Company Overview - Fulgent Genetics, Inc. (NASDAQ: FLGT) is a leading provider of comprehensive genetic testing solutions, primarily serving healthcare providers, researchers, and individuals in the United States [1] - The company specializes in next-generation sequencing (NGS) technology, which enables advanced genetic analysis [1] Investment Analysis - The Stock Research Platform (SRP) is focused on identifying companies with strong balance sheets, sustainable growth pathways, and attractive valuations that present significant upside potential with limited downside risk [1] - The analysis reflects the author's personal opinions and is not intended as investment advice, emphasizing the importance of individual due diligence [1] Analyst Position - The analyst has a beneficial long position in the shares of FLGT, indicating confidence in the company's future performance [2]

Core Viewpoint - Fulgent Genetics reported better-than-expected Q2 2025 results, with significant revenue growth and a raised full-year revenue outlook, despite a wider GAAP loss due to a one-time impairment [1][11]. Financial Performance - Q2 2025 GAAP revenue was $81.8 million, exceeding the analyst consensus estimate of $76.2 million, representing a 15.2% year-over-year increase from $71.0 million in Q2 2024 [2]. - Non-GAAP earnings per share were $0.07, outperforming the anticipated $(0.18) loss, although this reflects a 53.3% decline from $0.15 in Q2 2024 [2]. - Non-GAAP gross margin improved to 44.2%, up from 40.1% in the prior year [2]. - Adjusted EBITDA was a loss of $3.0 million, widening from a loss of $0.7 million in the same period last year [2]. - Total liquidity was $777.5 million, supporting ongoing investments and potential share repurchases [10]. Business Segments - The Laboratory Services segment drove the majority of revenue, with core revenue reaching $81.7 million, up 16% year-over-year, primarily due to reproductive health diagnostics and strong legacy test volumes [5]. - The Therapeutic Development segment is advancing clinical trials for cancer drug candidates, with FID-007 in phase 2 and FID-022 entering phase 1, indicating long-term growth potential [7]. - The biopharma services division expanded its offerings, with revenue from anatomic pathology returning to year-over-year growth after investments in digital systems [8]. Strategic Initiatives - Significant investments in digital pathology and AI are enhancing productivity and improving turnaround times for laboratory workflows [6]. - The company is focusing on product innovation, expanding partnerships, and compliance with healthcare regulations to meet market demands [4]. Future Outlook - Management raised the FY2025 core revenue outlook to $320 million, citing strong order momentum and new client wins [11]. - The company expects a GAAP loss of approximately $(2.10) per share for FY2025, reflecting the one-time impairment, and a smaller non-GAAP loss of $(0.35) per share [11].

Core Insights - Fulgent Genetics experienced a significant stock price increase of over 8% following its second-quarter earnings release, contrasting with a nearly 2% decline in the S&P 500 index [1] Financial Performance - The company reported second-quarter revenue of nearly $82 million, representing a year-over-year increase of more than 15% [2] - Non-GAAP adjusted net income fell sharply by 56% to just over $2 million, equating to $0.07 per share [2] Analyst Expectations - Analysts had anticipated worse results, projecting an adjusted bottom-line loss of $0.18 per share on revenue of only $76 million [4] Strategic Progress - Fulgent attributed its better-than-expected results to diversification efforts, with CEO Ming Hsieh noting progress in growing revenue from laboratory services and advancing clinical trials for therapeutic development [4] Future Guidance - The company raised its revenue and adjusted bottom-line guidance for full-year 2025, now expecting "core" revenue of approximately $320 million and an adjusted net loss of $0.35 per share, surpassing analyst projections of a $0.55 net loss and revenue under $311 million [5]

Financial Data and Key Metrics Changes - The company reported total revenue of $81.8 million for Q2 2025, compared to $73.5 million in Q2 2024, reflecting a year-over-year increase [17] - Core revenue from laboratory services was $81.7 million, up 16% year-over-year and 11% sequentially [10][17] - Non-GAAP gross margin improved to 44.2%, while GAAP gross margin was 42.1%, showing improvements due to streamlined operations and efficiency [17] - Non-GAAP operating expenses totaled $43.9 million, up from $37.4 million in Q2 2024, driven by increased R&D and sales and marketing costs [18] - The company adjusted its revenue guidance for 2025 from $310 million to $320 million, representing a 14% year-over-year growth [20] Business Line Data and Key Metrics Changes - Precision Diagnostics revenue increased by 7% sequentially, while Biopharma Services revenue surged by 54%, and Anatomic Pathology revenue rose by 11% [10] - The company launched a new whole genome sequencing service, enhancing accuracy and resolution in genetic testing [11][12] - The American Academy of Pediatrics recommended exome and genome sequencing as first-tier tests, which is expected to drive growth in genomic testing [12][14] Market Data and Key Metrics Changes - The company executed over 20 new agreements in managed care, adding over 35 million new covered lives to its network contracts [15] - The CE Mark certification for Fulgent Exome and Fulgent Pipeline Manager is expected to expand the company's market presence in Europe [15] Company Strategy and Development Direction - The company is focused on expanding its laboratory operations and enhancing existing facilities while managing spending [21] - The acquisition of AMP Technologies for approximately $4 million is aimed at gaining control over the development and commercialization of drug candidates [22] - The company plans to continue investing in its clinical pipeline and expanding its sales organization to capture additional market share [16][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in laboratory services and the therapeutic development pipeline, with expectations for continued growth [7][9] - The company anticipates completing patient enrollment for its clinical trials by the end of the year, with data readout expected in 2026 [8][48] - Management highlighted the importance of maintaining strong relationships with key payer partners to support growth [16] Other Important Information - The company repurchased approximately 130,000 shares at a cost of $2.2 million, with a total of $110.4 million spent since the inception of the stock repurchase program [19] - The company ended the quarter with approximately $777.5 million in cash and marketable securities [19] Q&A Session Summary Question: Guidance increase for full year - The $10 million increase in guidance is attributed to both Q2 performance and anticipated improvements in the second half, with a $7 million increase in Precision Diagnostics linked to the VA contract [26][27] Question: Anatomic Pathology growth sustainability - The growth in Anatomic Pathology is organic, driven by improved sales execution and no one-time events affecting the quarter [31][33] Question: Gross margin adjustments - About half of the gross margin increase was due to a one-time accounting adjustment, while the other half reflects overall business strength and operational efficiency [34] Question: New geographies for Anatomic Pathology - The company has expanded its sales force into new geographies, leveraging strong managed care contracts to drive growth [39] Question: Trends in genomic testing - The company plans to penetrate the pediatric market more aggressively, supported by improved genomic testing services and endorsements from medical societies [42][45] Question: Clinical trial enrollment and timelines - Enrollment for the clinical trial is expected to accelerate in the second half of 2025, with adjustments made to include more patient groups [47][48]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 totaled $81.8 million, compared to $73.5 million in Q2 2024, reflecting a year-over-year growth