Have you checked the parameters on the Reader, assuming its a fGDB source https://docs.safe.com/fme/html/FME-Form-Documentation/FME-ReadersWriters/geodatabase/GEODATABASE_FILE_RASTER_DATASET_reader.htm

there's sheetings in the parameter for method… order...etc

Then also read up in detail about https://docs.safe.com/fme/html/FME-Form-Documentation/FME-Transformers/Transformers/pointcloudcombiner.htm

Rasters are converted as follows:

• The x and y components are created from the cell ground coordinates, or columns and rows if the raster has no coordinate system.
• The first selected numeric band will become the z component.
• The first selected bands with red/green/blue/gray interpretations will become the color_red/color_green/color_blue components.
• Additional selected bands will also be preserved. If the band has a name, the component name will be the band name. If the band has no name, the component name will be bandN, where N is the band index.
• Nodata may optionally be extracted

Thanks for your response.

I have left everything in the mosaic dataset reader as default, also the pointCloudCombiner.  As far as I can tell, this should read all the rasters in the mosaic and convert them to a point cloud.  There is nothing complicated about the tiffs, they are simply single band DSMs.  There is no overlapping data, so the mosaic parameters should not matter. 

For reference, I read in the tiffs natively using a csv exported from the mosaic footprints and a  featureReader, and converted these to LAS and the output is perfect.