1、 2024 Illumina,Inc.All rights reserved.CEO,IlluminaJacob Thaysen,Ph.D.42nd Annual J.P.Morgan Healthcare ConferenceJanuary 9,2024Note Regarding GRAILThe European Commission issued a decision to prohibit our acquisition of GRAIL in September 2022,and has adopted an order requiring Illumina and GRAIL t

2、o be held and operated as distinct and separate entities.Compliance with the order is monitored by an independent Monitoring Trustee.While the order is in place,Illumina and GRAIL are not permitted to share confidential business information except in cases in which a legal requirement to obtain such

3、 information applies or is necessary in connection with our divestment of GRAIL,and GRAIL must be run independently and exclusively in the best interests of GRAIL.Commercial interactions between the two companies must be undertaken at arms length.2Forward Looking StatementsThis release may contain f

4、orward-looking statements that involve risks and 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)challenges inherent in developing,manufacturing,and launching new produ

5、cts and services,(ii)our ability to further develop and commercialize our instruments,consumables,and products;(iii)the European Commissions prohibition of our acquisition of GRAIL,and the restorative measures imposed upon us that prohibit our integration of GRAIL;(iv)the risk that disruptions from

6、the consummation of our acquisition of GRAIL or any associated legal or regulatory proceedings or obligations will harm our business,including current plans and operations;(vi)our ability to timely divest GRAIL,and the risk that the terms of divestment are materially worse than the terms on which we

7、 acquired GRAIL,(vii)our ability to successfully partner with other companies and organizations to develop new products,expand markets,and grow our business,(vii)the impact to our business and operating results of macroeconomic factors,together with other factors detailed in our filings with the Sec

8、urities 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,and do not intend,to update these forward-looking statements,to review or conf

9、irm analysts expectations,or to provide interim reports or updates on the progress of the current quarter.IIllumina Overview3AgendaReasons I Joined Illumina4Serving Customers Across the Research-Clinical ContinuumImproving Patient Outcomes in Cancer&Other Disease AreasUnmatched Global Reach&Exceptio

10、nal Passion for the MissionPushing the Boundaries of Technology&Science to Enable Biology at ScaleTo improve human health by unlocking the power of the genomeOur Mission55%AMR26%Europe9%Greater China10%AMEA49%Research&Applied51%ClinicalEnd Markets2Geographies351%Oncology2%Other23%NIPT24%GDTCore Illu

11、mina is Operating from a Position of Strength51 Preliminary Core Illumina FY23 results.2Core Illumina%of sequencing consumables shipments.3Core Illumina%of revenue.Scale1Differentiation1Diversification1Revenue$4.4BCountries with regulatory approvals86Clinical ExpertiseInnovation Track RecordPatents

12、across 800 patent families9,800Clinical Markets2Covered lives1.3BIVD/EUA registrations1,200+Publications450KCustomers9,500Countries160Employees9,3006II2023 Preliminary ResultsQ423 Results Exceed Expectations7Note:Preliminary FY23 results.See appendix for reconciliations of these GAAP and non-GAAP fi

13、nancial measures.1 Core Illumina revenue includes GRAIL intercompany revenue of$5 million and$27 million for Q423 and FY23,respectively,which is eliminated in consolidation.Q4 2023 Preliminary ResultsFY 2023 Preliminary Results3.8%Non-GAAP Operating MarginConsolidated Illumina$1.12BRevenue5.3%Non-GA

14、AP Operating MarginConsolidated Illumina$4.50BRevenue18.0%Non-GAAP Operating MarginCore Illumina$1.09BRevenue119.8%Non-GAAP Operating MarginCore Illumina$4.43BRevenue135%Shipments to Clinical Customers20%Shipments to New-to-High-Throughput Customers12More countries than NovaSeq 60001352FY23 Shipment

15、sCompared to 330-340 expected38FY23 Ending Instrument BacklogShipments Support Greater Level of New Sequencing Activity1 Reflects number of countries with orders in the first four quarters of shipments.NovaSeq X:Most Successful High-Throughput Product LaunchWe are encouraged with early signs for Nov

16、aSeq X utilization,which positions us for consumables growth in 2024 and beyond8Cumulative Installations Top 25,000 Instruments9Note:Preliminary FY23 results.1 High-throughput metrics Exclude HiSeq.2 Cumulative installed base includes instruments that have been shipped to customers and may include d

17、ecommissioned or inactive instruments.3 Reflects 2023 average annualized pull through per instrument.High-Throughput1Mid-ThroughputLow-ThroughputNovaSeqXNovaSeq 6000NextSeq 1k/2kNextSeq 500/550MiSeq|MiniSeq|iSeq 2609203521,8802,1955,44015,200Not Disclosed$840$115$90$30 MiSeq|$20 MiniSeq20

