UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37894 FULGENT GENETICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

First Quarter 2024 Results: Note: 1) Core Revenue is revenue calculated in accordance with GAAP minus revenue from COVID-19 testing products and services including COVID-19 NGS testing revenue, each as calculated in accordance with GAAP. Non-GAAP income (loss), non-GAAP income (loss) per share, adjusted EBITDA income (loss), non-GAAP gross profit and margin, and non-GAAP operating income (loss) and margin, are described below under "Note Regarding Non-GAAP Financial Measures" and are reconciled to the most ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2023 was $70 million, compared to $68 million in Q4 2022, with $4 million from COVID-19 testing [33] - Core revenue, excluding COVID-19 testing, was $66 million, exceeding guidance of $64 million and representing a 21% year-over-year growth [33][28] - Adjusted EBITDA loss for Q4 was $6.8 million, an improvement from a loss of $15.1 million in Q4 2022 [10] - The company ended Q4 with approximately $848 million in cash, cash equivalents, and marketable securities [81] Business Line Data and Key Metrics Changes - Precision diagnostics revenue for 2023 was $132 million, with a projected growth to over $173 million in 2024, indicating over 31% organic growth [97] - Anatomic pathology revenue for 2023 was $104.7 million, with a projected decline in 2024 due to pricing pressure and lower contract rates [36][20] - Bio pharma services revenue for 2023 was $25.4 million, with a significant decline anticipated in 2024 due to project terminations [36][20] Market Data and Key Metrics Changes - The company gained significant market share in carrier screening due to a major competitor exiting the market [106] - The sales pipeline for carrier screening is filling up with new opportunities, indicating a positive market response [106] Company Strategy and Development Direction - The company is focused on expanding its precision diagnostics and improving its anatomic pathology and bio pharma services through technology investments and sales team enhancements [21][98] - A new facility in Dallas is being developed to enhance operational capabilities, with an expected cash outlay of over $15 million [37] - The company aims to leverage its technology platform to drive growth in precision diagnostics while addressing challenges in anatomic pathology [95][98] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the core business's strength and growth momentum, particularly in precision diagnostics [13] - The company anticipates a core revenue growth of approximately 7% year-over-year for 2024, with a focus on managing expenses and improving margins [35][12] - Management acknowledged challenges in the bio pharma services segment but emphasized the strength of their capabilities [32] Other Important Information - A one-time non-cash goodwill impairment charge of $120 million was recorded due to a decline in market capitalization, but it does not affect cash position or future operations [80] - The company has restructured its reporting segments to better reflect its operations, now categorizing its business into laboratory services and therapeutic development [73] Q&A Session Summary Question: Expectations for expanded carrier screening - Management noted that expanded carrier screening is becoming standard care, and positive guideline changes could enhance reimbursement opportunities [15] Question: Strategy around COVID testing - Management confirmed that they have effectively exited the COVID testing business, with current revenue primarily from collections on past tests [17] Question: Revenue breakdown for 2023 and growth expectations - Management provided detailed revenue figures for 2023 and projected declines in anatomic pathology and bio pharma services, with growth expected in precision diagnostics [20][46] Question: Update on the national rollout for Fulgent oncology - Management reported significant momentum in the oncology division, with robust reimbursement secured for assays [62] Question: Capital deployment strategy - Management indicated a focus on potential acquisitions and investments in technology to enhance efficiency and expand distribution channels [91]

