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Illumina Posts 21 Percent Q1 Revenue Increase

NEW YORK (GenomeWeb News) – Illumina reported after the close of the market Monday that its first-quarter revenues increased 21 percent year over year as the firm swung to a loss due to litigation-related charges.

The San Diego-based firm posted revenues of $331 million for the three months ended March 31, compared to $272.8 million for the first quarter of 2012. It beat the average analyst estimate of $310.7 million.

Its product revenue jumped to $296.2 million from $255.6 million year over year, and its service and other revenue more than doubled to $34.8 million from $17.1 million.

"Our business continued to accelerate, delivering orders substantially above our plan, with strong underlying trends across all geographies," Illumina President and CEO Jay Flatley said on a conference call following the release of the results. He added that it was "not only the sixth quarter of sequential growth, but also a record for quarterly revenue."

The firm's sequencing revenue grew 32 percent year over year to more than $235 million.

"The substantial growth was a result of increased demand for consumables, sequencing services, and HiSeq instruments," said Flatley. "We saw a resurgence in HiSeq sales, including shipment levels above those seen in the fourth quarter of 2011."

"In our clinical business we continue to see strong demand from non-traditional customers looking to employ next-gen sequencing technology, and in Q1 close to half of the HiSeq orders were to commercial, clinical, and translational customers," he added.

Flatley also said that following its recent acquisition of Verinata Health, the firm is "pleased with the initial integration progress." He declined to provide a run rate for the Verifi pre-natal test that is the flagship product for Verinata, but he said that test volume has "met or even slightly exceeded our expectations."

Illumina's microarray revenues inched up 1 percent, and the "outlook for arrays is as expected" with "interest remaining high" in such catalog genotyping products as its Infinium OmniExpressExome, CoreExome, and Omni2.5 BeadChips, said Flatley.

He added that in Q1 the company "set a record" for whole-genome association-studies-related products shipped during a quarter by sending customers enough BeadChips to genotype 300,000 samples.

Illumina posted a net loss of $22.6 million, or $.18 per share, for the quarter, driven by a $105.9 million charge for legal contingencies. Last month a federal court jury ordered Illumina to pay $96 million in damages to Syntrix Biosystems for patent infringement.

The loss compared to a profit of $26.2 million, or $.20 per share, for the first quarter of 2012.

On a non-GAAP basis, Illumina posted a profit of $63 million, or $.46 per share, versus a Q1 2012 non-GAAP profit of $48 million, or $.36 per share. It easily beat the consensus Wall Street estimate of $.39 per share.

Illumina's R&D spending in the quarter increased 26 percent to $61.5 million from $48.8 million, while its SG&A expenses climbed 25 percent to $85.1 million from $68 million.

The firm finished the quarter with $443.1 million in cash and cash equivalents and $624.4 million in short-term investments.

Illumina didn't provide updated guidance for FY 2013. In January the firm said that it expects to report revenue growth of 15 percent and non-GAAP EPS between $1.55 and $1.62 for the year.

"The effects of sequester on the future buying patterns of our customers remains to be determined," Flatley said on the call. "But to date, we've not been impacted and our business remains robust."

In Tuesday morning trade on the Nasdaq, shares of Illumina were up 13 percent at $62.04.