Revio™ system, the company's flagship platform, saw only 13 units sold compared to 22 in Q3 2024, per the press release. This decline reflects broader industry headwinds, including the lingering effects of Illumina's import ban in China, as reported by a Bloomberg report, which, though recently lifted, has left a void in the short-read sequencing market.

However, consumable revenue hit a record $21.3 million, underscoring the stickiness of PacBio's installed base. Non-GAAP gross margin also improved to 42%, a 9-point increase from Q3 2024, driven by higher consumable pull-through and cost discipline. Operating expenses fell to $53.9 million from $62.4 million year-over-year, narrowing the non-GAAP net loss to $36.8 million. Despite these improvements, cash reserves declined to $298.7 million from $471.1 million, raising questions about near-term liquidity.

Strategic Innovations: Cost Cuts and Clinical Breakthroughs

PacBio's most significant announcement in Q3 was the launch of SPRQ-Nx sequencing chemistry, which the company said promises to reduce sequencing costs by up to 40%. This innovation aligns with the company's roadmap to make long-read sequencing economically competitive with short-read alternatives. At scale, the technology could enable human genome sequencing for under $300, a critical threshold for widespread adoption in clinical and research settings.

Regulatory progress in China further bolstered the company's prospects. The Sequel® II CNDx system received Class III medical device approval through partner Berry Genomics, marking the first regulatory clearance for a clinical-grade long-read sequencer. This approval enables end-to-end workflows for thalassemia, prenatal, and rare-disease testing, addressing a market where short-read sequencing has traditionally dominated. Meanwhile, PacBio's involvement in high-profile projects like the National Institute on Aging's Long Life Family Study and the Korean Pangenome Reference Project highlights its growing relevance in large-scale genomic research.

Market Dynamics: Long-Read's Rise and Competitive Pressures

The long-read sequencing market is poised for explosive growth, driven by its ability to detect structural variants and complex mutations that short-read technologies miss, according to a Coherent Market Insights report. By 2030, the market is projected to reach $1.53 billion, with North America and Asia Pacific leading adoption (per the Grand View Research report cited above). PacBio's SMRT sequencing technology, known for its high-accuracy HiFi reads, competes directly with Oxford Nanopore's nanopore-based platforms, a dynamic also noted in the Grand View report. While nanopore sequencing currently holds a 56% market share due to its portability and real-time data generation, SMRT's precision and scalability are gaining traction in clinical and research applications.

Illumina, the short-read leader, remains a wildcard. The recent lifting of its import ban in China, reported by Bloomberg, could reignite competition, but PacBio's focus on long-read applications-where Illumina's short-read platforms struggle-positions it to capture market share in specialized niches.

Risks and Opportunities

PacBio's path to growth hinges on several factors. First, the success of SPRQ-Nx chemistry will depend on its ability to reduce costs without compromising accuracy. Second, the company must scale consumable pull-through-currently ~$236,000 annually per Revio system-to offset declining instrument sales. Third, regulatory approvals like the Sequel II CNDx clearance in China must translate into meaningful revenue, requiring robust partnerships and reimbursement frameworks.

On the positive side, the global push for precision medicine and the rise of pangenome projects create tailwinds for long-read sequencing. PacBio's CEO Christian Henry has set a target of positive cash flow by 2027, according to the earnings transcript, a goal that appears achievable if consumable growth continues and SPRQ-Nx drives adoption.

Conclusion

Pacific Biosciences' Q3 2025 results reflect the dual challenges of a maturing product lifecycle and a rapidly evolving market. While near-term financial metrics are mixed, the company's strategic innovations and regulatory milestones position it as a key player in the long-read sequencing revolution. For investors, the critical question is whether PacBio can leverage its technological edge to capture a significant share of a market expected to grow at a 20% CAGR. With SPRQ-Nx and clinical partnerships in China, the company has laid the groundwork for a pivotal 2026.