- Revenue of $1.12 billion for Q4
2023, up 4% from Q4 2022 (up 4% on a constant currency basis)
- Revenue of $4.50 billion for
fiscal year 2023, down 2% from fiscal year 2022 (flat on a constant
currency basis)
- Shipped 79 NovaSeq X instruments in Q4 2023 and 352 instruments
for fiscal year 2023
- GAAP diluted loss per share of $(1.11) for Q4 2023, compared to GAAP diluted
loss per share of $(0.89) for Q4
2022
- Non-GAAP diluted earnings per share of $0.14 for both Q4 2023 and Q4 2022
- GAAP diluted loss per share of $(7.34) for fiscal year 2023, which included
goodwill and intangible impairments of $821
million related to the GRAIL segment, compared to GAAP
diluted loss per share of $(28.00)
for fiscal year 2022, which included goodwill impairment of
$3.91 billion related to the GRAIL
segment
- Non-GAAP diluted earnings per share of $0.86 for fiscal year 2023, compared to non-GAAP
diluted earnings per share of $2.12
for fiscal year 2022
- For fiscal year 2024, expect Core Illumina revenue that is
approximately flat compared to 2023 and a Core Illumina non-GAAP
operating margin of approximately 20%
- On December 17, 2023, Illumina
announced it will divest GRAIL. The GRAIL divestiture will be
executed through a third-party sale or capital markets transaction,
consistent with the European Commission's divestiture order, with
the goal of finalizing the divestiture terms by the end of the
second quarter of this year. The timing of Illumina's progress with
the divestment is not affected by external factors, including, but
not limited to, the outcome of the European Court of Justice appeal
and the potential preliminary NHS rollout of Galleri in the UK
SAN
DIEGO, Feb. 8, 2024 /PRNewswire/ -- Illumina,
Inc. (Nasdaq: ILMN) ("Illumina" or the "company") today announced
its financial results for the fourth quarter and fiscal year 2023,
which include the consolidated financial results for GRAIL.
"I'm pleased that in the fourth quarter, my first full quarter
with the company, Illumina delivered results ahead of our
expectations, driven by NovaSeq X instrument and consumables
sales," said Jacob Thaysen, Chief
Executive Officer. "While our customers generally remain
constrained in their purchasing, we are well-positioned for growth
as market conditions improve. Illumina is focused on three key
priorities to accelerate value creation: driving our top line;
focusing on operational excellence, including boosting
productivity, cost savings, and customer-focused innovation; and
working to resolve GRAIL as quickly as possible."
Fourth quarter consolidated results
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in millions,
except per share amounts
|
Q4
2023
|
|
Q4
2022
|
|
Q4
2023
|
|
Q4
2022
|
Revenue
|
$
1,122
|
|
$
1,083
|
|
$
1,122
|
|
$
1,083
|
Gross margin
|
60.1 %
|
|
62.1 %
|
|
64.4 %
|
|
66.6 %
|
Research and
development ("R&D") expense
|
$ 341
|
|
$ 346
|
|
$ 329
|
|
$ 339
|
Selling, general and
administrative ("SG&A") expense
|
$ 485
|
|
$ 432
|
|
$ 342
|
|
$ 351
|
Goodwill and intangible
impairment
|
$
6
|
|
$ —
|
|
$
—
|
|
$ —
|
Legal contingency and
settlement
|
$
6
|
|
$ 21
|
|
$
—
|
|
$ —
|
Operating (loss)
profit
|
$
(164)
|
|
$
(127)
|
|
$
51
|
|
$ 31
|
Operating
margin
|
(14.6) %
|
|
(11.7) %
|
|
4.6 %
|
|
2.9 %
|
Tax provision
(benefit)
|
$
8
|
|
$
(28)
|
|
$
26
|
|
$
9
|
Tax rate
|
(4.9) %
|
|
16.8 %
|
|
55.4 %
|
|
29.3 %
|
Net (loss)
income
|
$
(176)
|
|
$
(140)
|
|
$
22
|
|
$ 22
|
Diluted (loss) earnings
per share
|
$
(1.11)
|
|
$
(0.89)
|
|
$
0.14
|
|
$
0.14
|
|
(a) See the
tables included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
Capital expenditures for free cash flow purposes were
$51 million for Q4 2023. Cash flow
provided by operations was $224
million, compared to cash flow provided by operations of
$147 million in the prior year
period. Free cash flow (cash flow provided by operations less
capital expenditures) was $173
million for the quarter, compared to $59 million in the prior year period.
Depreciation and amortization expenses were $109 million for Q4 2023. At the close of the
quarter, the company held $1,054 million in cash, cash equivalents and
short-term investments.
Fourth quarter segment results
Illumina has two
reportable segments, Core Illumina and GRAIL.
Core Illumina
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in
millions
|
Q4
2023
|
|
Q4
2022
|
|
Q4
2023
|
|
Q4
2022
|
Revenue
(b)
|
$
1,097
|
|
$
1,065
|
|
$
1,097
|
|
$
1,065
|
Gross margin
(c)
|
63.3 %
|
|
65.9 %
|
|
64.7 %
|
|
67.3 %
|
R&D
expense
|
$ 260
|
|
$ 264
|
|
$ 248
|
|
$ 257
|
SG&A
expense
|
$ 391
|
|
$ 347
|
|
$ 259
|
|
$ 271
|
Goodwill and intangible
impairment
|
$
6
|
|
$ —
|
|
$
—
|
|
$ —
|
Legal contingency and
settlement
|
$
6
|
|
$ 21
|
|
$
—
|
|
$ —
|
Operating
profit
|
$
33
|
|
$ 70
|
|
$ 203
|
|
$ 190
|
Operating
margin
|
3.0 %
|
|
6.6 %
|
|
18.5 %
|
|
17.8 %
|
|
(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 Q4 2023 was up 3% as compared to Q4 2022 and
up 3% on a constant currency basis. Amounts for Q4 2023 and Q4 2022
both included intercompany revenue of $5 million, which is
eliminated in consolidation.
