Illumina, Inc. (ILMN) has announced a series of updates to its NovaSeq X Series. The company’s single-flow-cell NovaSeq X Sequencing System is now available for the first time, alongside the software v1.3 upgrade to elevate sequencing performance and advance data quality.In addition, the new NovaSeq X 25B 100 and 200-cycle kits are now available under Illumina's brand following the company's acquisition of Fluent.ILMN Stock’s Likely Trend Following the NewsAfter yesterday’s announcement, Illumina shares edg ...

Core Product Updates - The single-flow-cell NovaSeq X Sequencing System offers high-quality flow cells and speed at a more accessible cost for labs with lower volume, shipping began in December [1] - The NovaSeq X Series software v1 3 upgrade enhances sequencing performance and data quality, with new NovaSeq X 25B 100- and 200-cycle kits also shipping in December [1] - The NovaSeq X Series is Illumina's most rapidly adopted and utilized high-throughput sequencing platform to date [1] Customer Feedback on Software Upgrade - The v1 3 software upgrade improves sequencing accuracy, yield, and reduces PhiX dependency, leading to more usable data per run [3] - Génome Québec reported a significant leap in data quality across various library types, with increased yield and optimized handling of low-diversity libraries [4] - Broad Clinical Labs observed significant high-quality data yield increases in early testing of the v1 3 update on their NovaSeq X Plus fleet [4] - University Medical Center Utrecht noted a decisive development in transitioning from whole-exome-based to whole-genome-based analysis with the v1 3 update [4] New Kits and Applications - The new 25B 100-cycle and 200-cycle kits for the NovaSeq X Series are optimized for counting applications and other assays at scale, offering shorter turnaround times and cost-effective runs [5] - The 25B kits address the evolving needs of clinical specialty labs, academic core labs, and service providers by providing flexibility in run sizes and cycle counts [5] - The NovaSeq X 25B kits are compatible with Illumina Single-Cell Prep, enabling efficient, affordable, and accurate workflows for large-scale single-cell analysis projects [9] Illumina Single-Cell Prep - Illumina Single-Cell Prep, formerly Fluent PipSeq V, is now available and shipping, offering broad compatibility across Illumina's NGS platform portfolio [6] - The technology removes barriers and limitations of current methods, enabling scalability of experiments from hundreds to millions of cells with low equipment cost and high sensitivity [6][7] - Illumina Single-Cell Prep provides streamlined bioinformatics workflows, streaming data directly into automated DRAGEN analysis in Illumina's informatics cloud solutions [9] Industry Impact and Innovation - Illumina's focus on innovation has established it as a global leader in DNA sequencing and array-based technologies, serving customers in research, clinical, and applied markets [11] - The company's products are used in life sciences, oncology, reproductive health, agriculture, and other emerging segments [11] - Early access data presented at the American Society of Human Genetics meeting highlighted the sequencing of challenging cell types, such as astrocytes and brain tissue, with innovative technology [8]

Illumina, Inc. (NASDAQ:ILMN) Annual Evercore ISI HealthCONx Healthcare Conference December 3, 2024 9:00 AM ET Company Participants Ankur Dhingra - CFO Sallilyn Schwartz - VP of Investor Relations Conference Call Participants Vijay Kumar - Evercore ISI Vijay Kumar Great. Thanks, everyone, for joining us this afternoon. I'm Vijay Kumar, a life science device analyst here at Evercore. Pleasure to have with us Illumina. We have Ankur Dhingra, CFO; and from Investor Relations, we have Salli Schwartz. Ankur, Sall ...

