ILLUMINA, INC.ILMN
ILLUMINA, INC. Fair Value Disclosure
| 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS | ||
Marketable Equity Securities
Our short-term investments consist of marketable equity securities, primarily our retained investment in GRAIL subsequent to the Spin-Off. As of December 28, 2025 and December 29, 2024, the fair value of our marketable equity securities totaled $215 million and $93 million, respectively.
Gains (losses) recognized in other income (expense), net on marketable equity securities were as follows:
| In millions | 2025 | 2024 (1) | 2023 | ||||||||||||||
Net gains (losses) recognized during the period | $ | 315 | $ | (310) | $ | (2) | |||||||||||
Less: Net gains (losses) recognized during the period on securities disposed of during the period | 150 | — | (2) | ||||||||||||||
Net unrealized gains (losses) recognized during the period on securities still held at the reporting date | $ | 165 | $ | (310) | $ | — | |||||||||||
(1)Subsequent to the Spin-Off of GRAIL, we recognized a of $309 million in 2024 on our retained investment.
Non-Marketable Equity Securities
As of December 28, 2025 and December 29, 2024, non-marketable equity securities, without readily determinable fair values, included in other assets, were $58 million and $26 million, respectively.
Venture Funds
We invest in three 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 $235 million and $201 million as of December 28, 2025 and December 29, 2024, respectively. We recorded net gains of $22 million and $5 million in 2025 and 2024, respectively, and a net loss of $33 million in 2023, in other income (expense), net.
Our commitments to the Funds are as follows:
Dollars in millions | Capital commitments | Callable through date | Remaining callable as of December 28, 2025 | ||||||||||||||
Fund I | $ | 100 | April 2026 | $ | 3 | ||||||||||||
Fund II | $ | 150 | July 2029 | $ | 33 | ||||||||||||
Fund III | $ | 60 | December 2034 | $ | 25 | ||||||||||||
Fair Value Measurements
The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:
| December 28, 2025 | December 29, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| In millions | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds (cash equivalents) | $ | 1,173 | $ | — | $ | — | $ | 1,173 | $ | 931 | $ | — | $ | — | $ | 931 | |||||||||||||||||||||||||||||||
| Marketable equity securities | 215 | — | — | 215 | 93 | — | — | 93 | |||||||||||||||||||||||||||||||||||||||
Other investments | — | — | 32 | 32 | — | — | 17 | 17 | |||||||||||||||||||||||||||||||||||||||
| Deferred compensation plan assets | — | 79 | — | 79 | — | 70 | — | 70 | |||||||||||||||||||||||||||||||||||||||
| Total assets measured at fair value | $ | 1,388 | $ | 79 | $ | 32 | $ | 1,499 | $ | 1,024 | $ | 70 | $ | 17 | $ | 1,111 | |||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration liabilities | $ | — | $ | — | $ | 54 | $ | 54 | $ | — | $ | — | $ | 73 | $ | 73 | |||||||||||||||||||||||||||||||
Deferred compensation plan liabilities | — | 72 | — | 72 | — | 65 | — | 65 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | — | $ | 72 | $ | 54 | $ | 126 | $ | — | $ | 65 | $ | 73 | $ | 138 | |||||||||||||||||||||||||||||||
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, which are included in other assets. Fair value is derived using a probability-weighted scenario approach with changes in fair value recognized in other income (expense), 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 were as follows:
| In millions | |||||
| Balance as of January 1, 2023 | $ | 412 | |||
| Change in estimated fair value | (24) | ||||
| Cash payments | (1) | ||||
| Balance as of December 31, 2023 | 387 | ||||
| Acquisition | 2 | ||||
| Change in estimated fair value | (315) | ||||
| Cash payments | (1) | ||||
| Balance as of December 29, 2024 | 73 | ||||
| Change in estimated fair value | (18) | ||||
| Cash payments | (1) | ||||
| Balance as of December 28, 2025 | $ | 54 | |||
The fair value of our contingent consideration liability related to GRAIL was $54 million and $71 million as of December 28, 2025 and December 29, 2024, respectively, of which $52 million and $70 million, respectively, was included in other long-term liabilities, with the remaining balances included in accrued liabilities. The contingent value rights 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 2024 through Q3 2025, Q4 2023 through Q3 2024, and Q4 2022 through Q3 2023 were $142 million, $117 million, and $85 million, respectively, driven primarily by sales of GRAIL’s Galleri test. Covered Revenue Payments for such periods were $1.3 million, $1.1 million, and $803,000, respectively, which were paid in 2025, 2024, and 2023, 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. Subsequent to the GRAIL Spin-Off, we no longer have access to GRAIL management’s forecasts. Therefore, 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 December 28, 2025, we selected a revenue risk premium of 3%. Given volatility in GRAIL’s market capitalization, the revenue risk premium is derived from reconciling forecasted revenues for GRAIL to GRAIL’s market capitalization, primarily using a 60-day trailing average, and consideration of a Capital Asset Pricing Model and comparable company betas.
The assumptions used in estimating the fair value of our contingent consideration liability related to GRAIL are inherently subject to uncertainty and we note that small changes in these assumptions could have a significant impact on the concluded value. For example, an increase or decrease of 20%, in each year, to the forecasted revenues would have resulted in an increase of $16 million and a decrease of $15 million, respectively, in the liability as of December 28, 2025. Additionally, an increase or decrease of 250 basis points to the selected revenue risk premium would have resulted in a decrease of $10 million and an increase of $12 million, respectively. We expect high levels of volatility in the GRAIL contingent consideration liability are possible in future periods.
Helix Contingent Value Right
In conjunction with the deconsolidation of Helix Holdings I, LLC (Helix) in April 2019, we received a contingent value right with a 7-year term that entitled us to consideration dependent upon the outcome of Helix’s future financing and/or liquidity events. We elected the fair value option to measure the contingent value right received from Helix. Changes in the estimated fair value are recognized in other income (expense), net. We estimated the fair value of the contingent value right using a Monte Carlo simulation. Estimates and assumptions used in the Monte Carlo simulation included probabilities related to the timing and outcome of future financing and/or liquidity events, assumptions regarding collectability and volatility, and an estimated equity value of Helix. These unobservable inputs represented a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. In July 2024, we received cash of $83 million to settle the contingent value right early.
Changes in the Helix contingent value right were as follows:
| In millions | |||||
| Balance as of January 1, 2023 | $ | 58 | |||
| Change in estimated fair value | 10 | ||||
| Balance as of December 31, 2023 | 68 | ||||
| Change in estimated fair value | 15 | ||||
Cash received to settle | (83) | ||||
Balance as of December 29, 2024 and as of December 28, 2025 | $ | — | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 17, 2023 | |
| 2022 | Feb 18, 2022 | |
| 2021 | Feb 17, 2021 | |
| 2019 | Feb 11, 2020 | |
| 2018 | Feb 12, 2019 | |
| 2017 | Feb 13, 2018 | |
| 2016 | Mar 2, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.