Illumina finished strong to close out 2023, topping Wall Street estimates in a preliminary look at its fourth-quarter earnings, after what it described as its most successful launch of a high-throughput DNA sequencer ever and while it continues its preparations to let go of the cancer testing company Grail.
Presented at the J.P. Morgan Healthcare Conference in San Francisco, the company reported about $1.12 billion in revenue from last year’s fourth quarter, representing a gain of 3% over the same period the year before. That top-line amount is about the same as the preceding third quarter of 2023, when Illumina had fallen below its own sales forecasts and ended up cutting its projections for the remainder of the year.
Spanning the entire calendar, Illumina logged just under $4.50 billion in revenue in 2023, an amount down 2% compared to its gains in 2022. The company also reiterated its previous view that its core business performance in 2024 will be similar to the past year.
“We expect our customers to remain cautious and constrained in their purchasing decisions,” CEO Jacob Thaysen told investors during his company’s conference presentation. “This will translate into modest instrument purchases and project scopes, and in the tests and applications they have built.”
“I’m very encouraged by the recent positive macroeconomic headlines, and I hope that this will drive momentum in our industry going forward,” added Thaysen, the former Agilent executive who took the helm last fall.
For the launch of the NovaSeq X—the machine first unveiled in late 2022, promising the ability to read human genomes at a price of $200 apiece at scale—Illumina said it shipped 352 instruments in 2023, beating its high-end estimate of 340. About a third of those went to clinical customers, the company said, while 20% were delivered to buyers entering high-throughput DNA sequencing for the first time. Illumina also listed a backlog of 38 systems at the end of the year.
“But our focus is beyond the NovaSeq X,” Thaysen said. “We are seeing that we have now more than 25,000 instruments placed… This year we placed more than 2,200 instruments.” That total equipment base—the majority of which includes the company’s low-throughput lines of smaller sequencers—also translated to about $2.8 billion in revenue from consumable supplies.
Illumina finally announced in mid-December that it would part ways with Grail, the former company spinout that it has been managing at arms’ length since 2021.
After having its $8 billion acquisition deal be formally denied by antitrust regulators on both sides of the Atlantic and partially rejected by U.S. courts—notwithstanding Illumina having closed the deal anyway—and after the issue ultimately sparked a proxy fight that lead to the ouster of Illumina’s CEO and board chair, the company now has its choice on how to move forward with the divestiture.
Illumina has said that it plans to finalize a strategy by the end of June; to either sell Grail to an interested buyer or have it go public as an independent company.
“All options are on the table,” Illumina CFO Joydeep Goswami said at the JPM conference. “At this point it’s too early for us to talk about potential valuations—we’ll let the market drive that process.”
The European Commission last October gave the company 12 months to complete its task, with the possibility of a three-month extension, but required Illumina to make sure that Grail will begin life anew on firm footing.
In the case of going independently public, that means Illumina must supply Grail with two-and-a-half years’ worth of funding. Illumina said it has been evaluating potential sponsors who could chip in to help fund a spinout—but if Illumina is left on the hook, it said it would be more likely to issue debt to cover the amount while prioritizing its investment grade credit rating.