This story has been updated to include additional revenue information from Illumina.
NEW YORK – Illumina officials were loath to speculate on the effects of being targeted by the Chinese government as they looked back on their 2024 financial results and set a target of low-single-digit revenue growth in the coming business year.
On Thursday, the firm provided 2025 guidance but said in a statement that it did not "attempt to reflect any impact" of a Monday announcement by the China Ministry of Commerce that Illumina had been placed on the country's "unreliable entities" list, subjecting the firm to possible trade sanctions. The move came shortly after the Trump administration announced 10 percent tariffs on all Chinese exports to the US and an ongoing campaign from federal legislators to pass the Biosecure Act — a move that would designate Illumina competitor MGI Tech, among others, as so-called "foreign adversary biotech companies of US national security concern." Illumina has lobbied US politicians to support the Biosecure Act.
Illumina expects 2025 core revenues to grow in the low-single digits compared to 2024, or reported revenue in the range of $4.28 billion to $4.4 billion with adjusted EPS in the range of $4.50 to $4.65. Illumina noted that its guidance "assumes a continuation of the current macroeconomic and political environments." The San Diego-based genomic tools firm expects Q1 revenues to be flat or even decline slightly.
On a conference call with investors and analysts to discuss Illumina's fourth quarter and full-year financial results, CEO Jacob Thaysen said the firm "is not making assumptions for disruption" and is "working promptly with the relevant parties to get a resolution on this."
China represents 7 percent of total revenue for the firm. During the Q&A portion of the call, Thaysen noted that "we continue to serve our customers" in that country, but he and CFO Ankur Dhingra repeatedly dodged questions about their predicament, often using the refrain that they were in talks with the right parties to resolve it.
Thaysen noted that Illumina is also "closely monitoring the evolving circumstances in Washington, D.C., particularly as it relates to research funding."
Analysts on the call also pressed Thaysen on losing out to Ultima Genomics to provide sequencing for several large projects, including NGS-based protein detection at the UK Biobank and single-cell sequencing of a billion cells to train new AI models.
"Everyone has to eventually show that they can make money, and we have shown that," Thaysen said. "I think it's up to them to show that can also do that, otherwise eventually the bank will run dry."
On Friday, TD Cowen analyst Dan Brennan downgraded Illumina's rating to "Hold." Guidance of about 3 percent growth in sequencing consumables was below expectations, and the decline of NovaSeq 6000 consumables revenues was steeper than he had anticipated, Brennan wrote in a note to investors. The China situation, possible decreases in National Institutes of Health funding, and competition in sequencing were other factors that contributed to the downgrade.
In Friday morning trading on the Nasdaq, shares of Illumina were down 7 percent at $113.80 and are down nearly 12 percent this week.
Illumina's Q4 revenues were up 1 percent, year over year, driven by consumables revenues, while full-year core Illumina revenues were down 2 percent from the prior year, in line with preliminary estimates.
For the three months ended Dec. 29, Illumina posted revenues of $1.10 billion, relatively flat year over year but above analysts' average estimate of $1.07 billion. On a constant currency basis, revenues were up 1 percent.
Sequencing consumables revenues were $698 million, up 2 percent year over year, driven by high-throughput sequencing and growth in mid-throughput sequencing against a modest prior-year comparison, Dhingra said.
Sequencing instruments revenues were $155 million, down 3 percent from $161 million, driven by a decline in mid-throughput instrument revenues. The firm placed 91 NovaSeq X instruments in Q4, bringing the total installed base to 630 instruments. It also placed more than 70 of its new MiSeq i100 instruments in the quarter.
Core Illumina sequencing service and other revenues were $151 million, down 1 percent from the prior year, attributable to the timing of partnerships.
Total microarray revenues in Q4 were $100 million, up 3 percent from $97 million in 2023.
Americas revenues were $589 million, up 2 percent from $577 million a year ago and up 3 percent on a constant currency basis. Europe revenues were $326 million, up 4 percent, year over year.
Asia-Pacific, Middle East, and Africa revenues were $109 million, down 10 percent from the prior-year period, Thaysen said, while China revenues were up 1 percent on a constant currency basis.
Illumina's net income for the quarter totaled $117 million, or $.73 per share, compared to a net loss of $176.0 million, or $1.11 per share, in Q4 of 2023. Adjusted EPS came in at $.95, above the average Wall Street estimate of $.92 per share.
Illumina's R&D expenses for the quarter were $256 million, down 2 percent from $260 million a year ago. Selling, general, and administrative expenses were $279 million, down 29 percent from $391 a year ago.
Dhingra noted that the firm repurchased $17 million worth of shares in Q4.
For full-year 2024, Illumina reported core revenues of $4.33 billion, down 2 percent from $4.44 billion the year prior, just short of the Wall Street estimate of $4.34 billion.
Full-year sequencing consumables revenues were $2.87 billion, up 2 percent from $2.81 billion a year ago. Sequencing instrument revenues were $484.0 million, down 30 percent from $687 in 2023. Sequencing service and other revenues were $597 million, up 9 percent from $546 in 2023.
Total microarray revenues were $379 million, down 3 percent from $392 million in 2023.
Core Illumina net income for the year was $894 million, or $5.61 per share, compared to income of $269 million, or $1.70 per share, in 2023. Adjusted EPS was $4.16, beating analysts' average estimate of $4.13 per share.
Consolidated net loss was $1.22 billion, or $7.69 loss per share, largely attributable to a $1.89 billion goodwill and intangible impairment on Grail assets taken in Q2. Illumina divested Grail in June.
Full-year core Illumina R&D expenses were $988 million, down 4 percent from $1.03 billion in 2023. Selling, general, and administrative expenses were $900 million, down 28 percent from $1.25 billion the year prior.
As of Dec. 29, Illumina held $1.13 billion in cash and cash equivalents and $93 million in short-term investments.