Expenses hit profits at gene-sequencing manufactuer Illumina

Illumina, maker of gene-sequencing machines, saw a 32% decline in profit in its fourth quarter, as the company's expenses rose from $122.2m to $147.3m. However it exceeded even its own expectations for earnings, all be they lower than a year earlier, including items at $104m or 70 cents per share (compared with $153m or $1.03 per share). Earlier this month, Illumina launched Grail, a liquid biopsy company that will develop a test to detect evidence of cancer in the blood. The company expects revenues to rise 16% in the next fiscal year, with adjusted earnings on a per-share basis between $3.55 and $3.65.

Genetic-sequencing company Illumina Inc. posted a 32% decline in profit for its fourth quarter Tuesday amid climbing expenses.

According to the San Diego maker of gene-sequencing machines, gross margin during the three-month period fell to 69.4% from 75.1% a year ago. Among the added costs, selling, general and administrative expenses climbed to $147.3 million in the quarter from $122.2 million.

The company, however, edged above its own expectations for revenue and earnings.

For the coming fiscal year, the company said it expected revenue to climb 16% from the mark of $2.22 billion reached this year. Analysts for Thomson Reuters expected annual revenue in 2016 of $2.57 billion, in line with the company's projection.

Illumina expects adjusted earnings on a per-share basis between $3.55 and $3.65. Analysts forecast earnings of $3.64.

Earlier this month, Illumina launched a company to develop a test to detect genetic evidence of cancer in the blood. Illumina said it is forming the company, called Grail, with a group of other investors, marking the latest bet that so-called liquid biopsies will become a major tool for detecting, diagnosing and managing treatment of cancer.

For the quarter ended Jan. 3, Illumina earned $104 million, or 70 cents a share, compared with $153 million, or $1.03 a share, a year earlier. Earnings excluding items were 81 cents a share down from 87 cents.

Revenue rose 15% to $592 million. For the fourth quarter, the company had expected revenue of $590 million, boosted from prior views, and earnings excluding items of 78 cents to 80 cents a share.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com