ILLUMINA, INC.

SomaLogic Acquisition

On January 30, 2026, we acquired SomaLogic, a proteomics company that provides high-throughput protein measurement technology and related data analysis services, and other specified assets from Standard BioTools. We expect the acquisition to enhance our presence in the proteomics market and advance our multiomics strategy.

The total purchase price consisted of the following:

Standard BioTools was eligible to receive up to $75 million in milestone payments, comprised of up to $25 million based on 2025 performance and up to $50 million based on 2026 performance, due upon the achievement of specified targets for net revenue generated from SOMAmer-based assay services and related products (the Milestone Contingent Consideration). In addition, Standard BioTools was entitled to receive a 2% royalty on net revenues generated from sales of SOMAmer-based next-generation sequencing library preparation kits, to be paid quarterly for 10 years from the acquisition date through January 2036 (the Royalty Contingent Consideration). The aggregate acquisition date fair value of these contingent consideration arrangements was $81 million.

We used 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 discounted cash flow analysis included forecasted revenues, a revenue risk premium, an operational leverage ratio and a counterparty credit spread. An estimate for revenue volatility was 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.

In Q2 2026, we paid $25 million for the milestone payment earned for the 2025 performance period. Additionally, in Q3 2026, we paid $30 million to buy out early both the 2026 Milestone Contingent Consideration and Royalty Contingent Consideration obligations. See note 4. Investments and Fair Value Measurements for additional details.

The preliminary fair values of assets acquired and liabilities assumed were:

(1)Includes $22 million of inventory classified as noncurrent. See note 7. Supplemental Balance Sheet and Statement of Operations Details.

We recorded a measurement period adjustment in Q2 2026 for the settlement of an assumed contingency for which the Company is indemnified. We are still finalizing the allocation of the purchase price as additional information is received to complete our analysis and certain tax returns are finalized. The preliminary fair value estimates assigned to goodwill and the related tax impacts of the acquisition, among other items, are subject to change. We expect to finalize the allocation as soon as practicable, but no later than one year after the acquisition date.

Goodwill is primarily attributable to assembled workforce, expanded market opportunities, and expected synergies to be achieved. We expect that the entire amount of goodwill recognized will be deductible for tax purposes.

The preliminary fair values assigned to identifiable intangible assets acquired were as follows:

The fair values of the developed technology, trade name and customer relationships were estimated using an income approach. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair values were developed by discounting future net cash flows to their present value at market-based rates of return. The useful lives of the intangible assets for amortization purposes were determined by considering the period of expected cash flows used to measure the fair values of the intangible assets adjusted as appropriate for entity-specific factors. The acquired intangible assets are amortized on a straight-line basis over their estimated useful lives.

Transaction costs associated with the acquisition, consisting primarily of legal, regulatory and financial advisory fees, were approximately $6 million and $8 million in YTD 2026 and YTD 2025, respectively. These costs were expensed as incurred as selling, general and administrative expense.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information summarizes the combined results of operations of Illumina and SomaLogic as if the companies had been combined as of the beginning of our fiscal year 2025.

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been completed at the beginning of our fiscal year 2025. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition. The unaudited pro forma financial information includes adjustments to reflect the elimination of intercompany transactions, incremental amortization and depreciation expense of the intangible assets and property and equipment acquired, respectively, acquisition-related transaction costs, and purchase accounting adjustments to reflect fair value step-up adjustments for inventory and fixed assets, among other items.

Intangible Assets

The following is a summary of our identifiable intangible assets:

During Q1 2026, we acquired an intellectual property portfolio for total consideration of $50 million, which was assigned to an individual intangible asset that is amortized on a straight-line basis over an estimated useful life of 14 years. A cost accumulation model is used to determine the cost of an asset acquisition. Direct transaction costs are recognized as part of the cost of an asset acquisition. The cost of an asset acquisition, including transaction costs, is allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. Goodwill is not recognized in an asset acquisition. Any difference between the cost of an asset acquisition and the fair value of the net assets acquired is allocated to the non-monetary identifiable assets based on their relative fair values.

In Q2 2025, we recorded an impairment charge of $23 million when the planned use of a finite-lived intangible asset changed. We performed a recoverability test and concluded the carrying value of the intangible asset exceeded its estimated fair value, which was determined using a discounted cash flow model that included estimates and assumptions for projected future cash flows. The estimates and assumptions used in our assessment of fair value represent Level 3 measurements as they are supported by little or no market activity and reflect our own assumptions in measuring fair value. The impairment was recorded in cost of product revenue.

The estimated future annual amortization of intangible assets is shown in the following table. Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors.

Goodwill

Changes to goodwill during YTD 2026 were as follows:

Goodwill is reviewed for impairment annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. We performed our annual assessment in Q2 2026, noting no impairment.