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Illumina Inc ILMN

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Illumina Closes Grail Acquisition Despite Pending EU and U.S. Regulatory Reviews; No FVE Change

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Narrow-moat Illumina announced that it completed the acquisition of liquid biopsy test maker Grail, despite ongoing reviews of the transaction by European Union and U.S. regulators. Our fair value estimate already includes the acquisition of Grail starting in 2022, so moving up the completion date by a few months should not materially alter our view, although we may tinker with our estimates a bit. However, the decision to acquire Grail prior to getting clearance from key regulatory agencies is highly unusual and could expose Illumina to additional risks, although the Grail opportunity appears so great that management has determined they are worth it.

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Company Profile

Business Description

Illumina provides tools and services to analyze genetic material with life science and clinical lab applications. The company generates revenue from sequencing tools and dedicated consumables (76% of 2020 sales). Illumina’s high-throughput technology enables whole genome sequencing in humans and other large organisms. Its lower throughput tools enable applications that require smaller data outputs, such as viral and cancer tumor screening. Illumina also sells microarrays (9% of sales) that enable lower-cost, focused genetic screening with primarily consumer and agricultural applications. Services account for 16% of sales and include basic maintenance services, clinical lab applications (such as noninvasive prenatal, oncology, and rare-disease screening), and whole genome sequencing.

200 Illumina Way
San Diego, CA, 92122
T +1 858 202-4500
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 30, 2020
Stock Type Slow Growth
Employees 7,850