ILLUMINA, INC. [ILMN] Filings

10-Q 1 ilmn-20240630.htm 10-Q ilmn-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2024


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 001-35406

Illumina, Inc.

(Exact name of registrant as specified in its charter)


Delaware						33-0804655
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

5200 Illumina Way, San Diego, CA 92122

(Address of principal executive offices) (Zip code)

(858) 202-4500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ILMN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13a of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of August 2, 2024, there were 159.3 million shares of the registrant’s common stock outstanding.

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ILLUMINA, INC.

FORM 10-Q

FOR THE FISCAL QUARTER ENDED JUNE 30, 2024

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See “Form 10-Q Cross-Reference Index” within Other Key Information for a cross-reference to the parts and items requirements of the Securities and Exchange Commission Quarterly Report on Form 10-Q.


CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			PAGE
Condensed Consolidated Balance Sheets			5
Condensed Consolidated Statements of Operations			6
Condensed Consolidated Statements of Comprehensive Loss			7
Condensed Consolidated Statement s of Stockholders’ Equity			8
Condensed Consolidated Statements of Cash Flows			10
Notes to Condensed Consolidated Financial Statements			11
1. Organization and Significant Accounting Policies			11
2. GRAIL Spin-Off			13
3. Revenue			14
4. Investments and Fair Value Measurements			15
5. Debt			18
6. Stockholders’ Equity			19
7. Supplemental Balance Sheet Details			22
8. Legal Proceedings			26
9. Income Taxes			30
10. Segment Information			31
11. Subsequent Event			33

MANAGEMENT’S DISCUSSION & ANALYSIS
Management’s Overview and Outlook			32
Results of Operations			34
Liquidity and Capital Resources			38
Critical Accounting Policies and Estimates			40
Recent Accounting Pronouncements			41

Quantitative and Qualitative Disclosures About Market Risk			41

OTHER KEY INFORMATION
Controls and Procedures			41
Legal Proceedings			41
Risk Factors			41
Share Repurchases and Sales			44
Adoptions, Modifications or Terminations of Trading Plans			44
Other Information			44
Exhibits			44
Form 10-Q Cross-Reference Index			47

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Consideration Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “continue,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “potential,” “predict,” “should,” “will,” or similar words or phrases, or the negatives of these words, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward looking. Examples of forward-looking statements include, among others, statements we make regarding:

•our expectations as to our future financial performance, results of operations, or other operational results or metrics;

•the benefits that we expect will result from our business activities and certain transactions we have completed, or may complete, such as product introductions, increased revenue, decreased expenses, and avoided expenses and expenditures;

•our expectations of the effect on our financial condition of claims, litigation, contingent liabilities, and governmental investigations, proceedings, and regulations;

•our strategies or expectations for product development, market position, financial results, and reserves;

•our ability to successfully implement cost reduction plans in a timely manner and the possibility that costs associated with our cost reduction plans are greater than we anticipate;

•risks relating to the recent divestiture of GRAIL, Inc. (f/k/a GRAIL, LLC) (GRAIL);

•the European Commission proceedings in respect of our acquisition and divestiture of GRAIL;

•the Article 14(2)(b) fine imposed by the European Commission on July 12, 2023; and

•other expectations, beliefs, plans, strategies, anticipated developments, and other matters that are not historical facts.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

•our expectations and beliefs regarding prospects and growth for our business and the markets in which we operate;

•the timing and mix of customer orders among our products and services;

•challenges inherent in developing, manufacturing, and launching new products and services, including expanding manufacturing operations and reliance on third-party suppliers for critical components;

•the impact of recently launched or pre-announced products and services on existing products and services;

•risks and uncertainties regarding legal and regulatory proceedings;

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•risks associated with contracts or other agreements containing provisions that might be implicated by the divestiture of GRAIL or other aspects of the EC Divestment Decision, including our ability to fully realize the anticipated economic benefits of our commercial arrangements with GRAIL and our obligations with respect to contingent value rights (the CVRs) issued by us in connection with the GRAIL acquisition, which may adversely affect us and our business and/or the market value of the CVRs;