Core Insights - Myriad Genetics has expanded its collaboration with Illumina to integrate their technologies, enhancing the capabilities of genomic profiling in cancer diagnostics [3][5] - The Genomic Instability Score (GIS) will now be included in all samples analyzed with Illumina's TruSight™ Oncology 500 v2 assay, broadening the range of cancer types that can receive HRD status [2][4] - This partnership aims to strengthen Myriad's oncology product portfolio and facilitate the development of companion diagnostics for HRD-based therapies across various tumor types [4][5] Company Overview - Myriad Genetics is a leader in genetic testing and precision medicine, focusing on improving health outcomes through genetic insights [7] - The company offers tests that assess disease risk and guide treatment decisions, ultimately aiming to enhance patient care and reduce healthcare costs [7] Technology and Product Development - Myriad's MyChoice CDx is a comprehensive HRD test that identifies patients with tumors vulnerable to DNA-damaging drugs, utilizing advanced sequencing technologies [6] - The integration of GIS into Myriad's Precise Tumor clinical reports will enhance the utility of their genomic profiling tests [5]

Illumina, Inc. (NASDAQ:ILMN) Conference Call Summary Company Overview - **Company**: Illumina, Inc. - **Date**: November 20, 2024 - **Participants**: Ankur Dhingra (CFO), Doug Schenkel (Wolfe Research) Key Points Industry Context - **Market Dynamics**: The call discussed the implications of recent elections on NIH funding, local competition in China, and tariff impacts on the business [3][19][39]. Financial Performance and Strategy - **Revenue Growth**: Illumina aims to restore revenue growth to high-single-digit percentages over the next few years, focusing on core consumables and instrumentation [7][8]. - **Divestiture**: The company has divested GRAIL, which is expected to streamline operations and focus on core business [7]. - **Cash Flow**: Illumina has robust free cash flow and is exploring M&A opportunities while also considering share repurchases [18]. Clinical Market Insights - **High Throughput Growth**: High throughput and mid throughput sequencing activity grew 40% year-over-year, but revenue growth was impacted by pricing declines, with a noted 25% price drop during the quarter [52][56]. - **Transition to New Platforms**: The transition from older platforms to the new X platform is expected to stabilize pricing and improve revenue flow by the second half of 2025 [61]. Customer Engagement and Product Development - **Customer Collaboration**: Illumina has opened its pipeline to key customers for early access to new technologies, enhancing customer feedback and engagement [14][15]. - **Multiomics Strategy**: The company is expanding its multiomics capabilities through acquisitions and partnerships, which are expected to contribute to growth [10][16]. Challenges and Risks - **NIH Funding**: The company is monitoring NIH funding closely, noting that while direct exposure is low, any cuts could impact business indirectly [24][29]. - **China Market**: Illumina faces strong competition in China, but recent stabilization at approximately $75 million per quarter is noted. The company is making structural changes to improve its market position [39][40][41]. - **Mid Throughput Pressure**: The mid throughput segment is under pressure due to macroeconomic factors, with customers transitioning to high throughput options [77][80]. Future Outlook - **2025 Projections**: Consensus estimates suggest 4% revenue growth for 2025, with potential upside from new product launches and ongoing transitions to the X platform [83][84]. - **Market Conditions**: The company does not anticipate macroeconomic improvements in the near term, which could affect revenue trajectories [84]. Additional Insights - **Regulatory Environment**: Improvements in regulatory relationships in China are noted, allowing for increased participation in tenders and direct sales to hospitals [42][43]. - **Tariff Exposure**: Illumina's manufacturing is primarily outside of China, with minimal exposure to tariffs, allowing for flexibility in supply chain management [48][49]. This summary encapsulates the key discussions and insights from the Illumina conference call, highlighting the company's strategic direction, market challenges, and future outlook.

Illumina, Inc. (ILMN) is expanding its TruSight Oncology portfolio with a new version of its flagship cancer research assay, currently under development. The TruSight Oncology 500 v2 (TSO 500 v2) to enable comprehensive genomic profiling (CGP) of tumors will be presented at the annual meeting of the Association of Molecular Pathology in Vancouver, British Columbia, on Nov. 21. One of the customers having early access to TSO 500 v2 emphasized the relevance of the assay's new features to clinical research lab ...

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Core Insights - Illumina's international revenue performance is crucial for assessing its financial resilience and growth prospects [1][2] - The company's reliance on international markets is increasingly important for understanding its earnings sustainability and growth potential [2][3] Revenue Performance - Illumina's total revenue for the quarter ending September 2024 was $1.08 billion, a decline of 3.5% year over year [4] - Europe contributed $291 million, accounting for 26.94% of total revenue, with a surprise decline of -4.03% compared to analyst expectations [5] - Asia-Pacific, Middle East, and Africa generated $105 million, representing 9.72% of total revenue, with a surprise decline of -12.03% [6] - Greater China contributed $75 million, making up 6.94% of total revenue, with a surprise decline of -4.98% [7] Future Revenue Expectations - Analysts expect Illumina to report $1.07 billion in total revenue for the current fiscal quarter, indicating a decline of 4.7% from the previous year [8] - For the full year, total revenue is projected to be $4.31 billion, a decrease of 4.2% from last year, with regional contributions expected from Europe (27.6%), Asia-Pacific, Middle East, and Africa (11%), and Greater China (7.3%) [9] Strategic Considerations - Illumina's international market presence offers both opportunities and challenges, necessitating close monitoring of revenue trends to project future directions [10] - Analysts consider various factors, including a company's domestic standing, when adjusting earnings forecasts [11]

SAN DIEGO, Nov. 6, 2024 /PRNewswire/ -- Illumina, Inc. (NASDAQ: ILMN) today announced that its executives will be speaking at the following investor conferences: Wolfe Research 2024 Healthcare Conference on November 20, 2024Fireside chat at 6:20am Pacific Time (9:20am Eastern Time) 7th Annual Evercore HealthCONx Conference on December 3, 2024Fireside chat at 10:20am Pacific Time (1:20pm Eastern Time)For each conference, the webcast can be accessed through the Investor Info section of Illumina's website at i ...

