How did Illumina perform financially in the fourth quarter of 2023?

Q4 2023 revenue was $1.12 billion, up 4% from Q4 2022. GAAP operating loss was $(164) million and GAAP diluted loss per share was $(1.11), while non-GAAP diluted EPS was $0.14, the same as in Q4 2022. Operating cash flow was $224 million and free cash flow was $173 million.

Why was the GAAP loss for fiscal 2023 so large?

The filing attributes the GAAP diluted loss per share of $(7.34) largely to goodwill and intangible impairments of $821 million related to the GRAIL segment, which included $712 million of goodwill and $109 million of IPR&D intangible asset impairment. The goodwill impairment was primarily due to a decrease in consolidated market capitalization and a higher discount rate.

What is the outlook for fiscal 2024?

The company expects Core Illumina revenue to be approximately flat compared to fiscal 2023 and a Core Illumina non-GAAP operating margin of approximately 20%. Management said it is focusing the outlook on Core Illumina because the specific timing and impact of the GRAIL divestment remain uncertain.

What is the status of the GRAIL divestiture?

Illumina announced on December 17, 2023 that it will divest GRAIL through a third-party sale or capital markets transaction, consistent with the European Commission's divestiture order. The company aims to finalize divestiture terms by the end of the second quarter of 2024 and has submitted a confidential draft Form 10 registration statement to the SEC related to the divestment.

ILMN 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 8, 2024. Cited figures are marked; the original filing is the authoritative source.

Illumina, Inc. filed this Form 8-K under Item 2.02 (Results of Operations and Financial Condition) to furnish a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2023.

The filing states that fourth-quarter revenue was $1.12 billion^a, up 4% from the prior year period, while fiscal 2023 revenue was $4.50 billion, down 2% from fiscal 2022. GAAP diluted loss per share was $(1.11) for Q4 2023 and $(7.34) for fiscal 2023, the latter including $821 million of goodwill and intangible impairments related to the GRAIL segment. Non-GAAP diluted earnings per share were $0.14 for Q4 2023 and $0.86 for fiscal 2023, compared with $2.12 for fiscal 2022.

The company reported Q4 2023 operating loss of $(164) million on a GAAP basis, compared with a non-GAAP operating profit of $51 million^b, and Q4 free cash flow of $173 million. Core Illumina revenue for fiscal 2024 is expected to be approximately flat versus 2023, with a Core Illumina non-GAAP operating margin of approximately 20%. Management stated that the company is focusing its outlook on Core Illumina because the timing and impact of the GRAIL divestment remain uncertain.

The filing also reiterates that Illumina announced on December 17, 2023 its intention to divest GRAIL, with a goal of finalizing divestiture terms by the end of the second quarter of 2024, consistent with the European Commission's divestiture order. Key announcements cited include a draft Form 10 registration statement submitted confidentially for the GRAIL divestment, and the expansion of the Alliance for Genomic Discovery.

02—Key points

Key Highlights

Q4 2023 revenue of $1.12 billion, up 4% year over year (up 4% on a constant currency basis).
Fiscal 2023 revenue of $4.50 billion, down 2% from fiscal 2022 (flat on a constant currency basis).
GAAP diluted loss per share of $(7.34) for fiscal 2023, including $821 million of GRAIL goodwill and intangible impairments; non-GAAP diluted EPS of $0.86 versus $2.12 in fiscal 2022.
Fiscal 2023 shipments of 352 NovaSeq X instruments, including 79 in Q4 2023.
Fiscal 2024 guidance: Core Illumina revenue approximately flat versus 2023 and Core Illumina non-GAAP operating margin of approximately 20%.
GRAIL divestiture underway, with a goal of finalizing terms by the end of Q2 2024; a draft Form 10 registration statement was submitted confidentially to the SEC.
Cash, cash equivalents and short-term investments of $1,054 million at year-end, with fiscal 2023 free cash flow of $283 million.

03—Questions

Frequently Asked Questions

How did Illumina perform financially in the fourth quarter of 2023?
Q4 2023 revenue was $1.12 billion, up 4% from Q4 2022. GAAP operating loss was $(164) million and GAAP diluted loss per share was $(1.11), while non-GAAP diluted EPS was $0.14, the same as in Q4 2022. Operating cash flow was $224 million and free cash flow was $173 million.
Why was the GAAP loss for fiscal 2023 so large?
The filing attributes the GAAP diluted loss per share of $(7.34) largely to goodwill and intangible impairments of $821 million related to the GRAIL segment, which included $712 million of goodwill and $109 million of IPR&D intangible asset impairment. The goodwill impairment was primarily due to a decrease in consolidated market capitalization and a higher discount rate.
What is the outlook for fiscal 2024?
The company expects Core Illumina revenue to be approximately flat compared to fiscal 2023 and a Core Illumina non-GAAP operating margin of approximately 20%. Management said it is focusing the outlook on Core Illumina because the specific timing and impact of the GRAIL divestment remain uncertain.
What is the status of the GRAIL divestiture?
Illumina announced on December 17, 2023 that it will divest GRAIL through a third-party sale or capital markets transaction, consistent with the European Commission's divestiture order. The company aims to finalize divestiture terms by the end of the second quarter of 2024 and has submitted a confidential draft Form 10 registration statement to the SEC related to the divestment.

04—Continue

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