|
(c) The
year-over-year decrease in gross margin was primarily driven by the
mix of lower margin strategic partnership revenue, lower instrument
margins due to the NovaSeq X launch, which is typical with a new
platform introduction, and increased field services and
installation costs, partially offset by lower freight
costs.
|
GRAIL
|
GAAP
|
|
Non-GAAP
(a)
|
In
millions
|
Q4
2023
|
|
Q4
2022
|
|
Q4
2023
|
|
Q4
2022
|
Revenue
|
$
30
|
|
$
23
|
|
$
30
|
|
$
23
|
Gross (loss)
profit
|
$
(19)
|
|
$
(26)
|
|
$
14
|
|
$
8
|
R&D
expense
|
$
84
|
|
$
85
|
|
$
84
|
|
$
85
|
SG&A
expense
|
$
94
|
|
$
86
|
|
$
83
|
|
$
81
|
Operating
loss
|
$
(197)
|
|
$
(197)
|
|
$
(152)
|
|
$
(159)
|
|
(a) See
Table 3 included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
Fiscal year 2023 consolidated results
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in millions,
except per share amounts
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
4,504
|
|
$
4,584
|
|
$
4,504
|
|
$
4,584
|
Gross margin
|
60.9 %
|
|
64.8 %
|
|
65.3 %
|
|
68.6 %
|
R&D
expense
|
$
1,354
|
|
$
1,321
|
|
$
1,325
|
|
$
1,313
|
SG&A
expense
|
$
1,612
|
|
$
1,297
|
|
$
1,367
|
|
$
1,346
|
Goodwill and intangible
impairment (b)
|
$ 827
|
|
$
3,914
|
|
$
—
|
|
$
—
|
Legal contingency and
settlement
|
$
20
|
|
$ 619
|
|
$
—
|
|
$
—
|
Operating (loss)
profit
|
$
(1,069)
|
|
$
(4,179)
|
|
$ 247
|
|
$ 487
|
Operating
margin
|
(23.7) %
|
|
(91.2) %
|
|
5.5 %
|
|
10.6 %
|
Tax
provision
|
$
44
|
|
$
68
|
|
$
98
|
|
$ 118
|
Tax rate
|
(3.9) %
|
|
(1.6) %
|
|
41.8 %
|
|
26.0 %
|
Net (loss)
income
|
$
(1,161)
|
|
$
(4,404)
|
|
$ 137
|
|
$ 336
|
Diluted (loss) earnings
per share
|
$
(7.34)
|
|
$
(28.00)
|
|
$ 0.86
|
|
$ 2.12
|
|
(a) See the
tables included in "Results of Operations - Non-GAAP" section below
for reconciliations of these GAAP and non-GAAP financial
measures.
|
(b) The
company recognized $712 million in goodwill and $109 million in
intangible asset (IPR&D) impairment related to the GRAIL
segment in 2023. 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. In 2022, the company recognized $3.91 billion in goodwill
impairment related to the GRAIL segment.
|
Capital expenditures for free cash flow purposes were
$195 million for fiscal year 2023.
Cash flow provided by operations was $478 million, compared to
$392 million in the prior year. Free cash flow (cash flow
provided by operations less capital expenditures) was
$283 million for the year, compared to $106 million in
the prior year. Depreciation and amortization expenses were
$432 million for fiscal year 2023.
Fiscal year 2023 segment results
Core Illumina
|
GAAP
|
|
Non-GAAP
(a)
|
In
millions
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
(b)
|
$
4,438
|
|
$
4,553
|
|
$
4,438
|
|
$
4,553
|
Gross margin
|
64.4 %
|
|
68.2 %
|
|
65.8 %
|
|
69.1 %
|
R&D
expense
|
$
1,030
|
|
$
1,004
|
|
$
1,001
|
|
$
996
|
SG&A
expense
|
$
1,248
|
|
$
1,003
|
|
$
1,032
|
|
$
1,069
|
Goodwill and intangible
impairment
|
$
6
|
|
$ —
|
|
$
—
|
|
$ —
|
Legal contingency and
settlement
|
$
20
|
|
$
619
|
|
$
—
|
|
$ —
|
Operating
profit
|
$
552
|
|
$
481
|
|
$
885
|
|
$
1,081
|
Operating
margin
|
12.4 %
|
|
10.6 %
|
|
19.9 %
|
|
23.8 %
|
|
(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 2023 was down 3% from 2022, and down 1% on a
constant currency basis. Amounts for 2023 and 2022 included
intercompany revenue of $26 million and $24 million,
respectively, which is eliminated in consolidation.