[Condensed Consolidated Financial Statements](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides the company's financial position, performance, and cash flows, supported by detailed notes on accounting policies, the GRAIL Spin-Off, and other key disclosures [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from **$10,111 million** to **$6,014 million**, primarily due to reductions in goodwill and intangible assets, reflecting the impact of the GRAIL Spin-Off | Metric | September 29, 2024 (Unaudited) | December 31, 2023 | | :---------------------------------- | :----------------------------- | :------------------ | | Total Assets | $6,014 million | $10,111 million | | Goodwill | $1,113 million | $2,545 million | | Intangible Assets, net | $305 million | $2,993 million | | Total Liabilities and Stockholders' Equity | $6,014 million | $10,111 million | | Total Stockholders' Equity | $2,125 million | $5,745 million | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss for both periods, significantly impacted by goodwill and intangible impairment charges, with total revenue decreasing by **3.4%** year-over-year for the nine months | Metric | Three Months Ended Sep 29, 2024 (Millions) | Three Months Ended Oct 1, 2023 (Millions) | Nine Months Ended Sep 29, 2024 (Millions) | Nine Months Ended Oct 1, 2023 (Millions) | | :---------------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Total Revenue | $1,119 | $1,119 | $3,268 | $3,382 | | Net Income (Loss) | $(754) | $(754) | $(1,410) | $(986) | | Basic Earnings (Loss) Per Share | $(4.77) | $(4.77) | $(8.86) | $(6.23) | | Goodwill and Intangible Impairment | $821 | $821 | $1,889 | $821 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive loss for the nine months ended September 29, 2024, increased to **$(1,414) million**, primarily reflecting the net loss | Metric | Three Months Ended Sep 29, 2024 (Millions) | Three Months Ended Oct 1, 2023 (Millions) | Nine Months Ended Sep 29, 2024 (Millions) | Nine Months Ended Oct 1, 2023 (Millions) | | :---------------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Net Income (Loss) | $705 | $(754) | $(1,410) | $(986) | | Unrealized (loss) gain on cash flow hedges, net of deferred tax | $(19) | $9 | $(4) | $18 | | Total Comprehensive Income (Loss) | $686 | $(745) | $(1,414) | $(968) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity significantly decreased from **$5,745 million** to **$2,125 million**, primarily due to net loss and the **$2,399 million** impact from the GRAIL Spin-Off | Metric | December 31, 2023 (Millions) | September 29, 2024 (Millions) | | :---------------------------------- | :------------------ | :----------------------------- | | Total Stockholders' Equity | $5,745 | $2,125 | | Additional Paid-In Capital (Impact of GRAIL Spin-Off) | $9,555 | $7,449 (decrease of $2,399 due to Spin-Off) | | Accumulated Deficit | $(19) | $(1,428) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to **$473 million**, while net cash used in financing activities decreased to **$(523) million**, driven by GRAIL deconsolidation and debt repayments | Cash Flow Activity | Nine Months Ended Sep 29, 2024 (Millions) | Nine Months Ended Oct 1, 2023 (Millions) | | :---------------------------------- | :----------------------------- | :---------------------------- | | Net cash provided by operating activities | $473 | $254 | | Net cash used in investing activities | $(130) | $(146) | | Net cash used in financing activities | $(523) | $(1,183) | | GRAIL cash deconsolidated as a result of spin-off | $(968) | — | | Cash and cash equivalents at end of period | $869 | $927 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover organization, accounting policies, the GRAIL Spin-Off, revenue, investments, debt, equity, balance sheet items, legal proceedings, income taxes, and segment information, highlighting key events and impairment charges [1. Organization and Significant Accounting Policies](index=11&type=section&id=1.%20Organization%20and%20Significant%20Accounting%20Policies) Illumina provides genetic analysis solutions; the GRAIL Spin-Off completed on June 24, 2024, with **14.5%** retained ownership, and no significant accounting policy changes occurred in YTD 2024 - Illumina provides sequencing- and array-based solutions for genetic and genomic analysis, serving research, clinical, and applied markets[25](index=25&type=chunk) - The GRAIL Spin-Off was completed on June 24, 2024, distributing approximately **85.5%** of GRAIL common stock to Illumina stockholders, with Illumina retaining approximately **14.5%**[26](index=26&type=chunk)[37](index=37&type=chunk) - No changes to significant accounting policies were made during YTD 2024[30](index=30&type=chunk) - ASU 2023-07 (Segment Reporting) is effective for the company in fiscal year 2024 and interim periods within fiscal year 2025. ASU 2023-09 (Income Taxes) is effective in fiscal year 2025[31](index=31&type=chunk)[32](index=32&type=chunk) [2. GRAIL Spin-Off](index=13&type=section&id=2.