Illumina's ($ILMN) stock soared more than 10% this week in anticipation of stellar revenue results for the 2013 third quarter. The San Diego gene sequencer did not disappoint, hitting numbers after the market's close Oct. 22 that reflect optimism over healthy gains and new full-year guidance revised higher for the second time in three months.
Illumina now predicts 22% revenue growth for the year, and non-GAAP-earnings per fully diluted share of $1.75 to $1.77, driven in large part by an expanded focus on diagnostics. At the end of the second quarter, Illumina nudged up its full-year guidance to a 20% revenue hike. The company's stock price closed Oct. 22 at $90.05.
Revenue soared to $357 million during the quarter, 25% higher than the $286 million booked during the 2012 third quarter. Net income nudged up to $31 million in Q3, up moderately from $30 million in net income booked over the same period a year ago.
Illumina said its costs hiked during the quarter, in part because of a one-time charge stemming from the discontinuation of a noncore product line. Research and development expenses also grew. At the same time, however, Illumina's increased focused on diagnostics has propelled revenue growth to new heights. Earlier this year, the company closed its $350 million acquisition of Verinata Health, maker of Verifi, a noninvasive prenatal test. Through Q3, Illumina expanded Verifi's reach even further, announcing during the quarter that the test can now be used on women who are pregnant with twins. Earlier this year, Illumina also inked a deal with Teva ($TEVA) to market Verifi in Israel. Further, Verinata Health won a clinical laboratory permit from the New York State Department of Health.
Beyond Verifi, Illumina also inked a three-year deal with Natera to supply the HiSeq 2500 sequencing system and related products for noninvasive prenatal testing.
Adding to the gains: Illumina launched two cystic fibrosis assays tied to its MiSeqDx sequencing platform in Europe earlier this year, after obtaining a CE mark for both. The company said it has been able to expand its overall use in clinical laboratories.
Illumina continues to build its gene-sequencing business as part of its overall strategy and made gains in that area during Q3 as well. Among those milestones: a project with Genomics England and the University of Cambridge to sequence 10,000 whole genomes, and a partnership with the Global Genomics Group to investigate new biomarkers and biological pathways connected to cardiovascular diseases.
"These results highlight another quarter of solid operational execution and record financial performance," Illumina President and CEO Jay Flatley said in a statement. "We continue to be pleased with the robust global trends demonstrated by our business and believe we are positioned to continue to deliver strong growth."
Illumina is much improved compared to its Q1 loss, which was driven by its defeat in a patent lawsuit from Syntrix Biosystems. Illumina said it still plans to appeal if its motion to vacate the verdict is unsuccessful.
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