- Welcomed new CEO Jacob Thaysen,
Ph.D., who started with Illumina on September 25, 2023
- With respect to GRAIL, continue to proceed quickly: retained
advisors and preparing for sale and capital markets transaction
options for GRAIL, including filing a Form 10, in accordance with
the European Commission's divestiture order; a Board special
committee has been established to expedite decisions; in parallel,
ongoing appeals preserve flexibility for any divestiture of GRAIL
and future transactions
- Revenue of $1.12 billion for Q3
2023, flat compared to Q3 2022 (up 1% on a constant currency basis)
and down 5% from Q2 2023
- Shipped 97 NovaSeq X instruments in Q3 2023; now expect to ship
330 to 340 instruments for fiscal year 2023
- GAAP diluted loss per share of $(4.77) for Q3 2023, which included goodwill and
intangible impairments of $821
million related to the GRAIL segment, compared to GAAP
diluted loss per share of $(24.26)
for Q3 2022, which included goodwill impairment of $3.91 billion related to the GRAIL segment
- Non-GAAP diluted earnings per share of $0.33 for Q3 2023, compared to non-GAAP diluted
earnings per share of $0.34 for Q3
2022
- Now expect fiscal year 2023 consolidated revenue to decrease 2%
to 3% from 2022, including Core Illumina revenue to decrease 3% to
4% from 2022 and GRAIL revenue at the low end of the $90 million to $110
million range
- Now expect GAAP diluted loss per share of $(6.67) to $(6.57)
for fiscal year 2023, which includes goodwill and intangible
impairments of $821 million related
to the GRAIL segment
- Now expect non-GAAP diluted earnings per share of $0.60 to $0.70 for
fiscal year 2023
SAN
DIEGO, Nov. 9, 2023 /PRNewswire/ -- Illumina,
Inc. (Nasdaq: ILMN) ("Illumina" or the "company") today announced
its financial results for the third quarter of fiscal year 2023,
which include the consolidated financial results for GRAIL.
"While the environment remains challenging, I am confident in
our ability to navigate it and position the company for long-term
success," said Jacob Thaysen, Chief
Executive Officer. "I came to Illumina for the opportunity
presented by our core business. While I evaluate the company's
strategy, we will remain focused on driving on further placements
of the NovaSeq X, which will boost consumables demand. We will also
continue optimizing our operations and drive stronger
execution."
Third quarter consolidated results
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in millions,
except per share amounts
|
Q3
2023
|
|
Q3
2022
|
|
Q3
2023
|
|
Q3
2022
|
Revenue
|
$
1,119
|
|
$
1,115
|
|
$
1,119
|
|
$
1,115
|
Gross margin
|
61.1 %
|
|
64.3 %
|
|
65.4 %
|
|
68.4 %
|
Research and
development ("R&D") expense
|
$ 315
|
|
$ 325
|
|
$ 312
|
|
$ 324
|
Selling, general and
administrative ("SG&A") expense
|
$ 303
|
|
$ 146
|
|
$ 328
|
|
$ 336
|
Goodwill and intangible
impairment
|
$ 821
|
|
$
3,914
|
|
$
—
|
|
$ —
|
Legal contingency and
settlement
|
$
(1)
|
|
$
(11)
|
|
$
—
|
|
$ —
|
Operating (loss)
profit
|
$
(754)
|
|
$ (3,657)
|
|
$
93
|
|
$ 102
|
Operating
margin
|
(67.3) %
|
|
(327.9) %
|
|
8.3 %
|
|
9.2 %
|
Tax (benefit)
provision
|
$
(28)
|
|
$ 144
|
|
$
35
|
|
$ 40
|
Tax rate
|
3.6 %
|
|
(4.0) %
|
|
39.7 %
|
|
43.2 %
|
Net (loss)
income
|
$
(754)
|
|
$ (3,816)
|
|
$
52
|
|
$ 54
|
Diluted (loss) earnings
per share
|
$
(4.77)
|
|
$ (24.26)
|
|
$
0.33
|
|
$
0.34
|
|
(a) See the
tables included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
During the third quarter of 2023, the company recognized
$712 million in goodwill and
$109 million in intangible asset
(IPR&D) impairment related to the GRAIL segment. The goodwill
impairment was primarily due to a decrease in the company's
consolidated market capitalization and a higher discount rate
selected for the fair value calculation of the GRAIL reporting
unit. The IPR&D impairment was primarily due to a decrease in
projected cash flows and a higher discount rate selected for the
fair value calculation of the GRAIL IPR&D asset. During the
third quarter of 2022, the company recognized $3.91 billion in goodwill impairment related to
the GRAIL segment.
Capital expenditures for free cash flow purposes were
$45 million for Q3 2023. Cash flow
provided by operations was $139
million, compared to cash flow used in operations of
$(52) million in the prior year
period, which included a one-time payment related to the litigation
settlement with BGI. Free cash flow (cash flow provided by (used
in) operations less capital expenditures) was $94 million for the quarter, compared to
$(119) million in the prior year
period. Depreciation and amortization expenses were $108 million for Q3 2023. At the close of the
quarter, the company held $933
million in cash, cash equivalents and short-term
investments. During the third quarter of 2023, the company used
$750 million in cash to repay the
outstanding principal of convertible notes that matured in
August 2023.
Third quarter segment results
Illumina has two reportable segments, Core Illumina and
GRAIL.
Core Illumina
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in
millions
|
Q3
2023
|
|
Q3
2022
|
|
Q3
2023
|
|
Q3
2022
|
Revenue
(b)
|
$
1,106
|
|
$
1,110
|
|
$
1,106
|
|
$
1,110
|
Gross margin
(c)
|
64.7 %
|
|
67.9 %
|
|
66.0 %
|
|
68.9 %
|
R&D
expense
|
$ 238
|
|
$ 253
|
|
$ 235
|
|
$ 252
|
SG&A
expense
|
$ 216
|
|
$ 66
|
|
$ 246
|
|
$ 262
|
Legal contingency and
settlement
|
$
(1)
|
|
$
(11)
|
|
$
—
|
|
$ —
|
Operating
profit
|
$ 262
|
|
$ 445
|
|
$ 249
|
|
$ 251
|
Operating
margin
|
23.7 %
|
|
40.1 %
|
|
22.5 %
|
|
22.6 %
|
|
(a) See
Table 3 included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
(b) Core
Illumina revenue for Q3 2023 was flat as compared to Q3 2022, and
flat on a constant currency basis. Amounts for Q3 2023 and Q3 2022
included intercompany revenue of $8 million and $5 million,
respectively, which is eliminated in consolidation.
|
(c) The
year-over-year decrease in gross margin was primarily driven by
less fixed cost leverage on lower manufacturing volumes, product
mix, as well as lower instrument margins and higher field service
and installation costs due to the NovaSeq X launch, which is
typical in a launch year.