%20GRAIL%20Spin-Off) The GRAIL Spin-Off completed on June 24, 2024, distributing **85.5%** of GRAIL common stock to Illumina stockholders, with Illumina retaining **14.5%** and contributing **$974 million** for operations, incurring **$53 million** in separation costs - GRAIL Spin-Off completed on June 24, 2024, distributing approximately **85.5%** of GRAIL common stock to Illumina stockholders (1 GRAIL share for every 6 Illumina shares)[37](index=37&type=chunk) - Illumina retained approximately **14.5%** of GRAIL common stock post-Spin-Off[37](index=37&type=chunk) - Illumina contributed **$974 million** (less GRAIL's cash) to GRAIL for **2.5 years** of operations[38](index=38&type=chunk) - Incurred **$53 million** in separation-related transaction costs in YTD 2024, recognized in selling, general, and administrative expense[39](index=39&type=chunk) GRAIL Net Assets Deconsolidated | GRAIL Net Assets Deconsolidated | Amount (in millions) | | :-------------------------------- | :------------------- | | Cash and cash equivalents | $968 | | Intangible assets, net | $2,201 | | GRAIL net assets | $2,738 | [3. Revenue](index=14&type=section&id=3.%20Revenue) Total revenue slightly decreased in Q3 and YTD 2024 due to lower instrument sales, offset by consumables and service growth, with regional declines in Americas and Greater China Revenue by Source | Revenue by Source (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Consumables | $807 | $760 | $2,376 | $2,327 | | Instruments | $107 | $181 | $342 | $537 | | Service and other revenue | $166 | $178 | $550 | $518 | | Total Revenue | $1,080 | $1,119 | $3,268 | $3,382 | Revenue by Geographic Area | Revenue by Geographic Area (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--------------------------------------- | :------ | :------ | :------- | :------- | | Americas | $609 | $663 | $1,852 | $1,920 | | Europe | $291 | $260 | $859 | $825 | | Greater China | $75 | $98 | $228 | $302 | | Asia-Pacific, Middle East, and Africa | $105 | $98 | $329 | $335 | | Total Revenue | $1,080 | $1,119 | $3,268 | $3,382 | - Remaining performance obligations totaled **$688 million** as of September 29, 2024, with approximately **82%** expected to convert to revenue in the next twelve months[45](index=45&type=chunk) [4. Investments and Fair Value Measurements](index=15&type=section&id=4.%20Investments%20and%20Fair%20Value%20Measurements) Marketable equity securities increased to **$70 million** due to retained GRAIL investment, incurring a **$332 million** unrealized loss, while the GRAIL contingent consideration liability decreased to **$82 million** due to revised projections and restructuring Investments | Metric (in millions) | September 29, 2024 | December 31, 2023 | | :---------------------------------- | :----------------- | :------------------ | | Marketable Equity Securities | $70 | $6 | | Non-Marketable Equity Securities | $27 | $28 | | Venture Funds (carrying amount) | $191 | $168 | - An unrealized loss of **$332 million** was recognized in YTD 2024 on the retained investment in GRAIL subsequent to the Spin-Off[48](index=48&type=chunk)[49](index=49&type=chunk) - The Helix contingent value right was settled for **$83 million** cash on July 31, 2024[54](index=54&type=chunk)[55](index=55&type=chunk) GRAIL Contingent Consideration Liability | GRAIL Contingent Consideration Liability (in millions) | September 29, 2024 | December 31, 2023 | | :----------------------------------------------------- | :----------------- | :------------------ | | Fair Value | $82 | $387 | - The significant decrease in the GRAIL contingent consideration liability was due to revised revenue projections announced by GRAIL in May 2024 and a restructuring announcement in August 2024, along with an increased revenue risk premium[58](index=58&type=chunk) [5. Debt](index=18&type=section&id=5.