USA — Illumina, a leading sequencing company, has initiated a series of cost-cutting measures aimed at reducing annual expenses by US$100 million.
The plan, devised by former CEO Francis deSouza, who recently stepped down following board chairman changes, involves job reductions and downsizing of office and research spaces.
The company estimates charges against earnings ranging from US$25 million to US$35 million to reflect the job cuts, which commenced on June 21 and will extend into the third quarter, with the majority of charges incurred in the second quarter.
Illumina specified that the charges will predominantly relate to severance payments, employee benefits, and associated costs.
Internal emails revealed that the job cuts included a 10% reduction in the company’s internal research and development (R&D) staff, located in San Diego (Illumina’s headquarters), Madison, WI, Singapore, the U.K., and Foster City, CA.
Following the announcement, Illumina’s shares experienced a 4% decline, dropping from US$191.88 to US$183.50.
Apart from job cuts, Illumina plans to reduce real estate costs by vacating its i3 campus in San Diego, initially opened in 2017 as a temporary expansion space while awaiting a future headquarters expansion.
The company is also considering options for its Foster City site, opened in 2018 to establish a presence in the Bay Area and northern California.
Illumina did not provide a specific timeline for exiting i3 or making a decision regarding Foster City, nor did it estimate the charges associated with any operational changes at these sites.
The company currently holds US$60 million in assets related to i3 and US$186 million related to Foster City.
As of January 1, Illumina had approximately 10,200 full-time employees, 60 part-time employees, and 1,400 contingent workers.
These figures exclude the workforce of Grail, a cancer blood test developer acquired by Illumina for US$7.1 billion.
The acquisition and subsequent regulatory resistance prompted activist investor Carl Icahn to advocate for changes within Illumina, including the removal of deSouza and divestment of Grail.
Icahn successfully nominated three allies to Illumina’s board, resulting in the election of Andrew J. Teno and the removal of John W. Thompson, a deSouza ally who served as chairman.
The departure of deSouza occurred approximately two weeks after Teno’s election, marking a significant transition for Illumina and its strategic direction.
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.
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