|
GRAIL
|
GAAP
|
|
Non-GAAP
(a)
|
In
millions
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
93
|
|
$
55
|
|
$
93
|
|
$
55
|
Gross (loss)
profit
|
$
(96)
|
|
$
(117)
|
|
$
38
|
|
$
17
|
R&D
expense
|
$
338
|
|
$
330
|
|
$
338
|
|
$ 330
|
SG&A
expense
|
$
366
|
|
$
296
|
|
$
337
|
|
$ 279
|
Goodwill and intangible
impairment
|
$
821
|
|
$ 3,914
|
|
$
—
|
|
$
—
|
Operating
loss
|
$
(1,621)
|
|
$
(4,657)
|
|
$
(638)
|
|
$ (592)
|
|
(a) See
Table 3 included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
Key announcements by Illumina since Illumina's last earnings
release
- Announced the decision to divest GRAIL, executed through a
third-party sale or capital markets transaction, with the goal of
finalizing terms by the end of the second quarter 2024
- Submitted a confidential, draft registration statement on Form
10 related to the GRAIL divestment to the U.S. Securities and
Exchange Commission
- Signed agreement with Janssen Research & Development, LLC
(Janssen) to collaborate on the development of Illumina's novel
molecular residual disease (MRD) assay
- Expanded the Alliance for Genomic Discovery, adding Bristol
Myers Squibb (BMS), GSK and Novo Nordisk to join founding member
organizations AbbVie, Amgen, AstraZeneca, Bayer, and Merck, who
together will co-fund the whole-genome sequencing (WGS) of 250,000
data samples and have access to the resulting data for use in drug
discovery and therapeutic development
- Launched the Global Health Access Initiative to support access
to pathogen sequencing tools for public health in low- and
middle-income countries (LMICs)
- Conducted a stewardship-focused non-deal roadshow led by
Illumina's independent board directors; held discussions with
shareholders owning more than half of outstanding shares
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
- Highlighted the presentation of analytical and clinical
validation data on a novel prognostic test in early-stage lung
cancer, generated through collaboration with the Samsung Medical
Centre and AstraZeneca, demonstrating sensitive and specific
detection of circulating tumor DNA (ctDNA) for Lung Adenocarcinoma
(LUAD) at a clinically meaningful threshold for disease
prognostication
- Announced that it will initiate Real-world Evidence to Advance
Multi-Cancer Early Detection Health Equity (REACH/Galleri-Medicare
study) following the U.S. Food and Drug Administration's (FDA)
approval of GRAIL's Investigational Device Exemption (IDE)
application and the Centers for Medicare and Medicaid Services'
(CMS) approval for Medicare coverage of the study
- Announced BeniComp, a customized health plan provider, and
Curative Insurance, a pioneering healthcare services company, will
make Galleri available to eligible patients
A full list of recent GRAIL announcements can be found in
GRAIL's Newsroom.
Financial outlook and guidance
For fiscal year 2024,
the company expects Core Illumina revenue to be approximately flat
compared to fiscal year 2023 and Core Illumina non-GAAP operating
margin to be approximately 20%. While Illumina continues to move as
quickly as possible to resolve GRAIL, the company is focusing its
financial outlook on Core Illumina, as the specific timing and
impact of the GRAIL divestment remains uncertain.
The company provides forward-looking guidance on a non-GAAP
basis. The company is unable to provide a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP reported financial measures because it is unable to
predict with reasonable certainty the financial impact of items
such as acquisition-related expenses, gains and losses from our
strategic investments, fair value adjustments related to contingent
consideration and contingent value rights, potential future asset
impairments, restructuring activities, and the ultimate outcome of
pending litigation without unreasonable effort. These items are
uncertain, inherently difficult to predict, depend on various
factors, and could have a material impact on GAAP reported results
for the guidance period. For the same reasons, the company is
unable to address the significance of the unavailable information,
which could be material to future results.
Conference call information
The conference call will
begin at 2 p.m. Pacific Time (5
p.m. Eastern Time) on Thursday, February 8, 2024.
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 877.400.0505 or +1.323.701.0225 outside
North America, both using
conference ID 1615812. 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; (xi) to
deploy new products, services, and applications, and to expand the
markets for our technology platforms; (xii) 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; (xiii) the risks and costs
associated with the expected divestment of GRAIL, including the
possibility that the terms on which we divest all or a portion of
the assets or equity interests of GRAIL are materially worse than
those on which we acquired GRAIL; (xiv) our ability to satisfy the
necessary conditions to consummate the divestiture of GRAIL on a
timely basis or at all, due to the requirements set by the European
Commission; (xv) 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; (xvi) the risk of
incurring additional fines associated with the consummation of our
acquisition of GRAIL; (xvii) our ability to obtain approval by
third-party payors to reimburse patients for our products; (xviii)
our ability to obtain regulatory clearance for our products from
government agencies; (xix) our ability to successfully partner with
other companies and organizations to develop new products, expand
markets, and grow our business; (xx) uncertainty, or adverse
economic and business conditions, including as a result of slowing
or uncertain economic growth or armed conflict; (xxi) the
application of generally accepted accounting principles, which are
highly complex and involve many subjective assumptions, estimates,
and judgments and (xxii) 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. Our focus on innovation 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)
|
|
|
December 31,
2023
|
|
January 1,
2023
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,048
|
|
$
2,011
|
Short-term
investments
|
6
|
|
26
|
Accounts receivable,
net
|
734
|
|
671
|
Inventory,
net
|
587
|
|
568
|
Prepaid expenses and
other current assets
|
234
|
|
285
|
Total current
assets
|
2,609
|
|
3,561
|
Property and equipment,
net
|
1,007
|
|
1,091
|
Operating lease
right-of-use assets
|
544
|
|
653
|
Goodwill
|
2,545
|
|
3,239
|
Intangible assets,
net
|
2,993
|
|
3,285
|
Other assets
|
413
|
|
423
|
Total
assets
|
$
10,111
|
|
$
12,252
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
245
|
|
$
293
|
Accrued
liabilities
|
1,325
|
|
1,232
|
Term notes, current
portion
|
—
|
|
500
|
Convertible senior
notes, current portion
|
—
|
|
748
|
Total current
liabilities
|
1,570
|
|
2,773
|
Operating lease
liabilities
|
687
|
|
744
|
Term notes
|
1,489
|
|
1,487
|
Other long-term
liabilities
|
620
|
|
649
|
Stockholders'
equity
|
5,745
|
|
6,599
|
Total liabilities and
stockholders' equity
|
$
10,111
|
|
$
12,252
|
Illumina,
Inc.