%20Debt) Net term debt increased to **$1,988 million** with the issuance of **$500 million** in 2026 Term Notes and repayment of the **$750 million** Delayed Draw Credit Facility, while the **$750 million** revolving credit facility remains undrawn Term Debt Obligations | Term Debt Obligations (in millions) | September 29, 2024 | December 31, 2023 | | :---------------------------------- | :----------------- | :------------------ | | Principal amount of 2025 Term Notes outstanding | $500 | $500 | | Principal amount of 2026 Term Notes outstanding | $500 | — | | Principal amount of 2027 Term Notes outstanding | $500 | $500 | | Principal amount of 2031 Term Notes outstanding | $500 | $500 | | Net carrying amount of term debt, non-current | $1,988 | $1,489 | - Issued **$500 million** aggregate principal amount of **4.650%** Term Notes due 2026 on September 9, 2024, with net proceeds of **$497 million** used to repay debt[63](index=63&type=chunk)[182](index=182&type=chunk) - The **$750 million** Delayed Draw Credit Facility, borrowed on June 20, 2024, was fully repaid on September 9, 2024, resulting in a **$5 million** loss on debt extinguishment[68](index=68&type=chunk)[181](index=181&type=chunk) - A **$750 million** senior unsecured five-year revolving credit facility is available, with no outstanding borrowings as of September 29, 2024[69](index=69&type=chunk)[70](index=70&type=chunk)[184](index=184&type=chunk) [6. Stockholders' Equity](index=19&type=section&id=6.%20Stockholders'%20Equity) Stockholders' equity was impacted by the GRAIL Spin-Off and equity award adjustments; a new **$1.5 billion** share repurchase program was authorized, with **$99 million** in repurchases in Q3 2024 - Approximately **5.4 million** shares remained available for future grants under the 2015 Stock and Incentive Compensation Plan as of September 29, 2024[73](index=73&type=chunk) Restricted Stock Units | Restricted Stock Units (in thousands) | Outstanding at Dec 31, 2023 | Outstanding at Sep 29, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | | RSU | 2,198 | 4,623 | | PSU | — | 620 | - All stock options were cancelled, resulting in no outstanding options as of September 29, 2024[76](index=76&type=chunk) - Liability-classified equity incentive awards for GRAIL employees were assumed by GRAIL in connection with the Spin-Off, with a derecognition of **$283 million**[77](index=77&type=chunk) - A new share repurchase program for up to **$1.5 billion** of common stock was authorized in August 2024, with **$1.4 billion** remaining available as of September 29, 2024[81](index=81&type=chunk)[186](index=186&type=chunk) Share Repurchase Activity (Q3 2024) | Share Repurchase Activity (Q3 2024) | Value | | :---------------------------------- | :---- | | Number of shares repurchased (thousands) | 770 | | Total cost of shares repurchased (millions) | $99 | | Average price paid per share | $127.71 | Share-Based Compensation Expense | Share-Based Compensation Expense (in millions, before taxes) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------------------------------------------------- | :------ | :------ | :------- | :------- | | Total Share-based compensation expense | $84 | $86 | $291 | $286 | [7. Supplemental Balance Sheet Details](index=22&type=section&id=7.%20Supplemental%20Balance%20Sheet%20Details) Accrued liabilities significantly decreased to **$784 million**, with **$46 million** in restructuring charges and **$1,886 million** in goodwill and **$420 million** in IPR&D impairments for GRAIL, while derivative instruments manage foreign exchange risks Balance Sheet Metrics | Metric (in millions) | September 29, 2024 | December 31, 2023 | | :---------------------------------- | :----------------- | :------------------ | | Accounts Receivable, net | $699 | $734 | | Inventory, net | $574 | $587 | | Accrued Liabilities | $784 | $1,325 | Restructuring Charges | Restructuring Charges (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :---------------------------------- | :------ | :------ | :------- | :------- | | Employee separation costs | $6 | $7 | $13 | $33 | | Asset impairment charges | — | $49 | $32 | $56 | | Total restructuring charges | $6 | $58 | $46 | $91 | - A goodwill impairment of **$1,466 million** for GRAIL was recorded in Q2 2024, as its carrying value exceeded its fair value[94](index=94&type=chunk) - An IPR&D asset impairment of **$420 million** for GRAIL was recorded in Q2 2024[98](index=98&type=chunk) Intangible Assets, Net | Intangible Assets, Net (in millions) | September 29, 2024 | December 31, 2023 | | :----------------------------------- | :----------------- | :------------------ | | Total finite-lived intangible assets, net | $305 | $2,403 | | In-process research and development (IPR&D) | — | $590 | | Total intangible assets, net | $305 | $2,993 | - Acquired Fluent BioSciences in Q3 2024, recording **$42 million** in developed technology and **$2 million** in customer relationship intangibles[103](index=103&type=chunk) - Foreign exchange forward contracts for non-hedging purposes had total notional amounts of **$497 million** as of September 29, 2024. Contracts for cash flow hedges had total notional amounts of **$671 million**[107](index=107&type=chunk)[108](index=108&type=chunk) [8. Legal Proceedings](index=27&type=section&id=8.