of approximately 7% [17] - Core revenue from laboratory services was $81.7 million, up 16% year-over-year and 11% sequentially [10][17] - Non-GAAP gross margin was 44.2%, while GAAP gross margin was 42.1%, showing improvement due to streamlined operations and efficiency [17] - Non-GAAP operating expenses increased to $43.9 million from $37.4 million in Q2 2024, reflecting investments in R&D and sales and marketing [18] - Adjusted EBITDA loss for Q2 was approximately $3 million, compared to a loss of $2.9 million in Q2 2024 [19] - Cash position at the end of Q2 was approximately $777.5 million, with guidance for ending 2025 with around $770 million [19][23] Business Line Data and Key Metrics Changes - Precision Diagnostics revenue increased by 7% sequentially, while Biopharma Services revenue surged by 54% [10] - Anatomic Pathology revenue grew by 11% sequentially, attributed to improved sales execution and expanded sales organization [10][32] Market Data and Key Metrics Changes - The company executed over 20 new agreements in managed care, adding over 35 million new covered lives [14] - The American Academy of Pediatrics recommended exome and genome sequencing as first-tier tests for children with developmental delays, enhancing market potential [12] Company Strategy and Development Direction - The company is focused on expanding its laboratory services and enhancing its existing facilities, with a strong emphasis on genomic sequencing and precision diagnostics [21] - The acquisition of AMP Technologies for $4 million is expected to enhance R&D capabilities and control over drug development [21] - The company aims to increase market share in its three business areas and expand its sales organization [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in laboratory services and the therapeutic development pipeline, with expectations for continued growth in 2025 [6][20] - The company anticipates a slight improvement in non-GAAP operating margins from -15% to -13% for the year, driven by increased revenue [20] Other Important Information - The company has received CE Mark certification for its Fulgent Exome and Fulgent Pipeline Manager, allowing expansion into European markets [12][14] - The company repurchased approximately 130,000 shares at a cost of $2.2 million during the quarter, with a total of $110.4 million spent since the program's inception [19] Q&A Session Summary Question: Guidance increase for the full year - Management indicated that the $10 million increase in guidance reflects both Q2 performance and anticipated improvements in the second half, with the VA contract contributing to the $7 million increase in Precision Diagnostics [26][27] Question: Anatomic Pathology growth sustainability - Management confirmed that the growth in Anatomic Pathology is organic and attributed to improved sales execution and expanded sales organization, with no one-time events affecting the quarter [30][32] Question: Organic gross margin clarification - Management noted that about half of the gross margin increase was due to a one-time adjustment, while the other half resulted from overall business strength and operational efficiency [33] Question: Anatomic Pathology revenue outlook - Management acknowledged potential seasonality in the second half but expressed optimism about the pipeline and new wins that could outpace seasonal trends [52][56] Question: Managed care contracts impact - Management highlighted that strong managed care contracts enhance the go-to-market strategy, as clinicians prefer in-network laboratories, which improves patient access and revenue potential [59][61]

Core Viewpoint - Fulgent Genetics, Inc. reported quarterly earnings of $0.07 per share, significantly beating the Zacks Consensus Estimate of a loss of $0.23 per share, marking an earnings surprise of +130.43% [1] Financial Performance - The company posted revenues of $81.8 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 7.80% and showing an increase from $71.03 million year-over-year [2] - Over the last four quarters, Fulgent Genetics has surpassed consensus EPS estimates four times and topped consensus revenue estimates four times as well [2] Stock Performance - Fulgent Genetics shares have declined approximately 7% since the beginning of the year, contrasting with the S&P 500's gain of 7.8% [3] Future Outlook - The company's earnings outlook will be crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is -$0.22 on revenues of $78.25 million, and -$0.62 on revenues of $309.87 million for the current fiscal year [7] Industry Context - The Medical Info Systems industry, to which Fulgent Genetics belongs, is currently ranked in the top 23% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Fulgent Genetics' Q2 2025 core revenue reached $82 million, a 16% year-over-year increase [12, 13] - The company's last twelve months (LTM) core revenue as of Q2 2025 was $3029 million, a 14% year-over-year increase [81] - Q2 2025 gross profit was $34435 thousand, with a gross margin of 421% [85, 88] - Non-GAAP gross profit for Q2 2025 was $36036 thousand, resulting in a non-GAAP gross margin of 441% [87, 90] - The company anticipates approximately $770 million in cash, cash equivalents, and investments in marketable securities as of December 31, 2025 [92] Financial Guidance - Fulgent Genetics projects a full-year 2025 core revenue of $320 million, representing a 14% year-over-year growth [92] - The company expects a GAAP EPS of ($210) and a non-GAAP EPS of ($035) for the full year 2025 [92] - The revenue breakdown for 2025 is projected as follows: Precision Diagnostics at $194 million, Anatomic Pathology at $108 million, and BioPharma Services at $18 million [92] Therapeutic Development - FID-007, a wholly-owned drug candidate, is initially focused on Head & Neck (H&N) and Pancreatic/Ampullary cancers [76] - Preliminary findings from the FID-007 Phase 1/1b clinical trial showed a 45% ORR and 72% DCR in heavily treated HNSCC patients [61] - The Phase 2 trial for FID-007 plus Cetuximab in H&N cancer has multiple clinical sites activated with 32 patients dosed as of August 1, 2025 [62] - The market opportunity for Head & Neck cancer is estimated at $186 billion in 2025, growing to $21 billion by 2035 [19, 72]

[PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and detailed notes, offering insights into the company's financial position, performance, and cash flows [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instrument fair values, segment information, and contingencies [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total assets | $1,199,838 | $1,219,964 | | Total liabilities | $88,202 | $90,805 | | Total stockholders' equity | $1,111,636 | $1,129,159 | | Cash and cash equivalents | $87,880 | $55,144 | | Marketable securities (long-term) | $484,471 | $570,351 | | Trade accounts receivable, net | $77,190 | $69,021 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenue, gross profit, operating loss, and net loss over specific periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $81,803 | $71,028 | $155,266 | $135,513 | | Gross profit | $34,435 | $26,491 | $62,781 | $48,595 | | Operating loss | $(19,713) | $(18,906) | $(39,508) | $(40,704) | | Impairment loss | $(9,926) | — | $(9,926) | — | | Net loss attributable to Fulgent | $(18,957) | $(8,710) | $(30,487) | $(22,172) | | Basic net loss per common share | $(0.62) | $(0.29) | $(0.99) | $(0.74) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section details the company's comprehensive loss, including net loss and other comprehensive income or loss components Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss from consolidated operations | $(19,256) | $(9,090) | $(31,155) | $(22,936) | | Net gain (loss) on available-for-sale debt securities, net of tax | $1,193 | $312 | $5,817 | $(1,760) | | Net comprehensive loss from consolidated operations | $(17,830) | $(8,889) | $(24,996) | $(25,140) | | Comprehensive loss attributable to Fulgent | $(17,294) | $(8,485) | $(24,121) | $(24,254) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents changes in the company's stockholders' equity, reflecting net loss, equity-based compensation, and stock repurchases Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :----------------------------------- | :---------------- | :------------ | | Total Fulgent stockholders' equity | $1,133,228 | $1,116,580 | Changes for Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :------------------ | :------------------ | | Equity-based compensation | $20,589 | $23,153 | | Repurchase of common stock | $(10,884) | $(225) | | Net loss | $(30,487) | $(22,172) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------- | :----- | :----- | | Net cash (used in) provided by operating activities | $(34,602) | $11,551 | | Net cash provided by (used in) investing activities | $81,133 | $(39,882) | | Net cash used in financing activities | $(13,810) | $(3,953) | | Cash, cash equivalents, and restricted cash at end of period | $88,015 | $65,111 | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, financial instruments, and segment information [Note 1. Overview and Basis of Presentation](index=10&type=section&id=Note%201.