Condensed
Consolidated Statements of Operations
(In millions, except
per share amounts)
(unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
January 1,
2023
|
|
December 31,
2023
|
|
January 1,
2023
|
Revenue:
|
|
|
|
|
|
|
|
Product
revenue
|
$
923
|
|
$
913
|
|
$
3,787
|
|
$
3,953
|
Service and other
revenue
|
199
|
|
170
|
|
717
|
|
631
|
Total
revenue
|
1,122
|
|
1,083
|
|
4,504
|
|
4,584
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Cost of product
revenue (a)
|
293
|
|
279
|
|
1,177
|
|
1,144
|
Cost of service and
other revenue (a)
|
108
|
|
84
|
|
392
|
|
295
|
Amortization of
acquired intangible assets
|
47
|
|
48
|
|
191
|
|
173
|
Total cost of
revenue
|
448
|
|
411
|
|
1,760
|
|
1,612
|
Gross
profit
|
674
|
|
672
|
|
2,744
|
|
2,972
|
Operating
expense:
|
|
|
|
|
|
|
|
Research and
development (a)
|
341
|
|
346
|
|
1,354
|
|
1,321
|
Selling, general and
administrative (a)
|
485
|
|
432
|
|
1,612
|
|
1,297
|
Goodwill and
intangible impairment
|
6
|
|
—
|
|
827
|
|
3,914
|
Legal contingency and
settlement
|
6
|
|
21
|
|
20
|
|
619
|
Total operating
expense
|
838
|
|
799
|
|
3,813
|
|
7,151
|
Loss from
operations
|
(164)
|
|
(127)
|
|
(1,069)
|
|
(4,179)
|
Other expense,
net
|
(4)
|
|
(41)
|
|
(48)
|
|
(157)
|
Loss before income
taxes
|
(168)
|
|
(168)
|
|
(1,117)
|
|
(4,336)
|
Provision (benefit)
for income taxes
|
8
|
|
(28)
|
|
44
|
|
68
|
Net loss
|
$
(176)
|
|
$
(140)
|
|
$
(1,161)
|
|
$ (4,404)
|
Loss per
share:
|
|
|
|
|
|
|
|
Basic
|
$
(1.11)
|
|
$
(0.89)
|
|
$
(7.34)
|
|
$ (28.00)
|
Diluted
|
$
(1.11)
|
|
$
(0.89)
|
|
$
(7.34)
|
|
$ (28.00)
|
Shares used in
computing loss per share:
|
|
|
|
|
|
|
|
Basic
|
159
|
|
158
|
|
158
|
|
157
|
Diluted
|
159
|
|
158
|
|
158
|
|
157
|
|
(a) Includes
stock-based compensation expense for stock-based awards:
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
January 1,
2023
|
|
December 31,
2023
|
|
January 1,
2023
|
Cost of product
revenue
|
$
7
|
|
$
6
|
|
$
29
|
|
$
26
|
Cost of service and
other revenue
|
2
|
|
1
|
|
7
|
|
6
|
Research and
development
|
39
|
|
40
|
|
155
|
|
153
|
Selling, general and
administrative
|
48
|
|
51
|
|
189
|
|
181
|
Stock-based
compensation expense before taxes
|
$
96
|
|
$
98
|
|
$
380
|
|
$
366
|
Illumina, Inc.
Condensed Consolidated Statements of Cash
Flows
(In
millions)
(unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
January 1,
2023
|
|
December 31,
2023
|
|
January 1,
2023
|
Net cash provided by
operating activities
|
$
224
|
|
$
147
|
|
$
478
|
|
$
392
|
Net cash used in
investing activities
|
(84)
|
|
(102)
|
|
(231)
|
|
(591)
|
Net cash (used in)
provided by financing activities
|
(27)
|
|
956
|
|
(1,210)
|
|
1,000
|
Effect of exchange rate
changes on cash and cash equivalents
|
8
|
|
10
|
|
—
|
|
(22)
|
Net increase (decrease)
in cash and cash equivalents
|
121
|
|
1,011
|
|
(963)
|
|
779
|
Cash and cash
equivalents, beginning of period
|
927
|
|
1,000
|
|
2,011
|
|
1,232
|
Cash and cash
equivalents, end of period
|
$
1,048
|
|
$
2,011
|
|
$
1,048
|
|
$
2,011
|
|
|
|
|
|
|
|
|
Calculation of free
cash flow:
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
224
|
|
$
147
|
|
$
478
|
|
$
392
|
Purchases of property
and equipment
|
(51)
|
|
(88)
|
|
(195)
|
|
(286)
|
Free cash flow
(a)
|
$
173
|
|
$
59
|
|
$
283
|
|
$
106
|
|
(a) Free cash
flow, which is a non-GAAP financial measure, is calculated as net
cash provided by 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
|
|
Year
Ended
|
|
December 31,
2023
|
|
January 1,
2023
|
|
%
Change
|
|
December 31,
2023
|
|
January 1,
2023
|
|
%
Change
|
Consolidated
revenue
|
$
1,122
|
|
$
1,083
|
|
4 %
|
|
$
4,504
|
|
$
4,584
|
|
(2) %
|
Less: Hedge
gains
|
10
|
|
21
|
|
|
|
18
|
|
53
|
|
|
Consolidated revenue,
excluding hedge effect
|
1,112
|
|
1,062
|
|
|
|
4,486
|
|
4,531
|
|
|
Less: Exchange rate
effect
|
10
|
|
—
|
|
|
|
(25)
|
|
—
|
|
|