|
GRAIL
|
GAAP
|
|
Non-GAAP
(a)
|
In
millions
|
Q3
2023
|
|
Q3
2022
|
|
Q3
2023
|
|
Q3
2022
|
Revenue
|
$
21
|
|
$
10
|
|
$
21
|
|
$
10
|
Gross (loss)
profit
|
$ (27)
|
|
$
(32)
|
|
$
6
|
|
$
1
|
R&D
expense
|
$
79
|
|
$
74
|
|
$
79
|
|
$
74
|
SG&A
expense
|
$
87
|
|
$
81
|
|
$
82
|
|
$
75
|
Goodwill and intangible
impairment
|
$ 821
|
|
$ 3,914
|
|
$
—
|
|
$
—
|
Operating
loss
|
$
(1,015)
|
|
$
(4,101)
|
|
$
(155)
|
|
$ (148)
|
|
(a) See
Table 3 included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
As previously stated, Illumina is committed to moving as quickly
as possible through the legal and regulatory processes associated
with its acquisition of GRAIL. At this point, Illumina expects
decisions on its appeals from the US Court of Appeals for the Fifth
Circuit by the end of 2023 and from the European Court of Justice
(ECJ) in mid-2024.
Key announcements by Illumina since Illumina's last earnings
release
- Received order from the European Commission to divest GRAIL;
Illumina is committed to resolving all issues in a timely manner,
with the objective of achieving the maximum value for shareholders
and the best outcome for GRAIL
- Launched TruSight Oncology 500 (TSO 500) ctDNA Version 2, a
liquid biopsy assay that enables comprehensive genomic profiling of
circulating tumor DNA; key improvements include a faster turnaround
time of less than four days, higher sensitivity with lower input
requirements, and a more streamlined workflow
- Opened new office and state-of-the-art Illumina Solutions
Center in Bengaluru, India to grow
the genomics market in the most populous country in the world,
unlocking opportunities for advancing health care and combating the
effects of climate change in South
Asia
- Appointed Jacob Thaysen, Ph.D.
as Chief Executive Officer and Dr. Steve
Barnard as Chief Technology Officer
- Launched the 25B flow cell
(300-cycle kit) for the NovaSeq X, enabling customers to generate
tens of thousands of whole genomes per year at the lowest cost per
sample of any Illumina platform
A full list of recent Illumina announcements can be found in the
company's News Center.
Key announcements by GRAIL since Illumina's last earnings
release
- Collaboration with HCA Healthcare, Inc. to make GRAIL's
Galleri® multi-cancer early detection (MCED) available to patients
who meet screening criteria at select HCA Healthcare physician
practices
- Published final results from PATHFINDER Study, which
demonstrated that an earlier version of Galleri identified many
cancer types that do not currently have recommended screening
tests, enabled targeted cancer diagnostic evaluations, and
supported diagnostic resolution for the majority of participants in
less than three months
- Expanded pilot with Point32Health to offer Galleri to members
meeting eligibility requirements, making Point32Health the first
commercial health plan in the U.S. to offer Galleri in addition to
recommended cancer screenings
A full list of recent GRAIL announcements can be found in
GRAIL's Newsroom.
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain
pro forma adjustments to assist in analyzing and assessing our core
operational performance, including the company's Core Illumina and
GRAIL segments. Please see our Reconciliation of Consolidated
Non-GAAP Financial Guidance included in this release for a
reconciliation of these GAAP and non-GAAP financial measures.
For fiscal year 2023, the company now expects consolidated
revenue to decrease 2% to 3% compared to fiscal year 2022. The
company now expects Core Illumina revenue to decrease 3% to 4%
compared to fiscal year 2022. GRAIL revenue is now expected to be
at the low end of the $90 million to
$110 million range.
The company now expects GAAP diluted loss per share of
$(6.67) to $(6.57) and non-GAAP diluted earnings per share
of $0.60 to $0.70.
Conference call information
The conference call will begin at 2 p.m. Pacific
Time (5 p.m. Eastern Time)
on Thursday, November 9, 2023. Interested parties may access
the live teleconference through the Investor Info section of
Illumina's website at investor.illumina.com. Alternatively,
individuals can access the call by dialing 866.400.0049 or
+1.323.794.2149 outside North
America, both using conference ID 1991305. To ensure timely
connection, please dial in at least ten minutes before the
scheduled start of the call.
A replay of the conference call will be posted on Illumina's
website after the event and will be available for at least 30 days
following.
Statement regarding use of non-GAAP financial
measures
The company reports non-GAAP results for diluted earnings per
share, net income, gross margin, operating expenses, including
research and development expense, selling general and
administrative expense, and from time to time, as applicable, legal
contingencies and settlement, and goodwill and intangible
impairment, operating income (loss), operating margin, gross profit
(loss), other income (expense), tax provision, constant currency
revenue growth, and free cash flow (on a consolidated and, as
applicable, segment basis for our Core Illumina and GRAIL segments)
in addition to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. The
company's financial measures under GAAP include substantial charges
such as amortization of acquired intangible assets among others
that are listed in the itemized reconciliations between GAAP and
non-GAAP financial measures included in this press release, as well
as the effects of currency translation. Management has excluded the
effects of these items in non-GAAP measures to assist investors in
analyzing and assessing past and future operating performance,
including in the non-GAAP measures related to our Core Illumina and
GRAIL segments. Additionally, non-GAAP net income and diluted
earnings per share are key components of the financial metrics
utilized by the company's board of directors to measure, in part,
management's performance and determine significant elements of
management's compensation.
The company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Reconciliations between GAAP
and non-GAAP results are presented in the tables of this
release.