•the risk of additional litigation arising against us in connection with the GRAIL acquisition;

•the assumptions underlying our critical accounting policies and estimates;

•our assessments and estimates that determine our effective tax rate;

•our assessments and beliefs regarding the outcome of pending legal proceedings and any liability that we may incur as a result of those proceedings, as well as the cost and potential diversion of management resources associated with these proceedings;

•uncertainty, or adverse economic and business conditions, including as a result of slowing or uncertain economic growth, public health crisis, or armed conflict; and

•other factors detailed in our filings with the Securities and Exchange Commission (SEC), including the risks, uncertainties, and assumptions described in “Risk Factors” within the Business & Market Information section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the “Other Key Information” section of our Quarterly Report on Form 10-Q for the period ended March 31, 2024, the “Risk Factors” section below, or in information disclosed in public conference calls, the date and time of which are released beforehand.

Any forward-looking statement made by us in this Quarterly Report on Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation, and do not intend, to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, or to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of any current financial quarter, in each case whether as a result of new information, future developments, or otherwise.

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ILLUMINA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)


	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	920	$	1,048
Short-term investments	74		6
Accounts receivable, net	641		734
Inventory, net	561		587

Prepaid expenses and other current assets	263		234
Total current assets	2,459		2,609
Property and equipment, net	859		1,007
Operating lease right-of-use assets	460		544
Goodwill	1,079		2,545
Intangible assets, net	278		2,993
Deferred tax assets, net	632		56
Other assets	314		357
Total assets	$	6,081	$	10,111

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	199	$	245
Accrued liabilities	1,265		1,325



Term debt, current portion	744		—

Total current liabilities	2,208		1,570
Operating lease liabilities	616		687
Term debt	1,490		1,489


Other long-term liabilities	331		620

Stockholders’ equity:

Common stock	2		2
Additional paid-in capital	7,347		9,555
Accumulated other comprehensive income (loss)	14		(1)
Accumulated deficit	(2,133)		(19)
Treasury stock, at cost	(3,794)		(3,792)


Total stockholders’ equity	1,436		5,745
Total liabilities and stockholders’ equity	$	6,081	$	10,111

See accompanying notes to condensed consolidated financial statements.

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ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Revenue:
Product revenue	$	927	$	1,001	$	1,803	$	1,923
Service and other revenue	185		175		385		340
Total revenue	1,112		1,176		2,188		2,263
Cost of revenue:
Cost of product revenue	250		305		504		591
Cost of service and other revenue	95		91		202		190
Amortization of acquired intangible assets	46		48		94		96
Total cost of revenue	391		444		800		877
Gross profit	721		732		1,388		1,386
Operating expense:
Research and development	325		358		660		699
Selling, general and administrative	147		462		588		839
Goodwill and intangible impairment	1,886		—		1,889		—




Total operating expense	2,358		820		3,137		1,538
Loss from operations	(1,637)		(88)		(1,749)		(152)
Other income (expense):
Interest income	13		17		25		34
Interest expense	(20)		(19)		(39)		(39)

Other (expense) income, net	(332)		1		(323)		(10)
Total other expense, net	(339)		(1)		(337)		(15)
Loss before income taxes	(1,976)		(89)		(2,086)		(167)
Provision for income taxes	12		145		28		64
Net loss	$	(1,988)	$	(234)	$	(2,114)	$	(231)



Loss per share:
Basic	$	(12.48)	$	(1.48)	$	(13.28)	$	(1.46)
Diluted	$	(12.48)	$	(1.48)	$	(13.28)	$	(1.46)
Shares used in computing loss per share:
Basic	159		158		159		158
Diluted	159		158		159		158

See accompanying notes to condensed consolidated financial statements.

