Illumina says slumping sales in core segment expected as demand softens, economy weighs

Illumina, the biggest seller of gene sequencing machines, gave a weak outlook for sales in its central business in 2024. According to the company, genetic testing instruments will continue to see lacklustre demand all year. The tepid demand for tools and services to develop therapies and vaccines came from key markets like China. That weakness is amplified by a conservatism in spending from biotechnology firms in an environment of high interest rates.

Though consumable sales were solid and indicative of increased sequencing activity, CEO Jacob Thaysen called out a weakening demand for instruments in the face of a constrained funding landscape. As such, Illumina now expects its Core Illumina revenue to decline 2 per cent to 3 per cent year-over-year. Earlier, it had expected full-year revenue from the segment to be flat.

On an adjusted basis, Illumina forecasts a core segment per-share profit of $3.80 to $3.95 for 2024, which is near analyst expectations for a full-year adjusted profit of $3.91 per share for the entire company.

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Illumina works under two reportable segments: Core Illumina and Grail. Grail, which was spun off on June 24, has been divested following its antitrust problems with both US and European regulators, plus huge opposition from activist investor Carl Icahn. The company had flagged a $1.47 billion goodwill impairment charge in the second quarter related to the Grail spin-off.

San Diego-based Illumina reported quarterly revenues of $1.11 billion for the second quarter, ahead of $1.08 billion that analysts had estimated. The company earned 36 cents a share on an adjusted basis during the quarter ended June 30, missing the average analyst estimate of 90 cents a share.

Illumina is focused on executing a strong consumable sales backdrop that will sustain it through a weakened instrument demand environment. These strategic decisions—like the divestiture of Grail—represent the company's efforts to refocus and renew its core operations within ongoing uncertainties in the markets.