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Illumina's Q4 Revenues Rise 24 Percent

NEW YORK (GenomeWeb News) – Illumina reported after the close of the market Monday that its fourth-quarter revenues climbed 24 percent, topping analysts' consensus estimate.

The San Diego-based genetic analysis products firm brought in total revenues of $309.3 million for the three months ended Dec. 30, 2012, in line with its pre-announcement and up from $250.1 million for the fourth quarter of 2011. It beat the consensus Wall Street estimate of $305.4 million.

Illumina reported product revenues of $278.9 million, up from $230.4 million year over year, and service and other revenue of $30.3 million versus $19.7 million for Q4 2011.

Microarray revenues in the quarter grew 4 percent year over year, which Illumina President and CEO Jay Flatley said on a conference call following the release of the results was due to the contribution of BlueGnome, a UK-based maker of cytogenetic and in vitro fertilization screening tests that Illumina acquired for $88 million in September. BlueGnome provided revenues of around $7 million in the quarter, CFO Marc Stapley added on the call. In the fourth quarter, the company shipped more than a million samples worth of arrays across all of its array-based product lines.

Sequencing revenues in the quarter grew 35 percent year over year driven by strong demand for consumables, up 56 percent year over year due to higher utilization per instrument and growth in the HiSeq and MiSeq instrument base, according to Flatley.

Sequencing instrument revenue grew 6 percent compared to the fourth quarter of 2011, "with MiSeq instrument sales demonstrating significant growth year over year," said Flatley. He noted that the firm received more than 300 MiSeq orders in the fourth quarter, which exceeded its manufacturing capacity.

In addition, Flatley said that interest in Illumina's sequencing services remains high and the firm shipped more than 2,500 genomes in the fourth quarter — more than three times the number shipped in Q4 2011. He reiterated the company's plans to open a new lab at its Hayward, Calif., location to meet rising demand for the sequencing services.

Illumina posted net income for the quarter of $71.9 million, or $.53 per share, compared to $11.7 million, or $.09 per share, for the fourth quarter of 2011. On a non-GAAP basis, its profit was $56.8 million, or $.42 per share, compared to $43.5 million, or $.35 per share. It beat analysts' estimates by a penny.

The quarter included a $48.6 million pre-tax gain from the sale of the firm's minority interest ownership in Decode Genetics, which was acquired by Amgen last month for $415 million.

Charges in the quarter included $4.4 million related to Roche's unsolicited offer to acquire the company earlier in the year, $2.9 million in headquarter relocation expense, and $88,000 in restructuring charges. In Q4 2011, Illumina reported relocation expense of $30.2 million and restructuring charges of $8.1 million.

Its R&D spending for the quarter was $56.9 million, up 25 percent from $45.5 million, while its SG&A expenses grew 31 percent to $79.7 million from $60.9 million.

For full-year 2012, Illumina reported total revenues of $1.15 billion, up around 8 percent from $1.06 billion in 2011, and edging out the Wall Street consensus estimate of $1.14 billion. Its product revenue jumped to $1.06 billion from $987.3 million, and its service and other revenue increased to $92.7 million from $68.3 million.

Illumina posted a profit of $151.3 million, or $1.13 per share, compared to $86.6 million, or $.62 per share, for FY 2011. On a non-GAAP basis, net income was $210.4 million, or $1.59 per share, versus $176 million, or $1.30 per share, and beating analysts' average estimate of $1.58.

The firm's R&D spending for the year was $231 million, up 17 percent from $196.9 million, and its SG&A expenses increased 9 percent to $286 million from $261.8 million.

Illumina finished the year with $434 million in cash and cash equivalents and $916.2 million in short-term investments.

"We ended the year with a strong performance, and made significant progress on our strategy of growing our clinical business, both organically and through acquisition," Flatley said in a statement. "We remain optimistic about our growth prospects in 2013 and beyond, in spite of the continuing challenges of the economic environment."

He said on the conference call that the firm remains focused on diversifying its customer base. In 2012, around 30 percent of its revenues came from non-academic and non-government segments, but Flatley said Illumina's goal is to increase that share to around 50 percent in the next five years as its products are pushed further into applied and clinical markets.

He also said that Illumina would focus organic investments in 2013 on three key areas: hiring more than 50 new sales reps, spending incrementally more on R&D for initiatives including its nanopore development efforts, and spending around $10 million in 2013 to enhance infrastructure, such as updating its ERP and related systems, and improve its manufacturing and inventory management.

He said that the increased sales force would target clinical accounts, cytogenetics, forensics and other new markets, and general geographic add-ons aimed at increasing the firm's market reach.

For 2013 Illumina expects to report revenue growth of 15 percent and non-GAAP EPS between $1.55 and $1.62.

The projections include the pending acquisition of Verinata Health, which Illumina announced earlier this month it is acquiring for $450 million.

It also announced earlier this month that it had acquired long-read sequencing technology firm Moleculo for an undisclosed amount.

In early Tuesday trade on the Nasdaq shares of Illumina were down 1 percent at $51.20.

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