Gene-sequencing leader Illumina guided for moderating growth.
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Illumina alerted investors a month ago that it beat Wall Street forecasts for December-quarter sales. After Thursday’s close, the gene-sequencing leader reported its full results for the quarter, and they included a strong earnings beat, as well. Guidance was for moderating growth, however, and in after-hours trading, the stock slipped.
Illumina (ticker: ILMN) had previewed its results in January, when it announced its strong December-quarter revenue growth and signaled that Wall Street’s forecasts for 2022 revenues were too low. At the same time, Illumina announced that it would introduce new technologies that would reduce gene-sequencing costs, and improve Illumina’s reading of long snippets of DNA.
Thursday’s reports of 26% growth in December-quarter revenue, to $1.2 billion, was a hair ahead of Illumina’s preannouncement, which hadn’t discussed earnings. Quarterly earnings were $117 million, or 75 cents a share, adjusted for noncash and one-time charges. The consensus tabulated by FactSet had expected earnings per share of just 46 cents. The year-ago quarter’s adjusted earnings were $179 million, or EPS of $1.22.
For the 2021 year, Illumina grew sales 40%, to $4.5 billion. It earned $892 million, or $5.90 a share. Free cash flow was $337 million.
Guidance for 2022, in the Thursday release, is for revenue growth in the range from 14% to 16%, with adjusted EPS between $4.00 and $4.20.
Illumina stock closed Thursday at $358.08, down 2.7% for the trading session. The stock edged down another 1.4% in after-hours trading, to $353. The sequencing firm’s booming business has spared it some of the scorn shown by investors for the biotech sector generally. While the SPDR S&P Biotech ETF (XBI) lost more than 40% in the past 12 months, Illumina stock is down around 16%. The Nasdaq Composite , by comparison, is 2% higher in the same stretch. Most analysts rate Illumina stock a Hold.
Illumina’s sequencers are the most-used systems for reading the genetic instructions encoded in the DNA of humans and other living things. After initial use by researchers, the systems have become the basis of a genomic testing industry that guides the treatment of cancer patients and of families dealing with genetic disorders.
“We are seeing strength across our business as a growing number of patients around the world are accessing the lifesaving benefits of genomics,” said Illumina CEO Francis deSouza. “Opportunities are also expanding across new markets like proteomics, infectious disease and drug discovery.”
One of the opportunities exciting the most interest is the use of the DNA systems to screen people’s blood for signs of undetected cancers. Such cancer blood screens could transform cancer treatment and grow into an annual market worth tens of billions of dollars. Illumina spun off a venture called Grail to develop such tests, then reacquired the business on the verge of Grail’s initial public offering. Grail launched its Galleri test last year.
Illumina’s acquisition of Grail is being challenged by antitrust regulators in the U.S. and Europe, in response to complaints by other companies who are developing similar cancer blood screens that rely on Illumina’s underlying sequencing systems. These rivals include Exact Sciences (EXAS) and Guardant Health (GH). Grail and deSouza defend the Illumina/Grail combination, with promises not to disadvantage Grail rivals in their sequencing needs.
Meanwhile, Illumina is reporting Grail’s financial results separately. Thursday’s report showed that Grail revenues in the December quarter were all of $10 million, on which the cancer-testing venture lost $128 million, excluding noncash costs. For 2022, Grail expects revenue in the range from $70 million to $90 million.
Write to Bill Alpert at [email protected]
