Illumina lowers outlook as business challenges, exec departures continue
Published: Aug 10, 2023
By Tristan Manalac
During its second-quarter earnings report on Wednesday, Illumina lowered its financial outlook for fiscal year 2023 and is now only expecting revenue growth of 1% compared to the previous forecast of 7% to 10%.
The news comes as the DNA sequencing company grapples with an activist investor, leadership shake-ups and strong anti-trust pushback over its acquisition deal with GRAIL.
In the second quarter, Illumina generated $1.18 billion in revenue, representing a modest but nevertheless positive 1% increase from its earnings during the same period last year. Without taking exchange rates into consideration, Illumina’s revenue grew 3%.
Illumina also reported financial results for GRAIL, which it moved to buy for $8 billion in September 2020. The cancer detection company made $22 million in the second quarter, up from $12 million during the same timeframe last year.
Despite better revenues, Illumina is still reducing its guidance for 2023 driven in large part by “a more protracted economic recovery and an increasingly challenged competitive landscape” in China, as compared to the U.S. and Europe, interim CEO and general counsel Charles Dadswell said in an investor call Wednesday.
Dadswell also revealed during the earnings call that Illumina’s Chief Technology Officer Alex Aravanis and Chief Medical Officer Phil Febbo had resigned from their positions. Aravanis’ responsibilities will be assumed by Steve Barnard, who has been with the company for 25 years, while Illumina is still searching for Febbo’s replacement.
Dadswell himself is only temporarily taking over Illumina’s reins after the previous CEO Francis deSouza stepped down in June 2023. The company’s search for a permanent replacement is ongoing.
Aside from deSouza’s departure, Illumina’s rocky second-quarter also saw a face-off against activist investor Carl Icahn, who tried to place his representatives on Illumina’s board during the company’s annual shareholder meeting in May 2023. Icahn pointed to deSouza’s blunders including the acquisition of GRAIL, which has since contended with strong anti-trust backlash.
Most recently, the European Commission in July 2023 slapped Illumina with a record-breaking $476 million fine for pushing through with the GRAIL deal before regulatory approval. This penalty is the largest ever meted out under the EC’s merger regulations. GRAIL was also given a symbolic fine amounting to around $1,100 and is the first company to be sanctioned under these rules.
Following these challenges, Illumina also announced last month that it was laying off 79 employees in San Diego as part of a plan to cut costs by $100 million this year. The company is also downsizing by letting go of its i3 campus in San Diego, while rethinking the future of another site in California.