Illumina-JPM-Conference-January-2025.pdf

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1、 2025 Illumina,Inc.All rights reserved.CEOJacob Thaysen,Ph.D.43rdAnnual J.P.Morgan Healthcare ConferenceJanuary 14,2025J.P.Morgan Healthcare Conference 2025Cautionary Notes on Forward Looking StatementsThis release may contain forward-looking statements that involve risks and uncertainties.Among the

2、 important factors to which our business is subject that could cause actual results to differ materially from those in any forward-looking statements are:Our ability to meet our revenue and earnings per share growth targets;Changes in the rate of growth in the markets we serve;The volume,timing and

3、mix of customer orders among our products and services;Our ability to adjust our operating expenses to align with our revenue expectations;Our ability to manufacture robust instrumentation and consumables;The success of products and services competitive with our own;Challenges inherent in developing

4、,manufacturing,and launching new products and services,including expanding or modifying manufacturing operations and reliance on third-party suppliers for critical components;The impact of recently launched or pre-announced products and services on existing products and services;Our ability to reali

5、ze the anticipated benefits from prior or future actions to streamline and improve our R&D processes,reduce our operating expenses and maximize our revenue growth;To deploy new products,services,and applications,and to expand the markets for our technology platforms;Our ability to obtain approval by

6、 third-party payors to reimburse patients for our products;Our ability to obtain regulatory clearance for our products from government agencies;Our ability to successfully partner with other companies and organizations to develop new products,expand markets,and grow our business;Uncertainty,or adver

7、se economic and business conditions,including as a result of slowing or uncertain economic growth or armed conflict;The application of generally accepted accounting principles,which are highly complex and involve many subjective assumptions,estimates,and judgmentsLegislative,regulatory and economic

8、developments,together with other factors detailed in our filings with the Securities and Exchange Commission,including our most recent filings on Forms 10-K and 10-Q,or in information disclosed in public conference calls,the date and time of which are released beforehand.We undertake no obligation,a

9、nd do not intend,to update these forward-looking statements,to review or confirm analysts expectations,or to provide interim reports or updates on the progress of the current quarter2J.P.Morgan Healthcare Conference 20253AgendaIIllumina OverviewIIPreliminary Results&Financial OutlookIIIStrategy Exec

10、utionIVOur Path AheadJ.P.Morgan Healthcare Conference 20254AgendaIIllumina OverviewJ.P.Morgan Healthcare Conference 2025Illuminas Global Position of Strength5Note:Gb=gigabase.Pb=petabase(1 Pb=1M gigabases).GDT=genetic disease testing.RH=reproductive health.LTM=last twelve months.1.Reflects Gb shippe

11、d for ILMN sequencers across the throughput spectrum.Gb shipped correlates closely with data generated.2.Preliminary unaudited Core Illumina FY24 results.3.See appendix for reconciliations of GAAP and non-GAAP financial measures.4.As of 12/29/2024.Countries165+Employees9kMarket Segments2%of Sequenci

12、ng ConsumablesFY24 Revenue2$4.33BFY24 Free Cash Flow2,3$1.07BGross Debt/LTM EBITDA2,41.75xTotal Active Installed Base22kData Generated on ILMN Sequencers1480 PbClinical Markets2%of Clinical Sequencing Consumables56%44%50%25%22%3%ClinicalResearch&AppliedOncologyGDTRHOtherReachScaleStrengthYoY Growth

13、Sequencing Volume+35%J.P.Morgan Healthcare Conference 2025We are Building Towards an Exciting Vision for NGSWe are working to shift the industry from cost per Gb to highest quality insights for the lowest end-to-end cost6Whole genomes are the diagnostics standard of care routinely adopted in local h

14、ospitals around the worldWhole GenomesScientists adopt multiomics at scale catalyzing deeper biology and scientific breakthroughsMultiomicsPharma accelerates drug discovery and precision medicine leveraging AI-powered large cohort analysisDrug DiscoverySovereign nations move from sick-care to person

15、alized health-care broadly adopting NGS across healthcare systemsSovereign NationsJ.P.Morgan Healthcare Conference 2025Illuminas Long-term Opportunity is Significant7NGS SAM CAGR218%6%Growth Drivers Oncology therapy selection Minimal residual disease(MRD)Broader adoption of clinical whole genome seq

16、uencing(WGS)Multiomics Large WGS-multiomics cohort studies Software,informatics,and AI$100B$4B$25B$6B$6BTAM&SAM1ClinicalResearchNGS SAM 2033NGS SAM 2024TAMSource:Publicly available sources(company filings,UN,WHO,etc.),market and sell-side research reports,Illumina estimates.NGS=next generation seque

17、ncing.SAM=serviceable addressable market.TAM=total addressable market.1.TAM represents the market opportunity of research and clinical samples addressable by NGS,including those addressed by technologies that NGS could substitute over time;SAM represents total NGS dollars including tools and assays.