Use of forward-looking statements
This release may contain forward-looking statements that involve
risks and uncertainties. Among the important factors to which our
business is subject that could cause actual results to differ
materially from those in any forward-looking statements are: (i)
changes in the rate of growth in the markets we serve; (ii) the
volume, timing and mix of customer orders among our products and
services; (iii) our ability to adjust our operating expenses to
align with our revenue expectations; (iv) our ability to
manufacture robust instrumentation and consumables; (v) the success
of products and services competitive with our own; (vi) challenges
inherent in developing, manufacturing, and launching new products
and services, including expanding or modifying manufacturing
operations and reliance on third-party suppliers for critical
components; (vii) the impact of recently launched or pre-announced
products and services on existing products and services; (viii) our
ability to modify our business strategies to accomplish our desired
operational goals; (ix) our ability to realize the anticipated
benefits from prior or future actions to streamline and improve our
R&D processes, reduce our operating expenses and maximize our
revenue growth; (x) our ability to further develop and
commercialize our instruments, consumables, and products, including
Galleri, the cancer screening test developed by GRAIL, to deploy
new products, services, and applications, and to expand the markets
for our technology platforms; (xi) the risks and costs associated
with our ongoing inability to integrate GRAIL due to the
transitional measures imposed on us by the European Commission as a
result of their prohibition of our acquisition of GRAIL and orders
issued by the European Commission and the Federal Trade Commission
requiring that we divest GRAIL; (xii) the risks and costs
associated with the integration of GRAIL's business if we are
ultimately able to integrate GRAIL; (xiii) the risk that
disruptions from the consummation of our acquisition of GRAIL and
associated legal or regulatory proceedings, including appeals, or
obligations will harm our business, including current plans and
operations; (xiv) the risk of incurring additional fines associated
with the consummation of our acquisition of GRAIL and the
possibility that we may be required to divest all or a portion of
the assets or equity interests of GRAIL on terms that could be
materially worse than the terms on which we acquired GRAIL; (xv)
our ability to obtain approval by third-party payors to reimburse
patients for our products; (xvi) our ability to obtain regulatory
clearance for our products from government agencies; (xvii) our
ability to successfully partner with other companies and
organizations to develop new products, expand markets, and grow our
business; (xviii) uncertainty, or adverse economic and business
conditions, including as a result of slowing or uncertain economic
growth, COVID-19 pandemic mitigation measures, or armed conflict;
(xix) the application of generally accepted accounting principles,
which are highly complex and involve many subjective assumptions,
estimates, and judgments and (xx) legislative, regulatory and
economic developments, together with other factors detailed in our
filings with the Securities and Exchange Commission, including our
most recent filings on Forms 10-K and 10-Q, or in information
disclosed in public conference calls, the date and time of which
are released beforehand. We undertake no obligation, and do not
intend, to update these forward-looking statements, to review or
confirm analysts' expectations, or to provide interim reports or
updates on the progress of the current quarter.
About Illumina
Illumina is improving human health by unlocking the power of the
genome. In 2023 we celebrate 25 years of innovation, which has
established us as a global leader in DNA sequencing and array-based
technologies, serving customers in the research, clinical, and
applied markets. Our products are used for applications in the life
sciences, oncology, reproductive health, agriculture, and other
emerging segments. To learn more, visit www.illumina.com and
connect with us on X (Twitter),
Facebook, LinkedIn, Instagram, TikTok, and YouTube.
About GRAIL
GRAIL is a healthcare company whose mission is to detect cancer
early, when it can be cured. GRAIL is focused on alleviating the
global burden of cancer by developing pioneering technology to
detect and identify multiple deadly cancer types early. The company
is using the power of next-generation sequencing, population-scale
clinical studies, and state-of-the-art computer science and data
science to enhance the scientific understanding of cancer biology,
and to develop its multi-cancer early detection blood test. GRAIL
is headquartered in Menlo Park, CA
with locations in Washington,
D.C., North Carolina, and
the United Kingdom. GRAIL, LLC, is
a wholly-owned subsidiary of Illumina, which currently must be held
and operated separately and independently from Illumina pursuant to
transitional measures ordered by the European Commission, which
prohibited our acquisition of GRAIL on September 6, 2022. For more information, please
visit www.grail.com.
Illumina,
Inc.
Condensed
Consolidated Balance Sheets
(In
millions)
|
|
|
October 1,
2023
|
|
January 1,
2023
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
927
|
|
$
2,011
|
Short-term
investments
|
6
|
|
26
|
Accounts receivable,
net
|
690
|
|
671
|
Inventory,
net
|
615
|
|
568
|
Prepaid expenses and
other current assets
|
268
|
|
285
|
Total current
assets
|
2,506
|
|
3,561
|
Property and equipment,
net
|
1,040
|
|
1,091
|
Operating lease
right-of-use assets
|
581
|
|
653
|
Goodwill
|
2,527
|
|
3,239
|
Intangible assets,
net
|
3,029
|
|
3,285
|
Other assets
|
439
|
|
423
|
Total
assets
|
$
10,122
|
|
$
12,252
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
240
|
|
$
293
|
Accrued
liabilities
|
1,242
|
|
1,232
|
Term notes, current
portion
|
—
|
|
500
|
Convertible senior
notes, current portion
|
—
|
|
748
|
Total current
liabilities
|
1,482
|
|
2,773
|
Operating lease
liabilities
|
698
|
|
744
|
Term notes
|
1,489
|
|
1,487
|
Other long-term
liabilities
|
555
|
|
649
|
Stockholders'
equity
|
5,898
|
|
6,599
|
Total liabilities and
stockholders' equity
|
$
10,122
|
|
$
12,252
|
Illumina,
Inc.
Condensed
Consolidated Statements of Operations
(In millions, except
per share amounts)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 2,
2022
|
|
October 1,
2023
|
|
October 2,
2022
|
Revenue:
|
|
|
|
|
|
|
|
Product
revenue
|
$
941
|
|
$
963
|
|
$
2,864
|
|
$
3,039
|
Service and other
revenue
|
178
|
|
152
|
|
518
|
|
462
|
Total
revenue
|
1,119
|
|
1,115
|
|
3,382
|
|
3,501
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Cost of product
revenue (a)
|
293
|
|
280
|
|
884
|
|
866
|
Cost of service and
other revenue (a)
|
95
|
|
72
|
|
285
|
|
210
|
Amortization of
acquired intangible assets
|
47
|
|
46
|
|
143
|
|
125
|
Total cost of
revenue
|
435
|
|
398
|
|
1,312
|
|
1,201
|
Gross
profit
|
684
|
|
717
|
|
2,070
|
|
2,300
|
Operating
expense:
|
|
|
|
|
|
|
|
Research and
development (a)
|
315
|
|
325
|
|
1,013
|
|
975
|
Selling, general and
administrative (a)
|
303
|
|
146
|
|
1,127
|
|
865
|
Goodwill and
intangible impairment
|
821
|
|
3,914
|
|
821
|
|
3,914
|
Legal contingency and
settlement
|
(1)
|
|
(11)
|
|
14
|
|
598
|
Total operating
expense
|
1,438
|
|
4,374
|
|
2,975
|
|
6,352
|
Loss from
operations
|
(754)
|
|
(3,657)
|
|
(905)
|
|
(4,052)
|
Other expense,
net
|
(28)
|
|
(15)
|
|
(45)
|
|
(116)
|
Loss before income
taxes
|
(782)
|
|
(3,672)
|
|
(950)
|
|
(4,168)
|
(Benefit) provision
for income taxes
|
(28)
|
|
144
|
|
36
|
|
97
|
Net loss
|
$
(754)
|
|
$
(3,816)
|
|
$
(986)
|
|
$ (4,265)
|
Loss per
share:
|
|
|
|
|
|
|
|
Basic
|
$
(4.77)
|
|
$
(24.26)
|
|
$
(6.23)
|
|
$ (27.13)
|
Diluted
|
$
(4.77)
|
|
$
(24.26)
|
|
$
(6.23)
|
|
$ (27.13)
|
Shares used in
computing loss per share:
|
|
|
|
|
|
|
|
Basic
|
158
|
|
157
|
|
158
|
|
157
|
Diluted
|
158
|
|
157
|
|
158
|
|
157
|
(a) Includes
stock-based compensation expense for stock-based awards:
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 2,
2022
|
|
October 1,
2023
|
|
October 2,
2022
|
Cost of product
revenue
|
$
7
|
|
$
7
|
|
$
22
|
|
$
20
|
Cost of service and
other revenue
|
2
|
|
2
|
|
5
|
|
4
|
Research and
development
|
36
|
|
37
|
|
117
|
|
112
|
Selling, general and
administrative
|
41
|
|
37
|
|
142
|
|
130
|
Stock-based
compensation expense before taxes
|
$
86
|
|
$
83
|
|
$
286
|
|
$
266
|
Illumina,
Inc.