Our consolidated cost of revenue decreased by $67.3 million, or 27%, from $252.1 million in 2022 to $184.8 million in 2023. The decrease was primarily due to decreases of $32.1 million in consulting and outside labor costs for production, $25.9 million in reagent and supply expenses, $12.3 million in depreciation expenses, $5.3 million in shipping expenses, and $1.2 million in travel and meals expense and $2.9 million in facility expense, all related to decreased COVID-19 testing, and partially offset by an ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) This section summarizes Fulgent's financial performance for Q4 and full year 2023, highlighting revenue, profitability, and cash flow metrics [Fourth Quarter 2023 Results](index=1&type=section&id=Fourth%20Quarter%202023%20Results) In Q4 2023, Fulgent reported total revenue of $70.5 million, with Core Revenue growing 21% year-over-year to $66.5 million, alongside a significant GAAP loss due to goodwill impairment but positive non-GAAP income and cash from operations | Metric | Value | | :--- | :--- | | Total Revenue | $70.5 million | | Core Revenue | $66.5 million (+21% YoY) | | GAAP Loss | $128.1 million | | GAAP Loss per Share | $4.30 | | Non-GAAP Income | $8.3 million | | Non-GAAP Income per Share | $0.28 | | Adjusted EBITDA Loss | $6.8 million | | Cash from Operations | $14.9 million | - The company repurchased approximately **873,000 shares** of its common stock for **$22.9 million** during the quarter[7](index=7&type=chunk) [Full Year 2023 Results](index=1&type=section&id=Full%20Year%202023%20Results) For the full year 2023, total revenue was $289.2 million, with Core Revenue increasing 44% year-over-year to $262.1 million, resulting in a GAAP loss but positive Adjusted EBITDA and a strong cash position | Metric | Value | | :--- | :--- | | Total Revenue | $289.2 million | | Core Revenue | $262.1 million (+44% YoY) | | GAAP Loss | $167.8 million | | GAAP Loss per Share | $5.63 | | Non-GAAP Loss | $12.3 million | | Non-GAAP Loss per Share | $0.41 | | Adjusted EBITDA | $1.5 million | | Cash from Operations | $27.0 million | - The company ended 2023 with **$847.7 million** in cash, cash equivalents, and investments in marketable securities, which translates to approximately **$28 per share**[7](index=7&type=chunk)[9](index=9&type=chunk) - Throughout the year, Fulgent repurchased over **953,000 shares** of common stock at an aggregate cost of **$25.1 million**[11](index=11&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management expressed satisfaction with 2023 performance, highlighting core business growth, therapeutic pipeline advancements, and a strong financial position [CEO and CFO Remarks](index=2&type=section&id=CEO%20and%20CFO%20Remarks) Management expressed satisfaction with the 2023 performance, highlighting the 44% year-over-year growth in the core business, driven by the Beacon787 Expanded Carrier screen, and progress in therapeutic development - CEO Ming Hsieh credited the **44% core business growth** in 2023 to the continued momentum in Precision Diagnostics, specifically the Beacon787 Expanded Carrier screen[8](index=8&type=chunk) - The therapeutic development pipeline is advancing, with the lead oncology drug FID-007 moving toward Phase 2 clinical testing and an Investigational New Drug (IND) application for FID-022 expected by the end of 2024[8](index=8&type=chunk) - CFO Paul Kim highlighted the company's **strong financial position** entering 2024, characterized by record core revenues, improving core gross margin, and a substantial cash balance[25](index=25&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) This section provides Fulgent's financial guidance for the full year 2024, including projected core revenue, profitability, and year-end cash position [Full Year 2024 Guidance](index=2&type=section&id=Full%20Year%202024%20Guidance) For the full year 2024, Fulgent projects Core Revenue of approximately $280 million, anticipating a GAAP loss of around $2.25 per share and a non-GAAP loss of $1.05 per share, while maintaining a strong cash position | Metric | 2024 Guidance | | :--- | :--- | | Core Revenue | ~$280 million | | GAAP Loss per Share | ~$2.25 | | Non-GAAP Loss per Share | ~$1.05 | | Year-End Cash & Investments | ~$800 million | [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents Fulgent's condensed consolidated financial statements, including the balance sheet and statement of operations, for the reported periods [Condensed Consolidated