ILMN - Earnings call transcript Q3 2021

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Operator

Hello, and welcome to the Illumina Q3, 2021 Earnings Call.

Following the presentation today, we will have a Q&A session. [Operator Instructions]. I would now like to hand the conference over to Brian Blanchett, so Brian, please go ahead.

Brian Blanchett

Good afternoon, everyone and welcome to our earnings call for the third quarter of 2021.

will we of the on market activity, which today, after results our call session. after close question-and-answer the and we the will financial review released commercial During a host offer commentary

Will If Bob you to earnings our GRAIL Investor it deSouza, the provide release, and will being Private website XXXX. GRAIL's Executive the Bob the at Chief financial our made updates during Financial is be update portion will joining on and regarding of It website. audio Sam call. Chief for Financial GRAIL. our business. protected section intent that Chief This on review of Also call statements be review be is Illumina found today Investors recorded Act of section the commercial on Sam the can of Illumina's an Relations activity is archived Litigation Officer, Samad, not us business. Illumina forward-looking Officer. have in Francis today Reform and President Ragusa, be had state will And all chance of Results. provide illumina.com. Participating will under Officer results Executive Francis and and will our today's both the Securities core the

information you from turn available are over that understand the With statements XX-Q current files better most to or could that, Commission, recent XX-Q. cause actual projected those Forms, discussed. documents to with update materially risks I Illumina including or to subject based Illumina these Exchange results All obligation we that differ upon now to call Forward-looking and refer to statements To Illumina's differ, Francis. may risks the events uncertainties the and Securities and assumes actual results statements. forward-looking are no uncertainties, and the

Francis Desouza

year-over-year, and good exceptionally $X.XXX of ahead in once another XX% expectations. And strong Illumina again, third you, billion Thank revenue, afternoon, with quarter, up significantly Brian. everyone. quarter was

Illumina leading over Sequencing activity GRAIL, was sequencing as Illumina, backlog, up consumable turn cover and Gusta, record Xnd XXXX, continues the strength XX% XXXX in positive new expand business. subsidiary than our than base to of a growth record. for we and instrument new Sequencing higher XX%. we quarter than $XXX was revenue the will customers setting across revenue GRAIL of we the $X.XXX the I'll exited a beginning This billion. added rapidly. a our quarter a with results year. as this double outlook three quarters for Because year-over-year. quarter defined growth midpoint range of for to revenue. I revenue business, GRAIL instrument revenue our other XX% also was the customers the in in Core Illumina then call future And raising third up more to approximately are talk of row, quarter is we at all approximately Our full-year to or XXXX. rate the to first the the the Core XX% And of in Barbara the indicator the of CEO the strong, with year-over-year, through guided million

recent to testing. drug new of labs growth [Indiscernible] installed testing XX% testing customers customers the instruments discovery throughput NovaSeq from sequencing, Oncology the obesity X,XXX sequencing, volume high The platforms focused using as infection These to as placements for therapy Oncology QX coupled NovaSeq for with NextSeq oncology assay, throughput upgrading order is by NextSeq Single-cell large high is low team platform shipments. our added this elicited Science enabling to the at NovaSeq instrument COVIDSeq expanded proportions with single-cell of fleets their over Tulane application support across growth to expanded opportunities discovery unlock MiSeq of for saw the XX inflammation. quarter to world School year-over-year, on also our population around highest pneumonia third continued use In engage the instruments. XXXX is accelerating. consumables pathogen and were surveillance. vaccine reimbursement X,XXX the Immunology. since in Bench-top our local selection Drug in inhaled RNA-seq Our to number shipment on quarter, with cells emerging a platform new experiments to Researchers and significant XXXX. Illumina testing, working in drove MiSeq the drove and XXXX develop aging, for to Medicine customer paper or is vaccines common also from are platforms diseases immune applications. of base. sample and a labs and for new study mid [Indiscernible] ranging initiatives, represented the to record published highest shipments

COVID placements and to local with brought broader This programs. Argentina conjunction surveillance both in quarter in Brazil national MiSeq communities

therapy Now, turning U.S. applied and their with had tests. is research Oncology over lives becoming which driving demand for response. insured now testing of for are testing robust the scaling record covered selection in Sequencing these market of in customers our sequencers largest quarter. therapy continues another and our to the segment, Reimbursement segments, Illumina's oncology selection, for XX% to fleets is standard rapidly for genetic clinical expand, and Testing, care in

the quarter for Profiling the reproductive quarter treatments post. power This matching Ministry another in using programs. to tests, the women. TSO of being partnership for access progress is ovarian testing program customers that year in ovarian care. market, Of around Myriad's the testing. XXX patients each a Merck on to XXX,XXX with include world, their cancer. content, HRD in noninvasive and of U.S. and with had the status In we as immunotherapy develop states model. will with the incorporated for now NIPT commercialize of prenatal. diagnosed TruSight additional In will In the begin into cancer; ACOG Health women genomic now comprehensive screening contingent Additionally, the prenatal and increasingly over September, And the pregnancies well. record deadliest we supporting an another over highlighting the announced assay, growth prenatal Genomic covered leveraging NIPT partnerships assay XX into in saw Oncology Approximately treatment myChoice profiling CDx goal the XXX their health, year a XXX, on labs. used the research Xth with our seeing September, revision be new in to these help we're are last issued proposal. are treatments. issued of Comprehensive patients XX% based the US screening incorporate patients currently targeted guidelines the now year-over-year additional cancer improving with of state to Italian prenatal being non-invasive California, is from strong guideline and request In revised outside has use as guidelines options only

continued reimbursement to data guidelines, is markets. whole Genetic our momentum VX genome gaining broad solution another clinical coverage drive also quarter compelling in With end-to-end disease as a utility traction strong posted and shift VeriSeq the testing sequencing. across global

