SEC Concludes Illumina-Grail Investigation as Company Faces Tariff Challenges

Illumina, the DNA sequencing giant, has received closure on a significant regulatory investigation while simultaneously grappling with new financial hurdles. The company announced on Thursday that the Securities and Exchange Commission (SEC) has concluded its probe into Illumina's 2021 acquisition of liquid biopsy maker Grail, recommending no enforcement action.

SEC Investigation Ends with No Action

The SEC's decision marks the end of a tumultuous chapter for Illumina, which has faced intense scrutiny over its $8 billion takeover of Grail. The company received a termination letter from the SEC on May 1, stating that the regulator did not intend to recommend any enforcement action after concluding its investigation.

This development follows Illumina's spinoff of Grail in 2024, a move that came after years of regulatory challenges and internal upheaval. The separation helped Illumina avoid a 432 million euro fine from the European Commission and led to the dismissal of the U.S. Federal Trade Commission's case against the merger.

Tariff Impact and Financial Outlook

While the SEC investigation's conclusion brings relief, Illumina faces new challenges on the financial front. The company has cut its 2025 earnings outlook, citing the impact of tariffs on its business. Illumina now expects $85 million in tariff-related costs to reduce earnings per share by 25 cents in fiscal 2025.

In response to these pressures, Illumina plans to implement cost-cutting measures:

• The company aims to reduce expenses by $100 million to mitigate the impact on revenue and operating income.
• These cuts are particularly focused on offsetting losses from Illumina's China business, where the company expects minimal instrument placements this year.

China Market Challenges

Illumina's difficulties in the Chinese market stem from recent geopolitical tensions:

• In February, China's Ministry of Commerce placed Illumina on its unreliable entity list.
• This action followed the Trump administration's order for new tariffs on Chinese imports.
• As a result, Illumina's ability to export sequencing instruments to China has been restricted.

Despite these setbacks, Illumina executives stated that the company is actively engaging with Chinese regulators to find solutions that would permit its long-term presence in the market.

In light of these developments, Illumina has revised its full-year forecast for non-GAAP EPS to a range of $4.20 to $4.30, down from the previous guidance of about $4.50. This adjustment primarily reflects the impact of the new tariffs on the company's financial performance.