Illumina’s Struggles Continue with Lower Outlook and Executive Exits

Illumina recently revealed that its expected revenue growth for FY2023 has dropped drastically from an initial forecast of 7-10%, to now just a 1% increase. This news was delivered during the company’s second-quarter earnings report on Wednesday.

The news is yet another sign of turbulence for the DNA sequencing company, whose acquisition deal with GRAIL faces strong antitrust pushback and who recently experienced an activist investor intervention and leadership shake-ups.

Illumina saw a slight yet encouraging 1% rise in its revenue during the second quarter of the year, totaling $1.18 billion. When accounting for exchange rates, this translates to a 3% year-on-year increase. Showcasing the company’s continued success, this marks a promising start for Illumina in 2021.

GRAIL, the cancer detection company acquired by Illumina for $8 billion in September 2020, experienced a significant financial upturn in the second quarter as revenues jumped to $22 million, up from $12 million in the same quarter of the previous year.

Illumina is facing headwinds in its forecast for 2023, citing the slower than expected economic recovery and competition in China as culprits. Interim CEO and General Counsel Charles Dadswell shared this information with investors in a Wednesday call, noting that these external factors are having an effect on the company’s outlook.

During the earnings call, Illumina CEO Francis deSouza confirmed that Chief Technology Officer Alex Aravanis and Chief Medical Officer Phil Febbo had stepped down from their positions. Steve Barnard, a 25-year Illumina veteran, will take on the responsibilities left vacant by Aravanis, while the company continues to search for a suitable successor for Febbo.

Dadswell is at the helm of Illumina while the company is in search for a permanent replacement for its former CEO Francis deSouza, who stepped down in June 2023. However, his stint as interim leader offers a chance for Illumina to enter unexplored waters.

May 2023 saw the face-off between Illumina and activist investor Carl Icahn as he attempted to push representatives onto the company’s board during their annual shareholder meeting. This resulted in discontent for the current board, headed by CEO Francis deSouza, due to a series of mislitigated decisions–notably the GRAIL acquisition, that ended up in strong antitrust backlash. In the coming months, deSouza would face the fallout of his leadership and ultimately be removed from his position.

In July 2023, the European Commission dealt a huge blow to Illumina, imposing a record-breaking fine of $476 million for pushing forward with their GRAIL deal prior to obtaining regulatory approval. Marking the largest fine ever meted out under the EC’s merger regulations, GRAIL was also given a slap on the wrist with a nominal fine of $1,100, becoming the first company to be punished under such a regulation.

Last month, Illumina took swift action to try and cut costs by $100 million in 2021, laying off 79 San Diego-based employees and closing the doors to its i3 campus. But the story doesn’t end there: there are plans afoot for rethinking the future of yet another site in California. This move serves as a glimpse into the economic uncertainty many businesses are navigating in this new normal.

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