groundbreaking published clinical in management both randomized twofold change newborns. pediatrics. NICUSeq the clinical in the genome efficacy acutely of demonstrated that coauthored sequencing drives trial The diagnostic and scientists, time-delayed improvement trial, for JAMA quarter, whole result This by ill of Illumina were a

direction children, are that and became to acutely working suspected these families to rapid genetic are Israel the access U.S. offer well. around and regardless sequencing these care and Michigan insurance. implement will other of time week, NICU like having world tests. to critically We a patients we making this and disorder diagnosis U.S. genome recently neonatal program first whole pilot Florida infants intensive infants State Outside to ill sequencing This for and a And can decision-making. genome as patients ill for states last in whole clinical to units. ensure California In support the the program announced the progress rapid of accelerate in

of we our an drove segments, research broader Illumina is ever disease. combined support saw research our programs XX-plus for programs and developing like investment large to the we quarter across drug in and sequencing ideal Our additional population and Illumina detect, discovery. research, 's make sequential world ways scalability that the The sequencing around Connected end-to-end outcomes, these prevent year-over-year population treat, solutions applied interest This The growth. Health, growth accuracy clinical and quarter. Future expanding our largest platforms for another initiatives. generating significant program and and value genomics on The of Analytics, strong like the new Turning to initiatives is with traction focused of UK

the by Canadian Illumina Connected Analytics that are announced part we Network. yesterday, HostSeq, Genomics of COVID-XX being Just used solutions

that around of of in drove for can programs biomarkers used than asthma, the drug Our COVID-XX. the therapeutics development disease, as and in dataset greater the create of to concerns to $XX Regeneron Relay bioinformatics into higher the solutions efforts. And foundation variance surveillance use concludes, like with obesity continue infrastructure genes to be We're linked of medicines ways, purchases see predict broader Biobank million with sequencing more novel machine-learning with the in innovation quarter translate focus And are and increase associations will findings shipments surveillance population trade support as is data to become XXX drug UK $XX for to and of along risk surveillance partnership to as or seeing sequencing identify Varian anticipate with the initial pathogen world. data actionable genomic We AI data in We and UK discovery. potential these as AstraZeneca. the to COVID defined diseases as multiple for critical from hypertension, utilizing new and million the workflows types risk surveillance like on data companies Therapeutics their which the of liver already increasingly the of to about part clinical discovery. help COVID instrument the this program combat will sequencing heighten including Biobank in disease. advance serious utilizing

schedule. this facility now Africa, the a total launched was CERI, of of a pandemic like genomes With Africa and XX,XXX from in countries to [Indiscernible]. ahead example, is And in in months genomics CDC two For sequencing this resources COVID response Africa. Africa sars capabilities of new epidemic sequenced, been have South XX available bolster with data XX -X quarter the across place, in

responsible which he Officer, help role accelerate recently has of Turning delighted first as CEO. more experience Bob for detection genomics. extraordinary was affordability GRAIL enabled With and the business the a as systems early Project, uniquely positioned GRAIL's Ragusa providing the to critical a significantly closed NovaSeq we will most Bob business Bob first to He sequencing for Illumina's scaling turn deep In than in XXX expertise, the growth during believe and updates. Operations Illumina's of Chief access his time years lead to am more multi-cancer and of decades screening. discuss to XX and discovery. I our call for August, countries to will and GRAIL. I served on now over Bob Genome Human in acquisition, than patient we is GRAIL's shipments. call in his introduce played

Bob Ragusa

to the honored mission GRAIL thoughts I'm detect cured. few I to to can team a Francis. lead to you, it progress. our advance recent when the am on cancer at pleased be talented share early, Thank

channels. we're to industrial, We to primary and transportation channel, and In encouraged the momentum notable partnerships significant pre services, want highlight I First, for gallery our -reimbursement the and progress. the expect announce new employer technology, in momentum across opportunities gaining professional with see commercial three sectors. gallery

We engaging cancer with are sector key of employers public area successfully as high such firefighters. risk also

with to we additional signed influential patient will that regions. to Health agreements and planning generate awareness establishing expect year. patients are several with providing quarter. focused agreements the in are to To also several we with key systems next For evidence Galleri partners community fourth systems influential have Galleri contract increase offering we early begin to are discussions health We're strategic with access in health experience real-world partners the health who date, start in on Galleri. systems also systems, medical strategic in and to communities

communicate In Galleri our progressive and addition, to driver interest including practices partnership of we innovative Medicare an are Advantage, soon. important payers, the excited Medical where expect to launch. see first are from we

the to care this to continue with agreements largest private networks several of and area. practice primary have expand in expect We

trends. We in are onboarding positive and focused prescriber networks physicians these on see

important individuals recently growth service an healthcare also future We prefer independent serve an We partnered Genome -reimbursement driver. Medical, pre believe and this launched who a several to ago with telemedicine be on option. weeks galleri.com will this provider,

telehealth national employer a Health, PWN to capability with partnered network, service some further we for addition, In extend our programs.

granted standard developed test. the one represents the for by York Galleri in validation the levels of York required The state rigorous Additionally, test. state of set most for New laboratory September, New approval a of

is excitement This is national Finally, controlled priority real-world study of tremendous A cancer participant, detection been that on improve there and 'XX, generated expectations. time. up national and population robust XXXX on expand randomized NHS-Galleri is widespread start that media larger this coverage. generated million around has the study. survival. part speed around X recent to of Enrollment to England's initial Based to in has data earlier from access international XXX,XXX with of after track study, a and Galleri could to people and to our