%20Legal%20Proceedings) All GRAIL acquisition regulatory proceedings in the US and EU are resolved, with the EU fine of **€432 million** withdrawn, resulting in a **$481 million** gain, though ongoing SEC, shareholder, and DOJ actions persist - All regulatory proceedings in the United States and European Union related to the GRAIL acquisition were resolved as of September 6, 2024[110](index=110&type=chunk) - The EU Court of Justice ruled in Illumina's favor on September 3, 2024, annulling the European Commission's assertion of jurisdiction over the GRAIL acquisition[113](index=113&type=chunk) - The European Commission withdrew its previously imposed fine of **€432 million** on September 6, 2024, resulting in a net gain of **$481 million** in Q3 2024[113](index=113&type=chunk)[114](index=114&type=chunk) - The U.S. Federal Trade Commission dismissed its administrative complaint on August 15, 2024[115](index=115&type=chunk) - An SEC inquiry related to the GRAIL acquisition and certain statements/disclosures is ongoing[116](index=116&type=chunk) - Multiple shareholder derivative complaints and federal and state securities class actions are ongoing, alleging breaches of fiduciary duties and misleading statements related to the GRAIL acquisition[117](index=117&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) - Received a DOJ civil investigative demand on January 18, 2024, concerning a False Claims Act investigation related to cybersecurity compliance[130](index=130&type=chunk) [9. Income Taxes](index=30&type=section&id=9.%20Income%20Taxes) The effective tax rate was **2.1%** for Q3 2024 and **(3.2)%** for YTD 2024, unfavorably impacted by **$308 million** goodwill impairment and **$141 million** GRAIL NOLs, but favorably by the EC fine reversal Effective Tax Rate | Effective Tax Rate | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------- | :------ | :------ | :------- | :------- | | Rate | 2.1% | 3.6% | (3.2)% | (3.8)% | - YTD 2024 effective tax rate was unfavorably impacted by a **$308 million** income tax expense from non-deductible goodwill impairment and a **$141 million** income tax expense from GRAIL pre-acquisition net operating losses on GILTI[134](index=134&type=chunk) - The income tax rate in Q3 2024 and YTD 2024 was favorably impacted by the reversal of the European Commission fine (excluded from taxable income) and the mix of earnings in jurisdictions with lower statutory tax rates, such as Singapore[134](index=134&type=chunk) [10. Segment Information](index=31&type=section&id=10.%20Segment%20Information) The company reports Core Illumina and GRAIL segments; post-Spin-Off, GRAIL no longer contributes revenue, while Core Illumina's revenue slightly decreased but income from operations significantly increased - Reportable segments are Core Illumina and GRAIL[136](index=136&type=chunk) Core Illumina | Core Illumina (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :-------------------------- | :------ | :------ | :------- | :------- | | Revenue | $1,080 | $1,106 | $3,228 | $3,341 | | Income (loss) from operations | $741 | $262 | $1,298 | $519 | - GRAIL's revenue and income (loss) from operations are no longer reported after the Spin-Off in Q2 2024[137](index=137&type=chunk)[139](index=139&type=chunk) [Management's Discussion & Analysis](index=32&type=section&id=MANAGEMENT'S%20DISCUSSION%20%26%20ANALYSIS) This section provides management's perspective on the company's financial condition and results of operations, covering an overview, detailed results, liquidity, capital resources, and critical accounting policies [Management's Overview and Outlook](index=32&type=section&id=Management's%20Overview%20and%20Outlook) Illumina, a DNA sequencing leader, faces macroeconomic and competitive challenges; the GRAIL Spin-Off completed in June 2024, with YTD 2024 revenue