Condensed
Consolidated Statements of Cash Flows
(In
millions)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 2,
2022
|
|
October 1,
2023
|
|
October 2,
2022
|
Net cash provided by
(used in) operating activities
|
$
139
|
|
$
(52)
|
|
$
254
|
|
$
245
|
Net cash used in
investing activities
|
(54)
|
|
(250)
|
|
(146)
|
|
(489)
|
Net cash (used in)
provided by financing activities
|
(707)
|
|
28
|
|
(1,183)
|
|
44
|
Effect of exchange rate
changes on cash and cash equivalents
|
(4)
|
|
(15)
|
|
(9)
|
|
(32)
|
Net decrease in cash
and cash equivalents
|
(626)
|
|
(289)
|
|
(1,084)
|
|
(232)
|
Cash and cash
equivalents, beginning of period
|
1,553
|
|
1,289
|
|
2,011
|
|
1,232
|
Cash and cash
equivalents, end of period
|
$
927
|
|
$
1,000
|
|
$
927
|
|
$
1,000
|
|
|
|
|
|
|
|
|
Calculation of free
cash flow:
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
139
|
|
$
(52)
|
|
$
254
|
|
$
245
|
Purchases of property
and equipment
|
(45)
|
|
(67)
|
|
(144)
|
|
(198)
|
Free cash flow
(a)
|
$
94
|
|
$
(119)
|
|
$
110
|
|
$
47
|
|
(a) Free cash
flow, which is a non-GAAP financial measure, is calculated as net
cash provided by (used in) operating activities reduced by
purchases of property and equipment. Free cash flow is useful to
management as it is one of the metrics used to evaluate our
performance and to compare us with other companies in our industry.
However, our calculation of free cash flow may not be comparable to
similar measures used by other companies.
|
Illumina,
Inc.
Results of
Operations - Revenue by Segment
(Dollars in
millions)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 2,
2022
|
|
%
Change
|
|
October 1,
2023
|
|
October 2,
2022
|
|
%
Change
|
Consolidated
revenue
|
$
1,119
|
|
$
1,115
|
|
—
|
|
$
3,382
|
|
$
3,501
|
|
(3) %
|
Less: Hedge
gains
|
5
|
|
16
|
|
|
|
9
|
|
32
|
|
|
Consolidated revenue,
excluding hedge effect
|
1,114
|
|
1,099
|
|
|
|
3,373
|
|
3,469
|
|
|
Less: Exchange rate
effect
|
4
|
|
—
|
|
|
|
(35)
|
|
—
|
|
|
Consolidated constant
currency revenue (a)
|
$
1,110
|
|
$
1,099
|
|
1 %
|
|
$
3,408
|
|
$
3,469
|
|
(2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Illumina
revenue
|
$
1,106
|
|
$
1,110
|
|
—
|
|
$
3,341
|
|
$
3,487
|
|
(4) %
|
Less: Hedge
gains
|
5
|
|
16
|
|
|
|
9
|
|
32
|
|
|
Core Illumina revenue,
excluding hedge effect
|
1,101
|
|
1,094
|
|
|
|
3,332
|
|
3,455
|
|
|
Less: Exchange rate
effect
|
4
|
|
—
|
|
|
|
(35)
|
|
—
|
|
|
Core Illumina constant
currency revenue (a)
|
$
1,097
|
|
$
1,094
|
|
—
|
|
$
3,367
|
|
$
3,455
|
|
(3) %
|
|
(a) Constant
currency revenue growth, which is a non-GAAP financial measure, is
calculated using comparative prior period foreign exchange rates to
translate current period revenue, net of the effects of
hedges.
|
Illumina,
Inc.
Results of
Operations - Non-GAAP
(In millions, except
per share amounts)
(unaudited)
|
|
TABLE
1: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND
NON-GAAP DILUTED (LOSS) EARNINGS PER
SHARE:
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 2,
2022
|
|
October 1,
2023
|
|
October 2,
2022
|
GAAP loss per share
- diluted
|
$
(4.77)
|
|
$
(24.26)
|
|
$
(6.23)
|
|
$
(27.13)
|
Cost of revenue
(b)
|
0.30
|
|
0.29
|
|
0.93
|
|
0.79
|
R&D expense
(b)
|
0.02
|
|
0.01
|
|
0.11
|
|
0.01
|
SG&A expense
(b)
|
(0.15)
|
|
(1.22)
|
|
0.64
|
|
(0.82)
|
Goodwill and intangible
impairment (b)
|
5.20
|
|
24.89
|
|
5.19
|
|
24.89
|
Legal contingency and
settlement (b)
|
(0.01)
|
|
(0.07)
|
|
0.09
|
|
3.81
|
Other expense, net
(b)
|
0.14
|
|
0.04
|
|
0.23
|
|
0.53
|
GILTI and U.S. foreign
tax credits (c)
|
0.24
|
|
0.19
|
|
0.40
|
|
0.38
|
Incremental non-GAAP
tax expense (d)
|
(0.65)
|
|
0.48
|
|
(0.68)
|
|
(0.48)
|
Income tax provision
(e)
|
0.01
|
|
—
|
|
0.05
|
|
0.03
|
Effect of dilutive
shares (f)
|
—
|
|
(0.01)
|
|
—
|
|
(0.03)
|
Non-GAAP earnings per
share - diluted (a)
|
$
0.33
|
|
$
0.34
|
|
$
0.73
|
|
$
1.98
|
|
|
|
|
|
|
|
|
GAAP diluted
shares
|
158
|
|
157
|
|
158
|
|
157
|
Non-GAAP dilutive
shares (f)
|
—
|
|
2
|
|
—
|
|
2
|
Non-GAAP diluted
shares
|
158
|
|
159
|
|
158
|
|
159
|
TABLE
2: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND
NON-GAAP NET (LOSS) INCOME:
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 2,
2022
|
|
October 1,
2023
|
|
October 2,
2022
|
GAAP net
loss
|
$
(754)
|
|
$
(3,816)
|
|
$
(986)
|
|
$
(4,265)
|
Cost of revenue
(b)
|
48
|
|
46
|
|
147
|
|
124
|
R&D expense
(b)
|
3
|
|
1
|
|
17
|
|
1
|
SG&A expense
(b)
|
(24)
|
|
(191)
|
|
102
|
|
(129)
|
Goodwill and intangible
impairment (b)
|
821
|
|
3,914
|
|
821
|
|
3,914
|
Legal contingency and
settlement (b)
|
(1)
|
|
(11)
|
|
14
|
|
598
|
Other expense, net
(b)
|
22
|
|
7
|
|
36
|
|
83
|
GILTI and U.S. foreign
tax credits (c)
|
38
|
|
30
|
|
63
|
|
60
|
Incremental non-GAAP
tax expense (d)
|
(102)
|
|
74
|
|
(108)
|
|
(77)
|
Income tax provision
(e)
|
1
|
|
—
|
|
9
|
|
5
|
Non-GAAP net income
(a)
|
52
|
|
54
|
|
115
|
|
314
|
Add: interest expense
on convertible notes, net of tax (g)
|
—
|
|
1
|
|
—
|
|
1
|
Non-GAAP net income for
diluted earnings per share
|
$
52
|
|
$
55
|
|
$
115
|
|
$
315
|
|
All amounts in
tables are rounded to the nearest millions, except as otherwise
noted. As a result, certain amounts may not recalculate using the
rounded amounts provided.