MRD gallery of note agreements to our and that reported Lastly, both GRAIL bio from with the companies. pharmaceutical our would sale recognized I revenue collaboration generated represents revenues the from pests like

are to of the number studies to test our pilot the initial results by opportunities. and and PDX expand We development support generated with encouraged of plan product partners MRD

look expect collaboration to as We become progress business. growth of attractive the more more coming quarters. you PDX future and continue I with our sharing forward driver an in also and an component GRAIL about and GRAIL mix MRD revenue is of important

turn over I Now will it Sam. to

Sam Samad

Bob. Thanks,

closed our third our for I'll the As for consolidated the the period a by segment followed after Illumina consolidated reminder, results on financial financial GRAIL start results results acquisition Core I quarter which encourage financial review to and I found these reviewing beginning supplementary conclude be then by XXXX. XX, non-GAAP and measures, GAAP available highlighting results, compensation. you on August include include results our website. will GRAIL, stock-based in the outlook. of our the which can reconciliation today's be non-GAAP release data for with

XX% once Third Illumina to revenue by expectations, revenue, of our million of Driven from and revenue $X.XXX again, growth billion. $X quarter significantly core growing exceeded GRAIL. XX% year-over-year

quarter, day previously one $XXX million $XXX gain expense income and was Non-GAAP in third GAAP $X.XX dilution which the per losses for dilution our million acquisition, from operating share, was diluted the to net $XXX of or net issued $X.XX the $X.XX fund to $X.XX For part the from acquisition. $X.X or in $XXX per GRAIL of million the investment the included incremental third GRAIL, a as included a which shares acquisition. diluted million, income million GRAIL from quarter share, compensation held GRAIL and of related

quarter million. Our weighted average was $XXX diluted share count for approximately the

of P&L. to to $XX million core operating million last the in Non-GAAP QX quarter million million and million was million expenses. to holdings and operating due increased $XXX $XX investments Non-GAAP increase GRAIL of $XX of fund we a rest non-GAAP Core non-GAAP of interest portfolio expenses the investment primarily increased in expense million $XX non-GAAP operating to due million lower Moving as driven and the increased consolidated our expenses. $XXX for decline million our a Illumina by non-GAAP of other operating sequentially, $XXX repositioned of expenses million GRAIL sequentially to and in $X GRAIL year-over-year, the expenses expenses subsequently income of year-over-year inclusion operating primarily income year increase a acquisition. Illumina operating $X The other was than liquidated $X as lower short-term the expected. on Non-GAAP

and partially GRAIL releases. of quarter as tax adjust XXXX. consolidated to tax by from decrease well in tax non-GAAP recorded the benefits prior-year in rate The tax QX XXXX, discrete of of related return results year-over-year the and notes non-GAAP in impact rate quarter operations. interest the reserve of year-over-year third tax last in XX.X% decreased was term the As to The expense on issued including due Illumina's offset

highlighting by $XXX that to more will of revenue than revenue XX% again doubled record XX% I Illumina to shipments Core year-over-year shipments to by grew of Illumina. revenue Illumina grew start year-over-year. results record million, instruments NovaSeq record Moving to in billion, grew to Core by grew Illumina $XXX million Illumina oncology segment revenue. consumable Sequencing year-over-year research. driven testing. driven the by and XX% for $X.XXX and Core represented accelerating year-over-year over Core XX% Core year-over-year $X.XXX Illumina that clinical revenue sequencing demand financial of XX% led billion XX% consumables NovaSeq shipments grew due both year-over-year sequencing results, for Core

doubled new the reached growth and solid throughput And was surveillance ended from sustained to X,XXX year. COVID-XX there the revenue incremental $XX high to contract surveillance NextSeq the focus as is across in X,XXX a mid in service expectations Revenue instrument orders grew and quarter, higher the entering sample infrastructure due quarter. sequencing a quarter and $XXX consumables record that XX% and low year-over-year. Core again with and We the growing exceeded tracking our almost all by variant backlog million sequencing backlog in on driven in Illumina revenue. scaling revenue instrument as revenue $XX approximately growth. base the million, sequencing contributing well installed service million other instrument on year-over-year systems GEL

for China due performance was strength prior for and Greater $XXX continued clinical revenue was year-over-year $XXX QX. driven growth clinical expanded UK regional driven growing representing and as the genomics all concluded by EMEA revenue for the region which disease XX% region also Illumina performance NGS in COVID was Third delivered was shipments $XXX Adoption oncology of And due than Health the America. such oncology NextSeqDx to growth contributed markets the to results in Biobank, period. The Almost and to us. performance strength shipments is million, all [Indiscernible]. initiatives was Americas Core emerging COVID half Latin new driven of also surveillance XX% growth which compared significant testing growth footprint of representing Network more drive of Revenue the expanding Public strong million, record by region led Illumina. of surveillance the And hospitals region. in to doubled testing by hospitals million in year-over-year. to and year-over-year. markets. by infectious Population in EMEA's the growth partially regional driven strength the helping ongoing Revenue hospital initiatives genomics population in customers. Quarter by testing the NextSeqDx demand testing, across in to in a Moving XX% year

XXXX, XX% for of Finally, as revenue consumables revenue testing from clinical and as sequencing oncology year-over-year, instrument million research. $XX grew NextSeq well driven APJ growth by growth across demand

higher leverage operating Illumina than of non-GAAP gross sequentially, non-GAAP P&L. by as to Moving expected On gross expenses margin and offset Illumina Core of higher declined result points basis patent the overall increased Core rest XX.X% project to XXX million pandemic. hiring to a timing basis, of partially increased margin recorded lower due year-over-year primarily of of the basis by the into core settlement fixed revenue cost Illumina $XXX the prior NIPT litigation up sequentially on due due a quarter. spend volumes, $X shifting in non-GAAP were the XX freight million were the but points costs QX. from one-time to

revenue. quarter up compared the as As growth million declined of year-over-year to to Illumina operating for $XX operating litigation expected, XX% revenue significant of GRAIL, settlement additional quarter, consisted GRAIL. that was in launched to related to headcount Operating expenses of Gallery $X recognized moderate in margin million to million due patent The the as quarter support clinical business. investments fees. $XX and one-time second XXXX. million expenses commercially early revenue for partnership multi-cancer primarily margins non-GAAP sequentially GRAIL to and well the non-GAAP trials. as $XXX as mostly of as the Core tests results which XX%, consisted of June, in for expected, totaled due non-GAAP of the prior expenses headcount were well our compensation detection primarily growth, increased operating financial MRD test performance-based quarter. Transitioning expenses the

