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Illumina (ILMN) Beats on Q2 Earnings, Lowers 2024 Sales View
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Illumina Inc. (ILMN - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 36 cents, which beat the Zacks Consensus Estimate of 12 cents by a stupendous 200%. The bottom line was above the year-ago quarter’s figure of 32 cents.
The adjustments exclude the impact of GRAIL’s pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits and the Pillar Two global minimum top-up tax, which became effective from the first quarter of 2024, among others.
Including one-time items, the company’s GAAP loss per share was $12.48 compared with the year-ago quarter’s loss of $1.48.
Q2 Revenues
Illumina’s revenues amounted to $1.11 billion, down 5.9% year over year (down 5% at CER). However, the top line surpassed the Zacks Consensus Estimate by 1.31%.
Segmental Details
Illumina has two reportable segments — Core Illumina and GRAIL.
Core Illumina revenues totaled $1.09 billion (down 6% year over year). This was primarily due to an increase in revenues from strategic partnerships and higher instrument service contract revenues on a growing install base.
Core Illumina sequencing service and other revenues totaled $143 million, up 7% year over year. Sequencing consumable revenues amounted to $737 million, flat year over year, primarily due to growth in high throughput.
GRAIL contributed $29 million to revenues in the reported quarter, indicating a 31.8% increase from the year-ago period’s reported actuals.
Margins
The adjusted gross margin (excluding amortization of acquired intangible assets) was 69%, up 265 basis points (bps) year over year.
Research and development expenses decreased 9.2% year over year to $325 million. SG&A expenses totaled $147 million, down 68.2% from the year-ago quarter’s level. Adjusted operating costs decreased 42.4% to $472 million. The adjusted operating profit in the quarter was $295 million against an adjusted operating loss of $40 million in the corresponding period of 2023.
Financial Update
Illumina exited the second quarter with cash and cash equivalents of $920 million compared with $1.11 billion at the end of the first quarter of 2024.
Cumulative net cash provided by operating activities at the end of the second quarter was $80 million compared with $105 million a year ago.
2024 Guidance
Illumina updated its outlook for 2024.
The company has lowered its revenue guidance. It expects revenues to decrease 2-3% year over year and 1.5-2.5% at cc.
The company expects Core Illumina non-GAAP operating margin to be in the range of 20.5-21% (up from earlier guidance of 20%).
Core Illumina non-GAAP diluted EPS is projected to be in the range of $3.80-$3.95 for 2024.
Throughout the first quarter, Illumina made headlines on many occasions. The company completed the integration of Illumina's latest chemistry, XLEAP-SBS, into all reagents for its NextSeq 1000 and NextSeq 2000 next-generation sequencing instruments. Illumina expanded its oncology menu for NovaSeq X Series customers by offering the newly verified high-throughput version of TruSight Oncology 500 (TSO 500 HT) and the latest version of its distributed liquid biopsy research assay, TruSight Oncology 500 ctDNA v2. The company also launched DRAGEN v4.3, the latest version of Illumina's DRAGEN software.
The company also completed the spin-off of GRAIL in the quarter. It acquired Fluent Biosciences, a developer of an emerging and highly differentiated single-cell technology.
Our Take
Illumina delivered better-than-expected earnings and revenues in the second quarter of 2024. The company’s innovative solutions are facilitating the next wave of progress in genomics and multiomics. Illumina continues to make significant progress in executing its three key priorities for value creation across the organization. The expansion of the gross margin during the quarter is impressive.
Meanwhile, the lowered 2024 revenue guidance looks disappointing. Illumina continues to navigate a challenging global macro environment where customers are still constrained in their purchasing decisions.
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Insulet (PODD - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1.
Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Insulet, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2024 earnings of 55 cents per share, which missed the Zacks Consensus Estimate by 3.5%. Revenues of $488.5 million surpassed the Zacks Consensus Estimate by 5.5%.
PODD has an earnings growth rate of 20.8% for 2025 compared with the S&P 500’s 11.3%. The company beat on earnings in three of the trailing four quarters and missed the same once, the average surprise being 67.53%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion outpaced the Zacks Consensus Estimate by 0.5%.
DGX has a historical five-year earnings growth rate of 7.4% compared with the industry’s 4.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.31%.