%20Overview%20and%20Basis%20of%20Presentation) This note describes the company's business segments and strategic goals, along with the basis of presentation for its unaudited interim financial statements - Fulgent Genetics, Inc. operates two main businesses: laboratory services (technical, testing, and professional interpretation) and therapeutic development (cancer drug candidates using nanoencapsulation and targeted therapy)[28](index=28&type=chunk) - The company's strategic goal is to transform from a genomic diagnostic business into a fully integrated precision medicine company[28](index=28&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's key accounting policies, including the use of estimates, management of trade accounts receivable and credit losses, treatment of intangible assets, fair value measurements, and revenue recognition by payor type. It also highlights the company's reliance on a limited number of suppliers and ongoing evaluation of new accounting pronouncements Allowance for Credit Losses Activity (Six Months Ended June 30, 2025, in thousands) | Metric | Amount | | :------------------------------------ | :----- | | Allowance at beginning of year | $20,458 | | Current period provision | $4,666 | | Write-downs | $(4,326) | | Recoveries | $618 | | Allowance as of June 30, 2025 | $21,416 | Revenue by Payor Type (in thousands) | Payor Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Institutional | $45,619 | $38,950 | $86,943 | $72,554 | | Insurance | $34,385 | $31,100 | $65,129 | $61,143 | | Patients | $1,799 | $978 | $3,194 | $1,816 | | **Total Revenue** | **$81,803** | **$71,028** | **$155,266** | **$135,513** | - One customer accounted for **22% of total revenue** for the three months ended June 30, 2025, and **23%** for the six months ended June 30, 2025, in the laboratory services segment[44](index=44&type=chunk) - The company relies on a sole supplier for next-generation sequencers and associated reagents, posing a risk of operational interruption if supply or service is disrupted[45](index=45&type=chunk) - The company is currently evaluating the impacts of ASU 2024-03, 'Disaggregation of Income Statement Expenses,' which is effective for annual periods beginning after December 15, 2026[58](index=58&type=chunk) [Note 3. Equity and Debt Securities](index=17&type=section&id=Note%203.%20Equity%20and%20Debt%20Securities) This note provides a breakdown of the company's equity and debt securities, detailing their amortized cost, unrealized gains/losses, and fair values Total Equity and Debt Securities (in thousands) | Date | Amortized Cost Basis | Unrealized Gains | Unrealized Losses | Aggregate Fair Value | | :--- | :------------------- | :--------------- | :---------------- | :------------------- | | Jun 30, 2025 | $701,797 | $3,454 | $(732) | $704,519 | | Dec 31, 2024 | $801,337 | $977 | $(4,074) | $798,240 | - Gross unrealized losses on the company's equity and debt securities decreased from **$4.1 million** as of December 31, 2024, to **$0.7 million** as of June 30, 2025[61](index=61&type=chunk) - There were no sales of available-for-sale securities in the three and six months ended June 30, 2025, compared to **$75.6 million** in proceeds from sales for the six months ended June 30, 2024[62](index=62&type=chunk) [Note 4. Fair Value Measurements](index=18&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note outlines the fair value hierarchy for financial instruments and details assets measured at fair value, including a significant impairment loss on an equity investment - The company recognized a **$9.9 million impairment loss** on its non-marketable equity investment in Helio Genomics, Inc. during the three and six months ended June 30, 2025, due to the investee's deteriorating financial condition and inability to secure sufficient financing[67](index=67&type=chunk)[69](index=69&type=chunk) - Level 1 assets include U.S. treasury bills and money market instruments; Level 2 assets consist of U.S. government and agency debt securities, municipal bonds, corporate debt securities, and Yankee debt securities; Level 3 assets include preferred stock of privately-held companies[65](index=65&type=chunk)[68](index=68&type=chunk) [Note 5. Fixed Assets](index=21&type=section&id=Note%205.%20Fixed%20Assets) This note provides a detailed breakdown of the company's fixed assets, their useful lives, and net carrying amounts, along with depreciation expense Fixed Assets, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Fixed assets, net | $110,223 | $105,549 | | Medical lab equipment | $61,118 | $57,541 | Depreciation Expense (in thousands) | Period | 2025 | 2024 | | :----- | :----- | :----- | | Three Months Ended June 30, | $3,900 | $4,000 | | Six Months Ended June 30, | $7,700 | $8,600 | [Note 6. Other Significant Balance Sheet Accounts](index=21&type=section&id=Note%206.%20Other%20Significant%20Balance%20Sheet%20Accounts) This note details the composition of other current assets, accrued liabilities, and other long-term liabilities, including changes in prepaid income taxes and a released SEC investigation liability Other Current Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Prepaid income taxes | $36,454 | $3,422 | | Total | $58,610 | $26,444 | Accrued Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Payroll liabilities | $7,618 | $8,210 | | Accrued bonus and commission | $2,882 | $5,803 | | Total | $21,699 | $24,279 | - A **$1.0 million** potential liability related to an SEC investigation, previously included in other accrued liabilities as of December 31, 2024, has been released following the closure of the investigation without enforcement action[75](index=75&type=chunk) [Note 7. Reportable Segment and Geographic Information](index=22&type=section&id=Note%207.%20Reportable%20Segment%20and%20Geographic%20Information) This note provides financial data for the company's laboratory services and therapeutic development segments, including revenue and adjusted operating loss by sub-segment and geographic region - The company operates two reportable segments: Laboratory Services (technical laboratory and testing services, professional interpretation) and Therapeutic Development (pharmaceutical research and development)[77](index=77&type=chunk) Adjusted Operating Loss by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :---------------------- | :----- | :----- | | Laboratory Services | $(5,813) | $(5,269) | | Therapeutic Development | $(9,126) | $(8,302) | | **Total Adjusted Operating Loss** | **$(14,939)** | **$(13,571)** | Revenue by Laboratory Services Sub-segment (Six Months Ended June 30, in thousands) | Sub-segment | 2025 | 2024 | % Change | | :-------------------- | :----- | :----- | :------- | | Precision diagnostics | $91,389 | $80,590 | 13% | | Anatomic pathology | $53,422 | $46,538 | 15% | | BioPharma services | $10,319 | $6,268 | 65% | | COVID-19 | $136 | $2,117 | (94)% | Geographic Distribution of Revenue (Six Months Ended June 30, in thousands) | Region | 2025 | 2024 | | :------------- | :----- | :----- | | United States | $144,033 | $122,044 | | Foreign | $11,233 | $13,469 | | **Total** | **$155,266** | **$135,513** | [Note 8. Debt, Commitments, and Contingencies](index=25&type=section&id=Note%208.