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ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In millions)


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Net loss	$	(1,988)	$	(234)	$	(2,114)	$	(231)

Unrealized gain on cash flow hedges, net of deferred tax	2		13		15		9
Total comprehensive loss	$	(1,986)	$	(221)	$	(2,099)	$	(222)

See accompanying notes to condensed consolidated financial statements.

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ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions)



				Additional		Accumulated Other		Retained					Total
	Common Stock			Paid-In		Comprehensive		Earnings		Treasury Stock			Stockholders’
	Shares	Amount		Capital		Income (Loss)		(Accumulated Deficit)		Shares	Amount		Equity





































































































































































































































Balance as of January 1, 2023	198	$	2	$	9,207	$	3	$	1,142	(40)	$	(3,755)	$	6,599
Net income	—	—		—		—		3		—	—		3
Unrealized loss on cash flow hedges, net of deferred tax	—	—		—		(4)		—		—	—		(4)
Issuance of common stock, net of repurchases	—	—		37		—		—		—	(9)		28
Share-based compensation	—	—		67		—		—		—	—		67

Balance as of April 2, 2023	198	2		9,311		(1)		1,145		(40)	(3,764)		6,693
Net loss	—	—		—		—		(234)		—	—		(234)
Unrealized gain on cash flow hedges, net of deferred tax	—	—		—		13		—		—	—		13
Issuance of common stock, net of repurchases	—	—		—		—		—		—	(3)		(3)
Share-based compensation	—	—		77		—		—		—	—		77
Reclassification of liability-classified awards	—	—		9		—		—		—	—		9

Balance as of July 2, 2023	198	2		9,397		12		911		(40)	(3,767)		6,555
Net loss	—	—		—		—		(754)		—	—		(754)
Unrealized gain on cash flow hedges, net of deferred tax	—	—		—		9		—		—	—		9
Issuance of common stock, net of repurchases	—	—		30		—		—		—	(2)		28
Share-based compensation	—	—		60		—		—		—	—		60


Balance as of October 1, 2023	198	2		9,487		21		157		(40)	(3,769)		5,898
Net loss	—	—		—		—		(176)		—	—		(176)
Unrealized loss on cash flow hedges, net of deferred tax	—	—		—		(22)		—		—	—		(22)
Issuance of common stock, net of repurchases	1	—		(3)		—		—		—	(23)		(26)
Share-based compensation	—	—		71		—		—		—	—		71


Balance as of December 31, 2023	199	$	2	$	9,555	$	(1)	$	(19)	(40)	$	(3,792)	$	5,745

See accompanying notes to condensed consolidated financial statements.

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ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions)



				Additional		Accumulated Other							Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury Stock			Stockholders’
	Shares	Amount		Capital		(Loss) Income		Deficit		Shares	Amount		Equity











































Balance as of December 31, 2023	199	$	2	$	9,555	$	(1)	$	(19)	(40)	$	(3,792)	$	5,745
Net loss	—	—		—		—		(126)		—	—		(126)
Unrealized gain on cash flow hedges, net of deferred tax	—	—		—		13		—		—	—		13
Issuance of common stock, net of repurchases	—	—		36		—		—		—	(1)		35
Share-based compensation	—	—		67		—		—		—	—		67


Balance as of March 31, 2024	199	2		9,658		12		(145)		(40)	(3,793)		5,734
Net loss	—	—		—		—		(1,988)		—	—		(1,988)
Unrealized gain on cash flow hedges, net of deferred tax	—	—		—		2		—		—	—		2
Issuance of common stock, net of repurchases	—	—		—		—		—		—	(1)		(1)
Share-based compensation	—	—		88		—		—		—	—		88

Spin-Off of GRAIL (see Note 2)	—	—		(2,399)		—		—		—	—		(2,399)
Balance as of June 30, 2024	199	$	2	$	7,347	$	14	$	(2,133)	(40)	$	(3,794)	$	1,436

See accompanying notes to condensed consolidated financial statements.