18、23 ShipmentsCumulativeInstalled Base2Avg.Pull Through3($Thousands)25,000Cumulativeinstalled base$2.8B2023 consumables revenue2,2002023 totalinstruments placed101 Illumina Connected Insights(ICI)not available in all geographies.ICI supports user-defined tertiary analysis through application programmi

19、ng interface(API)calls to third-party knowledge sources.InterpretAnalyzeSequencePrepareWorkflowStepsIllumina OfferingsIntegrated WorkflowSequencing RunSequencing InstrumentsSample&Library PreparationLibrary Prep Kits&AutomationClarity LIMSLab ManagementAlignment&Variant CallingData&Workflow Manageme

20、ntDRAGENIllumina Connected AnalyticsBaseSpaceAnnotation&InterpretationEmedgeneIllumina Connected Insights1PrimateAIGreater Focus on End-to-End Workflow to Support Customers More ComprehensivelyDelivering Innovation for Customers Future Needs11Note:ctDNA:circulating tumor DNA;MRD:molecular residual d

21、isease;WGS:whole genome sequencing.1 Reflects availability of XLEAP-SBS on NextSeq 1k/2k P4 flow cell;XLEAP-SBS to become available on other flow cells later in 2024.“X”-Related Launches25B Flow CellLaunched in Q4231.5B Flow CellQ124Other ReleasesXLEAP-SBS NextSeq 1k/2kIllumina Complete Long Reads(I

22、CLR)Enrichment PanelQ124Q1241Alliance for Genomic Discovery ExpansionAnnounced as Members8PharmaCompaniesFor use in drug discovery and therapeutic development250,000WGSSamplesMRD Assay CollaborationWGS multi-cancer research solution that detects ctDNA to better understand disease recurrenceMolecular

23、 Residual Disease AssayIn DevelopmentWill expand Illuminas tertiary analysis capability and elevate our software portfolioPartek AcquisitionSpecialized Multiomics Software SolutionAcquiredExpect 2024 Core Illumina Revenue and Operating Margin to be Similar to 2023We remain focused on execution acros

24、s the entire P&L12Key Revenue Expectations Currently expect our customers will remain cautious and constrained in their purchasing decisions;monitoring geopolitical challenges,particularly in China Solid interest and demand for NovaSeq X;difficult comp due to 2023 launch year that had significant fi

25、rst-year orders Modest high-throughput sequencing consumables growth as increased sales of NovaSeq X consumables outpace continued decline in NovaSeq 6000 consumablesKey Operating Margin ConsiderationsNon-GAAP Gross Margin Favorable product mix COGS savings initiativesNon-GAAP Operating Expenses Sav

26、ings from portfolio prioritization and increased productivity offset by Normalization of performance-based compensation,plus merit increases and inflation adjustments13III2024 Priorities2024 Priorities Overview14Focus on Operational ExcellenceIntroduce greater rigor throughout the P&LDrive margins o

27、ver time through greater productivityEvaluate additional areas for cost savings while macroeconomic challenges persistDrive our Top LineGrow placements of NovaSeq X and all our instrumentsPursue partnerships and initiatives to drive more sequencing activityEnhance commercial processes to generate in

28、creased customer value and engagementResolve GRAIL as Quickly as PossibleRecently announced that we will divest GRAILDivestiture will be through a sale or a capital markets transaction;goal of finalizing terms by end of Q2 2024Working to minimize divestiture impact to our balance sheet010203Expand N

29、ovaSeq X Placements Beyond Early Adopters15Note:As of FY23.Priority#1|Drive the Top Line10%750 have one NovaSeq 6000,of whichHave purchased a NovaSeq X40%250 have more than one NovaSeq 6000,of whichHave purchased a NovaSeq XEarly in the Transition of our High Throughput Customer BaseNovaSeq X Adopti

30、onEarly AdoptersMainstreamLate-StageOf 1,000 NovaSeq 6000 customersCUSTOMER EXAMPLEA clinical genomics lab is moving samples to the NovaSeq X to run larger projects to develop new applications,including single-cell proteomicsNote:ATAC:assay for transposase accessible chromatin;CGP:comprehensive geno

31、mic profiling;ctDNA:circulating tumor DNA;FFPE:formalin-fixed paraffin-embedded;WGBS:whole genome bisulfite sequencing;WGS:whole genome sequencing.Drive Greater Sequencing ActivityWe are confident we will see more sequencing activity over time a matter of“when”not“if”16Priority#1|Drive the Top LineM

