Illumina slips as GRAIL impairment prompts guidance cut
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Despite reporting better-than-expected financials for Q3 2022, Illumina, Inc. (NASDAQ:ILMN) dropped ~6% post-market Thursday as the life sciences company lowered its full-year earnings guidance, citing impairment charges related to its GRAIL acquisition.
While revenue for the period rose ~1% YoY to $1.1B on a reported basis, the topline indicated a sequential decline for the second consecutive quarter, falling ~3% from Q2 2022.
"Our third-quarter results were in line with our expectations, with traction across our portfolio offset by challenging macroeconomic dynamics that we expect will continue into 2023," Chief Executive Francis deSouza noted.
Revenue from the Core business remained flat at ~$1.1B, and GRAIL revenue rose ~400% YoY to $10M while the overall gross margin dropped to ~64% from ~70% in the prior year period.
Even as R&D expenses and SG&A expenses fell ~26% YoY and ~83% YoY to $325M and $145M, respectively, the company swung to a net loss of $3.8B compared to $317M of net income in Q3 2021 due to $3.9B of goodwill impairment related to GRAIL.
Citing multiple reasons, including forex headwinds and a decline in purchases in Q4 due to the upcoming launch of high throughput gene sequencer NovaSeq X, Illumina (ILMN) has lowered the full-year revenue growth forecast to flat â 1% compared to 4% - 5%, estimated three months ago.
The $3.9B impairment charge has led the company to forecast $(26.56) - $(26.41) of GAAP diluted loss per share for this year compared to $(2.93) - $(2.78) in the previous guidance.
Previously, Illumina (ILMN) has indicated plans to divest the cancer test developer GRAIL amid regulatory challenges against the acquisition.