Illumina's (NASDAQ: ILMN) growth rate slowed considerably in the company's fourth-quarter results announced in January. However, the gene-sequencing pioneer's fundamentals remained strong. And Illumina's full-year 2019 guidance reflected solid double-digit percentage earnings growth.
Investors received an initial look at how good of a start the company had in 2019 when Illumina reported its first-quarter earnings results after the market closed on Thursday. Here are the highlights from those results.
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Illumina results: The raw numbersMetric
$846 million $782 million
Net income from continuing operations
$233 million $208 million
Adjusted earnings per share
What happened with Illumina this quarter?
Illumina's revenue growth certainly slowed even more in the first quarter. CFO Sam Samad mentioned in the company's fourth-quarter conference call in January that instrument sales could slip by $50 million in Q1. The actual results showed that sequencing instrument sales fell to $105 million — a $55 million decline from the previous quarter.
Samad also predicted that Illumina's first-quarter sequencing consumables revenue would be flat to slightly higher compared to the company's fourth-quarter result. That view turned out to be on target. Illumina reported consumables revenue in the first quarter of $481 million, up 2.3% quarter over quarter and a year-over-year increase of 14%.
Illumina announced total microarrays revenue of $147 million in the first quarter. This reflected an 11.4% increase from the fourth quarter. However, microarrays revenue fell 3.3% from the prior-year period total. This sluggishness compared to early 2018 was expected. Illumina CEO Francis deSouza stated in the company's Q4 conference call that direct-to-consumer customers anticipated that their growth rates would moderate in 2019.
Trade tensions with China didn't appear to impact Illumina in the first quarter. The company posted revenue of $88 million in the Greater China region, up 14.3% from the fourth quarter and an increase of 12.8% over the prior-year period.
What management had to say
DeSouza stated, "This was a strong start to the year, with $846 million in revenue and more than $1 billion in orders for the first time in Illumina's history." He added, "Our growth is driven by a broad range of sequencing applications, with 14% sequencing consumable growth in the first quarter, including more than 20% growth in clinical sequencing consumables."
Illumina still expects revenue in 2019 will grow between 13% and 14%. However, it upped its earnings guidance for the full year.
The company now projects GAAP earnings per share between $6.29 and $6.39 compared to its previous outlook of GAAP EPS between $6.07 and $6.17. Non-GAAP EPS is now expected to be between $6.63 and $6.73 compared to the company's previous range of $6.50 to $6.60.
What's behind this improved full-year earnings forecast? Illumina is fully spinning out its Helix consumer genomics business. The company stated that this move accelerates "Helix's path to independence to address a broader opportunity in population and consumer genomics."
One major development for investors to look forward to now is the pending acquisition of Pacific Biosciences of California. This deal ran into a hurdle recently with regulators in the United Kingdom initiating an investigation. However, Illumina still thinks the transaction will close in mid-2019.
And while Illumina's growth in the first quarter wasn't all that impressive, the company should pick up momentum in the second half of the year. Several big population genomics efforts ramp up later in 2019, which should juice consumables revenue. Illumina also typically sees stronger overall sales in the third and fourth quarters as governments and corporate customers wrap up their fiscal years.
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