%20Debt,%20Commitments,%20and%20Contingencies) This note details the company's notes payable and ongoing legal matters, including DOJ Civil Investigative Demands and the closure of an SEC investigation - Notes payable totaled **$2.4 million** as of June 30, 2025, related to a building installment sale contract, with **$0.5 million** classified as current and **$2.0 million** as noncurrent[82](index=82&type=chunk) - The company is cooperating with DOJ Civil Investigative Demands (CIDs) concerning allegations of medically unnecessary laboratory testing, improper billing, Anti-Kickback Statute and Stark Law violations, and false claims to the HRSA Uninsured Program for COVID-19 tests. The outcome is uncertain, and no liability has been recorded[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The SEC concluded its non-public formal investigation in April 2025, with no enforcement action recommended, leading to the release of a previously recorded **$1.0 million** potential liability[89](index=89&type=chunk) [Note 9. Leases](index=26&type=section&id=Note%209.%20Leases) This note provides information on the company's operating and finance leases, including right-of-use assets, lease liabilities, and lease expenses Lease Liabilities and ROU Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Operating lease ROU asset, net | $4,809 | $5,395 | | Operating lease liabilities, long term | $3,765 | $4,120 | | Finance lease ROU asset, net | $508 | $771 | | Finance lease liabilities, long term | $181 | $360 | Total Lease Cost (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $932 | $1,817 | | Six Months Ended June 30, | $2,066 | $3,911 | - The weighted-average remaining lease term for operating leases is **5.91 years**, with a weighted-average discount rate of **5.41%**[93](index=93&type=chunk) [Note 10. Equity-Based Compensation](index=27&type=section&id=Note%2010.%20Equity-Based%20Compensation) This note details the allocation of equity-based compensation expense across cost of revenue and operating expenses Equity-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $1,737 | $1,999 | $3,517 | $4,008 | | Research and development | $3,339 | $4,136 | $6,813 | $7,980 | | Selling and marketing | $711 | $1,002 | $1,601 | $2,052 | | General and administrative | $4,252 | $4,498 | $8,658 | $9,113 | | **Total** | **$10,039** | **$11,635** | **$20,589** | **$23,153** | [Note 11. Income Taxes](index=28&type=section&id=Note%2011.%20Income%20Taxes) This note discusses the company's benefit from income taxes and effective tax rates, highlighting the impact of a valuation allowance and the purchase of Investment Tax Credits Benefit from Income Taxes (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $2,263 | $2,124 | | Six Months Ended June 30, | $2,087 | $2,451 | Effective Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | 11% | 19% | | Six Months Ended June 30, | 6% | 10% | - The company purchased **$33.8 million** of Investment Tax Credits for **$31.7 million** in cash during the three months ended June 30, 2025, resulting in a **$2.1 million** increase to income tax benefit and a **$33.8 million** increase in prepaid income tax[98](index=98&type=chunk) [Note 12. Loss per Share](index=28&type=section&id=Note%2012.%20Loss%20per%20Share) This note presents the calculation of basic and diluted loss per share, clarifying the exclusion of anti-dilutive securities due to net loss Loss per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net loss attributable to Fulgent (in thousands) | $(30,487) | $(22,172) | | Basic loss per share | $(0.99) | $(0.74) | | Diluted loss per share | $(0.99) | $(0.74) | - Stock options (**101 thousand**) and restricted stock units (**2,187 thousand**) were excluded from the calculation of diluted loss per share for both periods due to their anti-dilutive effect resulting from the company's net loss positions[99](index=99&type=chunk) [Note 13. Related Party](index=30&type=section&id=Note%2013.%20Related%20Party) This note discloses related party transactions with ANP Technologies, Inc., and reports its subsequent acquisition by the company - The company incurred **$0.6 million** in licensing and development services from ANP Technologies, Inc. for the six months ended June 30, 2025 (prior to April 25, 2025), and **$1.0 million** for the same period in 2024[100](index=100&type=chunk) - In July 2025, the company completed the acquisition of **100% of ANP**, which was previously a related party, to secure ownership of patents utilized in ongoing clinical studies[100](index=100&type=chunk) [Note 14. Goodwill and Intangible Assets](index=30&type=section&id=Note%2014.%20Goodwill%20and%20Intangible%20Assets) This note provides details on goodwill and intangible assets, including their carrying amounts, impairment testing, and expected amortization schedule - Goodwill remained at **$22.1 million** as of June 30, 2025, and December 31, 2024, entirely related to the therapeutic development business, with no impairment identified as of December 31, 2024[101](index=101&type=chunk)[103](index=103&type=chunk) Intangible Assets, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total intangible assets, net | $131,060 | $134,978 | | In-process research & development | $64,590 | $64,590 | Expected Annual Amortization Expense for Intangible Assets (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 (remaining 6 months) | $3,985 | | 2026 | $7,665 | | 2027 | $7,205 | | 2028 | $7,170 | | 2029 | $6,913 | | 2030 | $6,785 | | Thereafter | $26,747 | | **Total** | **$66,470** | [Note 15. Stock Repurchase Program](index=32&type=section&id=Note%2015.%20Stock%20Repurchase%20Program) This note provides an update on the company's stock repurchase program, detailing shares repurchased and remaining authorization - The Board of Directors authorized a **$250.0 million** stock repurchase program in March 2022, with no expiration date[108](index=108&type=chunk) Common Stock Repurchases (Six Months Ended June 30) | Period | Shares Repurchased (in millions) | Aggregate Cost (in millions) | | :----- | :------------------------------- | :--------------------------- | | 2025 | 0.6 | $10.9 | | 2024 | 0.01 | $0.2 | - As of June 30, 2025, approximately **$139.6 million** remained available for future repurchases under the program[109](index=109&type=chunk) [Note 16. Retirement Plans](index=32&type=section&id=Note%2016.%20Retirement%20Plans) This note describes the company's 401(k) retirement savings plan, including employee eligibility and the company's matching contribution policy - The company offers a 401(k) retirement savings plan and matches employee contributions up to **4%** of their compensation[110](index=110&type=chunk) Total Company 401(k) Matching Contributions (in millions) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $1.0 | $1.0 | | Six Months Ended June 30, | $2.2 | $1.9 | [Note 17. Subsequent Events](index=32&type=section&id=Note%2017.%20Subsequent%20Events) This note reports on two significant events occurring after the balance sheet date: the acquisition of ANP Technologies, Inc. in July 2025, and the enactment of the One Big Beautiful Bill Act (OBBBA), whose financial impact is still being evaluated - On July 9, 2025, the company acquired **100% of ANP Technologies, Inc.