|
|
(a) Non-GAAP net
income and diluted earnings per share exclude the effects of the
pro forma adjustments as detailed above. Non-GAAP net income and
diluted earnings per share are key components of the financial
metrics utilized by the company's board of directors to measure, in
part, management's performance and determine significant elements
of management's compensation. Management has excluded the effects
of these items in these measures to assist investors in analyzing
and assessing our past and future operating performance.
|
(b) Refer to the
Itemized Reconciliations between GAAP and Non-GAAP Results of
Operations for the components of these amounts.
|
(c) Amounts
represent the impact of GRAIL pre-acquisition net operating losses
on GILTI and the utilization of U.S. foreign tax
credits.
|
(d) Incremental
non-GAAP tax expense reflects the tax impact of the non-GAAP
adjustments listed.
|
(e) Amounts
represent the difference between book and tax accounting related to
stock-based compensation cost.
|
(f) In loss
periods, GAAP basic loss per share and diluted loss per share are
identical since the effect of potentially dilutive shares is
anti-dilutive and therefore excluded. For non-GAAP diluted earnings
per share, the impact of potentially dilutive shares from our
convertible senior notes and equity awards is included and is
calculated based on the sum of weighted-average common shares and
potentially dilutive shares outstanding during Q3 2022 and YTD
2022.
|
(g) Amount
represents interest expense on the 2023 Convertible Senior Notes,
net of any income tax effects, which is added back to the numerator
used to calculate non-GAAP diluted earnings per share, for purposes
of the if-converted method, as it would have a dilutive effect on
the calculation of non-GAAP diluted earnings per share.
|
Illumina,
Inc.
Results of
Operations - Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
|
|
TABLE 3: ITEMIZED
RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A
PERCENT
OF REVENUE:
|
|
|
Three Months
Ended
|
|
October 1,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
715
|
64.7 %
|
|
$
(27)
|
|
$
(4)
|
|
$
684
|
61.1 %
|
Amortization of
acquired intangible assets
|
14
|
1.2 %
|
|
33
|
|
—
|
|
47
|
4.2 %
|
Restructuring
(g)
|
1
|
0.1 %
|
|
—
|
|
—
|
|
1
|
0.1 %
|
Non-GAAP gross profit
(a)
|
$
730
|
66.0 %
|
|
$
6
|
|
$
(4)
|
|
$
732
|
65.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
238
|
21.5 %
|
|
$
79
|
|
$
(2)
|
|
$
315
|
28.1 %
|
Restructuring
(g)
|
(3)
|
(0.3) %
|
|
—
|
|
—
|
|
(3)
|
(0.3) %
|
Non-GAAP R&D
expense
|
$
235
|
21.2 %
|
|
$
79
|
|
$
(2)
|
|
$
312
|
27.8 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
216
|
19.5 %
|
|
$
87
|
|
$
—
|
|
$
303
|
27.0 %
|
Amortization of
acquired intangible assets
|
—
|
—
|
|
(1)
|
|
—
|
|
(1)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
110
|
9.9 %
|
|
—
|
|
—
|
|
110
|
9.8 %
|
Acquisition-related
expenses (d)
|
(27)
|
(2.3) %
|
|
(3)
|
|
—
|
|
(30)
|
(2.6) %
|
Restructuring
(g)
|
(54)
|
(4.9) %
|
|
(1)
|
|
—
|
|
(55)
|
(4.9) %
|
Proxy
contest
|
1
|
0.1 %
|
|
—
|
|
—
|
|
1
|
0.1 %
|
Non-GAAP SG&A
expense
|
$
246
|
22.3 %
|
|
$
82
|
|
$
—
|
|
$
328
|
29.3 %
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
821
|
|
$
—
|
|
$
821
|
73.4 %
|
Goodwill impairment
(i)
|
—
|
—
|
|
(712)
|
|
—
|
|
(712)
|
(63.6) %
|
Intangible (IPR&D)
impairment (i)
|
—
|
—
|
|
(109)
|
|
—
|
|
(109)
|
(9.8) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$ (1)
|
(0.2) %
|
|
$
—
|
|
$
—
|
|
$
(1)
|
(0.1) %
|
Legal contingency and
settlement (h)
|
1
|
0.2 %
|
|
—
|
|
—
|
|
1
|
0.1 %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
262
|
23.7 %
|
|
$
(1,015)
|
|
$
(1)
|
|
$
(754)
|
(67.3) %
|
Cost of
revenue
|
15
|
1.3 %
|
|
33
|
|
—
|
|
48
|
4.3 %
|
R&D
costs
|
3
|
0.4 %
|
|
—
|
|
—
|
|
3
|
0.3 %
|
SG&A
costs
|
(30)
|
(2.7) %
|
|
6
|
|
—
|
|
(24)
|
(2.3) %
|
Goodwill and intangible
impairment
|
—
|
—
|
|
821
|
|
—
|
|
821
|
73.4 %
|
Legal contingency and
settlement
|
(1)
|
(0.2) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Non-GAAP operating
profit (loss) (a)
|
$
249
|
22.5 %
|
|
$
(155)
|
|
$
(1)
|
|
$ 93
|
8.3 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(33)
|
(3.0) %
|
|
$
5
|
|
$
—
|
|
$ (28)
|
(2.6) %
|
Strategic investment
related loss, net (e)
|
19
|
1.8 %
|
|
—
|
|
—
|
|
19
|
1.8 %
|
Gain on Helix
contingent value right (f)
|
(5)
|
(0.5) %
|
|
—
|
|
—
|
|
(5)
|
(0.4) %
|
Unrealized foreign
currency loss on EC fine (j)
|
8
|
0.7 %
|
|
—
|
|
—
|
|
8
|
0.7 %
|
Non-GAAP other
(expense) income, net (a)
|
$
(11)
|
(1.0) %
|
|
$
5
|
|
$
—
|
|
$
(6)
|
(0.5) %
|
Illumina,
Inc.