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ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Six Months Ended
	June 30, 2024		July 2, 2023
Cash flows from operating activities:
Net loss	$	(2,114)	$	(231)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense	116		116
Amortization of intangible assets	97		99
Share-based compensation expense	208		199




Deferred income taxes	(180)		36
Goodwill and intangible (IPR&D) impairment	1,889		—
Property and equipment and right-of-use asset impairment	32		7

Net losses on strategic investments	330		19

Gain on Helix contingent value right	(11)		(3)




Change in fair value of contingent consideration liabilities	(255)		28

Other	(11)		14
Changes in operating assets and liabilities:
Accounts receivable	72		(78)
Inventory	4		(49)
Prepaid expenses and other current assets	(16)		(6)
Operating lease right-of-use assets and liabilities, net	(14)		(10)
Other assets	(9)		4
Accounts payable	(30)		(44)
Accrued liabilities	83		29

Other long-term liabilities	(34)		(15)
Net cash provided by operating activities	157		115
Cash flows from investing activities:





Purchases of property and equipment	(67)		(99)


Purchases of strategic investments	(22)		(11)
Sales of strategic investments	—		18

Cash paid for intangible asset	—		(1)
Net cash used in investing activities	(89)		(93)
Cash flows from financing activities:
GRAIL cash deconsolidated as a result of spin-off	(968)		—
Borrowings on delayed draw term loan, net of issuance costs	744		—
Debt issuance costs paid for credit facility	—		(1)
Payments on contingent consideration liabilities	(1)		—

Payments on term notes	—		(500)


Taxes paid related to net share settlement of equity awards	(2)		(12)

Proceeds from issuance of common stock	36		37


Net cash used in financing activities	(191)		(476)
Effect of exchange rate changes on cash and cash equivalents	(5)		(4)
Net decrease in cash and cash equivalents	(128)		(458)
Cash and cash equivalents at beginning of period	1,048		2,011
Cash and cash equivalents at end of period	$	920	$	1,553
Supplemental cash flow information:
GRAIL net assets, excluding cash and cash equivalents, deconsolidated as a result of spin-off	$	1,770	$	—

See accompanying notes to condensed consolidated financial statements.

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ILLUMINA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Unless the context requires otherwise, references in this report to “Illumina,” the “Company,” “we,” “us,” and “our” refer to Illumina, Inc. and its consolidated subsidiaries.


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Business Overview

We are a provider of sequencing- and array-based solutions, serving customers in the research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments. Our customers include leading genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies.

On June 24, 2024, we completed the separation (the Spin-Off) of GRAIL into a new public company through the distribution of 26,547,021 shares of GRAIL common stock to Illumina stockholders on a pro rata basis. The distribution reflected approximately 85.5% of the outstanding common stock of GRAIL as of 5:00 p.m. New York time on June 13, 2024, the record date for the distribution (the Record Date). We retained approximately 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and accordingly, GRAIL’s assets, liabilities, results of operations and cash flows have not been reclassified. Refer to note 2. GRAIL Spin-Off for additional details.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, from which the prior year balance sheet information herein was derived. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expense, and related disclosure of contingent assets and liabilities. Though macroeconomic factors such as inflation, exchange rate fluctuations and concerns about an economic downturn present additional uncertainty, we continue to use the best information available to form our critical accounting estimates. Actual results could differ from those estimates.

The unaudited condensed consolidated financial statements include our accounts, our wholly-owned subsidiaries, and majority-owned or controlled companies. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented.

Fiscal Year

Our fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. References to Q2 2024 and Q2 2023 refer to the three months ended June 30, 2024 and July 2, 2023, respectively, which were both 13 weeks, and references to year-to-date (YTD) 2024 and 2023 refer to the six months ended June 30, 2024 and July 2, 2023, respectively, which were both 26 weeks.