As closed financial the beginning on acquisition XX. August are results a after quarter reminder, GRAIL's period for third the

to was flow last compared the GRAIL cash due for expenses million, items quarter acquisition. $XXX of outflow the to revenue XX related Moving an operations driven linearity. Balance used sheet to for and which Cash days flow days consolidated DSO in XX to Illumina. was by quarter

expenditures common free cash balance $X.X in million. quarter. billion in quarter repurchase Third the million, any quarter We with XXXX ended capital not and and was were stock cash, We $XX approximately bank did negative $XXX the [Indiscernible] flow a third investments.

$X.X billion used fund we quarter, to GRAIL third the the acquisition. During

wanted I challenging strong I'm that team's I to of environment. and especially discuss guidance, acknowledge a surging execution demand proud record another our to deliver and Before fulfill quarter global

of incredible geographies was constraints efforts. some to teams’ While were there thanks impact There material small supply products our no for this specific and quarter. certain pockets

will continue and with operate source, We support and agility customers. to further to produce our enable growth

billion guidance, billion grow XXXX, of XXXX XXXX we to the an revenue million revenue for approximately to This Illumina compared and prior approximately and consolidated now or to full-year approximately Core represents increase $X.XX now XXXX, to XX%. expect Moving consolidated our compared of approximately of guidance. revenue growth $X.XX $XXX of midpoint

Core now For our sequencing to driven non-GAAP revenue to We between we our margin business. which expect XX.X% approximately operating base grow XXXX, to XX% Illumina Illumina momentum reflects revenue by expectations. Core continued fiscal expect now higher be XX%, year-over-year, in

increased $XX of QX investments robust expect Illumina QX, increase related expected QX expenses from the XXXX compared to as in for partnerships. XXXX, into certain QX growth XXXX, operating payments approximately by well business, expenses as the of due support to million We shifting to QX timing to Core to our

acquisition. to now rate approximately expect range diluted GAAP the the XX.X%. share to GRAIL non-GAAP diluted expect in the operating expect be includes GRAIL Our million. now per tax We the shares $X.XX. earnings to of now be outstanding in to to earnings diluted fund improving $X.XX dilution We operating non-GAAP shares XXXX expect margin of Illumina $X.XX. approximately $X.XX now share $X.XX time. of focus from $X million range on incremental Core We dilution to and fiscal of from issued our Which XXX loss continues X.X be over leverage the We approximately in consolidated

share we of XXXX, expect non-GAAP the $X.XX. the diluted earnings share GAAP $X.XX range Quarter in range of to earnings And diluted $X.XX Fourth $X.XX. per the to of in per For

the We expect of fourth diluted of outstanding approximately XXXX quarter shares for $XXX million.

to will remarks. call Francis his Now over hand I back for the final

Francis Desouza

Thank you, Sam.

Our the value dedication the enduring and of business, performance our talent third quarter our of of our the reflects strength and people, mission.

through greater to would and our advance like ESG announced In inspired saw an both I XXXX. I close, finish Zero our our and how we health quarter, are we performance our a you environmental QX. Company We To are of inaugural I are backlog, work. the strength commitment we our broad-based are to detail goals, to our join again hope the operating our mission XXth, will Investor strong health we're at into for the this responsibly sustainably. guidance, the to pace we continuing this Human And we and quarter. ESG third component highlight see annual excited aggressive of Before intertwined, Net on close, climate to in and furthering exceptional commitment revenue us. mission and on as raised environment third record business will November in across and the including event remarkable discuss momentum our ESG strategy this strategy. our and Sam with instrument and

advanced will supporting data new markets, of upon the along forefront customers usher this we strength build as be and enable to with this we oncology era will expansion we collectively existing seize as and our human genomic of the health. in at including will innovations, disease Illumina We these applications. Sequencing medicine, testing expand opportunities infectious as

Q&A Now, the I'll to invite operator for open

Operator

you. ask now session The [Operator Instructions] one that limit at a time, interest In Thank time. is of open. your you Q&A we the questions please to

of first Dan, Dan the the from Cowen. on go sidelines ahead. have We Brennan question please

Dan Brennan

easy the I begin on raising a guidance. million to just to to for per start looks strong After the outlook But a to million the thought fourth-quarter I know am you have quarter Great. things there and quarter the the your here. had why really [Indiscernible] the be given would I question, COVID a testing? I'm $XX And originally follow-up. fourth you. Is quarter. might Thank in Great. comp couple given us. in fourth to you're And year, of $XX wondering I to And for then outlook so COVID momentum, conservative backlog QX. stronger. and the implied guidance, want I the here the the anything further just the be for not wondering first strong

Sam Samad

hope Yes. have Thank Sam well. you and to this and Dan good doing the Welcome you're back is on you, call.

