ILLUMINA, INC.

Strategic Investments

Marketable Equity Securities

Our short-term investments consist of marketable equity securities, primarily our retained investment in GRAIL subsequent to our divestiture in 2024. As of March 29, 2026 and December 28, 2025, the fair value of our marketable equity securities totaled $66 million and $215 million, respectively.

Gains (losses) recognized in other (expense) income, net on marketable equity securities were as follows:

Non-Marketable Equity Securities

As of March 29, 2026 and December 28, 2025, non-marketable equity securities, without readily determinable fair values, included in other assets, were $60 million and $58 million, respectively.

Venture Funds

We invest inthree venture capital investment funds (the Funds), which are accounted for as equity-method investments. The aggregate carrying amount of the Funds, included in other assets, was $253 million and $235 million as of March 29, 2026 and December 28, 2025, respectively. Gains and losses are recorded in other (expense) income, net. We recorded net gains of $8 million and $2 million in Q1 2026 and Q1 2025, respectively.

Our commitments to the Funds are as follows:

Fair Value Measurements

The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:

Marketable equity securities are measured at fair value based on quoted trade prices in active markets. We elected the fair value option for other investments, primarily convertible notes, included in other assets. Fair value is derived using a probability-weighted scenario approach with changes in fair value recognized in other (expense) income, net. Deferred compensation plan assets consist primarily of investments in life insurance contracts carried at cash surrender value, which reflects the net asset value of the underlying publicly traded mutual funds. We corroborate the fair value of our holdings, comparing valuations obtained from our investment service provider to valuations reported by our asset custodians, validating pricing sources and models, and reviewing key model inputs.

Contingent Consideration Liabilities

We reassess the fair value of contingent consideration related to acquisitions on a quarterly basis, with changes in the fair value subsequent to the acquisition date, recognized in selling, general and administrative expense.

Changes in the estimated fair value of our contingent consideration liabilities during Q1 2026 were as follows:

SomaLogic Acquisition

The aggregate fair value of our SomaLogic contingent consideration liabilities was $84 million as of March 29, 2026, of which $66 million was included in accrued liabilities, with the remaining balance included in other long-term liabilities. In April 2026, we paid $25 million for the milestone payment earned for the 2025 performance period. See note 2. Acquisitions, Intangible Assets and Goodwill for details of the contingent consideration arrangements. We use a Monte Carlo simulation to estimate the fair value of the Milestone Contingent Consideration and a discounted cash flow analysis to estimate the fair value of the Royalty Contingent Consideration. Estimates and assumptions used in the Monte Carlo simulation and the discounted cash flow analysis include forecasted revenues, a revenue risk premium, an operational leverage ratio and a counterparty credit spread. An estimate for revenue volatility is also used in the Monte Carlo simulation. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value.

GRAIL Acquisition

The fair value of our GRAIL contingent consideration liability was $35 million and $54 million as of March 29, 2026 and December 28, 2025, respectively, of which $33 million and $52 million, respectively, was included in other long-term liabilities, with the remaining balances included in accrued liabilities. The CVRs issued as part of the acquisition entitle the holders to receive future quarterly cash payments (Covered Revenue Payments) representing a pro rata portion of certain GRAIL-related revenues (Covered Revenues) each year for a 12-year period through August 2033. As defined in the Contingent Value Rights Agreement, this reflects a 2.5% payment right to the first $1 billion of revenue each year for 12 years. Revenue above $1 billion each year will be subject to a 9% contingent payment right during this same period. Covered Revenues for the periods Q4 2025 and Q4 2024 were $44 million and $38 million, respectively, driven primarily by sales of GRAIL’s Galleri test. Covered Revenue Payments for such periods were $410,000 and $360,000, respectively, which were paid in Q1 2026 and Q1 2025, respectively.

We use a Monte Carlo simulation to estimate the fair value of our GRAIL contingent consideration. Estimates and assumptions used in the Monte Carlo simulation include forecasted revenues for GRAIL, a revenue risk premium, a revenue volatility estimate, an operational leverage ratio and a counterparty credit spread. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. We rely on information made public by GRAIL and information published in analyst reports to estimate forecasted revenues through August 2033. To estimate the liability as of March 29, 2026, we selected a revenue risk premium of 3%, which was derived from reconciling forecasted revenues for GRAIL to GRAIL’s market capitalization based on a 25-day trailing average and consideration of a Capital Asset Pricing Model and comparable company betas. We have primarily used a 60-day trailing average in prior periods.