Fulgent Genetics(FLGT) - 2023 Q4 - Annual Results

Financial Highlights This section summarizes Fulgent's financial performance for Q4 and full year 2023, highlighting revenue, profitability, and cash flow metrics Fourth Quarter 2023 Results 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] Full Year 2023 Results 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][9] - Throughout the year, Fulgent repurchased over 953,000 shares of common stock at an aggregate cost of $25.1 million[11] Management Commentary Management expressed satisfaction with 2023 performance, highlighting core business growth, therapeutic pipeline advancements, and a strong financial position CEO and CFO Remarks 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] - 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] - 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] Business Outlook 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 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 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 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 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 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 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 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 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 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 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] - The company's strategic aim is to transform into a fully integrated precision medicine company[15] Forward-Looking Statements 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] - 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] Note Regarding Non-GAAP Financial Measures 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] - 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]