for QX, talk the let year. me So, first of all, full about

are on talked about as to we revenue raising Dan, are We we approximately our prepared remarks, guide XX%. the

reduction For need you mind. we in likely a would in QX that is revenues of productive, I conclusion quarter-to-quarter standpoint areas or that genomics This population very from to will the a But that's present a $XX million in of versus and there's think been bit little One couple an terms talked important QX, the headwind I initiative about has QX. outcomes from keep incredibly the that initiatives. Biobank say, of the next steps. UK incredibly,

that second I with one area, and think then that's on And surveillance. area. to COVID regards in the So your touched question you

seen positive of with pandemic, strong samples the way and sequencing the the obviously, But So the globe. the we've is. year, it COVID with -- there's continue for surveillance testing has across been continued

we have million million of and For $XX COVID QX, of represented that in of instruments revenue consumables. the million $XX surveillance quarter, $XX

there Bob business, $XX which say I as with surveillance consumables. UK sequential from the of business, $XX think reduction $X then mean core from $XX our momentum, amount will when around and heard you of items, the associated comments COVID business, those represents have business strong, is million, two of our approximately COVID modest again, is about clinical QX reduction million concluding. about revenues, surveillance that as represents, well revenue, QX. another COVID and million million core is For really I That When we instrument we into QX, that is a which expectation Biobank GRAIL, research the but that

Dan Brennan

install a then platforms. rapidly of of, sense you give there, about of a Francis, like in have this know color growth terms but selection, What base? further supporting us Thank base you. you and look customer that growing gave in and backlog the been you for what's And this adding Could that's talked therapy that's if at Great. outlook don't customers clinical, I area? lot you the information, and

Bob Ragusa

and Yeah. add us great to it's you to Dan account, covering welcome I'll again. Thanks, my and see

for that a in driving expansion stories, oncology about whole talk a a has selection specifically Comprehensive in at And for the the the now panels of play therapy really lot as strength towards in that because been genomic so frankly, is did we've really the significant Profiling We genomic in I has gets larger seen testing for coverage in saw for have traction U.S., move selection year. story And time, the reimbursement segment, breakout one out what's the market. Genomic same base oncology testing. a the X. significant therapy So, that testing U.S. the few a and really we things.

And force And so expanding our two therapy those fleets. we're and powerful their created oncology a customers have selection testing. seeing

all terms play out playing segments. you're Now across it how seeing that's in of out,

therapy as the and also customers that forward. You're some larger expanding seeing But you're of smaller well the get customers our and selection. specifically, going demand expanding of customers fleet seeing, oncology anticipated their into seeing Novaseq significantly new are they're fleets some as demand their because

NovaSeq strong placing of the a takes at and having oncology, in the you same One lot if but NovaSeq of interesting biggest see pull-through backlog instruments. of the to and strong NovaSeq. I'd at NovaSeq drivers very of we're than look And it, seeing we're is one messages it strength of really say time, look you're instruments in the you'd oncology instruments, the more at is account into a

of pot sort seeing lot of that's about. the you're right? the end putting pull-through a end, of gold the there instruments talked so, double yet rainbow, at of the Because -- of we've the you're remains And high out high range end and

today, expecting I'd experiencing that's your so, what positive good indicator the outlook are going to is really And about people question and what forward. going a for what's forward, say they

Dan Brennan

Great. Thanks, Francis.

Operator

Evercore. please Thank from you're go next have question Vijay Vijay, you, the Kumar ready. now ahead Dan., We when from

Vijay Kumar

to year, $X.XX, one had taking $X.XX run have peers rate that QX that's think an And don't here should QX of for that because in EPS sure I most comps just assumption of around $X.XX. it? -- understand implied one-off about print XX% for we surveillance some I I comps and happening? fiscal but do on something $X.XX is The to and Hey, have -- XXXX, assuming my implies guys. your you guidance there right. there think QX question normalized costs should we updated that right. component your a the think I being are sounds want bit that I annualized abnormal growth. should to matter of is And backlog, on about in QX, or guidance is how I Congrats a fiscal that thanks are matter 'XX. this Because $X.XX make given question. -- comments have good that

Sam Samad

Yes.

GRAIL. including and effects the let EPS did about EPS QX, about So talk talking QX, me guide Vijay, $X.XX, $X.XX of for start by of to non-GAAP we

call, Those dilution result And related $X.XX about count $X.XX average as we share acquisition. the the roughly a year, dilution. to GRAIL that dollar on EPS impacts to then finance dilution the the for it $X.XX GRAIL that there's to with obviously about the GRAIL non-GAAP issued to related of talked shares are weighted specific there of is $X.XX $X.XX QX. for but QX, I in -- are a there about of in to As QX

dynamics In terms question, of of business, to talked I little couple talked around Dan's bit about core -- the to a Illumina I revenues. answer a

there of our also in are terms prepared yes, some Opex, that remarks. mentioned I In costs

expenses then that's lower why increased QX and expenses. than in of that now terms for we to spent our all, operating our is in terms expectations there QX QX. have timing also QX, QX in was expectations of Opex of has I shifted that from expected and about of First partnership talked

with do discrete significance have we somewhat expenditures that So, in some to certain QX. that's partnerships associated QX,

are talk guidance, terms incredibly guidance fundamentals the business we're say of In call, the except XXXX going to not strong. to about of on this

before changed. GRAIL XXXX. That have backlog talked dilution you But about $X.XX case. the heard has the very $X.XX We to That is not strong. remains of as the for

In exceptionally the clinical terms are and in terms fundamentals strong. core of of instruments research and

Vijay Kumar

clarification, 'XX. guys not incremental, I'm from have $X.XX GRAIL, dilution The is right? that $X.XX sorry, dilution to in $X.XX just fiscal Sam. You of a taken one

is that $X.XX, to inclusive $X.XX the $X.XX? So, the of

Sam Samad

we dilution to That's the on That's $X.XX dilution total impact incremental, EPS total for expect, that’s $X.XX GRAIL not that non-GAAP in in XXXX. XXXX.