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Illumina (ILMN) Beats on Q2 Earnings, Lowers 2024 Sales View
Illumina Inc. (ILMN - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 36 cents, which beat the Zacks Consensus Estimate of 12 cents by a stupendous 200%. The bottom line was above the year-ago quarter’s figure of 32 cents.
The adjustments exclude the impact of GRAIL’s pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits and the Pillar Two global minimum top-up tax, which became effective from the first quarter of 2024, among others.
Including one-time items, the company’s GAAP loss per share was $12.48 compared with the year-ago quarter’s loss of $1.48.
Q2 Revenues
Illumina’s revenues amounted to $1.11 billion, down 5.9% year over year (down 5% at CER). However, the top line surpassed the Zacks Consensus Estimate by 1.31%.
Segmental Details
Illumina has two reportable segments — Core Illumina and GRAIL.
Core Illumina revenues totaled $1.09 billion (down 6% year over year). This was primarily due to an increase in revenues from strategic partnerships and higher instrument service contract revenues on a growing install base.
Core Illumina sequencing service and other revenues totaled $143 million, up 7% year over year. Sequencing consumable revenues amounted to $737 million, flat year over year, primarily due to growth in high throughput.
GRAIL contributed $29 million to revenues in the reported quarter, indicating a 31.8% increase from the year-ago period’s reported actuals.
Margins
The adjusted gross margin (excluding amortization of acquired intangible assets) was 69%, up 265 basis points (bps) year over year.
Research and development expenses decreased 9.2% year over year to $325 million. SG&A expenses totaled $147 million, down 68.2% from the year-ago quarter’s level. Adjusted operating costs decreased 42.4% to $472 million. The adjusted operating profit in the quarter was $295 million against an adjusted operating loss of $40 million in the corresponding period of 2023.
Financial Update
Illumina exited the second quarter with cash and cash equivalents of $920 million compared with $1.11 billion at the end of the first quarter of 2024.
Cumulative net cash provided by operating activities at the end of the second quarter was $80 million compared with $105 million a year ago.
2024 Guidance
Illumina updated its outlook for 2024.
The company has lowered its revenue guidance. It expects revenues to decrease 2-3% year over year and 1.5-2.5% at cc.
The company expects Core Illumina non-GAAP operating margin to be in the range of 20.5-21% (up from earlier guidance of 20%).
Core Illumina non-GAAP diluted EPS is projected to be in the range of $3.80-$3.95 for 2024.
Illumina, Inc. Price, Consensus and EPS Surprise
Illumina, Inc. price-consensus-eps-surprise-chart | Illumina, Inc. Quote
Key Announcements
Throughout the first quarter, Illumina made headlines on many occasions. The company completed the integration of Illumina's latest chemistry, XLEAP-SBS, into all reagents for its NextSeq 1000 and NextSeq 2000 next-generation sequencing instruments. Illumina expanded its oncology menu for NovaSeq X Series customers by offering the newly verified high-throughput version of TruSight Oncology 500 (TSO 500 HT) and the latest version of its distributed liquid biopsy research assay, TruSight Oncology 500 ctDNA v2. The company also launched DRAGEN v4.3, the latest version of Illumina's DRAGEN software.
The company also completed the spin-off of GRAIL in the quarter. It acquired Fluent Biosciences, a developer of an emerging and highly differentiated single-cell technology.
Our Take
Illumina delivered better-than-expected earnings and revenues in the second quarter of 2024. The company’s innovative solutions are facilitating the next wave of progress in genomics and multiomics. Illumina continues to make significant progress in executing its three key priorities for value creation across the organization. The expansion of the gross margin during the quarter is impressive.
Meanwhile, the lowered 2024 revenue guidance looks disappointing. Illumina continues to navigate a challenging global macro environment where customers are still constrained in their purchasing decisions.
Zacks Rank & Other Key Picks
Illumina currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Insulet (PODD - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1.
Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Insulet, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2024 earnings of 55 cents per share, which missed the Zacks Consensus Estimate by 3.5%. Revenues of $488.5 million surpassed the Zacks Consensus Estimate by 5.5%.
PODD has an earnings growth rate of 20.8% for 2025 compared with the S&P 500’s 11.3%. The company beat on earnings in three of the trailing four quarters and missed the same once, the average surprise being 67.53%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion outpaced the Zacks Consensus Estimate by 0.5%.
DGX has a historical five-year earnings growth rate of 7.4% compared with the industry’s 4.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.31%.