Consolidated constant
currency revenue (a)
|
$
1,102
|
|
$
1,062
|
|
4 %
|
|
$
4,511
|
|
$
4,531
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Illumina
revenue
|
$
1,097
|
|
$
1,065
|
|
3 %
|
|
$
4,438
|
|
$
4,553
|
|
(3) %
|
Less: Hedge
gains
|
10
|
|
21
|
|
|
|
18
|
|
53
|
|
|
Core Illumina revenue,
excluding hedge effect
|
1,087
|
|
1,044
|
|
|
|
4,420
|
|
4,500
|
|
|
Less: Exchange rate
effect
|
10
|
|
—
|
|
|
|
(25)
|
|
—
|
|
|
Core Illumina constant
currency revenue (a)
|
$
1,077
|
|
$
1,044
|
|
3 %
|
|
$
4,445
|
|
$
4,500
|
|
(1) %
|
|
(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
|
|
Year
Ended
|
|
December 31,
2023
|
|
January 1,
2023
|
|
December 31,
2023
|
|
January 1,
2023
|
GAAP loss per share
- diluted
|
$
(1.11)
|
|
$
(0.89)
|
|
$
(7.34)
|
|
$
(28.00)
|
Cost of revenue
(b)
|
0.30
|
|
0.31
|
|
1.24
|
|
1.10
|
R&D expense
(b)
|
0.08
|
|
0.04
|
|
0.18
|
|
0.05
|
SG&A expense
(b)
|
0.90
|
|
0.51
|
|
1.54
|
|
(0.31)
|
Goodwill and intangible
impairment (b)
|
0.04
|
|
—
|
|
5.23
|
|
24.93
|
Legal contingency and
settlement (b)
|
0.03
|
|
0.14
|
|
0.13
|
|
3.94
|
Other expense, net
(b)
|
0.01
|
|
0.26
|
|
0.23
|
|
0.78
|
GILTI and U.S. foreign
tax credits (c)
|
(0.01)
|
|
(0.01)
|
|
0.38
|
|
0.38
|
Incremental non-GAAP
tax expense (d)
|
(0.28)
|
|
(0.31)
|
|
(0.96)
|
|
(0.83)
|
Income tax provision
(e)
|
0.18
|
|
0.09
|
|
0.23
|
|
0.11
|
Effect of dilutive
shares (f)
|
—
|
|
—
|
|
—
|
|
(0.03)
|
Non-GAAP earnings per
share - diluted (a)
|
$
0.14
|
|
$
0.14
|
|
$
0.86
|
|
$
2.12
|
|
|
|
|
|
|
|
|
GAAP diluted
shares
|
159
|
|
158
|
|
158
|
|
157
|
Non-GAAP dilutive
shares (f)
|
—
|
|
—
|
|
—
|
|
2
|
Non-GAAP diluted
shares
|
159
|
|
158
|
|
158
|
|
159
|
TABLE 2:
CONSOLIDATED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET (LOSS)
INCOME:
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
January 1,
2023
|
|
December 31,
2023
|
|
January 1,
2023
|
GAAP net
loss
|
$
(176)
|
|
$
(140)
|
|
$
(1,161)
|
|
$
(4,404)
|
Cost of revenue
(b)
|
48
|
|
49
|
|
196
|
|
173
|
R&D expense
(b)
|
12
|
|
7
|
|
29
|
|
8
|
SG&A expense
(b)
|
143
|
|
81
|
|
244
|
|
(48)
|
Goodwill and intangible
impairment (b)
|
6
|
|
—
|
|
827
|
|
3,914
|
Legal contingency and
settlement (b)
|
6
|
|
21
|
|
20
|
|
619
|
Other expense, net
(b)
|
1
|
|
41
|
|
36
|
|
124
|
GILTI and U.S. foreign
tax credits (c)
|
(2)
|
|
(1)
|
|
61
|
|
60
|
Incremental non-GAAP
tax expense (d)
|
(44)
|
|
(51)
|
|
(152)
|
|
(129)
|
Income tax provision
(e)
|
28
|
|
15
|
|
37
|
|
19
|
Non-GAAP net income
(a)
|
22
|
|
22
|
|
137
|
|
336
|
Add: interest expense
on convertible notes, net of tax (g)
|
—
|
|
—
|
|
—
|
|
2
|
Non-GAAP net income for
diluted earnings per share
|
$
22
|
|
$
22
|
|
$
137
|
|
$
338
|
|
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 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
|
|
December 31,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
695
|
63.3 %
|
|
$
(19)
|
|
$
(2)
|
|
$
674
|
60.1 %
|
Amortization of
acquired intangible assets
|
14
|
1.3 %
|
|
33
|
|
—
|
|
47
|
4.2 %
|
Restructuring
(g)
|
1
|
0.1 %
|
|
—
|
|
—
|
|
1
|
0.1 %
|
Non-GAAP gross profit
(a)
|
$
710
|
64.7 %
|
|
$
14
|
|
$
(2)
|
|
$
722
|
64.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
260
|
23.7 %
|
|
$
84
|
|
$
(3)
|
|
$
341
|
30.4 %
|
Acquisition-related
expenses (d)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Restructuring
(g)
|
(11)
|
(1.0) %
|
|
—
|
|
—
|
|
(11)
|
(1.0) %
|
Non-GAAP R&D
expense
|
$
248
|
22.6 %
|
|
$
84
|
|
$
(3)
|
|
$
329
|
29.3 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
391
|
35.6 %
|
|
$
94
|
|
$
—
|
|
$
485
|
43.2 %
|
Amortization of
acquired intangible assets
|
—
|
—
|
|
(1)
|
|
—
|
|
(1)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
(58)
|
(5.2) %
|
|
—
|
|
—
|
|
(58)
|
(5.1) %
|
Acquisition-related
expenses (d)
|
(24)
|
(2.2) %
|
|
(9)
|
|
—
|
|
(33)
|
(2.9) %
|
Restructuring