Vijay Kumar

Thanks guys. Thanks clarifying. for

Sam Samad

welcome You're

Operator

comes ahead. please question JPMorgan. Tycho, next of Your go from Tycho Peterson

Tycho Peterson

want to Sam, I comments disruption a limited little Thanks. chain hone up now. in your sounds on supply bit. It till like

quarter NovaSeq and heard being limited did not We able flow and shipments, record about exit customers sales backlog. the you get with have to

also and maybe graft, you supply low of now, the just given on touch chain the publicized shortages well but semis, adoptables? cameras can high tele dynamics So,

Francis Desouza

Hey, Francis. is this Tycho,

have I'll because good it's So, in ahead a such have you of big question you beat expectations. by and so a start demand coming just saying, far anytime

looking we're at the put now now of over guide the we guide to is XXX million think the over year the there. we've out out put I midpoint

see look playing the the we backdrop in you terms planning against demand the demand we out And work the supply big we a at are demand done of thing So of anytime started ability pandemic, this as as last sure I'm to such on is to pointed to make a said of seeing. to the we out, we're build tail big team call, at have this has capacity the you that serve. stay the year. of ahead of beat the end And incredibly first your able proud chain,

lot of on a of teams number did work the so, fronts. And a

cope we then inbound production lead we would knew supplies where invest items capacity. times, the or First, stock in they own plus a ordering like in, coming also that But in work the be our safety sometimes demand there like internally started be across board. up have able that will resins building meant with our supplies might to advance increasing through making things things was around shortages. to of was year And And that long sure coming. that did that to

whether this we first of year the started a half raise, we certainly across by move [Indiscernible] supply. to build ability to our invest that, sales, to addition to increasing in then last And the starting capacity started and increasing and production. So, board, closed it's or cartridges, year, we significantly are

we a example, this had know, in Brazil our this opened in transportation specifically, capacity and Eindhoven for in and Eindhoven expanded links a continue up warehousing strengthening distribution invest year, Japan our between new Eindhoven. we and Similarly, new then from to warehouse build demand on outbound year we is with started to on going stock these ended core up vast had we now, sure enough being The much hubs. than had supply. even the to safety knew so majority weeks we site we capacity we might also in perspective, to the we the safety strong to that's our X stock center regional be in hand we on we forth. in cope of and expected, consumables that make that's was expanded and warehousing So for to And of you side inventory stronger doubled we have our capacity X me put what

to then so, that it a to on end-to-end and supply the demand we jumping terrific the in. sort job sure team early it did our make really And of calling coming have capacity

Bob Ragusa

Yeah.

the is I So, the by strong that really backlog the would thank demand. driven Francis that, is add only to and you, thing

there's something few which driven that by ensure any of orders have have backlog that is causing would where that I is customer All we're we to things the supply demand, quarter. issues extensions see time. And say, in that. there But on been that by chain. normal. every instances Francis actions not customer time driven are general, fulfilling it's really been isolated lead continuity very of are the mentioned and That's we've much taken There supply those a

Operator

please Thank go of from Morgan question Tejas Savant you. We line a ahead. the now have on Stanley. Tejas,

Tejas Savant

you a the that they've have possibility to evening. you agreement question Have the your GRAIL. structure on of regulators Francis, from highlighted of partners the the time that then your have whole prepared here, to do Mayo infrastructure you the any see updates from the out close? decision traction now and is the commercial of quick to And now started plans some other you them Good Clinic the I anything separate heard can secondly, Galleri fine? guys. in early had Hey, and some just you the live digest on to build and remarks? from out lay

Francis Desouza

playing process we just will Yes. out Maybe regulatory Bob to to a thoughts as will the about regulatory commercial over process, no about surprises. it talk then I been there talk have had frankly And turn Tejas. perspective, about From I expansion. expected. It's

on that's in And the waiting likely and engaged X in the processes happening trial slip in QX are a that's at Commission, European Europe Brussels. And two to for happening that's playing may We we tail to get out. the are look for the trial decision we date phase a of with the the jurisdiction little. review end

expected consistent retail order likely we came So QX that's yeah, And QX. out likely -- but real surprises. how as out. consistent the more expected. year, play separate we with in U.S., ourselves you, would I'll continuing a administrative in put voluntarily general, hold be up and trial The -- out was in and with planned. In of we it separate. playing then no out out end of playing into as the played the with decision thought anticipation wrap to this in It's would generally turn we the Bob. terms that to it we in expect is and the process we consistent are hold just it that how of The place over

Bob Ragusa

working just the at we really the really that's Thanks, main key the out three entire to And up an one the opportunities so employer, is of across for significant sure can Galleri. now practices. on in a build-out. of health We to -- commercial channels, team organization have thanks systems, for ramp the addition, medical the And -reimbursement picture. the it's And the have going really like the see that the Francis. we're ability demand to to elements experience. operation meet side, fact question up We're make commercial demand with ramp of we at that deliver great and customer commercial And the scale looking pre to there. scale

the all a build that Really to number able of across be in we of challenge us to on position and a and a commercial delivery beautiful we really in the Gallery elements the product cause had functions that having excited -- will are that way. take all elements so because that And so in to to out Company. deploy strong, build across were really big building now just out the opportunity so can

Francis Desouza

Maybe test GRAIL thing to from a I'll add rolled just other the Illumina just personal We've Ye. out employees. one perspective.

