Company Overview - Fulgent Genetics, Inc. (FLGT) shares increased by 5.8% to close at $21.45, supported by higher trading volume compared to normal sessions, following a 4.1% decline over the past four weeks [1][2] Financial Performance Expectations - The company is anticipated to report a quarterly loss of $0.19 per share, reflecting a year-over-year change of +51.3%, with expected revenues of $71.42 million, down 15.7% from the previous year [3] - The Zacks Consensus Estimate for the third quarter earnings indicates a growth of 51.2%, with results scheduled for release on November 8, 2024 [2][3] Earnings Estimate Trends - The consensus EPS estimate for Fulgent Genetics has remained unchanged over the last 30 days, suggesting that stock price movements may not sustain without trends in earnings estimate revisions [4] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [4] Industry Context - Fulgent Genetics is part of the Zacks Medical Info Systems industry, where another company, SOPHiA GENETICS SA (SOPH), saw a 6.2% increase in its stock price, closing at $3.58, despite a -4.5% return over the past month [4]

Fulgent Genetics, Inc. (NASDAQ: FLGT ) is a laboratory services and therapeutic development company headquartered in El Monte, California. The laboratory services segment, which currently accounts for all of the company's revenue, strives to offer affordable diagnostic and genetic testing services I am a value investor with a concentrated portfolio, focusing on rare and exceptional buying opportunities. As a keen reader of Value Investing literature, I am well versed in the teachings of 'super investors' su ...

Group 1 - Fulgent Genetics, Inc. reported quarterly earnings of $0.15 per share, exceeding the Zacks Consensus Estimate of a loss of $0.31 per share, and compared to a loss of $0.08 per share a year ago, representing an earnings surprise of 148.39% [1] - The company posted revenues of $71.03 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 3.37%, and this is an increase from year-ago revenues of $67.85 million [2] - Fulgent Genetics has surpassed consensus EPS estimates three times over the last four quarters, indicating a positive trend in earnings performance [2] Group 2 - The stock has underperformed the market, losing about 18.5% since the beginning of the year, while the S&P 500 has gained 14.2% [3] - The current consensus EPS estimate for the coming quarter is -$0.24 on revenues of $71.57 million, and for the current fiscal year, it is -$1.03 on revenues of $279.75 million [7] - The Zacks Industry Rank for Medical Info Systems is currently in the bottom 43% of over 250 Zacks industries, suggesting that the industry outlook may negatively impact stock performance [8]

Financial Data and Key Metrics - Total GAAP operating expenses were $43.9 million for Q1 2024, down from $176.4 million in Q4 2023, primarily due to a one-time non-cash goodwill impairment charge in Q4 2023 [3] - Non-GAAP operating expenses totaled $32.4 million in Q1 2024, down from $45.1 million in Q4 2023 [3] - Non-GAAP operating margin increased by approximately 12 percentage points sequentially to minus 12.9%, driven by lower bad debt reserve and legal fees [3] - Adjusted EBITDA loss for Q1 2024 was $3.2 million, compared to a loss of $7.2 million in Q1 2023 [27] - The company ended Q1 2024 with approximately $846.2 million in cash, cash equivalents, and marketable securities [27] Business Line Data and Key Metrics - Core revenue for Q1 2024 was $63.2 million, up $500,000 year-over-year but down $3.3 million sequentially [24] - Precision diagnostics revenue increased by $9.5 million (34%) year-over-year and $2 million (6%) sequentially, driven by reproductive health and oncology [24] - Anatomic pathology revenue declined sequentially, attributed to timing issues in biopharma service contracts [24] - The company expects 10% sequential core revenue growth in Q2 2024, driven by momentum in precision diagnostics [24] - Gross margin excluding COVID-19 revenue and stock-based compensation increased from 28% in Q1 2023 to 36% in Q1 2024, with expectations to reach 40% or higher by Q2 2024 [16][43] Market Data and Key Metrics - The company is focusing on the OB-GYN market with the launch of its new NIPT test, KNOVA, which combines aneuploidy screening, deletion duplication screening, and de novo point mutations into one test [1] - The biopharma services revenue stream is tracking on plan for 2024, with efforts to expand existing relationships and forge new ones [2] - The company is expanding its biopharma sales team and building a robust product offering to address a large market for biopharma studies [2] Company Strategy and Industry Competition - The company is shifting focus to the OB-GYN market, hiring a new sales team with OB-GYN experience and launching the KNOVA NIPT test [1] - The therapeutic development business is progressing well, with the lead drug candidate FID-007 showing promising results in clinical trials for various cancers [23] - The company is developing next-generation antibody drug conjugates (ADCs) to address challenges in cancer treatment, with a focus on improving therapeutic windows and pharmacokinetics [38] - The company is investing in digital technology and AI to improve operational efficiency in anatomic pathology services [41] Management Commentary on Operating Environment and Future Outlook - Management is confident in the momentum of the business, particularly in precision diagnostics and reproductive health, and expects continued growth in these areas [24][40] - The company anticipates gross margins to improve to 40% or higher by Q2 2024, with further increases expected in Q3 and Q4 2024 [16][43] - Management reiterated the full-year 2024 core revenue guidance of $280 million, representing 7% year-over-year growth [56] - The company expects to end 2024 with approximately $800 million in cash, cash equivalents, and marketable securities, excluding stock repurchases or other expenditures [28] Other Important Information - The company is consolidating its Texas and New York operations into a new building outside Irving, Texas, to improve operational efficiency [41] - The company is investing in digital slide imaging and AI to enhance the quality and efficiency of its anatomic pathology services [41] - The company is expanding its oncology laboratories, with one in Alpharetta, Georgia, and another in Phoenix, Arizona, catering to pathologists and oncologists respectively [25] Q&A Session Summary Question: What gives confidence in the revenue ramp to hit the $280 million sales target for 2024? - The company is seeing momentum in precision diagnostics, gaining market share in reproductive health and oncology, and stabilizing the anatomic pathology business [30][59] Question: What are the implications of the finalized lab-developed test regulations for Fulgent? - The company believes the new regulations bode well for Fulgent, as existing products may be exempt from a full PMA process, and the company has the necessary quality systems in place to adhere to FDA guidelines [7][60] Question: Will the new NIPT offering require FDA 510(k) clearance? - The company believes its new NIPT test, KNOVA, will not require a full PMA process but will still adhere to FDA quality standards [11][12] Question: What is the investment plan for the OB-GYN market launch? - The company plans to ramp up to 20 new sales headcount by the end of 2024, focusing on a national rollout of the KNOVA NIPT test [49][66] Question: What is the outlook for the anatomic pathology business? - The company has revamped its go-to-market strategy and sales organization for anatomic pathology, with expectations of stabilization and growth in 2024 [53][70]

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 ...