18、2.NGS SAM CAGR reflects 10-year forward growth rate.J.P.Morgan Healthcare Conference 20258AgendaIIPreliminary Results&Financial OutlookJ.P.Morgan Healthcare Conference 2025Q424 Results Exceeded Our ExpectationsPreliminary Unaudited ResultsQ424FY24$4.33B(2%)YoY declineRevenue$1.10B1%YoY growth21.3%No

19、n-GAAP Operating Margin19.7%$4.12-$4.141Non-GAAP Diluted EPS$0.91-$0.93FY24 AccomplishmentsPortfolio rationalization and margin improvement programLaunch of new strategy to return to HSD growthFrom genomics to multiomics with continued innovationsRevitalized focus on customers and partnersNew leader

20、ship team and organizational structure9Note:Preliminary unaudited Core Illumina FY24 results.Note:EPS=earnings per share.HSD=high single digits.YoY=year over year.Note:See appendix for reconciliations of GAAP and non-GAAP financial measures.1.Assumes preliminary tax rate of 24.0%for FY24.J.P.Morgan

21、Healthcare Conference 2025Outlook for FY25 in Line with Strategy UpdateNote:FY25 outlook as of 01/14/2024.Note:See Appendix for statement regarding use of non-GAAP financial measures.1.Assumes FY25 FX impact of 1.2%.2.Assumes FY25 tax rate of 23%.YoY Revenue Growth in Constant Currency1“Return to Gr

22、owth”1Low Single DigitsReported Revenue:$4.28B to$4.4BNon-GAAP Operating Margin“Disciplined Execution”223%YoY Growth in Non-GAAP Diluted EPS2“Accelerated Value Creation”310%10J.P.Morgan Healthcare Conference 2025We Are Making Progress Towards Our Strategic GoalsNote:EPS=earnings per share.LSD=low si

23、ngle digit.HSD=high single digit.Note:See appendix for reconciliations of GAAP and non-GAAP financial measures.Note:Preliminary unaudited Core Illumina FY24 results.1.Reflects the midpoint of the FY24 preliminary unaudited EPS range of$4.12-$4.14.Revenue Growthin Constant CurrencyNon-GAAP Operating

24、MarginNon-GAAP Diluted EPS(2%)LSDHSDFY24AFY25EFY27E21%23%26%FY24AFY25EFY27E$4.13110%GrowthFY24AFY25EFY27EAccelerating to HSD growth by FY27500+bps expansion by FY27Double-digit to teensgrowth FY25-FY2720252025202511J.P.Morgan Healthcare Conference 2025Capital Allocation Priorities Support Strategic

25、Growth1.As of 12/29/2024.Strong balance sheet&credit ratingCommitted to maintaining investment grade rating1.75xGross Debt/LTM EBITDA1Return cash to shareholdersExecuting on anti-dilutive share repurchases;may opportunistically repurchase more$116MStock Repurchased in FY24Opportunistic M&A&strategic

26、 investmentsFocused on bolt-on-size key strategic enablersAcquired in Q423Acquired in Q324Capital AllocationConsiderationsRecent Examples12Organic investmentExpansion of genomics&multiomics offerings to increase accessibilityConstellation Mapped Reads2026 LaunchIllumina Proteomics Solution1H25 Launc

27、hJ.P.Morgan Healthcare Conference 202513AgendaIIIStrategy ExecutionJ.P.Morgan Healthcare Conference 2025Reaffirming Path to High Single Digit Growth by 2027+Key Growth Drivers14Core Sequencing&NovaSeq X TransitionComplete workflows unlocking sequencing intensive applications1Scalable Entry intoMulti

28、omicsNew high growth business to complement core sequencing2Expansion of Services,Data&SoftwareScalable,high-margin businesses with recurring revenue potential3J.P.Morgan Healthcare Conference 2025Continued Momentum with Transition to NovaSeq XNote:Gb=gigabase.HT=high-throughput.1.NovaSeq X installe

29、d base includes reagent rental units.2.Average pull-through reflects FY24 average annualized figures per instrument.NovaSeq X Installed Base630Active Installed Base191Q424ShipmentsOf total HT consumables revenue,expect50%To transition to NovaSeq X Series if transition trajectory continuesTransition