** for a preliminary consideration of **$4.2 million** (net of cash received), including contingent consideration of approximately **$5.7 million** in common stock. This acquisition secures ownership of patents for therapeutic candidates[111](index=111&type=chunk)[112](index=112&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, making **100% bonus depreciation** and domestic research cost expensing permanent. Its effects are not reflected in the June 30, 2025, financial statements and are still being evaluated[113](index=113&type=chunk)[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, covering business overview, risks, detailed analysis of revenue and expenses, liquidity, and capital resources. It highlights revenue growth in core laboratory services, increased operating expenses, and a shift to cash usage in operating activities [Overview](index=34&type=section&id=Overview) This section provides a high-level summary of the company's business operations and its strategic objectives - The company operates a technology-based business with established laboratory services and a therapeutic development business focused on cancer drug candidates[119](index=119&type=chunk) - The strategic goal is to transform from a genomic diagnostic business into a fully integrated precision medicine company[119](index=119&type=chunk) [Business Risks and Uncertainties and Other Factors Affecting Our Performance](index=34&type=section&id=Business%20Risks%20and%20Uncertainties%20and%20Other%20Factors%20Affecting%20Our%20Performance) This section outlines various risks and uncertainties, including government investigations and international trade policies, that could impact the company's performance - The company is exposed to numerous risks, including ongoing audits and investigations by government agencies (tax authorities, DOJ, HRSA) and the effects of international trade policies and tax legislation[120](index=120&type=chunk) - The final results of these matters are uncertain and could materially affect the company's business and results of operations[120](index=120&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenue, cost of revenue, and various operating expenses over the reporting periods Key Financial Performance (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Revenue | $81,803 | $71,028 | 15% | $155,266 | $135,513 | 15% | | Gross profit | $34,435 | $26,491 | 30% | $62,781 | $48,595 | 29% | | Operating loss | $(19,713) | $(18,906) | 4% | $(39,508) | $(40,704) | (3)% | | Net loss attributable to Fulgent | $(18,957) | $(8,710) | 118% | $(30,487) | $(22,172) | 38% | | Impairment loss | $(9,926) | — | * | $(9,926) | — | * | [Revenue](index=35&type=section&id=Revenue_MD%26A) Revenue increased by 15% for both the three and six months ended June 30, 2025, driven by growth in precision diagnostics, anatomic pathology, and BioPharma services, while COVID-19 testing revenue significantly declined. Non-U.S. revenue also decreased due to a non-recurring licensing arrangement and reclassification Revenue from Laboratory Services (in thousands, except percentages) | Sub-segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Precision diagnostics | $47,292 | $43,144 | 10% | $91,389 | $80,590 | 13% | | Anatomic pathology | $28,122 | $23,431 | 20% | $53,422 | $46,538 | 15% | | BioPharma services | $6,253 | $3,612 | 73% | $10,319 | $6,268 | 65% | | COVID-19 | $136 | $841 | (84)% | $136 | $2,117 | (94)% | | **Total laboratory services** | **$81,803** | **$71,028** | **15%** | **$155,266** | **$135,513** | **15%** | - The increase in precision diagnostics revenue was driven by growth in reproductive health services and continued strength in legacy diagnostic offerings[126](index=126&type=chunk) - Non-U.S. revenue decreased by **18% ($1.2 million)** for the three months and **17% ($2.2 million)** for the six months ended June 30, 2025, primarily due to a non-recurring licensing arrangement in the prior period and reclassification of certain revenues to the United States[129](index=129&type=chunk) [Cost of Revenue](index=36&type=section&id=Cost%20of%20Revenue_MD%26A) Consolidated cost of revenue increased by 6% for both the three and six months ended June 30, 2025, primarily due to higher personnel, reagent, and supply costs. However, as a percentage of revenue, cost of revenue decreased, leading to an improved gross margin Consolidated Cost of Revenue (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Cost of revenue | $47,368 | $44,537 | 6% | $92,485 | $86,918 | 6% | | Cost of revenue as a % of revenue | 58% | 63% | | 60% | 64% | | | Gross profit | $34,435 | $26,491 | 30% | $62,781 | $48,595 | 29% | | Gross margin | 42% | 37% | | 40% | 36% | | - The increase in cost of revenue was primarily driven by increases in personnel expenses (**$1.9 million** for 3 months, **$3.0 million** for 6 months) and reagent and supply costs (**$0.7 million** for 3 months, **$1.6 million** for 6 months)[130](index=130&type=chunk)[131](index=131&type=chunk) [Research and Development](index=38&type=section&id=Research%20and%20Development_MD%26A) Research and development expenses for laboratory services remained consistent, while therapeutic development R&D increased for the six-month period due to the advancement of clinical studies for FID-007 and FID-022. Further increases are anticipated as clinical trials progress Research and Development Expenses (in thousands, except percentages) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Laboratory services | $7,450 | $7,334 | 2% | $14,532 | $14,655 | (1)% | | Therapeutic development | $6,030 | $6,152 | (2)% | $11,343 | $10,265 | 11% | | **Total R&D** | **$13,480** | **$13,486** | **0%** | **$25,875** | **$24,920** | **4%** | - The **11% increase** in therapeutic development R&D for the six months ended June 30, 2025, was primarily driven by the advancement and continuation of clinical studies for FID-007 and preclinical development of FID-022[138](index=138&type=chunk) - Research and development expenses are expected to continue increasing as clinical trials for FID-007, FID-022, and other preclinical studies progress[139](index=139&type=chunk) [Selling and Marketing](index=40&type=section&id=Selling%20and%20Marketing_MD%26A) Consolidated selling and marketing expenses increased significantly for both the three and six months ended June 30, 2025, primarily due to higher personnel costs and increased advertising and marketing activities Consolidated Selling and Marketing Expenses (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Selling and marketing | $12,286 | $8,595 | 43% | $20,751 | $17,584 | 18% | - The increase was primarily due to higher personnel costs (**$1.6 million** for 3 months, **$1.3 million** for 6 months) and increased advertising and marketing expenses (**$1.5 million** for 3 months, **$1.3 million** for 6 months)[140](index=140&type=chunk)[141](index=141&type=chunk) [General and Administrative](index=40&type=section&id=General%20and%20Administrative_MD%26A) Consolidated general and administrative expenses increased for both the three and six months ended June 30, 2025, mainly driven by a significant rise in the provision for credit losses, alongside higher personnel, software, and consulting costs Consolidated General and Administrative Expenses (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | General and administrative | $26,392 | $21,326 | 24% | $51,683 | $42,815 | 21% | - The primary driver for the increase was a significant rise in the provision for credit losses (**$4.3 million** for 3 months, **$8.8 million** for 6 months), along with higher personnel, software, and consulting costs[142](index=142&type=chunk)[143](index=143&type=chunk) [Amortization of Intangible Assets](index=40&type=section&id=Amortization%20of%20Intangible%20Assets_MD%26A) Consolidated amortization of intangible assets remained consistent for both periods, stemming from prior business combinations and a patent purchase, with no new business combinations in the current period Consolidated Amortization of Intangible Assets (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $1,990 | $1,990 | | Six Months Ended June 30, | $3,980 | $3,980 | - These expenses arise from intangible assets acquired in business combinations in 2021 and 2022, and a patent purchased in 2021, with no new business combinations in the current period[144](index=144&type=chunk) [Other Income (Expenses)](index=40&type=section&id=Other%20Income%20(Expenses)_MD%26A) Other income (expense) shifted from net income in 2024 to a net expense in 2025 for the three-month period, primarily due to a one-time impairment loss on a prior investment, partially offset by increased interest income Total Other (Expense) Income, Net (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Total other (expense) income, net | $(1,806) | $7,692 | (124)% | $6,266 | $15,317 | (59)% | | Interest income | $8,091 | $7,706 | 5% | $16,109 | $15,091 | 7% | | Impairment loss | $(9,926) | — | * | $(9,926) | — | * | - The significant change was primarily due to a one-time, non-cash impairment loss of **$9.9 million** on a prior investment recognized in the current periods[145](index=145&type=chunk) [Benefit from Income