Illumina Inc. ILMN reported fourth-quarter 2024 adjusted earnings per share (EPS) of 86 cents, which missed the Zacks Consensus Estimate of 92 cents by 6.5%. The bottom line was significantly above the year-ago quarter’s level of 14 cents. 

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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.

Including one-time items, the company’s GAAP EPS was $1.17 against the year-ago reported loss of $1.11 per share.

Full-year adjusted EPS was $2.45 compared with the year-ago level of 86 cents. The figure missed the Zacks Consensus Estimate by 40.7%.

Following the earnings announcement, ILMN stock fell 4.9% at the after-market trading yesterday.

Illumina’s Revenues

Revenues amounted to $1.10 billion, down 1.6% year over year (down 1% at CER). However, the top line beat the Zacks Consensus Estimate by 2.6%.

Full-year revenues totaled $4.37 billion, down 2.8% from the 2023 level. The figure beat the Zacks Consensus Estimate by 1.6%. 

Illumina’s Segmental Details

Illumina has one reportable segment — Core Illumina.

Core Illumina’s revenues totaled $1.10 billion (up 1% year over year). The growth was due to the company’s high-throughput consumables business, NovaSeq X placements and encouraging uptake from clinical customers.

Core Illumina sequencing service and other revenues totaled $151 million, down 1% year over year. Sequencing consumable revenues amounted to $698 million, up 2% year over year, primarily due to continued strong uptake in X consumables.

The company’s GRAIL segment was spun off on June 24, 2024. Hence, GRAIL has no reportable impact on the fourth-quarter top line. 

Margins

The adjusted gross margin (excluding amortization of acquired intangible assets) was 65.9%, up 587 basis points (bps) year over year.

Research and development expenses decreased 24.9% year over year to $256 million. SG&A expenses totaled $279 million, down 42.5% from the year-ago level. The adjusted operating profit in the quarter was $193 million against the year-ago quarter’s operating loss of $152 million. 

Financial Update

Illumina exited 2024 with cash and cash equivalents of $1.13 billion compared with $1.05 billion at the end of 2023.

Cumulative net cash provided by operating activities at the end of the fourth quarter was $837 million compared with $478 million a year ago.

Illumina’s 2025 Guidance

Illumina provided its outlook for 2025.

The company expects full-year Core Illumina revenues to be in the range of $4.28-$4.40 billion. It expects constant currency revenue growth to be in the low single digits. ILMN expects Core Illumina's non-GAAP operating margin to be 23% in 2025.

Illumina, Inc. Price, Consensus and EPS Surprise

Illumina, Inc. price-consensus-eps-surprise-chart | Illumina, Inc. Quote

Non-GAAP diluted EPS is projected to be in the range of $4.50-$4.65 in 2025. The Zacks Consensus Estimate for full-year EPS is currently pegged at $4.42.

Key Announcements

Throughout the fourth quarter, Illumina made headlines on many occasions. It collaborated with NVIDIA to enhance the analysis and interpretation of multiomic data. The company also collaborated with Regeneron and invested in the Truveta Genome Project to extend the DNA sequence-linked healthcare database to advance scientific innovation and healthcare delivery. 

Illumina launched pilot proteomics program with UK Biobank and biopharma collaborators to analyze 50,000 samples. Additionally, it announced the expansion of TruSight Oncology, the latest solution to enable comprehensive genomic profiling of tumors. 

Our Take

Illumina exited the fourth quarter on a mixed note, wherein earnings missed estimates but revenues beat the same. The company’s innovative solutions are facilitating the next wave of progress in genomics and multiomics. The expansion of gross margins is impressive. 

ILMN continues to navigate a challenging global macro environment where customers are still constrained in their purchasing decisions. However, the company achieved additional cost savings from greater manufacturing and logistics efficiencies, contributing more than $100 million in cost savings in 2024. 

ILMN’s Zacks Rank and Key Picks

Illumina currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Quest Diagnostics DGX, ResMed RMD and Cardinal Health CAH. 

Quest Diagnostics reported fourth-quarter 2024 adjusted EPS of $2.23, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.62 billion beat the Zacks Consensus Estimate by 1.9%. 

DGX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DGX has an earnings yield of 5.9% compared with the industry’s 4.1%. The company beat on earnings in each of the trailing four quarters, the average surprise being 3.8%.

ResMed, carrying a Zacks Rank #2 at present, posted second-quarter fiscal 2025 adjusted EPS of $2.43, which topped the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion exceeded the Zacks Consensus Estimate by 1.6%.

RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Cardinal Health, carrying a Zacks Rank #2 at present, posted second-quarter fiscal 2025 adjusted EPS of $1.93, which outpaced the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion exceeded the Zacks Consensus Estimate by 0.7%.

CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

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