30、to X$1.3MFY24 Avg.Pull-Through2 75%Attributed to NovaSeq X Series Of total HT Gb shipped,expect15By 2H2025J.P.Morgan Healthcare Conference 2025NovaSeq X is Driving Significant Growth in Sequencing DataNote:HT=high-throughput.Gb=gigabase.Pb=petabase(1 Pb=1M Gb).HT Pb SequencedAvg.$/Gb460 Pb$19.2$3.42

31、015201620172018201920202021202220232024Avg.Cost($HT Gb)NovaSeq X LaunchHT Data Sequenced(Pb)NovaSeq 6000 Launch16J.P.Morgan Healthcare Conference 2025Expanding into Multiomics Powered by Illumina SoftwareNGS=next generation sequencing.1.Formerly known as Fluent Biosciences.2.74%of SOMAmer reagents h

32、ave more than one additional source of orthogonal confirmation.Illumina Analysis&Interpretation SoftwareDRAGENIllumina Connected AnalyticsPartekIllumina Connected Insights5-Base Genome2026 Commercial LaunchConstellation Mapped Reads1H 2025 Early Access2026 Commercial LaunchIllumina Proteomics Soluti

33、on1H 2025 LaunchIllumina Single Cell Solution1 Now AvailableOverwhelming customer feedbackConstellation Mapped ReadsOur most comprehensive genomic readout Challenging genomic regions Ultra long phasing Enhanced structural variant detectionUnprecedented ease of use that eliminates conventional librar

34、y prep17Illumina Proteomics SolutionMaterially outperforms on-market NGS proteomics products on precision and reproducibilityComplete end-to-end proteomics solutionLargest orthogonally validated NGS proteomics panel2J.P.Morgan Healthcare Conference 2025Scaling Services,Software,and Data BusinessEHR=

35、electronic health data.WES=whole exome sequencing.WGS=whole genome sequencing.Library PrepSequenceAnalyzeInterpretMultiomicspartnershipsIllumina Library Prep&Sequencing PlatformsIllumina Global Services&SupportNational Genomics ProgramsWGS data partnershipsCompute and AI partnershipsWES/EHR data col

36、laborationsIllumina Analysis&Interpretation Software18Our Future Health(UK)PRECISE(Singapore)Korean National Project of Bio-Big DataUK BioBankAbu Dhabi Department of Health(UAE)J.P.Morgan Healthcare Conference 202519AgendaIVOur Path AheadJ.P.Morgan Healthcare Conference 2025Focused&Disciplined Execu

37、tion to Deliver Sustainable,Profitable GrowthEPS=earnings per share.NGS=next generation sequencing.Strategic PrioritiesCustomer Centricity1Driving the NGS Ecosystem2Future-Defining Innovation Pipeline3Commercial&Operational Excellence4Value CreationAccelerated growthMargin expansionDifferentiated EP

38、S growth20 2025 Illumina,Inc.All rights reserved.AppendixJ.P.Morgan Healthcare Conference 2025NovaSeq X Updates25%Shipments to New-to-High Throughput 630Active Installed Base140%Shipments to Clinical Customers65%Total Gb ShippedNovaSeq X Shipment Breakdown Since LaunchHT Gb Data&Consumables Revenue

39、Attributed to NovaSeq X During Q424 40%Total Consumables RevenueNote:Gb=gigabase.HT=high-throughput.1.NovaSeq X installed base includes instrument and reagent rentals.50%Clinical Gb Shipped80%Research Gb Shipped22J.P.Morgan Healthcare Conference 2025FY24 Active Installed BaseNote:Reflects preliminar

40、y unaudited FY24 results.1.High-throughput figures exclude HiSeq.NovaSeq 6000 active installed base accounts for 150 decommissions in FY24.2.Active installed base excludes instruments that have been decommissioned;includes reagent rental units.3.Average pull through reflects FY24 average annualized

41、figures per instrument,in thousands.High-Throughput1Mid-ThroughputLow-ThroughputNovaSeqX SeriesNovaSeq 6000NextSeq 1k/2kNextSeq 500/550MiSeq i100|MiSeq MiniSeq|iSeq 100Q123Q117Q420|Q120Q114|Q115Q424|Q311Q116|Q11826630520903603806301,6402,7003,9508,5904,470$1,300$740$100$100$30 MiSeq$20 MiniSeqFY24 S

42、hipmentsActive Installed Base2Avg.Pull Through3First Shipment Date23Statement regarding use of non-GAAP financial measuresThe company reports non-GAAP results for diluted earnings per share,net income,gross margin,operating expenses,including research and development expense,selling general and admi

