NEW YORK – Illumina raised prices this week on all products and services for US and European customers in response to "tariff and supply chain trends."
In a communication to customers obtained by GenomeWeb, Illumina said US customers would see a "surcharge" on all new orders: 5 percent for consumables, between 2 percent and 9 percent on instruments, and 3.5 percent on most services. European customers will see a 3 percent surcharge on all three product categories.
Should the tariff situation change, "we will adjust accordingly," Illumina told customers.
On Thursday after the close of the market, the San Diego-based sequencing technology firm noted that it expects $85 million in tariff-related costs in fiscal year 2025 as it updated its guidance and provided first quarter financial results, which saw revenues fall 1 percent year over year, or flat on a constant currency basis.
The tariff costs are largely from goods made in Singapore and shipped to the US. In April, the Trump administration applied the baseline 10 percent tariff to imports from Singapore. On a conference call with investors following the release of results, Illumina CEO Jacob Thaysen said the firm would be "able to offset approximately half of that."
In a note to investors, Canaccord Genuity analyst Kyle Mikson wrote that Illumina expects the surcharges to "translate to a roughly $40 million revenue impact."
Illumina also said it now expects total 2025 revenues to decline between 1 percent and 3 percent on a constant currency basis, driven by restrictions to doing business in China. Previously it had guided to low single-digit growth, however, that guidance did not consider the impacts of a Chinese government ban on imports of Illumina products. The firm also lowered EPS guidance to between $4.20 and $4.30, down from $4.50 to $4.65.
Revenues from China are expected to be in the range of $165 million to $185 million, with $72 million recognized in Q1. At the midpoint, China revenues would be down $125 million from the prior year with "minimal" instrument placements.
Revenues from the rest of the world are expected to grow up to 2 percent on a constant currency basis, Illumina said. Instrument sales outside of China are expected to be flat year over year, while sequencing consumables could grow up to 2 percent year over year driven by clinical sequencing activity.
Illumina officials said on the call that US tariffs were increasing costs for the company and that pricing actions would partially offset their impact this year, providing incremental revenue benefit, primarily in the second half. So far, Illumina hasn't seen any customer change in behavior attributable to the tariffs, Thaysen said.
During the Q&A portion of the call, Thaysen suggested that Illumina had taken a "prudent" approach to its pricing strategy and that customers would accept increases as the cost of stability. "The customer wants to work with companies that will be here years from now," he said.
Illumina's guidance "does not assume any incremental tariffs, including any counter tariffs from the European Union or other countries," CFO Ankur Dhingra said. Thaysen noted that the firm is not seeking to make substantial changes to its manufacturing.
In addition to China and tariff-related stresses, Illumina's guidance anticipates a 15 percent decline in spending from research and government customers, driving a 3 percent decrease year over year in the overall research end market, Dhingra said, partially offset by expected growth in clinical sequencing.
In Friday morning trading on the Nasdaq, Illumina's shares were down 2 percent at $77.88.
For the three months ended March 30, Illumina recognized revenues of $1.04 billion, compared to core Illumina revenues of $1.06 billion in Q1 2024, in line with the consensus Wall Street estimate of $1.04 billion.
Product revenues were $880 million, nearly flat year over year, while service and other revenues were $161 million, down 20 percent.
Sequencing consumables revenues were flat year over year at $696 million and up 1 percent on a constant currency basis. Research customers were more conservative on consumables purchases, Dhingra said, impacting revenues by 1 percent.
Sequencing instrument revenues were flat at $109 million, with the firm noting 60 NovaSeq X instrument placements.
Sequencing services revenues were $142 million, down 6 percent year over year from $151 million, and down 5 percent on a constant currency basis, attributable to high strategic partnership revenues in the year-ago quarter. Excluding those, services revenues grew in the mid-single digits, Dhingra said.
Revenues from the Americas were $570 million, down 2 percent year over year; revenues in Europe were $293 million, up 5 percent; revenues in Asia-Pacific, the Middle East, and Africa were $106 million, down 9 percent; and revenues in greater China were $72 million, down 8 percent.
Illumina's net income for the quarter was $131 million, or $.82 per share, compared to a net loss of $126 million, or $.79 per share, in Q1 2024. On an adjusted basis, its EPS for Q1 2025 was $.97, beating analysts' average EPS estimate of $.94.
Illumina's R&D expenses fell 26 percent year over year to $252 million from $339 million. Its SG&A expenses were slashed 39 percent to $267 million from $439 million a year ago. Dhingra said operating expenses would be "flat to slightly down the rest of the year."
During the quarter, Illumina repurchased $200 million of its shares.
Thaysen noted that the US Securities and Exchange Commission has finished an investigation into the firm relating to its acquisition of Grail. "There are no findings," he said. "We're very pleased to have that behind us."
As of March 30, Illumina had $1.11 billion in cash and cash equivalents and $124 million in short-term investments.