Results of
Operations - Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
|
|
TABLE 3 (CONTINUED):
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF
OPERATIONS
AS A PERCENT OF REVENUE:
|
|
|
Three Months
Ended
|
|
October 2,
2022
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
753
|
67.9 %
|
|
$ (32)
|
|
$
(4)
|
|
$
717
|
64.3 %
|
Amortization of
acquired intangible assets
|
12
|
1.0 %
|
|
33
|
|
—
|
|
46
|
4.1 %
|
Non-GAAP gross profit
(a)
|
$
765
|
68.9 %
|
|
$
1
|
|
$
(4)
|
|
$
763
|
68.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
253
|
22.8 %
|
|
$
74
|
|
$
(2)
|
|
$
325
|
29.1 %
|
Acquisition-related
expenses (d)
|
(1)
|
(0.1)
|
|
—
|
|
—
|
|
(1)
|
—
|
Non-GAAP R&D
expense
|
$
252
|
22.7 %
|
|
$
74
|
|
$
(2)
|
|
$
324
|
29.1 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$ 66
|
5.9 %
|
|
$
81
|
|
$
(1)
|
|
$
146
|
13.1 %
|
Amortization of
acquired intangible assets
|
—
|
—
|
|
(1)
|
|
—
|
|
(1)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
219
|
19.7 %
|
|
—
|
|
—
|
|
219
|
19.6 %
|
Acquisition-related
expenses (d)
|
(23)
|
(2.1) %
|
|
(5)
|
|
—
|
|
(28)
|
(2.5) %
|
Non-GAAP SG&A
expense
|
$
262
|
23.6 %
|
|
$
75
|
|
$
(1)
|
|
$
336
|
30.1 %
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$
(11)
|
(1.0) %
|
|
$
—
|
|
$
—
|
|
$ (11)
|
(1.0) %
|
Legal contingency and
settlement (h)
|
11
|
1.0 %
|
|
—
|
|
—
|
|
11
|
1.0 %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$ —
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
3,914
|
|
$
—
|
|
$
3,914
|
351.0 %
|
Goodwill impairment
(i)
|
—
|
—
|
|
(3,914)
|
|
—
|
|
(3,914)
|
(351.0) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$ —
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
445
|
40.1 %
|
|
$
(4,101)
|
|
$
(1)
|
|
$
(3,657)
|
(327.9) %
|
Cost of
revenue
|
12
|
1.0 %
|
|
33
|
|
—
|
|
46
|
4.1 %
|
R&D
costs
|
1
|
0.1 %
|
|
—
|
|
—
|
|
1
|
—
|
SG&A
costs
|
(196)
|
(17.5) %
|
|
6
|
|
—
|
|
(191)
|
(17.0) %
|
Legal contingency and
settlement
|
(11)
|
(1.0) %
|
|
—
|
|
—
|
|
(11)
|
(1.0) %
|
Goodwill
impairment
|
—
|
—
|
|
3,914
|
|
—
|
|
3,914
|
351.0 %
|
Non-GAAP operating
profit (loss) (a)
|
$
251
|
22.6 %
|
|
$ (148)
|
|
$
(1)
|
|
$
102
|
9.2 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(15)
|
(1.4) %
|
|
$
1
|
|
$
—
|
|
$ (15)
|
(1.3) %
|
Strategic investment
related loss, net (e)
|
2
|
0.2 %
|
|
—
|
|
—
|
|
2
|
0.2 %
|
Loss on Helix
contingent value right (f)
|
5
|
0.5 %
|
|
—
|
|
—
|
|
5
|
0.4 %
|
Non-GAAP other
(expense) income, net (a)
|
$ (8)
|
(0.7) %
|
|
$
1
|
|
$
—
|
|
$ (8)
|
(0.7) %
|
Illumina,
Inc.
Results of
Operations - Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
|
|
TABLE 3 (CONTINUED):
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF
OPERATIONS
AS A PERCENT OF REVENUE:
|
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
2,161
|
64.7 %
|
|
$
(77)
|
|
$
(14)
|
|
$
2,070
|
61.2 %
|
Amortization of
acquired intangible assets
|
43
|
1.3 %
|
|
100
|
|
—
|
|
143
|
4.3 %
|
Restructuring
(g)
|
4
|
0.1 %
|
|
—
|
|
—
|
|
4
|
0.1 %
|
Non-GAAP gross profit
(a)
|
$
2,208
|
66.1 %
|
|
$
23
|
|
$
(14)
|
|
$
2,217
|
65.6 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
771
|
23.1 %
|
|
$ 254
|
|
$
(12)
|
|
$
1,013
|
30.0 %
|
Acquisition-related
expenses (d)
|
(1)
|
—
|
|
—
|
|
—
|
|
(1)
|
—
|
Restructuring
(g)
|
(16)
|
(0.6) %
|
|
—
|
|
—
|
|
(16)
|
(0.5) %
|
Non-GAAP R&D
expense
|
$
754
|
22.5 %
|
|
$ 254
|
|
$
(12)
|
|
$ 996
|
29.5 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
857
|
25.7 %
|
|
$ 271
|
|
$
(1)
|
|
$
1,127
|
33.3 %
|
Amortization of
acquired intangible assets
|
(1)
|
—
|
|
(3)
|
|
—
|
|
(4)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
82
|
2.5 %
|
|
—
|
|
—
|
|
82
|
2.3 %
|
Acquisition-related
expenses (d)
|
(64)
|
(1.9) %
|
|
(11)
|
|
—
|
|
(75)
|
(2.1) %
|
Restructuring
(g)
|
(72)
|
(2.3) %
|
|
(3)
|
|
—
|
|
(75)
|
(2.2) %
|
Proxy
contest
|
(29)
|
(0.9) %
|
|
—
|
|
—
|
|
(29)
|
(0.9) %
|
Non-GAAP SG&A
expense
|
$
773
|
23.1 %
|
|
$ 254
|
|
$
(1)
|
|
$
1,026
|
30.3 %
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$ 821
|
|
$
—
|
|
$ 821
|
24.3 %
|
Goodwill impairment
(i)
|
—
|
—
|
|
(712)
|
|
—
|
|
(712)
|
(21.1) %
|
Intangible (IPR&D)
impairment (i)
|
—
|
—
|
|
(109)
|
|
—
|
|
(109)
|
(3.2) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$ 14
|
0.4 %
|
|
$
—
|
|
$
—
|
|
$ 14
|
0.4 %
|
Legal contingency and
settlement (h)
|
(14)
|
(0.4) %
|
|
—
|
|
—
|
|
(14)
|
(0.4) %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
519
|
15.5 %
|
|
$
(1,424)
|
|
$
—
|
|
$
(905)
|
(26.8) %
|
Cost of
revenue
|
47
|
1.4 %
|
|
100
|
|
—
|
|
147
|
4.4 %
|
R&D
costs
|
17
|
0.5 %
|
|
—
|
|
—
|
|
17
|
0.5 %
|
SG&A
costs
|
84
|
2.6 %
|
|
18
|
|
—
|
|
102
|
3.0 %
|
Goodwill and intangible
impairment
|
—
|
—
|
|
821
|
|
—
|
|
821
|
24.3 %
|
Legal contingency and
settlement
|
14
|
0.4 %
|
|
—
|
|
—
|
|
14
|
0.4 %
|
Non-GAAP operating
profit (loss) (a)
|
$
681
|
20.4 %
|
|
$
(485)
|
|
$
—
|
|
$ 196
|
5.8 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(53)
|
(1.6) %
|
|
$
8
|
|
$
—
|
|
$ (45)
|
(1.3) %
|
Strategic investment
related loss, net (e)
|
36
|
1.1 %
|
|
—
|
|
—
|
|
36
|
1.0 %
|
Gain on Helix
contingent value right (f)
|
(8)
|
(0.2) %
|
|
—
|
|
—
|
|
(8)
|
(0.2) %
|
Unrealized foreign
currency loss on EC fine (j)
|
8
|
0.2 %
|
|
—
|
|
—
|
|
8
|
0.2 %
|
Non-GAAP other
(expense) income, net (a)
|
$
(17)
|
(0.5) %
|
|
$
8
|
|
$
—
|
|
$
(9)
|
(0.3) %
|
Illumina,
Inc.