(g)
|
(48)
|
(4.4) %
|
|
(1)
|
|
—
|
|
(49)
|
(4.4) %
|
Proxy
contest
|
(2)
|
(0.2) %
|
|
—
|
|
—
|
|
(2)
|
(0.2) %
|
Non-GAAP SG&A
expense
|
$
259
|
23.6 %
|
|
$
83
|
|
$
—
|
|
$
342
|
30.5 %
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$
6
|
0.5 %
|
|
$
—
|
|
$
—
|
|
$
6
|
0.5 %
|
Intangible (IPR&D)
impairment (i)
|
(6)
|
(0.5) %
|
|
—
|
|
—
|
|
(6)
|
(0.5) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$
6
|
0.5 %
|
|
$
—
|
|
$
—
|
|
$
6
|
0.5 %
|
Legal contingency and
settlement (h)
|
(6)
|
(0.5) %
|
|
—
|
|
—
|
|
(6)
|
(0.5) %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$ 33
|
3.0 %
|
|
$
(197)
|
|
$
—
|
|
$
(164)
|
(14.6) %
|
Cost of
revenue
|
15
|
1.4 %
|
|
33
|
|
—
|
|
48
|
4.3 %
|
R&D
costs
|
12
|
1.1 %
|
|
—
|
|
—
|
|
12
|
1.1 %
|
SG&A
costs
|
131
|
12.0 %
|
|
12
|
|
—
|
|
143
|
12.8 %
|
Goodwill and intangible
impairment
|
6
|
0.5 %
|
|
—
|
|
—
|
|
6
|
0.5 %
|
Legal contingency and
settlement
|
6
|
0.5 %
|
|
—
|
|
—
|
|
6
|
0.5 %
|
Non-GAAP operating
profit (loss) (a)
|
$
203
|
18.5 %
|
|
$
(152)
|
|
$
—
|
|
$ 51
|
4.6 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$ (6)
|
(0.5) %
|
|
$
2
|
|
$
—
|
|
$
(4)
|
(0.4) %
|
Gain on Helix
contingent value right (f)
|
(2)
|
(0.2) %
|
|
—
|
|
—
|
|
(2)
|
(0.2) %
|
Unrealized foreign
currency loss on EC fine (j)
|
3
|
0.3 %
|
|
—
|
|
—
|
|
3
|
0.3 %
|
Non-GAAP other
(expense) income, net (a)
|
$ (5)
|
(0.4) %
|
|
$
2
|
|
$
—
|
|
$
(3)
|
(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:
|
|
|
Three Months
Ended
|
|
January 1,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
702
|
65.9 %
|
|
$ (26)
|
|
$
(4)
|
|
$
672
|
62.1 %
|
Amortization of
acquired intangible assets
|
14
|
1.3 %
|
|
34
|
|
—
|
|
48
|
4.4 %
|
Restructuring
(g)
|
1
|
0.1 %
|
|
—
|
|
—
|
|
1
|
0.1 %
|
Non-GAAP gross profit
(a)
|
$
717
|
67.3 %
|
|
$
8
|
|
$
(4)
|
|
$
721
|
66.6 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
264
|
24.7 %
|
|
$
85
|
|
$
(3)
|
|
$
346
|
31.9 %
|
Acquisition-related
expenses (d)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Restructuring
(g)
|
(6)
|
(0.5) %
|
|
—
|
|
—
|
|
(6)
|
(0.5) %
|
Non-GAAP R&D
expense
|
$
257
|
24.1 %
|
|
$
85
|
|
$
(3)
|
|
$
339
|
31.3 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
347
|
32.6 %
|
|
$
86
|
|
$
(1)
|
|
$
432
|
39.9 %
|
Amortization of
acquired intangible assets
|
—
|
—
|
|
(1)
|
|
—
|
|
(1)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
(25)
|
(2.4) %
|
|
—
|
|
—
|
|
(25)
|
(2.3) %
|
Acquisition-related
expenses (d)
|
(27)
|
(2.5) %
|
|
(4)
|
|
—
|
|
(31)
|
(2.9) %
|
Restructuring
(g)
|
(24)
|
(2.3) %
|
|
—
|
|
—
|
|
(24)
|
(2.2) %
|
Non-GAAP SG&A
expense
|
$
271
|
25.4 %
|
|
$
81
|
|
$
(1)
|
|
$
351
|
32.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$ 21
|
2.0 %
|
|
$
—
|
|
$
—
|
|
$ 21
|
1.9 %
|
Legal contingency and
settlement (h)
|
(21)
|
(2.0) %
|
|
—
|
|
—
|
|
(21)
|
(1.9) %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$ 70
|
6.6 %
|
|
$ (197)
|
|
$
—
|
|
$
(127)
|
(11.7) %
|
Cost of
revenue
|
15
|
1.4 %
|
|
34
|
|
—
|
|
49
|
4.5 %
|
R&D
costs
|
7
|
0.6 %
|
|
—
|
|
—
|
|
7
|
0.6 %
|
SG&A
costs
|
77
|
7.2 %
|
|
4
|
|
—
|
|
81
|
7.6 %
|
Legal contingency and
settlement
|
21
|
2.0 %
|
|
—
|
|
—
|
|
21
|
1.9 %
|
Non-GAAP operating
profit (loss) (a)
|
$
190
|
17.8 %
|
|
$ (159)
|
|
$
—
|
|
$ 31
|
2.9 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(42)
|
(3.9) %
|
|
$
1
|
|
$
—
|
|
$ (41)
|
(3.8) %
|
Strategic investment
related loss, net (e)
|
42
|
3.9 %
|
|
—
|
|
—
|
|
42
|
3.9 %
|
Gain on Helix
contingent value right (f)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Non-GAAP other
(expense) income, net (a)
|
$ (1)
|
(0.1) %
|
|
$
1
|
|
$
—
|
|
$ —
|
—
|
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:
|
|
|
Year
Ended
|
|
December 31,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
2,856
|
64.4 %
|
|
$
(96)
|
|
$
(16)
|
|
$