CEO, to are able know, listening something roll And the since save again, we your will may some there started that's see to as few career have. a a money. university out first out to are -- get And they've also because in I annuals screens. beloved you been As to of come reach to you cancers times they that have they're talking the tests. don't cancer find of been they've us Gallery about and say to fortunate and And ones people feel other an early-stage that able the

the power test. this of And is so, a of this realization personal

Operator

Donnelly Patrick Thank you. We of question now have from a Citi.

when please ready. go you are Patrick, ahead So,

Patrick Donnelly

in obviously market Thanks you Hey, the a you put and is parts there? pretty taking what of the lot Can you seeing There of Can the about one expectations different guys. talk for result. trends there about maybe guys going questions. talk seeing noise good you're just a you're on forward? Francis, China. and

Francis Desouza

Yeah.

in be strong really We, growth. a overall, continued driven markets. clinical continues year-over-year of see performance China the We growth had to have by XX% The out China. to

on strategy, broadly that's NIPT, testing, testing. a more starting the really And year, just out genomic but last embracing starting market increasingly of so, focusing embraced early, paying they It's emerging is really really our hospital market to not which oncology roll also dividends.

terrific progress in ecosystem off. we're up there. years paying we've over it the seeing of And is partner built by really the driven China. that lot so, That's A

seeing actually emerged we're in that addition, have with a regulations associated some tailwind use the LDTs Shanghai. allow In that

started labs recent, their that's as dividends, LDT as pay to see we fairly already And up generate but so own has capability. -- that to been being stood testing more

helped happening what's But for we're now. in so right and driving And about of optimistic us the excited us definitely that's there. China tailwind some

Patrick Donnelly

Biobank again, you and you're this the we UK for become the then called update And one some how a out on obviously those UK see on Okay. population that us see to as for piece of Biobank rolling quarter. use maybe about guys? feeling And concluded you potential data sequencing, out? just you bigger Can

Francis Desouza

absolutely. Yeah,

the is that is to customers. really of things the see great of of the base broadening sequencing population One

fact the So, we now over the over XX of been that stage talked already these and cultivating about opportunities, XX we've at we're of revenue. where are these generating opportunities

it about from really a to health national great from as perspective, see a driven which a is diversification also that's sequencing So good perspective. lot initiatives these really of population are

care all, have built research ramped because patients. seeing what part valuable pathway terrific, that's of it aren't are standard you so place of But is a to you it countries and of you up to allows they get And the you're So, of in because projects, you're as just health is healthcare a population testing a embrace very system. once delivering scales goes system, the impact the means to in durable, first of genomic year-after-year. that's it then human into also information it

And so see. really to thing that's another exciting

a repositories of The data we're like looking playing are partners, around pharma them cohorts, lot population from big out out there world to some starting that's data the the level emergence other to of data biobanks. involving that is, see thing generate from of -- the

population building of sort And sequencing right so parts that's an emerging then ecosystem too. the now and of

Operator

of We of have Bruin Bank the Derik America now on line. De

please go ahead. Derik, So,

your proceed question. You with may

Mike

is ones, on I'm of Hey, instruments to on going just focus business. my Thanks couple quick taking side sequencing for and of Got the for a the Derik. question this question.

strength, really much sequencing majority to out X,XXX NextSeqDx, declined NovaSeq, But and X,XXX sequentially. total having called number the of You That's portfolio. the [Indiscernible] instrument pretty broad still revenue MiSeq.

a if dynamics follow-up mid-year? there's that. wondering there could pricing So, to you AFT I've I'm just on talk going if then or an got And in unusual anything

Francis Desouza

the record QX. ebb into general, at general, appreciate the of revenues Thank that fundamental terms from quarters or terms of all Mike. Thank year. you, in we instrument the QX NovaSeq terms change instrument for last in had Yes. no really the Listen, demand in between QX of placements doubling -- of there in Record is question. And had do you. quarter. placements have flow terms sometimes in revenues, the and we some In

quarter in backlog we of As exited we the record with said, instruments. terms

probably say small significant -- but QX. there's down that's So, here in QX were we anything really I movements terms and terms QX some nothing versus in there, versus very would slightly of why of

would surveillance, QX. minor as say well factor that instruments into a sequencing from of QX COVID I as terms was well In for

Sam Samad

used that that about, There in exceptionally little in as we there impact compared demand prior to with were doubling XXX sequencing so to the well. NextSeq versus place placements bit of NovaSeq the QX, QX general, But instruments strong. were talked not demand just strong XXXX, and years, prior, category then in had but mid year XXXX, is the historically throughput a is placed and a what as an few exceptionally we fewer last

Francis Desouza

just at a about. be high-end into with average NovaSeq NovaSeq expect the we to strong Yeah, let pull had even all place the pull-through of that, their are we up having and instrument we've lot had the and be. instruments range me But record even We QX NovaSeq, total of with pull-through in the reiterate what record mode, should are the Sam placed, just on they end low for QX them still around said a -- the talked through. you on of ramp It's with really in look, -- instrument are backlog. walking a shipments

in it’s there. fact So,

the just there's we the that the have walking backlog place orders that field. so, lot causing that's are NovaSeq to And a customers activity South record happening our QX. And on of in into driving

a to we And it's position that feel be. so, really strong fantastically really

Operator

have SVB now you're Souda When you. go ready. on please the Puneet, Puneet of head. line. Thank We Leerink Sir

Cooney Sudov

the thanks Francis. And taking question. Thanks, for

can First conduct in Bob, you to at the you've this and some that one can terms point to or you just you could for it trials of eventually have that understand the committed that to UK the XX,XXX, for have just look is trial FDA you are you time, that? are run order are I'm Francis this actually is screening to of inclusion? -- ongoing. NHS mentioned on of FDA trying submit needed prevalence walk maybe and then any GRAIL, terms guideline in of GRAIL collected Obviously, at or is banked that doing data? as to that that. reflecting the on than dilution, but towards progress more approved the What's assay trial to get that timing taken us potentially in a if and through market, that that trial registrational trial trials is overall trials What the initiate in needs to XXX,XXX that other reimbursement patient samples the trial on and it? order and trial that in in an you that approval, get you and terms prospective What you already need

