Pacific Biosciences of California Inc. PACB reported a decent first-quarter 2016, thanks to the growing demand for its new Sequel system. The company reported a loss of 23 cents per share, a penny narrower than the Zacks Consensus Estimate. The figure was also narrower than the loss of 27 cents reported in the year-ago quarter. Pacific Biosciences of California Inc. (PACB) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompanyHowever, management’s full-year 2016 guidance failed to impress. In addition to the headwind related to the limited availability of Single Molecule, Real-Time (SMRT) cells for the Sequel system and lower contractual revenues, higher non-cash operating expenses will hurt bottom-line growth.Pacific Biosciences expects to report a net loss of approximately $73 million in full-year 2016, which will include over $20 million of non-cash expense.Quarter DetailsRevenues of $19 million were in line with the Zacks Consensus Estimate and increased 8.4% on a year-over-year basis. Product revenues were up 9.5% to $12.4 million. Service revenues grew 15% from the year-ago quarter to $3.2 million.Instrument revenues increased 11% year over year to $7.8 million in the quarter. Consumable revenues totaled $4.6 million, up 8% on a year-over-year basis. Consumable comprises proprietary single molecule, real-time (SMRT) Cells and reagent kits, which are required to use in combination with the PacBio RS II instrument to attain the desired results.Pacific Biosciences received 30 orders for the new Sequel system and shipped 18 during the reported quarter. The company noted that almost half of the Sequel systems ordered in the quarter were from new customers. Moreover, the legacy PacBio RS II won three orders in the quarter. RS II system install base grew by 28% in full-year 2015.Gross profit came in at $9.5 million as compared with $5.9 million in the year-ago quarter due to favorable product mix. Notably, Sequel systems are higher margin products as compared to the legacy RS II systems. Higher Sequel system sales in the quarter helped in gross margin expansion.Research & development (R&D) expenses increased 13% year over year to $16.4 million, while selling, general & administrative (SG&A) expenses were up 8.7% to $11.7 million. The increase in expenses can be primarily attributed to higher compensation and product development costs related to the launch of the Sequel system.Operating loss narrowed to $18.6 million from $19.3 million in the year-ago quarter, primarily due to higher revenues and gross margin expansion.GuidancePacific Biosciences expects second-quarter 2016 revenues to be lower on a year-over-year basis due to lower contractual revenues. The company received $10 million in contractual revenues from Roche in the year-ago quarter as milestone payments.Pacific Biosciences reiterated its revenue forecast at approximately $93 million for full-year 2016. Product and service revenues are expected to increase almost 70% year over year.Pacific Biosciences still expects reduced Sequel system shipments in the first half of 2016 due to the limited availability of SMRT cells.Pacific Biosciences projects gross margin in the high 40% range, up from the earlier guided range of low 40% for full-year 2016. Management expects total operating expenses increase of approximately 10% (up from 5%) in full-year 2016, driven by higher stock-based compensation expenses.Zacks Rank & Key PicksCurrently, Pacific Biosciences has a Zacks Rank #3 (Hold).Better-ranked stocks in the same space are Inogen INGN, Exactech EXAC and Globus Medical GMED. All the three stocks carry a Zacks Rank #2 (Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PACIFIC BIOSCI (PACB): Free Stock Analysis Report INOGEN INC (INGN): Free Stock Analysis Report EXACTECH INC (EXAC): Free Stock Analysis Report GLOBUS MEDICAL (GMED): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research