Balance Sheet](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of December 31, 2023, Fulgent's balance sheet shows total assets of $1.24 billion, a decrease from 2022, but maintains a very strong liquidity position with $847.7 million in cash and marketable securities and robust stockholders' equity | Balance Sheet Item (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $97,473 | $79,506 | | Investments in marketable securities | $750,252 | $773,377 | | Total assets | $1,235,328 | $1,386,053 | | Total liabilities | $102,042 | $116,178 | | Total stockholders' equity | $1,133,286 | $1,269,875 | [Condensed Consolidated Statement of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) The statement of operations for 2023 reflects a significant revenue decline due to reduced COVID-19 testing and a $120.2 million goodwill impairment charge, leading to a full-year net loss compared to prior year's net income | (in thousands) | Twelve Months 2023 | Twelve Months 2022 | | :--- | :--- | :--- | | Revenue | $289,213 | $618,968 | | Gross Profit | $104,456 | $366,901 | | Goodwill Impairment Loss | $120,234 | $0 | | Operating (Loss) Income | ($195,529) | $178,527 | | Net (Loss) Income Attributable to Fulgent | ($167,825) | $143,403 | | (in thousands, except per share data) | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Revenue | $70,505 | $67,704 | | Operating Loss | ($151,121) | ($36,552) | | Net Loss Attributable to Fulgent | ($128,149) | ($23,832) | | Diluted Loss Per Share | ($4.30) | ($0.80) | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations from GAAP to non-GAAP financial measures, including net income, EPS, and Adjusted EBITDA, to offer a clearer view of core operational performance [Reconciliation of Net (Loss) Income and EPS](index=8&type=section&id=Reconciliation%20of%20Net%20%28Loss%29%20Income%20and%20EPS) The reconciliation from GAAP to non-GAAP net income shows significant adjustments for non-cash and non-recurring items, converting a substantial GAAP loss into a much smaller non-GAAP loss for the full year 2023 and a non-GAAP income for Q4 2023 | Full Year 2023 Reconciliation (in thousands) | Amount | | :--- | :--- | | GAAP Net Loss | ($167,825) | | Goodwill Impairment Loss | +$120,234 | | Equity-based Compensation | +$42,922 | | Amortization of Intangibles | +$7,845 | | Non-GAAP Tax Effect | ($15,473) | | **Non-GAAP Net Loss** | **($12,297)** | | Per Share Data | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | | GAAP Diluted (Loss) Income | ($5.63) | $4.63 | | Non-GAAP Diluted (Loss) Income | ($0.41) | $5.79 | [Reconciliation of Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Adjusted EBITDA for the full year 2023 was $1.5 million, a significant decrease from 2022, calculated by adjusting GAAP net loss for interest, taxes, depreciation, amortization, goodwill impairment, and other non-cash charges | Adjusted EBITDA Reconciliation (in thousands) | Twelve Months 2023 | Twelve Months 2022 | | :--- | :--- | :--- | | Net (Loss) Income | ($167,825) | $143,403 | | Goodwill Impairment Loss | $120,234 | $0 | | Equity-based Compensation | $42,922 | $32,640 | | Depreciation and Amortization | $26,143 | $32,662 | | **Adjusted EBITDA** | **$1,504** | **$257,106** | [Non-GAAP Operating Margin](index=10&type=section&id=Non-GAAP%20Operating%20Margin) The company's GAAP gross margin declined significantly to 36.1% in 2023 from 59.3% in 2022, with non-GAAP gross margin also decreasing, leading to a substantial non-GAAP operating loss for 2023 | Margin Analysis | Twelve Months 2023 | Twelve Months 2022 | | :--- | :--- | :--- | | GAAP Gross Margin | 36.1% | 59.3% | | Non-GAAP Gross Margin | 39.5% | 60.7% | | Operating Profit (Loss) (in thousands) | Twelve Months 2023 | Twelve Months 2022 | | :--- | :--- | :--- | | GAAP Operating (Loss) Income | ($195,529) | $178,527 | | Non-GAAP Operating (Loss) Profit | ($24,528) | $228,573 | [Company Information and Disclosures](index=3&type=section&id=Company%20Information%20and%20Disclosures) This section provides an overview of Fulgent's business, outlines forward-looking statement disclaimers, and explains the use of non-GAAP financial measures [About Fulgent](index=3&type=section&id=About%20Fulgent) Fulgent Genetics is a technology-based company operating in laboratory services and therapeutic development, with a long-term strategic goal to evolve into a fully integrated