Illumina on Tuesday unveiled plans to cut costs in a bid to improve the DNA sequencing company’s shrinking margins.
The plans aim to reduce Illumina’s annualized run rate expenses by more than $100 million starting later this year, according to the company’s first quarter earnings release.
The company reported gross margins of 60.3% for the period, down from 66.6% during the same period a year before.
“These cost savings will accelerate progress toward higher margins as well as free up capital to increase investment in high-growth areas,” Illumina said in the release.
The company is also battling criticism and a falling market cap in the wake of its controversial acquisition of Grail, a cancer screening company.
The San Diego-based company’s market value has fallen to roughly $34.5 billion from around $75 billion in August 2021, the month it closed its acquisition of cancer test developer Grail.
Antitrust regulators have repeatedly pushed back on the $7.1 billion Grail deal.
The U.S. Federal Trade Commission earlier this month ordered Illumina to divest the acquisition, saying it would stifle competition and innovation.
The EU’s executive body, the European Commission, last year blocked the deal over similar concerns.
Illumina said it is appealing both orders and expects a final decision in late 2023 or early 2024.
The Grail deal is also the focus of a proxy fight between activist investor Carl Icahn and Illumina, who have been trading jabs for more than a month.
Icahn, who owns a 1.4% stake in Illumina, is seeking seats on Illumina’s board of directors and pushing the company to unwind the deal. He is also calling for Illumina to oust its CEO Francis deSouza “immediately.”
The company is urging shareholders to reject Icahn’s three board nominees during the company’s annual shareholder meeting on May 25.
Illumina has repeatedly claimed that Grail has “tremendous long-term value creation potential.”
Grail claims to offer the only commercially available early screening test that can detect more than 50 types of cancers through a single blood draw.
The cancer test generated around $55 million in revenue in 2022 and is expected to rake in up to $110 million this year, Illumina said last month.