43、nistrative expense,legal contingencies and settlement,and goodwill and intangible impairment,operating income,operating margin,gross profit,other income(expense),tax provision,constant currency revenue growth,and free cash flow(on a consolidated and,as applicable,segment basis)in addition to,and not

44、 as a substitute for,or superior to,financial measures calculated in accordance with GAAP.The companys financial measures under GAAP include substantial charges such as amortization of acquired intangible assets among others that are listed in the reconciliations of GAAP and non-GAAP financial measu

45、res included in this press release,as well as the effects of currency translation.Management has excluded the effects of these items in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance.Non-GAAP net income,diluted earnings per share and operating

46、margin are key components of the financial metrics utilized by the companys board of directors to measure,in part,managements performance and determine significant elements of managements compensation.The company encourages investors to carefully consider its results under GAAP,as well as its supple

47、mental non-GAAP information and the reconciliation between these presentations,to more fully understand its business.Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.The company provides forward-looking guidance on a non-GAAP basis.The company is unable t

48、o provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP reported financial measures because it is unable to predict with reasonable certainty the impact of items such as acquisition-related expenses,gains and losses from strategic investments,fa

49、ir value adjustments to contingent consideration,potential future asset impairments,restructuring activities,and the ultimate outcome of pending litigation without unreasonable effort.These items are uncertain,inherently difficult to predict,depend on various factors,and could have a material impact

50、 on GAAP reported results for the guidance period.For the same reasons,the company is unable to address the significance of the unavailable information,which could be material to future results.Use of forward-looking statementsThis release may contain forward-looking statements that involve risks an

51、d uncertainties.Among the important factors to which our business is subject that could cause actual results to differ materially from those in any forward-looking statements are:(i)changes in the rate of growth in the markets we serve;(ii)the volume,timing and mix of customer orders among our produ

52、cts and services;(iii)our ability to adjust our operating expenses to align with our revenue expectations;(iv)our ability to manufacture robust instrumentation and consumables;(v)the success of products and services competitive with our own;(vi)challenges inherent in developing,manufacturing,and lau

53、nching new products and services,including expanding or modifying manufacturing operations and reliance on third-party suppliers for critical components;(vii)the impact of recently launched or pre-announced products and services on existing products and services;(viii)our ability to modify our busin

54、ess strategies to accomplish our desired operational goals;(ix)our ability to realize the anticipated benefits from prior or future actions to streamline and improve our R&D processes,reduce our operating expenses and maximize our revenue growth;(x)our ability to further develop and commercialize ou

55、r instruments,consumables,and products;(xi)to deploy new products,services,and applications,and to expand the markets for our technology platforms;(xii)the risks and costs associated with the divestment of GRAIL;(xiii)the risk of additional litigation arising against us in connection with the GRAIL

56、acquisition;(xiv)our ability to obtain approval by third-party payors to reimburse patients for our products;(xv)our ability to obtain regulatory clearance for our products from government agencies;(xvi)our ability to successfully partner with other companies and organizations to develop new product

57、s,expand markets,and grow our business;(xvii)uncertainty,or adverse economic and business conditions,including as a result of slowing or uncertain economic growth or armed conflict;(xviii)the application of generally accepted accounting principles,which are highly complex and involve many subjective

58、 assumptions,estimates,and judgments and(xix)legislative,regulatory and economic developments,together with other factors detailed in our filings with the Securities and Exchange Commission,including our most recent filings on Forms 10-K and 10-Q,or in information disclosed in public conference call

59、s,the date and time of which are released beforehand.We undertake no obligation,and do not intend,to update these forward-looking statements,to review or confirm analysts expectations,or to provide interim reports or updates on the progress of the current quarter.Illumina,Inc.Preliminary Results of

60、Operations for Core Illumina-Non-GAAP(unaudited)Our performance and financial results are subject to risks and uncertainties,and actual results could differ materially from preliminary results set forth below.Some of the factors that could affect our financial results are included from time to time

61、in the public reports filed with the Securities and Exchange Commission(SEC),including Form 10-K for the fiscal year ended December 31,2023,filed with the SEC on February 16,2024,Form 10-Q for the fiscal quarter ended March 31,2024,Form 10-Q for the fiscal quarter ended June 30,2024,and Form 10-Q fo

62、r the fiscal quarter ended September 29,2024.We assume no obligation to update any forward-looking statements or information.The preliminary unaudited information included in the tables below is approximate and subject to change.As previously announced,we will report our fourth quarter and full year