2,744
|
60.9 %
|
Amortization of
acquired intangible assets
|
57
|
1.3 %
|
|
134
|
|
—
|
|
191
|
4.3 %
|
Restructuring
(g)
|
5
|
0.1 %
|
|
—
|
|
—
|
|
5
|
0.1 %
|
Non-GAAP gross profit
(a)
|
$
2,918
|
65.8 %
|
|
$
38
|
|
$
(16)
|
|
$
2,940
|
65.3 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
1,030
|
23.2 %
|
|
$ 338
|
|
$
(14)
|
|
$
1,354
|
30.1 %
|
Acquisition-related
expenses (d)
|
(2)
|
—
|
|
—
|
|
—
|
|
(2)
|
—
|
Restructuring
(g)
|
(27)
|
(0.6) %
|
|
—
|
|
—
|
|
(27)
|
(0.7) %
|
Non-GAAP R&D
expense
|
$
1,001
|
22.6 %
|
|
$ 338
|
|
$
(14)
|
|
$
1,325
|
29.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
1,248
|
28.1 %
|
|
$ 366
|
|
$
(2)
|
|
$
1,612
|
35.8 %
|
Amortization of
acquired intangible assets
|
(1)
|
—
|
|
(4)
|
|
—
|
|
(5)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
24
|
0.5 %
|
|
—
|
|
—
|
|
24
|
0.5 %
|
Acquisition-related
expenses (d)
|
(88)
|
(1.9) %
|
|
(21)
|
|
—
|
|
(109)
|
(2.4) %
|
Restructuring
(g)
|
(119)
|
(2.7) %
|
|
(4)
|
|
—
|
|
(123)
|
(2.7) %
|
Proxy
contest
|
(32)
|
(0.7) %
|
|
—
|
|
—
|
|
(32)
|
(0.7) %
|
Non-GAAP SG&A
expense
|
$
1,032
|
23.3 %
|
|
$ 337
|
|
$
(2)
|
|
$
1,367
|
30.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$
6
|
0.1 %
|
|
$ 821
|
|
$
—
|
|
$ 827
|
18.3 %
|
Goodwill impairment
(i)
|
—
|
—
|
|
(712)
|
|
—
|
|
(712)
|
(15.7) %
|
Intangible (IPR&D)
impairment (i)
|
(6)
|
(0.1) %
|
|
(109)
|
|
—
|
|
(115)
|
(2.6) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$
20
|
0.4 %
|
|
$
—
|
|
$
—
|
|
$
20
|
0.4 %
|
Legal contingency and
settlement (h)
|
(20)
|
(0.4) %
|
|
—
|
|
—
|
|
(20)
|
(0.4) %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$
—
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
552
|
12.4 %
|
|
$
(1,621)
|
|
$
—
|
|
$
(1,069)
|
(23.7) %
|
Cost of
revenue
|
62
|
1.5 %
|
|
134
|
|
—
|
|
196
|
4.4 %
|
R&D
costs
|
29
|
0.6 %
|
|
—
|
|
—
|
|
29
|
0.7 %
|
SG&A
costs
|
216
|
4.9 %
|
|
28
|
|
—
|
|
244
|
5.4 %
|
Goodwill and intangible
impairment
|
6
|
0.1 %
|
|
821
|
|
—
|
|
827
|
18.3 %
|
Legal contingency and
settlement
|
20
|
0.4 %
|
|
—
|
|
—
|
|
20
|
0.4 %
|
Non-GAAP operating
profit (loss) (a)
|
$
885
|
19.9 %
|
|
$
(638)
|
|
$
—
|
|
$ 247
|
5.5 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(58)
|
(1.3) %
|
|
$
10
|
|
$
—
|
|
$
(48)
|
(1.1) %
|
Strategic investment
related loss, net (e)
|
35
|
0.8 %
|
|
—
|
|
—
|
|
35
|
0.8 %
|
Gain on Helix
contingent value right (f)
|
(10)
|
(0.2) %
|
|
—
|
|
—
|
|
(10)
|
(0.2) %
|
Unrealized foreign
currency loss on EC fine (j)
|
11
|
0.2 %
|
|
—
|
|
—
|
|
11
|
0.2 %
|
Non-GAAP other
(expense) income, net (a)
|
$
(22)
|
(0.5) %
|
|
$
10
|
|
$
—
|
|
$
(12)
|
(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:
|
|
|
Year
Ended
|
|
January 1,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$ 3,107
|
68.2 %
|
|
$
(117)
|
|
$
(18)
|
|
$
2,972
|
64.8 %
|
Amortization of
acquired intangible assets
|
38
|
0.9 %
|
|
134
|
|
—
|
|
172
|
3.8 %
|
Restructuring
(g)
|
1
|
—
|
|
—
|
|
—
|
|
1
|
—
|
Non-GAAP gross profit
(a)
|
$ 3,146
|
69.1 %
|
|
$ 17
|
|
$
(18)
|
|
$
3,145
|
68.6 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$ 1,004
|
22.0 %
|
|
$ 330
|
|
$
(13)
|
|
$
1,321
|
28.8 %
|
Acquisition-related
expenses (d)
|
(2)
|
—
|
|
—
|
|
—
|
|
(2)
|
—
|
Restructuring
(g)
|
(6)
|
(0.1) %
|
|
—
|
|
—
|
|
(6)
|
(0.2) %
|
Non-GAAP R&D
expense
|
$
996
|
21.9 %
|
|
$ 330
|
|
$
(13)
|
|
$
1,313
|
28.6 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$ 1,003
|
22.0 %
|
|
$ 296
|
|
$
(2)
|
|
$
1,297
|
28.3 %
|
Amortization of
acquired intangible assets
|
(1)
|
—
|
|
(4)
|
|
—
|
|
(5)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
205
|
4.5 %
|
|
—
|
|
—
|
|
205
|
4.5 %
|
Acquisition-related
expenses (d)
|
(114)
|
(2.5) %
|
|
(13)
|
|
—
|
|
(127)
|
(2.8) %
|
Restructuring
(g)
|
(24)
|
(0.5) %
|
|
—
|
|
—
|
|
(24)
|
(0.5) %
|
Non-GAAP SG&A
expense
|
$ 1,069
|
23.5 %
|
|
