Illumina Reports Financial Results for Second Quarter 2006
Tuesday July 18, 4:01 pm ET
Consumables and Instrument Revenue Drive 163% Growth Over Prior-Year Quarter
Company Raises Financial Guidance for Fiscal 2006
SAN DIEGO--(BUSINESS WIRE)--July 18, 2006--Illumina, Inc. (NASDAQ:ILMN - News) announced today its financial results for the second quarter and six-month period ended July 2, 2006.
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For the quarter ended July 2, 2006, Illumina reported total revenue of $41.6 million, a 163% increase over the $15.8 million reported in the second quarter of 2005. This represents the Company's 20th consecutive quarter of revenue growth. Revenue grew 43% compared to the first quarter of 2006. For the six-month period ended July 2, 2006, revenue was $70.7 million, a 128% increase compared to revenue of $31.0 million for the same six-month period in 2005.
On a GAAP basis, the Company reported net income of $6.8 million, or $0.16 per basic and $0.14 per diluted share for the second quarter of 2006, compared to a net loss of $18.5 million, or $0.46 per basic and diluted share, in the second quarter of 2005. Net income for the six-month period ended July 2, 2006 was $6.7 million, or $0.16 per basic and $0.14 per diluted share, compared to a net loss of $19.8 million, or $0.50 per basic and diluted share, for the same six-month period in 2005. The 2005 results include in-process research and development expense of $15.8 million related to Illumina's acquisition of CyVera Corporation in April 2005.
Net income for the second quarter and six-month period ended July 2, 2006 includes total non-cash compensation expense of $3.3 million and $6.5 million, respectively, associated with the Company's adoption of SFAS No. 123R. Excluding the impact of non-cash stock compensation expense, Illumina reported net income on a non-GAAP basis of $10.1 million, or $0.21 per diluted share for the second quarter, and $13.1 million, or $0.28 per diluted share, for the six-month period ended July 2, 2006.
The combined gross margin for product and services was 67.0% in the second quarter of 2006, compared to 69.3% in the comparable period of 2005. The decrease in product and services gross margin was due primarily to a shift in product mix. Research and development expenses were $8.6 million, compared to $7.3 million in the second quarter of 2005. Selling, general and administrative expenses for the quarter were $12.9 million, compared to $6.5 million in the second quarter of 2005. For the second quarter, excluding the effect of non-cash stock compensation expense, the non-GAAP results for the combined gross margin of product and services was 67.9%, research and development expense was $7.7 million and selling, general and administrative expense was $10.8 million.
For the six months ended July 2, 2006, product and services gross margin was 67.2%, compared to 69.2% in 2005. The decrease in product and services gross margin was due primarily to a shift in product mix. Research and development expenses were $16.8 million, compared to $13.2 million in 2005. Selling, general and administrative expenses for the six months were $25.0 million, compared to $12.6 million in 2005. For the first six months of 2006, excluding the effect of non-cash stock compensation expense, the non-GAAP results for the combined gross margin of product and services was 68.1%, research and development expense was $15.0 million and selling, general and administrative expense was $21.0 million.
The Company generated $14.9 million in cash from operations during the second quarter, compared to using $3.9 million for operations in the comparable quarter of 2005. The Company posted $103.2 million in positive net cash flow, which included $96.5 million of net proceeds received in connection with the Company's follow-on offering of common stock during the quarter. As a result, the Company ended the second quarter with $156.8 million in cash and short-term investments.
Year-to-date highlights since our last earnings release:
Signed agreement with deCODE Genetics of Iceland that will result in the largest Illumina system installation to date. In addition, entered into a collaborative agreement to develop diagnostic tests based on biomarkers discovered by deCODE.
In early June, announced an agreement with The Children's Hospital of Philadelphia to use the HumanHap550 BeadChip to perform whole genome association studies on at least 30,000 children and parents who come to the hospital for treatment. This represents the first large-scale integration of whole-genome genotyping into routine clinical practice.
Shipped our 12th BeadLab to the Genetics Facility at the Shafallah Center for Children with Special Needs in Doha, Qatar. The BeadLab will anchor the first phase of the Shafallah Center's transformation into a world-class center of research excellence, integrating child-centered capabilities that range from genomics and disease discovery to existing strengths in clinical treatment, special education and related paramedical services.
Shipped 26 BeadStations and 2 BeadLabs during the second quarter, bringing our total number of BeadLabs and BeadStations shipped to 178.
Introduced the Sentrix® HumanHap650Y BeadChip. The 650Y contains over 650,000 SNPs (single nucleotide polymorphisms) on a single microarray and provides the most comprehensive genomic coverage of any product currently available.
Launched iSelect(TM) Infinium(TM) custom genotyping products, enabling customers to design 12-sample (up to 60,000 SNPs/sample) BeadChips. Also launched the HumanHap550+, which enables customers to add up to 120,000 custom SNPs to our HumanHap550 BeadChip.
Announced first iSelect Infinium genotyping services contract with Johnson & Johnson Pharmaceutical Research & Development, L.L.C.
Raised $96.5 million in net proceeds through the successful completion of a follow-on stock offering of approximately four million shares.
Further strengthened management and corporate governance with appointments of Christian Cabou (General Counsel) and Dr. Jack Goldstein (Board of Directors).
Expanded our portfolio of patents, bringing our total to 45 issued or allowed and 90 pending.
Updated Financial Outlook
The non-GAAP financial guidance discussed below excludes the effect of non-cash stock compensation expense (see table which reconciles these non-GAAP financial measures to the related GAAP measure). The Company is updating its financial guidance for fiscal 2006 as follows:
Guidance for Q3 2006:
Based on the continued strong demand for the Company's products, the Company expects third quarter total revenue to grow a minimum of 125% over the third quarter of 2005 and is expected to be between $44 and $48 million. Management expects non-GAAP net income per diluted share to be between $0.22 and $0.24.
Guidance for Fiscal 2006:
Total revenue for fiscal 2006 is expected to be between $160 and $170 million.
Research and development expenses are expected to be between $30 and $35 million and decline as a percentage of total revenue.
Selling, general and administrative expenses are expected to be between $42 and $47 million.
We expect non-GAAP net income to be between $30 and $40 million, or $0.61 and $0.82 per diluted share, assuming 49 million fully diluted shares outstanding.
We expect non-cash stock compensation expense related to SFAS No. 123R to be between $13 and $15 million, or $0.27 and $0.31 per diluted share, assuming 49 million fully diluted shares outstanding.
Conference Call Information
A conference call has been scheduled for 2:00 p.m. Pacific Time today to discuss Illumina's second quarter 2006 results as well as updated 2006 guidance. Interested parties may listen to the call by dialing 866-831-6272 (passcode: 13281727) or if outside North America, by dialing +1 617-213-8859 (passcode: 13281727). Individuals may access the live webcast under the "Investors" tab of Illumina's website at: www.illumina.com.
About Illumina
Illumina (www.illumina.com) is developing next-generation tools for the large-scale analysis of genetic variation and function. The Company's proprietary BeadArray technology -- now used in leading genomics centers around the world -- provides the throughput, cost effectiveness and flexibility necessary to enable researchers in the life sciences and pharmaceutical industries to perform the billions of tests necessary to extract medically valuable information from advances in genomics and proteomics. This information will help pave the way to personalized medicine by correlating genetic variation and gene function with particular disease states, enhancing drug discovery, allowing diseases to be detected earlier and more specifically, and permitting better choices of drugs for individual patients. |