Francis Desouza

-- going is then Maybe today, which test anything continues to to said turn true it's a I'll early for concierge today, in it looking out. the There some self-pay are today, that to subscription as it. over And be models. this order been can we it a on rolled are It's or if already and market start say, covering of be and test U.S., systems you a need model more. it before are I'll LDT Bob. an could roll some it the it's be, doesn't system to a has health what out example, part is employers

to there. in for on and of on June existing to is the be market. that terms data test needed nothing the And so, sources talked been U.S. to the out revenue real. in nothing continue since is and trials on It's is in nothing the Everything studies the all needed market Bob the of terms be about -- for

it that out so self-contained it a already is more that population early and nothing start milestones about that's were were rolling this there. market that that is And what said a so of of would huge and ones it the scale. we then NHS reinforced comfortable to it path years up go next early put the studies out fact, needed XXX,XXX In get the is, the about they could then couple year population trial with in a published And sense the the just data at rolled the NHS the sort the scale. out said designed who onto of scale been amount has the in million progress far, the

need turn self-contained before, to said That's process. what And partnering They've to identified I'll it so, Bob. what continue we've it's fully a see. they we that's And with GRAIL. They're what to see. and over

Bob Ragusa

X. other Francis. The on that comments with Thanks, XXX,XXX key that years. talked study we've driving NHS expanding three a that. about, participants Maybe Really it. and elements few over towards then the

that of provide enormous data. So will set

the have of study, will conclude next middle Pathfinder also We which the year.

and registry far, screening to We of that's this And the with gallery Gallery. -- positive where at of enrollment XX,XXX so there also Want -reimbursement the even pre generally consistent And reimbursement, very this very, and that shown also the a were is on look point. prescribed has we'll data quarter, XX. so and then experiencing Francis without the also, patients for of over reflection eligible marks will data, validation said pre data clinical reflection age way a the tremendous that date the the was early significant study began amount healthcare from outcomes amplify -- to to test opportunity there provide to activity reimbursement. provider, -reimbursement

incredibly only to the is the while look it's to reimbursement march not And so, factor at. important,

Operator

Thank you.

last go please from Kyle Mikson Kyle, of we ahead. of Canaccord. our As time, are almost question out comes

Kyle Mikson

for GRAIL. thanks thing I here questions. Hi, wanted taking just to one the on confirm

will helpful XX. is the tack on and conclude. be quarter the visibility on just polarizing first alluded provided these ask resumed to revenue think I it of earlier, much regulatory just or reviews just so out now. you events when annualized spread guess, of this outcome quarter but most trials are to that the kind it'd have these we'll performance months for thing February level here. the to of 'XX. decisions the X been was in of The maybe like throughout a expecting it's of how early regarding, I kind clarity this topic. years first to pause been wanted the expect I I the it's Obviously, of pretty Honestly, to in First million. hope be and timelines, And be at beyond that in $XX the understand X GRAIL other it looks quarter, was one investigation

reimbursement to helpful. maybe would well trends maybe even as what be Thanks. test are and the volume understand Just want

Francis Desouza

we want forward path I'll asked. terms as Maybe question and about a think that be I Yes. look, GRAIL, it it's of the start have been I investors to say know in the priority,

to I so, to no GRAIL perspective what matter because to on know on other and rollout healthcare the published study will our sure NHS They but that launched said employers initiated lot in results. what what some regulatory the success plays signed and scenario that. some it's not continue no also we a people done value to if the they've our the of trials But can in progress a hugely going appreciated. outcome that's we that And continues that screened, through create is update give we systems do obviously, look and getting process. announced but that the you obviously XXX,XXX the we huge and GRAIL significantly is started out even schedule in And for and But the that have asset made only work signed a have make up want event our GRAIL we to means not at what and create only an we have in still big that valuable U.S. GRAIL they get shareholders. have shareholders, value grow for June. at huge, matter the we And for announced the the since is, deal, are win deal, of since we'll an we their deal, been who that's at if because customers product They you is

going shareholders. business. announced need that our Bob make business what is. our go valuable seeing XX-XX ago hugely does So, create we also and clear the our value just when is months to to to sure it's the partially significant focus And deal. maybe has from matter created ensures team a they his win shareholding, And everything a have it what to outcome no It's for that is somebody the be

that's sure you were that a I So, make want happen about while to we that clear the talk trial. to continuing lot if very

For February around timeframe, a that as we trial around expect X our sort the date we in perspective, decisions maybe the jurisdiction X you looking also is late Should the we the And maybe now, don't you be any we the either little, district Inevitably, probably right in maybe re-review -- -- maybe phase on one we're to That the the expect QX. administrative X with come expect right? then pointed And next those Europe that's around in results fronts, a out, in slip prevail but appeal in trial go out for in from with of makes QX, you result We're we process our those still XXth. date appeals phase then -- so QX. a already Brussels. steps, QX also of on court thing, first-half said, a I the got -- decision, process that. prevail of after done FTC, of we then through. regulatory the in the then year. on if we've then we will expect QX as a or there's Union. you European in process. if there don't, back If go that commissioners an depending to which half And the So,

process. other turn for the I over And to it any Bob Ragusa that's So will color.

Bob Ragusa

Yeah, revenue just the question. on

companies. generated revenues grow as Gallery our with as So, agreements the revenues well from biopharmaceutical of our test, our represents revenue MRD both from recognized sale collaboration

business. an quarter-to-quarter. MRD early growth phase important collaboration We revenue element will gross continue of an as launch MRD the income component of future components and variable from PDx We pharma expect the to be the as attractive the revenue GRAIL our mix do of expect during

the sample not so, a -- And is revenue real indicator mix overall revenue not of that overall of the is volume. the pricing because and really great of

Operator

Thank you.

to further the will hand some I Blanchett for time, have you closing no back it As Brian on remarks. questions

Brian Blanchett

Thank you.

available call our of next call we for release. today. following you as concludes replay the earnings a the today's and of through website, Investors of us contained This XXXX. this will look update our reminder, on forward be to joining dial close well a section in As as the our Thank instructions

Operator

Illumina for QX again call you has now Call. Today's joining. concluded. Today's XXXX Earnings Thank

and now your lovely a may You lines disconnect have day.

Illumina (ILMN) 5 Nov 212021 Q3 Earnings call transcript