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How Illumina, Inc. (ILMN) stock turnaround on Monday Apil 5, 2021

Illumina, Inc. (ILMN) stock started the new week with minor negativity and lost 0.13% but it gained 9.94% in the extended trading session on Monday, April 5, 2021.


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Let’s try to find out the reason behind its turnaround.

Updated Revenue estimates for First Quarter Fiscal Year 2021

The stock jumped on Monday when ILMN announced that it is expecting revenue of approximately $1,085 million for Q1, 2021, compared to $859 million in the first quarter of 2020, which is 26% revenue growth year-over-year. the company is expecting a revenue of $1 billion thanks to record orders and revenue growth in its gene-sequencing and related businesses.

The company also updated its full-year 2021 revenue figures and now expecting 25%-28% revenue growth compared to the fiscal year 2020.

Illumina’s (ILMN) Grail Merger facing hurdles

On March 31, 2021, Illumina’s (ILMN) Grail Merger received another setback when Federal Trade Commission filed a lawsuit in federal court requesting to block Illumina’s ILMN $7.1 billion proposed acquisition of cancer diagnostic startup Grail Inc. the recent lawsuit has significant importance, assuming that the proposed acquisition of Grail was a vertical merger. Vertical merger term is used for the companies when they don’t compete head-to-head

The ILMN said that it will pursue its right to proceed with the transaction, opposing the FTC’s challenge.

Recent Illumina’s Board Restructuring

On March 19, 2021, Illumina announced that Jay Flatley has decided to leave the Board of Directors and will be replaced by John W. Thompson who will be the Company’s new Chair of the Board. These changes will take effect on May 26, 2021, at the ILMNannual shareholder meeting. Jay Flatley has 22 years of service in Illuminaand led Illumina as CEO from 1999 until mid-2016, served as Executive Chair from mid-2016 through 2019, and currently serves as Chair of the Board.

ILMN Expanded NIPT Coverage

On March 12, 2021, ILMN announced a positive study outcome related to the evaluation of the impact of expanded coverage of non-invasive prenatal testing (NIPT). The research was carried out together with the researchers at the University of Colorado and Harvard Pilgrim Health Care.

ILMN said the positive outcomes will expand insurance coverage of NIPT and will include pregnant women under the age of 35 through an innovative risk-sharing agreement.

Recent Financial Results

Illumina announced its financial results for the fourth quarter and fiscal year 2020 on February 12, 2021.

Q4 2020 financial highlights

  • For the fourth quarter, ILMN revenue was $953 million.
  • For the reported quarter, GAAP net income to Illumina stockholders was $257 million, or $1.75 per diluted share, compared to $239 million, or $1.61 per diluted share, for the prior-year period.
  • Non-GAAP net income was $179 million, or $1.22 per diluted share for the reported quarter, compared to $252 million, or $1.70 per diluted share for Q4 2019.
  • $406 million of cash flow in Q4 2020, compared to $443 million in the prior-year period
  • 66.1% was the gross margin in Q4, 2020 compared to 69.5% in the prior-year period
  • Research and development (R&D) expenses were $200 million for the fourth quarter of 2020 compared to $161 million in the prior-year fourth quarter.
  • For the reported quarter, ILMN spent $298 million in Selling, general and administrative expenses, compared to $233 million in Q4 2019.

The fiscal year 2020 financial highlights

  • For the full year, 2020 ILMN revenue was $3,239 million, compared to $3,543 million in fiscal 2019.
  • ILMN GAAP net income was $656 million, or $4.45 per diluted share, compared to $1,002 million, or $6.74 per diluted share, in the prior year.
  • Non-GAAP net income was $664 million, or $4.50 per diluted share, compared to $976 million, or $6.57 per diluted share, in 2019.
  • $1,080 million cash flow in FY 2020 compared to $1,051 million in fiscal 2019
  • Gross margin was 68.0% in 2020, compared to 69.6% in 2019.
  • for fiscal 2020, R&D expenses were $682 million compared to $647 million in the prior year
  • SG&A expenses for fiscal 2020 were $941 million compared to $835 million in the prior-year period

Conclusion: the updated and improved revenue figures for the Q1 and fiscal 2021 took the stock towards the positivity on Monday.

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