$ 279
|
|
$
(2)
|
|
$
1,346
|
29.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP legal
contingency and settlement
|
$
619
|
13.6 %
|
|
$
—
|
|
$
—
|
|
$ 619
|
13.5 %
|
Legal contingency and
settlement (h)
|
(619)
|
(13.6) %
|
|
—
|
|
—
|
|
(619)
|
(13.5) %
|
Non-GAAP legal
contingency and settlement
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$ —
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
3,914
|
|
$
—
|
|
$
3,914
|
85.4 %
|
Goodwill impairment
(i)
|
—
|
—
|
|
(3,914)
|
|
—
|
|
(3,914)
|
(85.4) %
|
Non-GAAP goodwill and
intangible impairment
|
$ —
|
—
|
|
$
—
|
|
$
—
|
|
$ —
|
—
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
481
|
10.6 %
|
|
$ (4,657)
|
|
$
(3)
|
|
$ (4,179)
|
(91.2) %
|
Cost of
revenue
|
39
|
0.9 %
|
|
134
|
|
—
|
|
173
|
3.8 %
|
R&D
costs
|
8
|
0.1 %
|
|
—
|
|
—
|
|
8
|
0.2 %
|
SG&A
costs
|
(66)
|
(1.4) %
|
|
17
|
|
—
|
|
(48)
|
(1.1) %
|
Legal contingency and
settlement
|
619
|
13.6 %
|
|
—
|
|
—
|
|
619
|
13.5 %
|
Goodwill
impairment
|
—
|
—
|
|
3,914
|
|
—
|
|
3,914
|
85.4 %
|
Non-GAAP operating
profit (loss) (a)
|
$ 1,081
|
23.8 %
|
|
$
(592)
|
|
$
(3)
|
|
$ 487
|
10.6 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(159)
|
(3.5) %
|
|
$
2
|
|
$
—
|
|
$
(157)
|
(3.4) %
|
Strategic investment
related loss, net (e)
|
117
|
2.6 %
|
|
—
|
|
—
|
|
117
|
2.5 %
|
Loss on Helix
contingent value right (f)
|
7
|
0.1 %
|
|
—
|
|
—
|
|
7
|
0.2 %
|
Non-GAAP other
(expense) income, net (a)
|
$
(35)
|
(0.8) %
|
|
$
2
|
|
$
—
|
|
$ (33)
|
(0.7) %
|
|
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
consist primarily of lease and other asset impairments and employee
severance costs related to restructuring activities.
|
(h) Amount for
Q4 2023 consists primarily of accrued interest on the fine imposed
by the European Commission. Amount for FY 2023 also consists of a
loss related to a patent litigation settlement in Q1 2023, an
adjustment recorded in Q2 2023 to our accrual for the fine imposed
by the European Commission in July 2023, and a gain related to a
patent litigation settlement in Q3 2023. Amount for Q4 2022
consists of a legal accrual related to our litigation with RavGen
and an adjustment made to our previously recorded legal accrual for
the fine that the European Commission imposed on us. Amount for FY
2022 also consists of expense of $145 million related to the
settlement of our litigation with BGI.
|
(i) Amount for
Q4 2023 consists of an IPR&D intangible asset impairment
related to our Core Illumina segment. Amount for FY 2023 also
consists of goodwill and IPR&D intangible asset impairments
related to our GRAIL segment. Amount for FY 2022 consists of
goodwill impairment related to our GRAIL segment.
|
(j) Amounts
consist of unrealized gains/losses related to foreign currency
balance sheet remeasurement of the EC fine liability and unrealized
mark-to-market gains/losses on the hedge associated with the EC
fine.
|
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
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2023
|
GAAP tax
provision
|
$
8
|
(4.9) %
|
|
$
44
|
(3.9) %
|
Incremental non-GAAP
tax expense (b)
|
44
|
|
|
152
|
|
Income tax provision
(c)
|
(28)
|
|
|
(37)
|
|
GILTI and U.S. foreign
tax credits (d)
|
2
|
|
|
(61)
|
|
Non-GAAP tax provision
(a)
|
$
26
|
55.4 %
|
|
$
98
|
41.8 %
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
January 1,
2023
|
|
January 1,
2023
|
GAAP tax (benefit)
provision
|
$ (28)
|
16.8 %
|
|
$
68
|
(1.6) %
|
Incremental non-GAAP
tax expense (b)
|
51
|
|
|
129
|
|
Income tax provision
(c)
|
(15)
|
|
|
(19)
|
|
GILTI and U.S. foreign
tax credits (d)
|
1
|
|
|
(60)
|
|
Non-GAAP tax provision
(a)
|
$
9
|
29.3 %
|
|
$ 118
|
26.0 %
|
|
(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.
|
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-fourth-quarter-and-fiscal-year-2023-302057998.html
SOURCE Illumina, Inc.