32、ORE SAMPLESMORE ANALYSES PER SAMPLEMORE DATA PER ANALYSIS Clinical and longitudinal samples Popgen and pharma discovery cohorts Spatial and single cell analysis Lower sample need and analysis Multiomics:DNA,RNA,methylation,protein,immune repertoire,etc.Small panels to CGP CGP to exomes;exomes to WGS

33、 FFPE tissue to ctDNACUSTOMER EXAMPLEA large academic lab is using the 25B flow cell and NovaSeq Xs multiple lane capabilities to unlock deeper single cell studies,running bulk RNA,single cell RNA,single cell ATAC and WGBSCUSTOMER EXAMPLEA genomics lab will leverage the NovaSeq Xs faster turnaround

34、time to transition their sequencing from tissue to liquid biopsy,which is more sequencing intensive1.5x 2.0 x1.5x 3.0 x3.0 x 4.0 xDisciplined Approach to Improve the Quality of EarningsWe are embarking on a multi-year transformation to deliver operational excellence17Priority#2|Deliver Operational E

35、xcellence20232024+Headcount Reductions Reduced global workforceReal Estate Rationalization Fully exited i3 campus in San Diego,CA Partially exited campus in Foster City,CA Evaluating remaining real estate portfolioOther Non-Labor Expenses Rationalizing third-party vendor spend Accelerating IT optimi

36、zation effortsLaunching Programmatic Efforts to Optimize SpendingCOGS Cost Saving Program Driving productivity improvements throughout our end-to-end supply chain Portfolio Optimization Strategy Focused on bringing only the most impactful technologies to marketPrioritized Investment Strategy Evaluat

37、ing our key investment areas and how we should best pursue them$175MRun-Rate Expense SavingsAhead of original projection of$100MAnnounced Will Divest GRAIL18Priority#3|Resolve GRAIL as Quickly as Possible Recent UpdatesNext StepsBalance Sheet Considerations GRAIL divestiture to be executed through t

38、hird-party sale or capital markets transaction,with goal of finalizing terms by end of Q224 Engaging with interested parties who may participate through a sponsorship or an outright saleForm 10Filed with the U.S.SEC on December 9thEuropean Court of JusticeParticipated in hearing on December 12thDive

39、stiture AnnouncementAnnounced decision to divest GRAIL on December 17th Evaluating sponsors for potential funding needs If Illumina is funding GRAIL,more likely to issue debt Prioritize investment grade credit rating Additional leverage capacity available on balance sheet as GRAILs operating loss is

40、 removedU.S.Fifth Court of AppealsReceived decision regarding FTC decision on December 15th19IVOur Path AheadStrong innovation roadmap will fuel next decade of growth31New leadership is focused on the Core business2NovaSeq X is unlocking multi-year demand elasticity4Management is prioritizing operat

41、ional excellence5Core Illumina will deliver significant earnings power20To improve human health by unlocking the power of the genomeOur MissionIllumina is Building Momentum 2024 Illumina,Inc.All rights reserved.AppendixStatement regarding use of non-GAAP financial measures The company reports non-GA

42、AP results for diluted earnings per share,net income,gross margin,operating expenses,including research and development expense,selling general and administrative expense,and from time to time,as applicable,legal contingencies and settlement,and goodwill and intangible impairment,operating income(lo

43、ss),operating margin,gross profit(loss),other income(expense),tax provision,constant currency revenue growth,and free cash flow(on a consolidated and,as applicable,segment basis for our Core Illumina and GRAIL segments)in addition to,and not as a substitute for,or superior to,financial measures calc

44、ulated 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 itemized reconciliations between GAAP and non-GAAP financial measures included in this press release,as well as

45、 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,including in the non-GAAP measures related to our Core Illumina and GRAIL segments.Additionally,non-GAAP n

46、et income 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 significant elements of managements compensation.The company encourages investors to carefully consider its result

47、s under GAAP,as well as its supplemental 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.Use of forward-looking statements This release may cont

48、ain forward-looking statements that involve risks and 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)the finalization of the accounting and audit procedures necessary

49、to report our financial results for the fourth quarter and fiscal year 2023;(ii)changes in the rate of growth in the markets we serve;(iii)the volume,timing and mix of customer orders among our products and services;(iv)our ability to adjust our operating expenses to align with our revenue expectati

50、ons;(v)our ability to manufacture robust instrumentation and consumables;(vi)the success of products and services competitive with our own;(vii)challenges inherent in developing,manufacturing,and launching new products and services,including expanding or modifying manufacturing operations and relian

51、ce on third-party suppliers for critical components;(viii)the impact of recently launched or pre-announced products and services on existing products and services;(ix)our ability to modify our business strategies to accomplish our desired operational goals;(x)our ability to realize the anticipated b