down **3%**, gross margin at **65.3%**, and increased operating loss due to impairments - Illumina is a global leader in DNA sequencing and array-based technologies, serving research, clinical, and applied markets[146](index=146&type=chunk) - Macroeconomic factors (inflation, exchange rates, economic downturn), competitive challenges in China, and Russia sanctions continue to impact sales and operations[150](index=150&type=chunk) - The GRAIL Spin-Off was completed on June 24, 2024, with Illumina retaining approximately **14.5%** of GRAIL common stock[147](index=147&type=chunk) Financial Highlights (YTD 2024) | Financial Highlight (YTD 2024) | Value | Change from YTD 2023 | | :----------------------------- | :---- | :------------------- | | Revenue | $3,268M | -3% | | Gross Margin | 65.3% | +4.1 percentage points | | Loss from Operations | $(1,008)M | Increased by $103M | | Effective Tax Rate | (3.2)% | +0.6 percentage points | | Cash, Cash Equivalents, and Short-term Investments (Q3 2024) | $939M | - | | Goodwill and Intangible Impairment (YTD 2024) | $1,889M | +$1,068M | | Legal Contingency and Settlement (YTD 2024) | $(474)M | Favorable impact of $488M | | Gains on GRAIL Contingent Consideration Liability (YTD 2024) | - | Increased by $222M | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Consolidated revenue decreased by **3%** due to lower instrument sales, while gross margin improved; operating expenses were impacted by GRAIL impairments and the EC fine reversal, with other income affected by GRAIL investment losses Consolidated Financial Performance | Metric | Q3 2024 (Millions) | Q3 2023 (Millions) | YTD 2024 (Millions) | YTD 2023 (Millions) | | :---------------------------------- | :------ | :------ | :------- | :------- | | Total Revenue | $1,080 | $1,119 | $3,268 | $3,382 | | Consolidated Gross Profit | $745 | $684 | $2,133 | $2,070 | | Consolidated Gross Margin | 68.9% | 61.1% | 65.3% | 61.2% | | Consolidated Operating Expense | $4 | $1,438 | $3,141 | $2,975 | | Consolidated Research and Development | $253 | $315 | $913 | $1,013 | | Consolidated Selling, General and Administrative | $239 | $303 | $813 | $1,127 | | Consolidated Goodwill and Intangible Impairment | — | $821 | $1,889 | $821 | | Core Illumina Legal Contingency and Settlement | $(488) | $(1) | $(474) | $14 | | Total Other Expense, net | $(21) | $(28) | $(358) | $(45) | | Provision (Benefit) for Income Taxes | $15 | $(28) | $44 | $36 | - Core Illumina consumables revenue increased due to NovaSeq X consumables, while instrument revenue decreased due to fewer high-throughput and mid-throughput instrument shipments[158](index=158&type=chunk) - GRAIL goodwill and intangible impairment for YTD 2024 included **$1,466 million** goodwill impairment and **$420 million** IPR&D intangible asset impairment[170](index=170&type=chunk) - Core Illumina legal contingency and settlement in Q3 2024 and YTD 2024 primarily consisted of a **$489 million** gain from the reversal of the EC fine accrual[171](index=171&type=chunk) - Other income (expense), net in YTD 2024 was primarily driven by an increase in net losses on strategic investments of **$303 million**, including an unrealized loss of **$332 million** on the retained investment in GRAIL[173](index=173&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased to **$869 million** due to GRAIL deconsolidation and debt repayments; **$500 million** in new term notes were issued, a **$750 million** loan repaid, and a **$1.5 billion** share repurchase program authorized Cash Flow Summary | Metric (in millions) | YTD 2024 | YTD 2023 | | :---------------------------------- | :------- | :------- | | Net cash provided by operating activities | $473 | $254 | | Net cash used in investing activities | $(130) | $(146) | | Net cash used in financing activities | $(523) | $(1,183) | | Net decrease in cash and cash equivalents | $(179) | $(1,084) | - Cash and cash equivalents were **$869 million** as of September 29, 2024, with **$464 million** held by foreign subsidiaries[179](index=179&type=chunk) - The European Commission withdrew its **€432 million** fine, resulting in a net gain of **$481 million** in Q3 2024, and related guarantees are no longer outstanding[180](index=180&type=chunk) - Issued **$500 million** aggregate principal amount of 2026 Term Notes and repaid the **$750 million** Delayed Draw Credit Facility in Q3 2024[181](index=181&type=chunk)[182](index=182&type=chunk) - A new share repurchase program for up to **$1.5 billion** was