precision medicine company - Fulgent operates two primary business segments: **laboratory services** and **therapeutic development**[27](index=27&type=chunk) - The company's strategic aim is to transform into a **fully integrated precision medicine company**[15](index=15&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section cautions investors that statements regarding future performance, guidance, clinical trial progress, and market opportunities are forward-looking and subject to numerous risks and uncertainties, which could cause actual results to differ materially - Forward-looking statements include guidance on financial results, the growth of testing services like the Beacon Expanded Carrier screen, and the expected timing and results of clinical trials[28](index=28&type=chunk) - Key risks highlighted include market adoption of tests, maintaining low costs and acceptable margins, volatility in results, customer concentration, and success in obtaining reimbursement from payors[17](index=17&type=chunk) [Note Regarding Non-GAAP Financial Measures](index=3&type=section&id=Note%20Regarding%20Non-GAAP%20Financial%20Measures) This note explains that non-GAAP financial measures are used to provide a clearer view of core operating results by excluding certain non-cash or non-recurring items, and should not be considered a substitute for GAAP measures - The company uses non-GAAP measures to provide a basis for measuring business performance, excluding items management believes are not directly tied to operating results[5](index=5&type=chunk) - Key adjustments to derive non-GAAP income from GAAP income include amortization of intangible assets, goodwill impairment loss, restructuring costs, acquisition-related costs, and equity-based compensation expenses[5](index=5&type=chunk)

Testing offers CBR families the opportunity to proactively seek additional information about their child's health TRUMBULL, Conn. and EL MONTE, Calif., Feb. 9, 2024 /PRNewswire/ -- CooperSurgical®, a global leader in fertility and women's health, and Fulgent Genetics, Inc. (NASDAQ: FLGT), a technology-based company with a well-established clinical diagnostic business and a therapeutic development business, today announced that they have partnered to offer families of Cord Blood Registry® (CBR®) exclusive ne ...

Financial Data and Key Metrics - Total revenue for Q3 2023 was $85 million, down from $106 million in Q3 2022, with $19 million coming from COVID-19 testing, which was not part of the guidance [8] - Core revenue for Q3 2023 was $66 million, exceeding the guidance of $65 million and growing 17% year-over-year [8] - Gross margin was 47%, with the increase primarily related to COVID-19 revenues recognized on previously built tests due to successful insurance collection on appeals [8] - Adjusted EBITDA for Q3 2023 was $18.1 million, compared to $19.7 million in Q3 2022 [9] - Non-GAAP loss for the quarter was $11.7 million or $0.39 per share based on 30 million weighted average shares outstanding [9] - The company ended Q3 with approximately $851 million in cash, cash equivalents, and marketable securities, an increase of $4 million from Q2 [29] Business Line Data and Key Metrics - Precision Diagnostics revenue for Q3 2023 was $37.5 million, up 16% sequentially and 45% year-over-year [5] - Pharma Services revenue for Q3 2023 was $3.7 million, down 50% sequentially and up 19% year-over-year [5] - Beacon carrier screening portfolio continues to be a significant growth driver for Precision Diagnostics, with a mean turnaround time of 12 days [6] - The company updated its hereditary cancer panels to align with the latest NCCN guidelines, focusing on high to moderate risk factors for cancer [7] Market Data and Key Metrics - The company entered into a new agreement with Progyny for Beacon carrier screening, allowing it to provide reproductive genetic testing to the Progyny member network [25] - The company is focusing on gaining market share in the infertility space and planning for a rollout to the OB market [6] Company Strategy and Industry Competition - The company is moving forward with Phase II studies for FID-007 in head and neck cancer, with an initial study expected in Q1 2024 [4] - The company is being highly selective in evaluating M&A or strategic investment opportunities, focusing on organic growth and strengthening its market position [26] - The company