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Illumina Q3 Revenues Grow 40 Percent

NEW YORK – Illumina reported after the close of the market on Thursday that its third quarter revenues grew 40 percent year over year.

For the three months ended Oct. 3, San Diego-based Illumina recorded total consolidated revenues of $1.11 billion, compared to $794 million a year ago, beating the consensus Wall Street analyst estimate of $1.05 billion.

Following the closing of its purchase of Grail in August, in which Illumina promised to hold the two companies separate until regulatory matters in the US and Europe are either resolved or force it to unwind the deal, the company is reporting consolidated results as well as separate results for its core business and Grail. Illumina began recording Grail results Aug. 18. 

Core Illumina accounted for the vast majority of revenues, with Grail contributing $2 million in Q3.

Consolidated product revenues were $978 million while service and other revenues were $130 million.

Sequencing revenues grew 43 percent and represented 92 percent of Core Illumina revenues. Consumables revenues grew 45 percent year over year to $743 million. Revenue from COVID-19 surveillance contributed $40 million in sequencing consumables revenues and $15 million in instrument revenues. Core Illumina services revenues grew 11 percent to $110 million, driven by higher instrument service contract revenues.

By region, Americas revenues were $581 million, up 33 percent year over year, driven by oncology testing, population sequencing initiatives including the All of Us program, and COVID-19 surveillance in Latin America. Europe, Middle East, and Africa revenues were $313 million, up 47 percent year over year, driven by clinical markets and strength in emerging markets. Greater China revenues were $122 million, up 47 percent year over year, driven by growth in clinical markets. Asia Pacific and Japan revenues were $90 million, up 45 percent year over year, driven by sequencing instrument revenue.

"Illumina's financial results again exceeded expectations in the third quarter led by record shipments for both clinical and research," Illumina CEO Francis deSouza said in a statement. "Clinical market expansion is driving momentum in the core business, including significant demand in testing for therapy selection in oncology as we continue to advance genomics as a standard of care in the clinic. Our teams' continued execution to meet this robust demand will enable a strong finish to an exceptional 2021."

On a conference call with investors following the release of the results, deSouza said the company has added 50 percent more new customers so far this year than it did in all of 2020. Also, more than half of its sales of mid-throughput systems, including the NextSeq 1000, 2000, and 550 instruments, were to new customers or customers upgrading from low-throughput systems.

Illumina's Q3 consolidated net income was $317 million, or $2.08 per share, compared to net income of $179 million, or $1.21 per share, in the year-ago period. On an adjusted basis, EPS was $1.45, beating analysts' consensus estimate for EPS of $1.14.

Illumina's consolidated R&D expenses more than doubled to $436 million from $172 million in Q3. Core Illumina R&D expenses were $212 million, up 23 percent from $172 million a year ago, while Grail R&D expenses were $224 million.

The company's consolidated SG&A expenses more than quadrupled to $879 million in the quarter from $192 million in Q3 2020. Core Illumina SG&A expenses were $365 million, up 90 percent from $192 million a year ago, while Grail SG&A expenses were $514 million.

The company finished the quarter with $1.08 billion in cash and cash equivalents and $185 million in short-term investments.

Illumina raised its revenue guidance for the year. For full-year 2021, the firm now expects both consolidated and Core Illumina revenue growth of approximately 36 percent and adjusted earnings of $5.50 to $5.60 per share, which includes dilution of approximately $1.00 per share from Grail's adjusted operating loss and incremental dilution of $.15 per share from the 9.8 million shares issued to fund the acquisition.

Illumina officials noted that the firm has a "record backlog" of sequencing instrument orders.

In Friday morning trading on the Nasdaq, shares of Illumina were down 4 percent at $405.41.

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