Fulgent Genetics(FLGT) - 2022 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements show decreased net income and operating cash flow alongside an increase in total assets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $353,069 | $164,894 | | Total current assets | $765,333 | $611,960 | | Total assets | $1,465,590 | $1,278,720 | | Liabilities & Equity | | | | Total current liabilities | $141,714 | $105,310 | | Total liabilities | $152,630 | $112,840 | | Total stockholders' equity | $1,312,960 | $1,165,880 | Condensed Consolidated Statements of Income (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $320,268 | $359,429 | | Gross Profit | $242,543 | $285,354 | | Operating Income | $201,933 | $266,922 | | Net income attributable to Fulgent | $153,979 | $200,691 | | Diluted EPS | $4.93 | $6.52 | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $188,411 | $233,179 | | Net cash provided by (used in) investing activities | $688 | $(216,491) | | Net cash (used in) provided by financing activities | $(934) | $47,347 | | Net increase in cash and cash equivalents | $188,175 | $64,035 | - The company offers large-scale COVID-19 testing and comprehensive genetic testing using its proprietary NGS technology platform[25] Revenue by Payor Type (Q1 2022 vs Q1 2021, in thousands) | Payor Type | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Insurance | $210,677 | $207,558 | | Institutional customers | $109,468 | $151,569 | | Patients | $123 | $302 | | Total Revenue | $320,268 | $359,429 | - The company received a Civil Investigative Demand from the U.S. Department of Justice but does not expect a material adverse impact[77] - In April 2022, the company acquired Inform Diagnostics, Inc. for approximately $170 million to expand its pathology test menu[100] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses an 11% revenue decrease due to lower COVID-19 test volumes, rising costs, and increased operating expenses Key Operating Metrics (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Billable tests delivered | 3.2 million | 3.8 million | | Average price per billable test | ~$99 | ~$95 | | Cost per billable test | ~$24 | ~$20 | - Strong demand for COVID-19 testing was a significant revenue driver in Q1 2022, though its future duration is uncertain[111] - Revenue decreased by $39.2 million (11%) YoY, driven by a 15% decrease in billable tests from reduced COVID-19 test orders[117][119][122] - Cost of revenue increased by 5% YoY due to higher consulting, labor, and depreciation costs[123] - Operating expenses rose by 120% YoY, largely from a 222% increase in G&A expenses due to higher credit loss provisions and professional fees[117][128] - The effective tax rate decreased from 25% to 24% due to an international restructuring[133] - The company's liquidity remains strong, with cash, cash equivalents, and marketable securities totaling $1.1 billion as of March 31, 2022[136] - Net cash from operating activities was $188.4 million, a decrease from $233.2 million in Q1 2021, due to timing of collections and payments[146][147][148] - Management believes existing cash is sufficient to meet cash requirements for at least the next 12 months[143] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required for the company as a smaller reporting company - The company has indicated that this disclosure is not required[159] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[162] - No material changes to internal control over financial reporting occurred during the first quarter of 2022[164] PART II—OTHER INFORMATION Legal Proceedings The company is not currently party to any legal proceedings expected to have a material business effect - The company is not involved in any legal proceedings that management believes would have a material effect on the business[168] Risk Factors No material changes have been made to the risk factors disclosed in the 2021 Annual Report - The company states there have been no material changes to the risk factors set forth in its 2021 Annual Report[169] Unregistered Sales of Equity Securities and Use of Proceeds Proceeds from the 2016 IPO and subsequent offerings have been used for operations and investments - Net proceeds from the 2016 IPO and subsequent stock sales have been used to fund operations and invested in securities[173][178] Other Information The company's Chief Operating Officer, Jian Xie, was appointed to the additional role of President - Effective May 3, 2022, COO Jian Xie was appointed as President, with Ming Hsieh remaining CEO and Chair of the Board[179] Exhibits This section refers to the Exhibit Index for a list of all documents filed with the report - This item refers to the Exhibit Index for a list of documents filed with the report[182]