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Illumina's Q3 Revenues Rise 21 Percent

NEW YORK (GenomeWeb News) – Illumina reported after the close of the market Tuesday that its third-quarter revenues increased 21 percent year over year, as the firm beat Wall Street estimates on the top and bottom line.

The San Diego-based genetic analysis tools firm reported total revenues of $285.9 million, up from $235.5 million for Q3 2011 and above analysts' consensus estimate of $284.8 million. Its product revenues climbed to $262.4 million from $220.3 million, and its service and other revenue jumped to $23.5 million from $15.2 million.

Instrument revenue for the third quarter was $82 million, up 14 percent sequentially and 15 percent year over year. CFO Marc Stapley said on a conference call following the release of the results that the year-over-year increase was primarily due to the impact of the MiSeq platform, which began shipments in Q3 2011.

Consumables revenue for the quarter was $177 million, down 4 percent sequentially but up 22 percent year over year. Stapley said the sequential decline was due to two factors: reduced usage during the summer vacation season and Q2 consumables sales were affected positively by an effort to reduce reagent backorders.

Noting the increase in service revenues, Stapley said, "We shipped more than twice as many whole genome samples from our fast-track services lab as compared to the prior quarter."

Microarray revenues declined 3 percent sequentially, primarily due to strong Infinium sample shipments in Q2," Illumina President and CEO Jay Flatley said on the call. Shipments for iScan microarray instruments, however, were the highest since the third quarter of 2010.

Total sequencing revenue grew 4 percent sequentially, with sequencing revenues up 44 percent over Q3 of last year. "While HiSeq utilization was down sequentially, this was partially offset by strong growth in the HiSeq and MiSeq installed base," said Flatley.

US shipments increased 19 percent year over year, Flatley noted, and Canadian shipments were up 11 percent. European shipments were up 19 percent year over year, while Asia had growth of 21 percent, including 79 percent growth in China.

Late in the quarter Illumina announced that it had acquired BlueGnome, a UK-based maker of cytogenetic and in vitro fertilization screening tests. Stapley said on the call that Illumina paid $88 million to acquire that business.

BlueGnome's 24sure test is a preimplantation genetic screening assay for counting the chromosomes in a single human cell and "holds enormous promise for increasing IVF success rates," Illumina said at the time. That business contributed about $1 million in revenues in Q3.

Illumina posted net income of $29.7 million, or $.22 per share, compared to a profit of $10.2 million, or $.15 per share, for Q3 2011. On a non-GAAP basis, its EPS was $.41 versus $.22 for Q3 2011, surpassing Wall Street's consensus estimate of $.39.

The firm's R&D spending increased around 7 percent to $54.1 million from $50.4 million, and its SG&A expenses climbed 6 percent to $69.8 million from $66 million. Illumina also recorded expenses of approximately $4 million related to Roche's failed bid to acquire the firm earlier this year.

Illumina finished the quarter with $343.1 million in cash and cash equivalents and $890 million in short-term investments.

The firm tightened its forecast for full-year 2012, though the guidance remained within a range previously provided by the company. It expects revenues of between $1.13 billion and $1.14 billion with non-GAAP EPS of $1.54 to $1.59.

"As a result of our performance and the recent announcement regarding NIH funding under the continuing resolution, we are tightening our 2012 revenue and EPS guidance ranges," Illumina President and CEO Jay Flatley said in a statement accompanying the financial results. "However, we remain cautious given the uncertainty of the US fiscal cliff as well as the outcome of the presidential election."

In early Wednesday trade on the Nasdaq shares of Illumina were up 3 percent at $46.48.

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