On February 10, 2022 Illumina, Inc. (NASDAQ: ILMN) reported its financial results for the fourth quarter and fiscal year 2021, which include the consolidated financial results of GRAIL (Press release, Illumina, FEB 10, 2022, View Source [SID1234607975]).
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Fourth quarter consolidated results:
•Revenue of $1,198 million, a 26% increase compared to the prior year period
•GAAP net income for the quarter of $112 million, or $0.71 per diluted share, compared to $257 million, or $1.75 per diluted share, for the prior year period
•Non-GAAP net income for the quarter of $117 million, or $0.75 per diluted share, compared to $179 million, or $1.22 per diluted share, for the prior year period (see the "Consolidated Reconciliation Between GAAP and Non-GAAP Net Income" table for a reconciliation of these GAAP and non-GAAP financial measures)
•Cash flow from operations of $282 million compared to $406 million in the prior year period
•Free cash flow (cash flow from operations less capital expenditures) of $212 million for the quarter compared to $344 million in the prior year period
"We are seeing strength across our business as a growing number of patients around the world are accessing the life-saving benefits of genomics, from oncology therapy selection to genetic disease testing and pathogen surveillance," said Francis deSouza, Chief Executive Officer. "Opportunities are also expanding across new markets like proteomics, infectious disease and drug discovery. In addition, momentum for GRAIL’s groundbreaking multi-cancer early detection blood test continues to accelerate. We are also making great progress on exciting new innovations, like our breakthrough Chemistry X and our Infinity long-read technology, to help clinicians and scientists make discoveries that improve patient care."
Gross margin in the fourth quarter of 2021 was 68.2% compared to 66.1% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 71.5% for the fourth quarter of 2021 compared to 66.9% in the prior year period.
Research and development (R&D) expenses for the fourth quarter of 2021 were $350 million compared to $200 million in the prior year period. Non-GAAP R&D expenses as a percentage of revenue were 29.2% compared to 20.9% in the prior year period.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2021 were $426 million compared to $298 million in the prior year period. Excluding acquisition-related expenses, fair value adjustments on contingent consideration liabilities and amortization of acquired intangible assets, non-GAAP SG&A expenses as a percentage of revenue were 30.1% compared to 25.1% in the prior year period.
Depreciation and amortization expenses were $90 million and capital expenditures for free cash flow purposes were $70 million during the fourth quarter of 2021. At the close of the quarter, the company held $1.3 billion in cash, cash equivalents and short-term investments, compared to $3.5 billion as of January 3, 2021.
Fiscal year 2021 consolidated results:
•Revenue of $4,526 million, a 40% increase compared to $3,239 million in fiscal 2020
•GAAP net income of $762 million, or $5.04 per diluted share, which included an $899 million gain from our previously held investment in GRAIL and $654 million in GRAIL acquisition-related compensation expense. This compared to $656 million, or $4.45 per diluted share, in fiscal 2020
•Non-GAAP net income of $892 million, or $5.90 per diluted share, compared to $664 million, or $4.50 per diluted share, in fiscal 2020 (see the "Consolidated Reconciliation Between GAAP and Non-GAAP Net Income" table for a reconciliation of these GAAP and non-GAAP financial measures)
•Cash flow from operations of $545 million compared to $1,080 million in fiscal 2020, with the year-over-year decrease primarily attributable to expenses related to the GRAIL acquisition, as well as GRAIL’s operating loss for the period after the acquisition
•Free cash flow (cash flow from operations less capital expenditures) of $337 million, compared to $891 million in fiscal 2020
Gross margin for fiscal 2021 was 69.7% compared to 68.0% in the prior year. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 71.3% for fiscal 2021 compared to 69.0% in the prior year period.
R&D expenses for fiscal 2021 were $1,185 million compared to $682 million in the prior year. Excluding GRAIL acquisition-related compensation expense, non-GAAP R&D expenses as a percentage of revenue were 21.9% compared to 21.0% in the prior year period.
SG&A expenses for fiscal 2021 were $2,092 million compared to $941 million in the prior year period. Excluding GRAIL acquisition-related compensation expense and other acquisition-related expenses, fair value adjustments on contingent consideration liabilities, expenses and income related to COVID-19, gain on litigation and amortization of acquired intangible assets, non-GAAP SG&A expenses as a percentage of revenue were 25.2% compared to 24.6% in the prior year period.
Fiscal year 2021 segment results:
Following the acquisition of GRAIL on August 18, 2021, we have two reportable segments, Core Illumina and GRAIL. GRAIL financial results are reflected for the period after the acquisition.
Announcements since Illumina’s last earnings release:
Core Illumina
•Key oncology studies utilizing our TruSight Oncology 500 panel, including:
▪With the Jean Perrin Center at the Clermont-Ferrand University Hospital in France for the CELIA study assessing the clinical value of comprehensive genomic profiling (CGP) on cancer therapy selection for patients with late-stage disease
▪With the National Cancer Center Japan to analyze the blood-based genomic profile and clinical information of patients living with Nasopharyngeal Carcinoma
•Expansion of oncology testing partnerships, including:
▪A companion diagnostic partnership with Boehringer Ingelheim for programs in their oncology pipeline
▪An IVD co-development partnership with Agendia N.V. to advance the use of next-generation sequencing for decentralized oncology testing
•Participation in Our Future Health, the largest-ever research program in the U.K., with up to 5 million volunteers
•Updates on groundbreaking innovations, including:
▪Progress with revolutionary Chemistry X for future platforms
▪Development of new long-read technology, code-named Infinity, planned for launch in the second half of 2022
•Collaborations in large, emerging spaces of genomics, including:
▪Co-development partnership with SomaLogic to accelerate the rapidly growing high-throughput sector of the proteomics market
▪Collaboration with Nashville Biosciences to transform new insights into drug discovery and therapy development
•The 2022 Illumina Genomics Forum will take place in person and online Sept. 28 – Oct. 1, 2022 in San Diego
▪In addition to this customer event, Illumina will also host its Investor Day in late September
▪More information regarding Investor Day will be shared in the coming months
A full list of recent Illumina announcements can be found in the company’s News Center
GRAIL
•A collaboration with the Knight Cancer Institute at Oregon Health & Science University to offer Galleri, GRAIL’s multi-cancer early detection blood test
•A collaboration with Premier, Inc.’s PINC AI, an advanced technology and services platform that provides artificial intelligence-enabled clinical performance improvement technologies, to support patient access to Galleri
•A partnership with Alignment Health Plan, a national Medicare Advantage health plan from Alignment Healthcare (NASDAQ: ALHC), to provide its Medicare Advantage members access to Galleri
A full list of recent GRAIL announcements can be found in the company’s Newsroom
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance, including our Core Illumina and GRAIL segments. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.
For fiscal 2022, the company expects consolidated revenue growth in the range of 14% to 16%, GAAP earnings per diluted share of $3.04 to $3.24, and non-GAAP earnings per diluted share of $4.00 to $4.20. The company expects Core Illumina revenue growth in the range of 13% to 15%. GRAIL revenue is expected to be in the range of $70 million to $90 million.
Conference call information
The conference call will begin at 2 p.m. Pacific Time (5 p.m. Eastern Time) on Thursday, February 10, 2022. Interested parties may access the live teleconference through the Investor Info section of Illumina’s website under the "Company" tab at www.illumina.com. Alternatively, individuals can access the call by dialing 1.844.200.6205 or 1.929.526.1599 outside North America, both using conference ID 018314.
A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.