Taxes](index=40&type=section&id=Benefit%20from%20Income%20Taxes_MD%26A) The benefit from income taxes remained relatively stable, but the effective tax rate decreased due to a valuation allowance. The impact of the recently enacted One Big Beautiful Bill Act (OBBBA) is still being evaluated and not yet reflected in the financial statements Benefit from Income Taxes (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $2,263 | $2,124 | | Six Months Ended June 30, | $2,087 | $2,451 | Effective Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | 11% | 19% | | Six Months Ended June 30, | 6% | 10% | - The change in the effective tax rate is primarily due to a valuation allowance that precludes the company from recognizing the benefit from its net operating losses[146](index=146&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, making **100% bonus depreciation** and domestic research cost expensing permanent, is not reflected in the June 30, 2025, financial statements, and its full impact is under evaluation[147](index=147&type=chunk)[149](index=149&type=chunk) [Net Loss Attributable to Noncontrolling Interest](index=42&type=section&id=Net%20Loss%20Attributable%20to%20Noncontrolling%20Interest_MD%26A) This section clarifies that net loss attributable to noncontrolling interest represents the portion of net loss allocated to minority shareholders in entities not wholly owned by the company Net Loss Attributable to Noncontrolling Interests (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net loss attributable to noncontrolling interests | $299 | $380 | (21)% | $668 | $764 | (13)% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations, detailing available cash, marketable securities, and cash flow activities, along with potential future capital needs - Total cash, cash equivalents, restricted cash, and marketable securities were **$777.5 million** as of June 30, 2025, down from **$828.6 million** at December 31, 2024[152](index=152&type=chunk) - The company expects existing cash and short-term marketable securities to be sufficient for at least the next 12 months, but may seek additional capital through various means, which could lead to dilution or operational restrictions[154](index=154&type=chunk)[155](index=155&type=chunk) - Main uses of cash include capital expenditures (buildings, building improvements, medical laboratory equipment), stock repurchases, supporting operations, and funding strategic acquisitions[153](index=153&type=chunk) [Liquidity and Sources of Cash](index=42&type=section&id=Liquidity%20and%20Sources%20of%20Cash) The company's liquidity is supported by $777.5 million in cash and marketable securities. While current resources are expected to be sufficient for the next 12 months, the company acknowledges potential needs for additional capital, which could involve equity or debt financing, asset sales, or collaborations - The company's cash, cash equivalents, restricted cash, and marketable securities totaled **$777.5 million** as of June 30, 2025, primarily consisting of U.S. government and agency debt securities[152](index=152&type=chunk) - Existing liquidity is expected to be sufficient for anticipated cash requirements for at least the next 12 months, but the company may still seek additional capital through securities offerings, credit facilities, debt financings, asset sales, or collaborations[154](index=154&type=chunk)[155](index=155&type=chunk) [Cash Flows](index=43&type=section&id=Cash%20Flows_MD%26A) Cash flows from operating activities shifted from providing cash in 2024 to using cash in 2025, primarily due to the purchase of IRA tax credits. Investing activities provided significant cash, mainly from marketable securities maturities, while financing activities used more cash due to increased stock repurchases Summary of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :-------------------------------------------- | :----- | :----- | | Net cash (used in) provided by operating activities | $(34,602) | $11,551 | | Net cash provided by (used in) investing activities | $81,133 | $(39,882) | | Net cash used in financing activities | $(13,810) | $(3,953) | - Operating activities used **$34.6 million** of cash in the six months ended June 30, 2025, a decrease from **$11.6 million** provided in 2024, primarily due to the purchase of **$33.8 million** in IRA tax credits[158](index=158&type=chunk) - Investing activities provided **$81.1 million** in 2025, mainly from **$92.7 million** in maturities of marketable securities, contrasting with **$39.9 million** used in 2024[160](index=160&type=chunk)[161](index=161&type=chunk) - Financing activities used **$13.8 million** in 2025, primarily due to **$10.9 million** in common stock repurchases[162](index=162&type=chunk) [Stock Repurchase Program](index=43&type=section&id=Stock%20Repurchase%20Program_MD%26A) The company continued its $250.0 million stock repurchase program, repurchasing 0.6 million shares for $10.9 million during the six months ended June 30, 2025, with approximately $139.6 million remaining available - The Board of Directors authorized a **$250.0 million** stock repurchase program in March 2022, with no expiration[165](index=165&type=chunk) Common Stock Repurchases (Six Months Ended June 30) | Period | Shares Repurchased (in millions) | Aggregate Cost (in millions) | | :----- | :------------------------------- | :--------------------------- | | 2025 | 0.6 | $10.9 | | 2024 | 0.01 | $0.2 | - As of June 30, 2025, approximately **$139.6 million** remained available for future repurchases under the program[166](index=166&type=chunk) [Critical Accounting Policies and Use of Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section confirms that there have been no material changes to the company's critical accounting policies or estimates since the prior annual report - There have been no material changes to the company's critical accounting policies or estimates from the information provided in the 2024 Annual Report[168](index=168&type=chunk) [Recent Accounting Pronouncements](index=45&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for information regarding recent accounting pronouncements and their potential impact on the company's financial statements - Refer to Note 2, Summary of Significant Accounting Policies, for information about recent accounting pronouncements[170](index=170&type=chunk) [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements during the reported periods - The company did not have any material off-balance sheet arrangements during the periods presented[172](index=172&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there were no material changes to the company's quantitative and qualitative disclosures about market risk during the six months ended June 30, 2025 - There were no material changes to the quantitative and qualitative disclosures about market risk during the six months ended June 30, 2025, compared to the 2024 Annual Report[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and reports no material changes in internal control over financial reporting. It also acknowledges the inherent limitations of any control system [Evaluation of Disclosure Controls and Procedures](index=45&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms management's conclusion that the company's disclosure controls and procedures were effective as of June 30, 2025 - Management, with the participation of the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[175](index=175&type=chunk) [Changes in Internal Control over Financial Reporting](index=45&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in the company's internal control over financial reporting during the three and six months ended June 30, 2025 - There have been no material changes in the company's internal control over financial reporting during the three and six months ended June 30, 2025[177](index=177&type=chunk) [Inherent Limitations on Disclosure Controls and Procedures and Internal Control over Financial Reporting](index=45&type=section&id=Inherent%20Limitations%20on%20Disclosure%20Controls%20and%20Procedures%20and%20Internal%20Control%20over%20Financial%20Reporting) This section acknowledges the inherent limitations of control