Results of
Operations - Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
|
|
TABLE 3 (CONTINUED):
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF
OPERATIONS
AS A PERCENT OF REVENUE:
|
|
|
Nine Months
Ended
|
|
October 2,
2022
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$ 2,405
|
69.0 %
|
|
$ (91)
|
|
$
(14)
|
|
$
2,300
|
65.7 %
|
Amortization of
acquired intangible assets
|
24
|
0.7 %
|
|
101
|
|
—
|
|
124
|
3.5 %
|
Non-GAAP gross profit
(a)
|
$ 2,429
|
69.7 %
|
|
$ 10
|
|
$
(14)
|
|
$
2,424
|
69.2 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
740
|
21.2 %
|
|
$ 245
|
|
$
(10)
|
|
$ 975
|
27.8 %
|
Acquisition-related
expenses (d)
|
(1)
|
—
|
|
—
|
|
—
|
|
(1)
|
—
|
Non-GAAP R&D
expense
|
$
739
|
21.2 %
|
|
$ 245
|
|
$
(10)
|
|
$ 974
|
27.8 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
656
|
18.8 %
|
|
$ 210
|
|
$
(1)
|
|
$ 865
|
24.7 %
|
Amortization of
acquired intangible assets
|
(1)
|
—
|
|
(3)
|
|
—
|
|
(4)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
230
|
6.6 %
|
|
—
|
|
—
|
|
230
|
6.6 %
|
Acquisition-related
expenses (d)
|
(86)
|
(2.5) %
|
|
(9)
|
|
—
|
|
(96)
|
(2.8) %
|
Non-GAAP SG&A
expense
|
$
799
|
22.9 %
|
|
$ 198
|
|
$
(1)
|
|
$ 995
|
28.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$
598
|
17.1 %
|
|
$
—
|
|
$
—
|
|
$ 598
|
17.1 %
|
Legal contingency and
settlement (h)
|
(598)
|
(17.1) %
|
|
—
|
|
—
|
|
(598)
|
(17.1) %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$ —
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
3,914
|
|
$
—
|
|
$
3,914
|
111.8 %
|
Goodwill impairment
(i)
|
—
|
—
|
|
(3,914)
|
|
—
|
|
(3,914)
|
(111.8) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$ —
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
411
|
11.8 %
|
|
$ (4,460)
|
|
$
(3)
|
|
$ (4,052)
|
(115.7) %
|
Cost of
revenue
|
24
|
0.7 %
|
|
101
|
|
—
|
|
124
|
3.5 %
|
R&D
costs
|
1
|
—
|
|
—
|
|
—
|
|
1
|
— %
|
SG&A
costs
|
(143)
|
(4.0) %
|
|
12
|
|
—
|
|
(129)
|
(3.7) %
|
Legal contingency and
settlement
|
598
|
17.1 %
|
|
—
|
|
—
|
|
598
|
17.1 %
|
Goodwill
impairment
|
—
|
—
|
|
3,914
|
|
—
|
|
3,914
|
111.8 %
|
Non-GAAP operating
profit (loss) (a)
|
$
891
|
25.6 %
|
|
$
(433)
|
|
$
(3)
|
|
$ 456
|
13.0 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(117)
|
(3.4) %
|
|
$
1
|
|
$
—
|
|
$
(116)
|
(3.3) %
|
Strategic investment
related loss, net (e)
|
75
|
2.2 %
|
|
—
|
|
—
|
|
75
|
2.2 %
|
Loss on Helix
contingent value right (f)
|
8
|
0.2 %
|
|
—
|
|
—
|
|
8
|
0.2 %
|
Non-GAAP other
(expense) income, net (a)
|
$
(34)
|
(1.0) %
|
|
$
1
|
|
$
—
|
|
$ (33)
|
(0.9) %
|
|
All amounts in
tables are rounded to the nearest millions, except as otherwise
noted. As a result, certain amounts may not recalculate using the
rounded amounts provided. Percentages of revenue are calculated
based on the revenue of the respective segment.
|
|
(a) Non-GAAP
gross profit, included within non-GAAP operating profit (loss), is
a key measure of the effectiveness and efficiency of manufacturing
processes, product mix and the average selling prices of our
products and services. Non-GAAP operating profit (loss) and
non-GAAP other (expense) income, net exclude the effects of the pro
forma adjustments as detailed above. Management has excluded the
effects of these items in these measures to assist investors in
analyzing and assessing past and future operating performance,
including in the non-GAAP measures related to our Core Illumina and
GRAIL segments.
|
(b) Reconciling
amounts are recorded in cost of revenue.
|
(c) Amounts
consist primarily of fair value adjustments for our contingent
consideration liability related to GRAIL.
|
(d) Amounts
consist primarily of legal expenses related to the acquisition of
GRAIL.
|
(e) Amounts
consist primarily of mark-to-market adjustments and impairments
from our strategic investments.
|
(f) Amounts
consist of fair value adjustments related to our Helix contingent
value right.
|
(g) Amounts for
Q3 2023 consist primarily of lease and other asset impairments and
amounts for YTD 2023 consist primarily of employee severance costs
and lease and other asset impairments related to restructuring
activities.
|
(h) Amount
for Q3 2023 consists of a gain related to a patent litigation
settlement. The amount for YTD 2023 also consists of a loss related
to a patent litigation settlement in Q1 2023 and an adjustment
recorded in Q2 2023 to our accrual for the fine imposed by the
European Commission in July 2023. Amounts in YTD 2022 consist
of an expense of $145 million related to the settlement of our
litigation with BGI, which includes a gain of $11 million recorded
in Q3 2022 as a result of releasing $6 million of previously
recorded litigation accrual and $5 million of a gain contingency
recognized in Q3 2022. In addition, the amount in YTD 2022 consists
of an accrual of $453 million, recorded in Q2 2022, for the fine
imposed by the European Commission.
|
(i) Amounts for
Q3 2023 and YTD 2023 consist of goodwill and IPR&D intangible
asset impairments related to our GRAIL segment. Amounts for Q3 2022
and YTD 2022 consist of goodwill impairment related to our GRAIL
segment.
|
(j) Amounts
consist of an unrealized mark-to-market loss on hedge entered into
in Q3 2023 associated with the EC fine, partially offset by an
unrealized gain related to foreign currency balance sheet
remeasurement of the EC fine liability.
|
Illumina,
Inc.
