Risk Factors Update Summary

• Net operating losses decreased from $1,003 million to $902 million, a significant change.
• Revenue decreased by $115 million in 2023 compared to 2022, primarily due to a decrease in sequencing consumables revenue by $127 million.
• Net cash used in investing activities increased significantly from $231 million in 2022 to $1,210 million in 2023.
• Term Notes now include 2027 maturity date, accruing interest at 5%. This change impacts long-term debt structure significantly.
• Share-based compensation expense for PSU now requires certain estimates and assumptions affecting expense recognition.
• Legal proceedings with the FTC and European Commission may result in fines of up to €432 million. This poses a significant financial risk.
• The company announced the divestiture of GRAIL, expected to be completed by Q2 2024.
• Restructuring charges of $152 million recorded in 2023 for cost reduction initiatives. This affects expenses and operational efficiency.
• Tax credits increased from $157 million to $211 million, impacting future tax liabilities.
• New Credit Agreement entered on January 4, 2023, with maturity on January 4, 2028. This affects liquidity and financial flexibility.
• Performance stock units now include a market condition, impacting recognition and liability recording.
• Legal proceedings and regulatory orders may result in fines up to €432 million.
• Financing activities saw a substantial increase in net cash used, rising from $1,069 million in 2022 to $1,210 million in 2023.
• Gross margin decreased from 64.8% in 2022 to 60.9% in 2023, driven by lower manufacturing volumes and lower instrument margins.
• Stock options outstanding decreased from 35 to 16, with an exercise price of $330.25. This impacts potential dilution and employee incentives.
• Stockholders approved an increase in shares for the 2015 Stock Plan by 8 million. This impacts equity dilution potential.
• Revenue by Source for 2023 shows an increase in Total product revenue to $4,171 million.
• The company faces ongoing legal and regulatory challenges impacting financial results and operations.
• Deferred tax liabilities related to purchased intangible amortization increased from $734 million to $800 million.
• Goodwill and IPR & D impairments totaled $827 million in 2023, a significant increase from the previous year.
• Operating expenses decreased by $3.3 billion in 2023, primarily due to significant decreases in goodwill and legal contingency expenses.
• Property and equipment and right-of-use asset impairment amounted to $100 million in 2023.
• Valuation allowance on deferred tax assets increased from $203 million to $251 million.
• The fair value of Helix contingent value right increased to $68 million as of December 31, 2023.
• RSU liability-classified awards reclassified to equity awards after stockholder approval. This affects balance sheet classification and equity compensation.
• Core Illumina research and development expenses increased by $119 million, or 13%, in 2023, mainly due to increased headcount and compensation expenses.
• Share-based compensation expenses rose to $380 million in 2023, up from $366 million in the previous year.
• Deferred tax assets decreased from $965 million to $902 million.
• Core Illumina selling, general and administrative expenses increased by $245 million, or 33%, in 2023, primarily due to lower gains on contingent consideration liabilities.
• Intangible assets net value increased to $3,893 million as of December 31, 2023.
• The fair value of term notes outstanding decreased to $1,440 million as of December 31, 2023.
• Deferred tax liabilities decreased from $847 million to $941 million.
• GRAIL service and other revenue increased by $38 million, or 69%, in 2023, primarily due to sales of Galleri.
• The fair value of foreign currency forward contracts increased to $85 million in total assets in 2023.
• Goodwill impairment related to GRAIL reporting unit was recorded at $3,914 million in Q3 2022.
• Matching contributions to the retirement plan increased from $30 million to $36 million in 2023.
• The European Commission imposed a €432 million fine on the company in 2023, representing the maximum fine of 10% of consolidated annual revenues for 2022.
• The fair value of foreign currency forward contracts in total liabilities was $69 million in 2023.