63、 fiscal 2024 results on February 6,2025.PRELIMINARY CONSTANT CURRENCY REVENUE:Dollars in millionsFiscal Year2024 Fiscal Year2023%ChangeRevenue$4,332$4,438 (2)%Less:Hedge gains 15 18 Revenue,excluding hedge effect 4,317 4,420 Less:Exchange rate effect(8)Constant currency revenue(a)$4,325$4,420 (2)%RE

64、CONCILIATION BETWEEN PRELIMINARY GAAP AND NON-GAAP OPERATING MARGIN:Fourth Quarter2024Fiscal Year2024 Preliminary GAAP operating margin16.7%34.2%Amortization of acquired intangible assets1.51.5Acquisition-related expenses(c)0.42.1Restructuring(d)1.31.4Contingent consideration liabilities(e)(1.0)(7.3

65、)Intangible(IPR&D)impairment(f)0.1Legal contingency and settlement(g)0.8(10.7)Preliminary non-GAAP operating margin(b)19.7%21.3%Illumina,Inc.Preliminary Results of Operations for Core Illumina-Non-GAAP(continued)(unaudited)RECONCILIATION BETWEEN PRELIMINARY GAAP AND NON-GAAP DILUTED EARNINGS PER SHA

66、RE:Fourth Quarter2024Fiscal Year2024 Preliminary GAAP earnings per share-diluted$0.77-$0.79$5.65-$5.67Amortization of acquired intangible assets0.110.40Acquisition-related expenses(c)0.030.60Restructuring(d)0.090.38Contingent consideration liabilities(e)(0.07)(1.98)Intangible(IPR&D)impairment(f)0.02

67、Legal contingency and settlement(g)0.06(2.92)Other(income)expense,net(h)(0.19)1.84Income tax provision(i)0.110.13Preliminary non-GAAP earnings per share-diluted(b)$0.91-$0.93$4.12-$4.14CALCULATION OF PRELIMINARY FREE CASH FLOW:In millionsFiscal Year2024 Net cash provided by operating activities$1,20

68、7 Purchases of property and equipment(137)Free cash flow(j)$1,070(a)Constant currency revenue growth,which is a non-GAAP financial measure,is calculated using comparative prior period foreign exchange rates to translate current period revenue,net of the effects of hedges.(b)Non-GAAP operating margin

69、 and diluted earnings per share exclude the effects of the pro forma adjustments detailed above.Non-GAAP operating margin and diluted earnings per share are key components of the financial metrics utilized by the companys board of directors to measure,in part,managements performance and determine si

70、gnificant elements of managements compensation.Management has excluded the effects of these items to assist investors in analyzing and assessing past and future operating performance.(c)Amounts consist primarily of legal and other expenses related to the acquisition and divestiture of GRAIL.(d)Amoun

71、ts consist primarily of lease and other asset impairments and employee severance costs.(e)Amounts consist primarily of fair value adjustments for our contingent consideration liability related to GRAIL.(f)Amounts consist of an IPR&D intangible asset impairment recognized in Q1 2024.(g)Amounts for FY

72、2024 primarily consist of the reversal of the accrued EC fine,including accrued interest.(h)Amounts consist primarily of mark-to-market adjustments and impairments from strategic investments.(i)Amounts represent the aggregate of(1)the impact of GRAIL pre-acquisition net operating losses on GILTI,the

73、 utilization of US foreign tax credits,and the Pillar Two global minimum top-up tax,which became effective in Q1 2024,(2)the difference between book and tax accounting related to stock-based compensation cost,and(3)the tax impact related to the non-GAAP adjustments listed.(j)Free cash flow,which is

74、a non-GAAP financial measure,is calculated as net cash provided by operating activities reduced by purchases of property and equipment.Free cash flow is useful to management as it is one of the metrics used to evaluate our performance and to compare us with other companies in our industry.Our calcul

75、ation of free cash flow may not be comparable to similar measures used by other companies.Illumina,Inc.Preliminary Results of Operations for Core Illumina-Non-GAAP(continued)(unaudited)RECONCILIATION BETWEEN PRELIMINARY GAAP AND NON-GAAP TAX RATE:Fiscal Year2024 Preliminary GAAP tax rate20.1%Prelimi

76、nary non-GAAP tax rate(a)24.0%(a)Non-GAAP tax rate excludes the effects of(1)the impact of GRAIL pre-acquisition net operating losses on GILTI,the utilization of US foreign tax credits,and the Pillar Two global minimum top-up tax,which became effective in Q1 2024,(2)the difference between book and tax accounting related to stock-based compensation cost,and(3)the tax impact related to the non-GAAP adjustments listed,which have been excluded to assist investors in analyzing and assessing past and future operating performance.