authorized in August 2024, with **$1.4 billion** remaining available[186](index=186&type=chunk) - The company expects current cash, cash equivalents, short-term investments, operating cash flows, and available borrowing capacity to be sufficient for near-term capital and operating needs for at least the next 12 months[188](index=188&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes occurred to critical accounting policies and estimates during YTD 2024, despite macroeconomic uncertainties - No material changes to critical accounting policies and estimates during YTD 2024[195](index=195&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) Recent accounting pronouncements applicable to the condensed consolidated financial statements are summarized in Note 1, 'Organization and Significant Accounting Policies' - Refer to Note 1 for a summary of recent accounting pronouncements[196](index=196&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No substantial changes to the company's market risks occurred in YTD 2024 compared to prior disclosures in the Annual Report on Form 10-K - No substantial changes to market risks in YTD 2024[197](index=197&type=chunk) [Other Key Information](index=41&type=section&id=OTHER%20KEY%20INFORMATION) This section covers additional important information including controls and procedures, legal proceedings, risk factors, share repurchases, trading plans, and a list of exhibits [Controls and Procedures](index=41&type=section&id=Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of Q3 2024, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of the end of Q3 2024[200](index=200&type=chunk) - No material changes in internal control over financial reporting occurred during Q3 2024[199](index=199&type=chunk) [Legal Proceedings](index=41&type=section&id=Legal%20Proceedings) Detailed discussion of legal proceedings is provided in Note 8, 'Legal Proceedings', within the Condensed Consolidated Financial Statements section - Refer to Note 8 for details on legal proceedings[201](index=201&type=chunk) [Risk Factors](index=41&type=section&id=Risk%20Factors) The GRAIL Spin-Off introduced significant costs, potential revenue loss, and adverse impacts, while ongoing litigation, regulatory investigations, and shareholder lawsuits related to the acquisition persist - The GRAIL Spin-Off resulted in significant costs, potential loss of revenue, and adverse effects on business, financial condition, results of operations, and stock price[204](index=204&type=chunk) - The company is subject to ongoing SEC investigations, shareholder inspection demands, derivative lawsuits, and securities class actions related to the GRAIL acquisition[205](index=205&type=chunk) [Share Repurchases and Sales](index=42&type=section&id=Share%20Repurchases%20and%20Sales) A new **$1.5 billion** share repurchase program was authorized in August 2024, with **770 thousand** shares repurchased for **$99 million** in Q3 2024 - A new share repurchase program for up to **$1.5 billion** of outstanding common stock was authorized in August 2024[206](index=206&type=chunk) Share Repurchase Activity (Q3 2024) | Share Repurchase Activity (Q3 2024) | Value | | :---------------------------------- | :---- | | Total Number of Shares Purchased (thousands) | 770 | | Total Cost of Shares Repurchased (millions) | $99 | | Average Price Paid per Share | $127.71 | | Approximate Dollar Value of Shares Remaining Under Program (millions) | $1,401.684 | [Adoptions, Modifications or Terminations of Trading Plans](index=43&type=section&id=Adoptions,%20Modifications%20or%20Terminations%20of%20Trading%20Plans) No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q3 2024[210](index=210&type=chunk) [Exhibits](index=44&type=section&id=Exhibits) This section lists exhibits filed with Form 10-Q, including amended bylaws, underwriting agreements, officer's certificates, a separation agreement, and SOX certifications - Exhibits include Amended and Restated Bylaws, Underwriting Agreement, Officer's Certificate, Separation Agreement, and Section 302 and 906 certifications[212](index=212&type=chunk) [Form 10-Q Cross-Reference Index](index=46&type=section&id=Form%2010-Q%20Cross-Reference%20Index) This index provides a cross-reference to the parts and items requirements of the SEC Quarterly Report on Form 10-Q, indicating page numbers for each item - Provides a cross-reference index for the parts and items requirements of the SEC Quarterly Report on Form 10-Q[215](index=215&type=chunk)