NEW YORK – Illumina reported after the close of the market on Wednesday that its fourth quarter 2019 revenues rose by 10 percent, echoing its forecast at the JP Morgan Healthcare conference earlier this month.
The San Diego-based company reported total Q4 2019 revenues of $953 million, compared to $867 million a year ago, beating the analysts' average estimate of $943 million. Its Q4 revenue included $812 million in product revenue and $141 million in service and other revenue.
Sequencing consumables revenue in Q4 was $572 million, up 22 percent from the prior year period. Sequencing systems revenue in Q4 was $265 million, representing a 12 percent decrease year-over-year, and included the shipment of about 320 NovaSeq instruments.
Revenues from Illumina's microarray business were down 12 percent in Q4 year over year to $116 million, including a 32 percent decrease in array services due to DTC testing weakness.
Service revenue of $124 million was up 19 percent, driven largely by an upfront payment from Roche and offset by lower revenues from in vitro diagnostic licensing and from Genomics England.
"While some variation of mix should always be expected in our dynamic industry, we are pleased to have delivered higher-than-expected revenue in the fourth quarter," Illumina CEO and president Francis deSouza said on a conference call following the release of the results. He noted that the sequencing system revenue was "softer" and that Q4 NextSeq instrument shipments were lower than expected "due to customer timing."
But he noted that the firm shipped more than 2,400 instruments in 2019, "the most in Illumina's history." He added that the firm reviewed its HiSeq instrument installed base and found approximately 1,300 active instruments, with approximately 200 decommissions reported in 2019.
Fourth quarter revenues from Europe, the Middle East, and Africa were up 19 percent, driven by the UK Biobank scaling up sequencing.
Net income for the quarter was $239 million, or $1.61 per share, compared to $210 million, or $1.41 per share, in Q4 2018. Adjusted net income was $1.70 per share, beating analysts' average estimate of $1.58 per share.
Illumina CFO Sam Samad noted that the company repurchased $63 million in stock in Q4.
Illumina's Q4 R&D expenses shrank 9 percent to $161 million from $176 million a year ago. Its SG&A expenses increased 7 percent to $233 million from $217 million a year ago.
Full-year 2019 revenues grew 6 percent to $3.54 billion from $3.33 billion in 2018, in line with the consensus Wall Street estimate. Product revenue was $2.92 billion, up 6 percent from $2.75 billion a year ago, and service and other revenue was $614 million, up 5 percent from $584 million in 2018.
Sequencing consumables revenue was $2.1 billion, up 14 percent over 2018, driven by 20 percent growth in clinical sequencing consumables, especially in oncology applications.
Net income for the year was $1 billion, or $6.74 per share, compared to a net income of $826 million, or $5.56 per share, in 2018. Adjusted EPS for 2019 was $6.57 per share, beating the Wall Street estimate of $6.46 per share.
Illumina's 2019 R&D expenses totaled $647 million, a 4 percent increase from $623 million in 2018. Total 2019 SG&A expenses rose 5 percent to $835 million from $794 million in 2018.
Illumina reiterated its previous 2020 revenue guidance of 9 percent to 11 percent growth. At the JP Morgan Healthcare conference, deSouza had said the firm expected 14 percent growth in total sequencing revenue and 17 percent growth in sequencing consumables revenue, offset by a 15 percent decline in array revenue due to weakness in direct-to-consumer testing. Samad added during this week's call that the firm expected first quarter 2020 revenues in the range of $850 million to $855 million.
As of Dec. 30, 2018, Illumina held $2.04 billion in cash and cash equivalents and $1.37 billion in short-term investments.
In morning trading on the Nasdaq, shares of Illumina were flat at $314.56.