Results of
Operations - Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
|
|
TABLE 4:
CONSOLIDATED ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX
PROVISION
(BENEFIT):
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 1,
2023
|
|
October 1,
2023
|
GAAP tax (benefit)
provision
|
$
(28)
|
3.6 %
|
|
$
36
|
(3.8) %
|
Incremental non-GAAP
tax expense (b)
|
102
|
|
|
108
|
|
Income tax provision
(c)
|
(1)
|
|
|
(9)
|
|
GILTI and U.S. foreign
tax credits (d)
|
(38)
|
|
|
(63)
|
|
Non-GAAP tax provision
(a)
|
$
35
|
39.7 %
|
|
$
72
|
38.3 %
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 2,
2022
|
|
October 2,
2022
|
GAAP tax
provision
|
$ 144
|
(4.0) %
|
|
$
97
|
(2.3) %
|
Incremental non-GAAP
tax expense (b)
|
(74)
|
|
|
77
|
|
Income tax provision
(c)
|
—
|
|
|
(5)
|
|
GILTI and U.S. foreign
tax credits (d)
|
(30)
|
|
|
(60)
|
|
Non-GAAP tax provision
(a)
|
$
40
|
43.2 %
|
|
$ 109
|
25.8 %
|
|
(a) Non-GAAP tax
provision excludes the effects of the pro forma adjustments as
detailed above. Management has excluded the effects of these items
in this measure to assist investors in analyzing and assessing past
and future operating performance.
|
(b) Incremental
non-GAAP tax expense reflects the tax impact of the non-GAAP
adjustments listed in Table 2.
|
(c) Amounts
represent the difference between book and tax accounting related to
stock-based compensation cost.
|
(d) Amounts
represent the impact of GRAIL pre-acquisition net operating losses
on GILTI and the utilization of U.S. foreign tax
credits.
|
Illumina, Inc.
Reconciliation of
Consolidated Non-GAAP Financial
Guidance
(unaudited)
Our future performance and financial results are subject to
risks and uncertainties, and actual results could differ materially
from the guidance set forth below. Some of the factors that could
affect our financial results are stated above in this press
release. More information on potential factors that could affect
our financial results is included from time to time in the public
reports filed with the Securities and Exchange Commission,
including Form 10-K for the fiscal year ended January 1, 2023 filed with the SEC on
February 17, 2023, Form 10-Q for the
fiscal quarter ended April 2, 2023,
and Form 10-Q for the fiscal quarter ended July 2, 2023. We assume no obligation to update
any forward-looking statements or information.
TABLE 5:
RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED (LOSS) EARNINGS
PER SHARE GUIDANCE:
|
|
|
Fiscal
Year
2023
|
Consolidated GAAP
diluted loss per share
|
$(6.67) -
$(6.57)
|
Amortization of
acquired intangible assets
|
1.23
|
Goodwill and intangible
impairment (b)
|
5.15
|
Legal contingency and
settlement (c)
|
0.09
|
Acquisition-related
expenses (d)
|
0.48
|
Strategic investment
related loss, net (e)
|
0.22
|
Gain on Helix
contingent value right (f)
|
(0.05)
|
Unrealized foreign
currency loss on EC fine (g)
|
0.05
|
Restructuring
(h)
|
0.59
|
Contingent
consideration liabilities (i)
|
(0.51)
|
GILTI and U.S. foreign
tax credits (j)
|
0.41
|
Incremental non-GAAP
tax expense (k)
|
(0.63)
|
Income tax provision
(l)
|
0.06
|
Proxy
contest
|
0.18
|
Consolidated non-GAAP
diluted earnings per share (a)
|
$0.60 -
$0.70
|
|
(a) Non-GAAP
diluted earnings per share excludes the effects of the pro forma
adjustments as detailed above. Non-GAAP diluted earnings per share
is a key component of the financial metrics utilized by the
company's board of directors to measure, in part, management's
performance and determine significant elements of management's
compensation. Management has excluded the effects of these items in
this measure to assist investors in analyzing and assessing our
past and future operating performance.
|
(b) Amount
consists of goodwill and IPR&D intangible asset impairments
related to our GRAIL segment recognized in Q3 2023.
|
(c) Amount
consists of a gain related to a patent litigation settlement in Q3
2023, an adjustment in Q2 2023 to our accrual for the fine imposed
by the European Commission and a loss related to a patent
litigation settlement in Q1 2023.
|
(d) Amount
consists primarily of legal expenses incurred through Q3 2023
related to the acquisition of GRAIL.
|
(e) Amount
consists primarily of mark-to-market adjustments and impairments
recognized through Q3 2023 on our strategic investments.
|
(f) Amount
consists of fair value adjustments recognized through Q3 2023 on
our Helix contingent value right.
|
(g) Amount
consists of an unrealized mark-to-market loss on hedge entered into
in Q3 2023 associated with the EC fine, partially offset by an
unrealized gain related to foreign currency balance sheet
remeasurement of the EC fine liability.
|
(h) Amount
consists primarily of employee severance costs and lease and other
asset impairments incurred through Q3 2023 related to restructuring
activities.
|
(i) Amount
consists primarily of fair value adjustments recognized through Q3
2023 for our contingent consideration liability related to
GRAIL.
|
(j) Amount
represents the impact of GRAIL pre-acquisition net operating losses
on GILTI and the utilization of U.S. foreign tax
credits.
|
(k) Incremental
non-GAAP tax expense reflects the tax impact related to the
non-GAAP adjustments listed.
|
(l) Amount
represents the difference between book and tax accounting related
to stock-based compensation cost recognized through Q3
2023.
|
Investors:
Salli Schwartz
+1.858.291.6421
ir@illumina.com
Media:
David McAlpine
+1.347.327.1336
pr@illumina.com
View original
content:https://www.prnewswire.com/news-releases/illumina-reports-financial-results-for-third-quarter-of-fiscal-year-2023-301983971.html
SOURCE Illumina, Inc.