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Significant Accounting Policies

During YTD 2024, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, with the exception of the following for income taxes:

Historically, we calculated the provision/(benefit) for income taxes for interim periods utilizing an estimated annual effective tax rate applied to the income/(loss) for the reporting period, except in Q1 2024 and Q2 2023 when a year-to-date effective tax rate method was utilized. In accordance with the authoritative guidance for accounting for income taxes in interim periods, we determined the estimated annual effective tax rate method would provide a more reliable estimate of the provision for income taxes for Q2 2024 and YTD 2024 since minor changes in the estimated income/(loss) before income taxes would not result in significant changes in the estimated annual effective tax rate.

Accounting Pronouncements Pending Adoption

In December 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The new standard requires a company to disclose incremental segment information on an annual and interim basis, including significant segment expenses and measures of profit or loss that are regularly provided to the chief operating decision maker (CODM). The standard is effective for us beginning in fiscal year 2024 and interim periods within fiscal year 2025, with early adoption permitted. We do not expect to early adopt the new standard. We are currently evaluating the impact of ASU 2023-07 on the consolidated financial statements and related disclosures and will adopt the new standard using a retrospective approach.

In December 2023, the FASB also issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The new standard requires a company to expand its existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard is effective for us beginning in fiscal year 2025, with early adoption permitted. We do not expect to early adopt the new standard. The new standard is expected to be applied prospectively, but retrospective application is permitted. We are currently evaluating the impact of ASU 2023-09 on the consolidated financial statements and related disclosures.

Loss per Share

Basic loss per share is computed based on the weighted average number of common shares outstanding during the period. Diluted loss per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares.

The following table presents the weighted average shares used to calculate basic and diluted loss per share:



In millions	Q2 2024	Q2 2023	YTD 2024	YTD 2023




Weighted average shares used in calculating basic loss per share	159	158	159	158




Weighted average shares used in calculating diluted loss per share	159	158	159	158

Antidilutive shares:
Equity awards	5	3	4	3
Convertible senior notes	—	2	—	2
Potentially dilutive shares excluded from calculation due to antidilutive effect	5	5	4	5

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2. GRAIL Spin-Off

On June 24, 2024, we completed the Spin-Off of GRAIL into a separate, independent publicly traded company through the distribution of 26,547,021 shares of GRAIL common stock to Illumina stockholders on a pro rata basis. The GRAIL common stock distributed in the Spin-Off consisted of approximately 85.5% of the outstanding common stock of GRAIL as of the Record Date. The Spin-Off was structured as a tax-free spin-off and Illumina stockholders received one share of GRAIL common stock for every six shares of Illumina common stock held on the Record Date. We retained approximately 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and accordingly, GRAIL’s assets, liabilities, results of operations and cash flows have not been reclassified.

As part of the Spin-Off, we contributed to GRAIL an amount, in cash, to cover 2.5 years of GRAIL’s operations (the Disposal Funding), which was determined to be $974 million, less the cash and cash equivalents held by GRAIL.

The carrying amounts of GRAIL’s assets and liabilities included as part of the disposal group were as follows:


In millions
Cash and cash equivalents	$	968
Accounts receivable, net	13
Inventory, net	22
Prepaid expenses and other current assets	27
Property and equipment, net	80
Operating lease right-of-use assets	74

Intangible assets, net	2,201
Other assets	14
Accounts payable	(12)
Accrued liabilities	(118)
Operating lease liabilities	(62)
Other long term-liabilities	(469)
GRAIL net assets	$	2,738
Amount of GRAIL net assets recorded to short-term investments	$	397
Amount of GRAIL net assets recorded to additional paid-in capital	$	2,341

Additional adjustments recorded to additional paid-in capital as a result of the GRAIL Spin-Off:
Non-contingent indemnification liability (see No te 6)	1
Tax adjustment for difference between the book and tax values of our retained investment in GRAIL	57
Total recorded to additional paid-in capital as a result of the GRAIL Spin-Off	$	2,399

See note 10. Segment Information for GRAIL’s results of operations included in our consolidated statements of operations for the three and six months ended June 30, 2024 and July 2, 2023, respectively.

In planning for and executing the Spin-Off, we incurred $37 million and $52 million in separation-related transact