systems, emphasizing that they provide reasonable but not absolute assurance against all potential issues - Management acknowledges that controls and procedures, regardless of design, can only provide reasonable assurance and are subject to inherent limitations, meaning they may not prevent or detect all instances of fraud, misstatements, or other control issues[178](index=178&type=chunk) [PART II—OTHER INFORMATION](index=46&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section covers additional information not included in the financial statements, such as legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 for details on ongoing legal investigations, audits, and voluntary disclosure processes, emphasizing the inherent uncertainty of outcomes and potential adverse impacts on the company - The company is involved in certain legal investigations, audits, and voluntary disclosure processes, as detailed in Note 8, Debt, Commitments, and Contingencies[180](index=180&type=chunk) - The outcomes of these matters are inherently uncertain, and litigation can have an adverse impact due to defense and settlement costs, diversion of management resources, negative publicity, and reputational harm[181](index=181&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the 2024 Annual Report and the Form 10-Q for the quarter ended March 31, 2025 - There have been no material changes to the risk factors set forth in Part I, 'Item 1A, Risk Factors,' of the 2024 Annual Report and Part II, 'Item 1A. Risk Factors' of the Form 10-Q for the quarter ended March 31, 2025[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of proceeds from registered securities, with $267.9 million allocated to operations and business combinations, and provides information on common stock repurchases made under the authorized program [Use of Proceeds from Registered Securities](index=46&type=section&id=Use%20of%20Proceeds%20from%20Registered%20Securities) This section outlines how the company has utilized proceeds from common stock sales, primarily for operations and business combinations, with remaining funds invested in securities - The company has used **$267.9 million** of net proceeds from common stock sales to fund operations and business combinations[184](index=184&type=chunk) - All other net proceeds from common stock sales are invested in investment-grade and interest-bearing securities[184](index=184&type=chunk) [Information on Share Repurchases](index=46&type=section&id=Information%20on%20Share%20Repurchases) This section provides details on the company's common stock repurchases under its authorized program, including shares bought back and remaining authorization - The Board of Directors authorized a **$250.0 million** stock repurchase program in March 2022, with no expiration[186](index=186&type=chunk) Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Repurchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | April 2025 | 177,000 | $16.91 | | May 2025 | — | $— | | June 2025 | — | $— | | **Total** | **177,000** | | - As of June 30, 2025, approximately **$139.5 million** remained available for future repurchases under the program[187](index=187&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section discloses the termination of a non-Rule 10b5-1 trading arrangement by the CEO involving pledged common stock - CEO Ming Hsieh terminated a prepaid variable forward agreement (a non-Rule 10b5-1 trading arrangement) on June 9, 2025, involving up to **0.8 million pledged shares** of common stock, upon payment of **$16.4 million**[188](index=188&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section refers to the Exhibit Index for a comprehensive list of all exhibits filed as part of this report - The information required by this Item 6 is set forth on the Exhibit Index immediately preceding the signature page of this report and is incorporated herein by reference[189](index=189&type=chunk) [Exhibit Index](index=49&type=section&id=Exhibit%20Index) This index lists all exhibits accompanying the Form 10-Q, including corporate governance documents, certifications from executive officers, and Inline XBRL data files - The Exhibit Index includes corporate documents (Certificate of Incorporation, Bylaws), certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1), and Inline XBRL Instance Document and Taxonomy Extension Documents (Exhibits 101.INS to 101.PRE, and 104)[191](index=191&type=chunk) [Signatures](index=50&type=section&id=Signatures) This section contains the required signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the accuracy and completeness of the Form 10-Q report - The report is signed by Ming Hsieh, Chief Executive Officer, and Paul Kim, Chief Financial Officer, on August 1, 2025[196](index=196&type=chunk)

Executive Summary & Highlights [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Fulgent's Q2 2025 core revenue grew 16% to $81.7 million, with a GAAP net loss of $19.0 million and $777.5 million in cash and investments | Metric | Q2 2025 (Millions) | YoY Change | | :-------------------------------- | :------------------ | :--------- | | Core Revenue | $81.7 | +16% | | Total Revenue | $81.8 | - | | GAAP Gross Profit | $34.4 | - | | GAAP Gross Margin | 42.1% | - | | Non-GAAP Gross Profit | $36.2 | - | | Non-GAAP Gross Margin | 44.2% | - | | GAAP Net Loss | ($19.0) | - | | GAAP EPS | ($0.62) | - | | Non-GAAP Income | $2.1 | - | | Non-GAAP EPS | $0.07 | - | | Adjusted EBITDA Loss | ($3.0) | - | | Cash, Cash Equivalents, Restricted Cash, and Investments in Marketable Securities (End of Q2) | $777.5 | - | - Approximately **130,000 shares** were repurchased for **$2.2 million** in Q2 2025, bringing the cumulative repurchase total to **$110.4 million** since the program's March 2022 inception[7](index=7&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Ming Hsieh noted strong progress in laboratory services and therapeutic development, with CFO Paul Kim raising full-year 2025 guidance - Significant progress was made in laboratory services revenue growth and clinical trial advancements within the therapeutic development business[6](index=6&type=chunk) - Revenue and non-GAAP net income guidance were raised mid-year 2025, reflecting positive momentum and employee efforts in core business growth[6](index=6&type=chunk) [Full Year 2025 Outlook](index=2&type=section&id=Outlook) Fulgent's 2025 outlook projects core revenue of $320 million, GAAP loss per share of ($2.10), and $770 million in cash and investments | Metric | Full Year 2025 Guidance (Approximate) | | :-------------------------------------------------------------------------------- | :----------------------------------- | | Core Revenue | $320.0 million | | GAAP Loss per Share | ($2.10) | | Non-GAAP Loss per Share | ($0.35) | | Cash, Cash Equivalents, Restricted Cash, and Investments in Marketable Securities (as of Dec 31, 2025) | $770.0 million | Company Overview [About Fulgent](index=3&type=section&id=About%20Fulgent) Fulgent is a technology-driven company with established laboratory services and therapeutic development, aiming for precision medicine integration - Fulgent operates established laboratory services and therapeutic development businesses[13](index=13&type=chunk) - The therapeutic development business focuses on developing drug candidates for various cancers using novel nano-encapsulation and targeted therapeutic platforms[13](index=13&type=chunk) - The company aims to transition from a diagnostics business to a fully integrated precision medicine company[13](index=13&type=chunk) Financial Statements [Condensed Consolidated Balance Sheet Data](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheet%20Data) Fulgent's total assets were $1,199.8 million as of June 30, 2025, with cash and equivalents at $87.9 million and marketable securities at $689.5 million | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Cash and cash equivalents | $87,880 | $55,144 | +$32,736 | | Investments in marketable securities | $689,518 | $773,313 | -$83,795 | | Accounts receivable, net | $77,190 | $69,021 | +$8,169 | | Property, plant, and equipment, net | $110,223 | $105,549 | +$4,674 | | Other assets | $235,027 | $216,937 | +$18,090 | | Total assets | $1,199,838 | $1,219,964 | -$20,126 | | Accounts payable, accrued liabilities and other liabilities | $88,202 | $90,805 | -$2,603 | | Total stockholders' equity | $1,111,636 | $1,129,159 | -$17,523 | | Total liabilities & equity | $1,199,838 | $1,219,964 | -$20,126 | [Condensed Consolidated Statement of Operations Data](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations%20Data) Q2 2025 revenue increased to $81.8 million, with gross profit at $34.4 million (42.1% margin), and net loss attributable to Fulgent at ($19.0) million | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Revenue | $81,803 | $71,028 | +15.2% | | Cost of revenue | $47,368 | $44,537 | +6.4% | | Gross profit | $34,435 | $26,491 | +29.9% | | Gross margin | 42.1% | 37.3% | +4.8 pp | | Total operating expenses | $54,148 | $45,397 | +19.3% | | Operating loss | ($19,713) | ($18,906) | +4.3% | | Impairment loss | ($9,926) | — | N/A | | Net loss attributable to Fulgent | ($18,957) | ($8,710) | +117.6% | | Basic Net loss per common share | ($0.62) | ($0.29) | +113.8% | | Metric (in thousands, except per share) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :-------------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Revenue | $155,266 | $135,513 | +14.6% | | Cost of revenue | $92,485 | $86,918 | +6.4% | | Gross profit | $62,781 | $48,595 | +29.2% | | Gross margin | 40.4% | 35.9% | +4.5 pp | | Total operating expenses | $102,289 | $89,299 | +14.5% | | Operating loss | ($39,508) | ($40,704) | -2.9% | | Impairment loss | ($9,926) | — | N/A | | Net loss attributable to Fulgent | ($30,487) | ($22,172) | +37.5% | | Basic Net loss per common share | ($0.99) | ($0.74) | +33.8% | [Non-GAAP Reconciliations](index=7&type=section&id=Non-GAAP%20Reconciliations) [Non-GAAP Income (Loss) Reconciliation](index=7&type=section&id=Non-GAAP%20Income%20%28Loss%29%20Reconciliation) Q2 2025 non-GAAP income was $2.1 million ($0.07 per share), down from $4.7 million in Q2 2024, adjusted for amortization, equity compensation, and impairment | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Net loss attributable to Fulgent (GAAP) | ($18,957) | ($8,710) | +117.6% | | Amortization of intangible assets | $1,990 | $1,990 | 0% | | Equity-based compensation expense | $10,039 | $11,635 | -13.7% | | Impairment loss | $9,926 | — | N/A | | Non-GAAP tax effect | ($919) | ($224) | +310.3% | | Non-GAAP income (loss) attributable to Fulgent | $2,079 | $4,691 | -55.7% | | Non-GAAP income (loss) per common share (Basic) | $0.07 | $0.16 | -56.3% | | Metric (in thousands, except per share) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :-------------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Net loss attributable to Fulgent (GAAP) | ($30,487) | ($22,172) | +37.5% | | Amortization of intangible assets | $3,980 | $3,980 | 0% | | Equity-based compensation expense | $20,589 | $23,153 | -11.1% | | Impairment loss | $9,926 | — | N/A | | Non-GAAP tax effect | ($763) | ($539) | +41.6% | | Non-GAAP income (loss) attributable to Fulgent | $3,245 | $4,422 | -26.6% | | Non-GAAP income (loss) per common share (Basic) | $0.11 | $0.15 | -26.7% | [Non-GAAP Adjusted EBITDA Reconciliation](index=8&type=section&id=Non-GAAP%20Adjusted%20EBITDA%20Reconciliation) Fulgent's Q2 2025 adjusted EBITDA loss was ($3.0) million, a significant increase from ($0.7) million in Q2 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | | Adjusted EBITDA | ($2,992) | ($727) | +311.6% | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | | Adjusted EBITDA | ($5,881) | ($3,969) | +48.2% | [Non-GAAP Operating Margin](index=9&type=section&id=Non-GAAP%20Operating%20Margin) Q2 2025 non-GAAP gross profit was $36.2 million (44.2% margin), with a non-GAAP operating loss of ($7.7) million and -9.4% margin | Metric (in thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :---------------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Non-GAAP gross profit | $36,172 | $28,490 | +27.0% | | Non-GAAP gross margin | 44.2% | 40.1% | +4.1 pp | | Non-GAAP operating loss | ($7,684) | ($5,281) | +45.5% | | Non-GAAP operating margin | -9.4% | -7.4% | -2.0 pp | | Metric (in thousands, except percentages) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :---------------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Non-GAAP gross profit | $66,298 | $52,603 | +26.0% | | Non-GAAP gross margin | 42.7% | 38.8% | +3.9 pp | | Non-GAAP operating loss | ($14,939) | ($13,571) | +10.1% | | Non-GAAP operating margin | -9.6% | -10.0% | +0.4 pp | Additional Information [Note Regarding Non-GAAP Financial Measures](index=2&type=section&id=Note%20Regarding%20Non-GAAP%20Financial%20Measures) This section defines Fulgent's non-GAAP financial measures, explaining their use to clarify business performance by excluding non-core items, and noting limitations - Non-GAAP financial measures (income/loss, EPS, Adjusted EBITDA, gross profit/margin, operating income/loss/margin) are utilized to assess business performance by excluding items not directly attributable to operating results[10](index=10&type=chunk) - Non-GAAP income (loss) is calculated by adjusting GAAP net income (loss) for amortization of intangible assets, equity-based compensation, impairment loss on investments, non-GAAP tax effects, and other expenses or benefits management deems unrepresentative of company operations[10](index=10&type=chunk) - The company does not provide a reconciliation of forward-looking non-GAAP measures to GAAP due to the inability to predict the amount and timing of certain items outside its control, particularly those related to equity-based compensation, tax effects, and potential impairments[12](index=12&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) Forward-looking statements are based on management assumptions and expectations, subject to risks that could cause actual results to differ materially - Forward-looking statements pertain to future events or circumstances, based on management's current assumptions, expectations, and beliefs regarding future developments and their potential impact on the company's business[14](index=14&type=chunk)[15](index=15&type=chunk) - These statements are subject to various risks and uncertainties, including market potential for the company's tests, technological changes, reimbursement levels, success of development efforts, and regulatory compliance, which could cause actual results to differ materially from those described or implied in forward-looking statements[15](index=15&type=chunk)[16](index=16&type=chunk) - The company undertakes no obligation to publicly update any such forward-looking statements to reflect actual results or changes in expectations, except as required by law[17](index=17&type=chunk) [Conference Call Information & Investor Relations](index=2&type=section&id=Conference%20Call%20Information%20%26%20Investor%20Relations) Fulgent held a Q2 2025 earnings call on August 1, 2025, accessible via webcast, with investor inquiries directed to Lauren Sloane - The Q2 2025 earnings conference call was held on August 1, 2025, at 8:30 AM ET, accessible via live audio webcast on the company's investor relations website[9](index=9&type=chunk) - Investor relations contact: Lauren Sloane of The Blueshirt Group[19](index=19&type=chunk)

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud and unlawful business practices involving Fulgent Genetics, Inc. and its officers or directors [1] Group 1: Investigation Details - The investigation is prompted by claims from investors of Fulgent Genetics, Inc. [1] - Investors are encouraged to contact Pomerantz LLP for more information regarding the investigation [1] Group 2: Recent Developments - On February 28, 2025, Fulgent disclosed receiving a civil investigative demand from the U.S. Department of Justice concerning potential false claims under the Uninsured Program [3] - Following this disclosure, Fulgent's stock price decreased by $0.41 per share, or 2.61%, closing at $15.28 per share on March 3, 2025 [3] Group 3: Firm Background - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of over 85 years in the field [4] - The firm has successfully recovered numerous multimillion-dollar damages awards for victims of securities fraud and corporate misconduct [4]