Illumina begins layoffs in plan to cut more than $100M in expenses this year

Just a couple of months after laying out a plan to shave off at least $100 million from its 2023 expenses, Illumina is beginning to make those cost-cutting moves.

Among the first of those moves is a reduction in force that the DNA sequencing giant began on June 21 and disclosed in a filing (PDF) with the U.S. Securities and Exchange Commission (SEC) this week. The company didn’t detail how many of its 10,200 employees around the world will be affected by the layoffs, nor did it specify which areas of the company will be affected, but Stat, citing internal company emails, reported that the cuts comprise 10% of Illumina’s research and development team.

In a statement sent to Fierce Medtech, a company spokesperson said, “In April, Illumina committed to a plan to achieve more than $100 million of run-rate cost savings to accelerate margin improvement and create flexibility for further investment in high-growth areas. We believe these steps need to be taken to continue driving innovation, expand profitable growth for our shareholders and put us in the best position to carry out our mission of improving human health by unlocking the power of the genome.”

The statement continued, “We understand the impact this decision has on affected employees and their families, and we are committed to providing support to these employees in their transitions and treating them with gratitude and respect.”

The company said in the SEC filing that more layoffs will occur in the third quarter of the year. Together, both rounds of cuts are expected to cost Illumina between $25 million and $35 million in severance payments, employee benefits and other expenses; the bulk of those costs will show up on the company’s second-quarter earnings sheet, and “substantially all” will have been incurred by the end of this year, per the filing.

In another round of cost-saving attempts, Illumina is also shrinking its real estate portfolio. To start, according to the SEC filing, it’ll exit its i3 campus in San Diego, which was unveiled in 2017 and boasts a 7-acre footprint, with more than 300,000 square feet of office space.

Meanwhile, the company said it’s also “evaluating its options” in terms of slimming down its presence at its campus in Foster City, California, near Silicon Valley, suggesting that it may exit “a portion” of that outpost.

According to Illumina, the San Diego and Foster City campuses currently represent assets of $60 million and $186 million, respectively, on its balance sheet. As with the layoffs, leaving the San Diego location entirely and Foster City in part will first cost Illumina before the savings kick in, though the company wrote in the filing that it’s currently “not able to provide an estimate of the timing or amount of charges or the potential cash outlay it may incur in connection with these events.”

Illumina laid out the $100 million-plus savings plan in its first-quarter earnings presentation at the end of April. The plan builds on the layoffs that cut 5% of Illumina’s global workforce late last year; in addition to continued layoffs, the company said at the time that it will also prioritize “more cost-effective hubs,” conduct its work through a more streamlined R&D structure, trim the fat from its third-party vendor costs and more.

The cost-cutting plan was announced shortly after Illumina disclosed in its full-year 2022 earnings report that it had taken a $3.9 billion impairment charge to cover the fair market value of Grail, which Illumina acquired for $8 billion in 2021 and has since been ordered to offload by regulators in the U.S. and European Union—though Illumina is currently appealing the orders.

The regulatory snafu has led to even more tumult at Illumina: Though he survived a proxy battle with activist investor Carl Icahn earlier this year—which resulted in the loss of only one board member to Icahn’s selections—CEO Francis deSouza announced earlier this month that he would resign, effective immediately. Charles Dadswell, a senior VP at Illumina and its general counsel, is currently serving as interim CEO until deSouza’s permanent replacement has been found.

Editor's note: This story was updated to include a statement from Illumina.