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Illumina 8-K/A Report, Acquisition Completed (Jun 27, 2024)

Reports
Acquisitions & Dispositions·Exhibits & Filings
Filing Date
Filed June 27, 2024
Period End
June 27, 2024
Security
ILMN
In the record · 2016–202610-K1110-Q338-K167

ILMN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 167 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Nov ’17Nov ’17
  2. Material agreement8-K · Sep ’20Sep ’20
  3. Leadership change8-K · Sep ’22Sep ’22
  4. Material agreement8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K/A filed June 27, 2024. Cited figures are marked; the original filing is the authoritative source.

On June 24, 2024, Illumina, Inc. completed the spin-off of GRAIL, Inc. through a tax-free pro rata distribution of 26.5 million GRAIL common shares to Illumina shareholders, at a ratio of one GRAIL share for every six Illumina shares held at the June 13, 2024 record date.

The shares distributed represented 85.5%a of GRAIL's outstanding common stock, and Illumina retained a 14.5% ownership interest. GRAIL began regular-way trading on the Nasdaq Global Select Market under the symbol "GRAL" on June 25, 2024, and Illumina no longer consolidates GRAIL into its financial statements. This Form 8-K/A supplements the original 8-K filed June 24, 2024 by providing additional Item 2.01 information and unaudited pro forma condensed consolidated financial statements (balance sheet as of March 31, 2024; statements of operations for the three months ended March 31, 2024 and fiscal year 2023) giving effect to the spin-off.

Before the spin-off, Illumina made a one-time cash contribution to GRAIL, the "Disposal Funding," determined to be $974 millionb, intended to cover 2.5 years of GRAIL's operations based on its long range plan, less GRAIL's cash at the spin-off. To help fund this, Illumina borrowed $750 million under a 364-day delayed draw credit facility on June 20, 2024, with a current borrowing rate of approximately 6.69% and maturity on June 19, 2025. The pro forma statements show Illumina's total pro forma revenue of $4,438 million for fiscal 2023 versus $4,504 million historically, and a pro forma net income of $219 million versus a historical net loss of $1,161 million; for the three months ended March 31, 2024, pro forma revenue was $1,056 million and pro forma net income was $56 million.

The notes disclose expected second-quarter 2024 non-cash impairment charges of $1,466 millionc for GRAIL goodwill and $420 million for in-process R&D intangible assets, which the pro forma statements do not reflect. Illumina also expects additional nonrecurring spin-off costs, and royalty payments from GRAIL are waived for 30 months following the distribution date under the amended supply and commercialization agreement.

02—Key points

Key Highlights

  1. Spin-off completed June 24, 2024: GRAIL distributed at one share for every six Illumina shares held at the June 13, 2024 record date; 26.5 million shares, representing 85.5% of GRAIL's outstanding common stock.
  2. Illumina retains a 14.5% ownership interest in GRAIL (approximately 4.5 million shares) and no longer consolidates GRAIL's financial results.
  3. Illumina contributed $974 million in Disposal Funding to GRAIL (cash contribution of $774 million by Illumina, net of GRAIL's cash as of March 31, 2024), covering 2.5 years of GRAIL operations.
  4. Illumina borrowed $750 million under a 364-day delayed draw term loan on June 20, 2024, at an approximate 6.69% rate, maturing June 19, 2025.
  5. Expected Q2 2024 impairment charges of $1,466 million (GRAIL goodwill) and $420 million (IPR&D intangible assets), not reflected in the pro forma statements.
  6. Pro forma fiscal 2023 net income of $219 million versus historical net loss of $1,161 million; pro forma Q1 2024 net income of $56 million versus historical net loss of $126 million.
  7. GRAIL royalty payments are waived for the 30-month period following the Distribution Date under the Fourth Amendment to the Amended and Restated Supply and Commercialization Agreement.

03—Questions

Frequently Asked Questions

  1. What did Illumina shareholders receive in the GRAIL spin-off?

    Holders of record of Illumina common stock as of 5:00 p.m. New York City time on June 13, 2024 received one share of GRAIL common stock for every six shares of Illumina common stock held, with no fractional shares issued and cash paid in lieu of fractional shares where applicable.

  2. Does Illumina still have an interest in GRAIL?

    Yes. Illumina retained a 14.5% ownership interest in GRAIL, approximately 4.5 million shares valued at a closing price of $17.00 per share on June 25, 2024 for pro forma purposes. Illumina no longer consolidates GRAIL's financial results.

  3. How is Illumina financing the cash contribution to GRAIL?

    Illumina borrowed $750 million on June 20, 2024 under a 364-day delayed draw senior unsecured term loan credit facility entered June 17, 2024. The loan carries a variable rate based on Term SOFR plus an applicable margin and a 0.10% credit spread adjustment, with a current rate of approximately 6.69%, and can be prepaid without premium other than customary breakage costs.

  4. How would the spin-off affect Illumina's reported financial results?

    The unaudited pro forma statements show fiscal 2023 total revenue of $4,438 million (historically $4,504 million) and net income of $219 million (historically a net loss of $1,161 million). For the three months ended March 31, 2024, pro forma revenue was $1,056 million and net income was $56 million. The filing states these pro forma figures are informational only and may differ from actual results.

  5. What charges does Illumina expect to record related to GRAIL?

    Illumina expects to record goodwill impairment of $1,466 million and in-process R&D intangible asset impairment of $420 million in the second quarter of 2024. These charges are not reflected in the pro forma statements of operations.

04—Continue

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