Patent suit loss tanks Illumina's strong sales quarter

Illumina ($ILMN) put up another stellar revenue quarter, pulling in $331 million, a 21% jump over last year. But last month's lost patent suit to Syntrix Biosystems tacked on a $106.9 million charge, leaving the sequencing heavyweight with a $23 million net loss on the quarter.

In March, a Washington court ruled that Illumina violated Syntrix's patents with its BeadChip array, ordering the company to pay out $96 million. Added to legal fees, that loss was enough to erase Illumina's sales leap and leave it in the negatives; the company reported net income of $26 million in the same period last year.

But looking past that one-time charge, Illumina continued its leadership in the gene-sequencing space, increasing product sales by 13.7% and notching service revenue up by 51.7% compared to last year. And Illumina hasn't closed the book on the lost lawsuit, maintaining that Syntrix's claims are invalid and asking the court to vacate the ruling.

The company is focusing on expanding its diagnostics offerings in 2013, first closing the $350 million acquisition of Verinata Health to get a stake in the burgeoning demand for prenatal tests, and then signing a deal with China's Kindstar Global to distribute the TruSight sequencing technology in the fast-growing local market.

"Our business demonstrated strong growth across the entire portfolio, which resulted in record revenue, and we made significant progress on furthering our reproductive health strategy with the closing of the Verinata acquisition," CEO Jay Flatley said in a statement. "We are now focused on continuing to deliver on our 2013 strategic initiatives for strong long-term growth."

Illumina is still the market leader in sequencing, but the landscape is likely to change once Life Technologies ($LIFE) is absorbed into Thermo Fisher ($TMO), the result of a $13.6 billion buyout. For now, the company is confident in its strategy, Flatley said, planning further investments in emerging markets and upping its capabilities in diagnostics.

- read Illumina's full results