expects ongoing integration efforts with recent acquisitions to create efficiencies and improve gross and operating margins in 2024 [10] Management Commentary on Operating Environment and Future Outlook - The company reiterated its core revenue guidance of $260 million for 2023, excluding additional revenues from COVID-19 testing [10] - Management is pleased with the trajectory and sees good momentum ahead, with a strong balance sheet and cash position [30] - The company expects to end the year with approximately $830 million of cash, cash equivalents, and investments, excluding stock repurchases since Q3 or other expenditures outside the ordinary course [30] Other Important Information - The company repurchased approximately 80,000 shares of common stock at an aggregate cost of $2.2 million in Q3, and an additional 533,000 shares at an aggregate cost of $13.7 million subsequent to the end of the quarter [29] - The company recognized a tax expense of $20 million in Q3 as it put up a reserve against deferred tax assets [28] Q&A Session Summary Question: Potential for additional COVID-19 collections - There is a chance for additional collections from COVID-19 in Q4 and beyond, but it is not something the company is counting on [34] Question: Seasonality and revenue guidance - Some seasonality is expected, especially in the Anatomic Pathology division, and the company is taking a conservative approach due to lumpiness in Pharma Services [40] Question: Anatomic Pathology (AP) business update - The AP business is stable but has seen a slight downtrend, partly due to seasonality and account-level profitability adjustments [41] Question: Fulgent Oncology expansion - The company has onboarded two new sales reps in different territories and is continuing to look for additional sales talent [43] Question: FDA LDT regulations impact - The company is monitoring FDA LDT regulations closely and is prepared to respond with its subject matter and operational expertise [48] Question: COVID reimbursement payments - The company has mostly exited COVID testing but continues to appeal claims and collect on accounts receivable from previous COVID testing [32] Question: Pharma Services lumpiness and macro environment - The company anticipates lumpiness in Pharma Services but expects over 100% increase in that business for 2023 compared to 2022 [36] Question: R&D spend for Phase II studies - The company expects an annual burn rate of around $50 million for new drug development efforts, including Phase II studies [57] Question: Beacon carrier screening and OB market - The company is seeing continued momentum in Beacon carrier screening and is planning for a rollout to the OB market [45] Question: Share gains in IVF setting - The company continues to see opportunities to gain share in the IVF setting as clients reassess their laboratory choices [64]

FORM 10-Q | --- | --- | --- | |-----------------------------------------------------------------------------------|-------------------|---------------------------------------------------| | Securities registered pursuant to Section 12(b) of the Act: \nTitle of each class | Trading Symbol(s) | Name of each exchange on which registered | | Common Stock, par value $0.0001 per share | FLGT | The Nasdaq Stock Market (Nasdaq Global Market) | UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (M ...

Fulgent Genetics, Inc. (NASDAQ:FLGT) Q2 2023 Earnings Conference Call August 4, 2023 8:30 AM ET Company Participants Melanie Solomon - Investor Relations Ming Hsieh - Chief Executive Officer Brandon Perthuis - Chief Commercial Officer Paul Kim - Chief Financial Officer Lawrence Weiss - Chief Medical Officer Conference Call Participants Dan Leonard - Credit Suisse David Westenberg - Piper Sandler Andrew Cooper - Raymond James Operator Hello and welcome to the Fulgent Genetics Q2 2023 Earnings Conference Call ...

Cash used in investing activities in the six months ended June 30, 2023 was $5.5 million, which primarily related to $250.5 million on purchases of marketable securities and $14.2 million on purchases of fixed assets, including real estate, partially offset by $258.8 million related to maturities of marketable securities. Cash used in investing activities in the six months ended June 30, 2022 was $213.0 million, which primarily related to $245.5 million on purchase of marketable securities and $137.8 millio ...