52、enefits from prior or future actions to streamline and improve our R&D processes,reduce our operating expenses and maximize our revenue growth;(xi)our ability to further develop and commercialize our instruments,consumables,and products;(xii)to deploy new products,services,and applications,and to ex

53、pand the markets for our technology platforms;(xiii)the risks and costs associated with our ongoing inability to integrate GRAIL due to the transitional measures imposed on us by the European Commission as a result of their prohibition of our acquisition of GRAIL and orders issued by the European Co

54、mmission and the Federal Trade Commission requiring that we divest GRAIL;(xiv)the risks and costs associated with the expected divestment of GRAIL,including the possibility that the terms on which we divest all or a portion of the assets or equity interests of GRAIL are materially worse than those o

55、n which we acquired GRAIL;(xv)the risk that disruptions from the consummation of our acquisition of GRAIL and associated legal or regulatory proceedings,including appeals,or obligations will harm our business,including current plans and operations;(xvi)the risk of incurring additional fines associat

56、ed with the consummation of our acquisition of GRAIL;(xvii)our ability to obtain approval by third-party payors to reimburse patients for our products;(xviii)our ability to obtain regulatory clearance for our products from government agencies;(xix)our ability to successfully partner with other compa

57、nies and organizations to develop new products,expand markets,and grow our business;(xx)uncertainty,or adverse economic and business conditions,including as a result of slowing or uncertain economic growth or armed conflict;(xxi)the application of generally accepted accounting principles,which are h

58、ighly complex and involve many subjective assumptions,estimates,and judgments and(xxii)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 infor

59、mation disclosed in public conference calls,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 qu

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

61、 included from time to time in the public reports filed with the Securities and Exchange Commission(SEC),including Form 10-K for the fiscal year ended January 1,2023,filed with the SEC on February 17,2023,Form 10-Q for the fiscal quarter ended April 2,2023,Form 10-Q for the fiscal quarter ended July

62、 2,2023,and Form 10-Q for the fiscal quarter ended October 1,2023.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.We will report our fourth quarter and full year fi

63、scal 2023 results in February.CONSOLIDATED RECONCILIATION BETWEEN PRELIMINARY GAAP AND NON-GAAP OPERATING MARGIN:Fourth Quarter 2023 Fiscal Year 2023 Preliminary GAAP operating margin(15.5)%(24.0)%Amortization of acquired intangible assets 4.4 4.3 Acquisition-related expenses(b)3.0 2.5 Restructuring

64、(d)5.5 3.5 Contingent consideration liabilities(e)5.2(0.5)Proxy contest 0.2 0.7 Goodwill and intangible(IPR&D)impairment(c)0.5 18.4 Legal contingency and settlement(f)0.5 0.4 Preliminary non-GAAP operating margin(a)3.8%5.3%CORE ILLUMINA RECONCILIATION BETWEEN PRELIMINARY GAAP AND NON-GAAP OPERATING

65、MARGIN:Fourth Quarter 2023 Fiscal Year 2023 Preliminary GAAP operating margin-Core Illumina 2.4%12.3%Amortization of acquired intangible assets 1.3 1.3 Acquisition-related expenses(b)2.3 2.0 Restructuring(d)5.5 3.5 Contingent consideration liabilities(e)5.3 (0.6)Proxy contest 0.2 0.7 Intangible(IPR&

66、D)impairment(c)0.5 0.1 Legal contingency and settlement(f)0.5 0.5 Preliminary non-GAAP operating margin-Core Illumina(a)18.0%19.8%(a)Non-GAAP operating margin excludes the effects of the pro forma adjustments as detailed above.Management has excluded the effects of these items in these measures to a

67、ssist investors in analyzing and assessing past and future operating performance,including in the non-GAAP measure related to our Core Illumina segment.(b)Amounts consist primarily of legal expenses related to the acquisition of GRAIL.(c)Amounts consist of goodwill impairment related to our GRAIL se

68、gment and IPR&D intangible asset impairments related to our GRAIL and Core Illumina segments.(d)Amounts consist primarily of lease and other asset impairments and employee severance costs related to restructuring activities.(e)Amounts consist of fair value adjustments for our contingent consideratio

69、n liability related to GRAIL.(f)The amount for Q4 2023 consisted of a gain related to a patent litigation settlement.The amount for YTD 2023 also consists of a loss related to a patent litigation settlement in Q1 2023,an adjustment recorded in Q2 2023 to our accrual for the fine imposed by the European Commission in July 2023,and gains related to patent litigation settlements in Q3 2023 and Q4 2023.