But there was still uncertainty as to whether the gene-sequencing pioneer could close out 2018 as strongly as it performed earlier in the year. Illumina answered that uncertainty with its fourth-quarter performance update provided after the market closed on Tuesday. Here are the highlights from Illumina's results.
Illumina results: The raw numbers
|$867 million||$778 million||
Net income from continuing operations
|$210 million||$68 million||
Adjusted earnings per share (EPS)
What happened with Illumina this quarter?
While Illumina again achieved double-digit percentage revenue growth, its growth rate slowed from the third quarter of 2018. But that's not too concerning.
Illumina CFO Sam Samad mentioned in the company's third-quarter conference call that consumables revenue in the fourth quarter would likely fall from the previous quarter. Some Chinese customers stocked up on consumables in the second and third quarters on concerns that tariffs could be placed on the products. Samad said that acceleration would potentially reduce fourth-quarter consumables sales by around $20 million.
There's also more to the story with the company's big year-over-year jump in GAAP net income. The primary factor behind this increase was a one-time hit from a provision for income taxes in the prior-year period that artificially improved the year-over-year comparison.
Illumina's adjusted EPS reflects a more accurate picture. This figure factored out the impact of taxes in the fourth quarter of 2017 as well as reflected several other lower adjustments. Illumina's increased spending, which included stock-based compensation, led to the company's adjusted EPS falling from the prior-year period.
In addition to its financial performance, Illumina pointed out several key achievements since its last quarterly update, including:
- The announcement of its pending acquisition of Pacific Biosciences of California
- The launch of the TruSight Oncology 500 (TSO 500) pan-cancer assay
- The FDA's awarding of Breakthrough Device Designation for its TruSight Assay companion diagnostic
What management had to say
Illumina CEO Francis deSouza stated:
With revenue growth of 21% in 2018, Illumina delivered its 20th consecutive year of growth, with increasing adoption of innovative sequencing applications across a wide range of customers and geographies. From the evolving regulatory environment for oncology diagnostics to progress in reimbursement for non-invasive prenatal and undiagnosed disease testing, genomics is accelerating on its path into clinical standard of care.
Illumina expects revenue for full-year 2019 will grow between 13% and 14%. The company thinks that GAAP EPS for 2019 will come in between $6.07 and $6.17, with adjusted non-GAAP EPS between $6.50 and $6.60. However, this guidance doesn't reflect any impact from the PacBio deal.
The acquisition of PacBio is certainly something for investors to look forward to. This transaction will give Illumina a presence in the long-read sequencing market and should complement its core short-read sequencing focus.
However, the more important story for Illumina going forward will continue to be the factors driving its long-term growth. These include the use of gene sequencing in consumer genomics, non-invasive prenatal testing (NIPT), oncology, population genomics, and rare and underdiagnosed diseases. Future expansion in these areas should enable Illumina to continue its winning ways.