Dive Brief:
- The Securities and Exchange Commission has concluded its investigation into Illumina’s 2021 acquisition of liquid biopsy maker Grail and recommended no enforcement action be taken, the company said Thursday.
- Illumina spun off Grail in 2024, following several tumultuous years in which regulators had challenged the $8 billion takeover, ultimately forcing the separation. During that time, activist investor Carl Icahn waged a proxy battle that saw shareholders vote to oust Chairman John Thompson in May 2023 and CEO Francis deSouza resign three weeks later.
- In an earnings statement for the first quarter, the DNA sequencing company also said it expects $85 million in tariff-related costs to reduce earnings per share by 25 cents in fiscal 2025.
Dive Insight:
Illumina bought Grail back after it had first spun off the business in 2016. But regulators objected to the move, warning Illumina’s dominance in the sequencing market would deter development of rival multi-cancer early detection tests.
Last year, Illumina avoided a 432 million euro fine from the European Commission after the Court of Justice ruled the EC did not have the authority to investigate the Grail acquisition. The U.S. Federal Trade Commission also dismissed its case against Illumina and Grail after the spinoff.
In its latest filing, Illumina said it received on May 1 a termination letter from the SEC, which stated the regulator did not intend to recommend any enforcement action after concluding its investigation.
The San Diego, California-based company plans to cut $100 million in costs to mitigate the impact of expected hits to revenue and operating income stemming from the company’s China business. Executives said on the earnings call that Illumina expects minimal instrument placements in the China region this year after the company’s ability to export sequencing instruments was restricted.
China’s Ministry of Commerce placed Illumina on its unreliable entity list in February, shortly after the Trump administration ordered a new tariff on Chinese imports.
Illumina is engaging with regulators in China on solutions to permit its long-term presence in the market, company executives said.
The company lowered its full-year forecast for non-GAAP EPS to a range of $4.20 to $4.30, down from the prior guidance of about $4.50, primarily due to tariffs.
