Fulgent Genetics(US:FLGT)2022-08-05 03:02Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $125 million, consistent with guidance, but down from $154 million in Q2 2021, primarily due to a decline in COVID-19 testing [12][48] - Core business revenue grew over 100% year-over-year to $45.3 million, exceeding guidance of $40 million [13][50] - Gross margin decreased to 52.1%, down 25 percentage points year-over-year, attributed to a shift in testing mix and higher costs associated with core genetic testing [54] Business Line Data and Key Metrics Changes - The company delivered over 1.3 million tests in Q2 2022, a 14% decline compared to Q2 2021, mainly due to reduced COVID-19 testing [12] - COVID-19 testing revenue was approximately $80 million, lower than the guidance of $85 million, while core business revenue reached $45 million [50] - The average selling price (ASP) for tests was $94, slightly lower than the previous quarter, influenced by the mix of COVID testing [52] Market Data and Key Metrics Changes - The company continues to process a significant number of COVID-19 tests, with ongoing contracts for surge testing in New York City [38] - The launch of a PCR test for monkeypox demonstrates the company's ability to respond to emerging health crises [40] Company Strategy and Development Direction - The company aims to become a national one-stop shop for genomic testing across various specialties, including oncology and hematology [23] - The integration of Inform Diagnostics is progressing well, with expectations of leveraging synergies across sales and operations [24] - Fulgent Oncology was launched to penetrate the precision medicine market, combining capabilities from recent acquisitions [27][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth strategy, focusing on efficiency and responsible investment despite current pressures on operating margins [21][64] - The company anticipates continued volatility in COVID testing demand but remains focused on executing post-COVID growth opportunities [51][61] - For 2022, total revenue is expected to be approximately $665 million, with core revenue projected at $185 million, reflecting a 99% year-over-year growth [62][63] Other Important Information - The company repurchased over 215,000 shares for $10.6 million, indicating confidence in its equity value [60] - New board members with extensive industry experience were appointed to enhance strategic relationships in the pharmaceutical and biotech sectors [17][19] Q&A Session Summary Question: Insights on core revenue performance - Management noted that the $45 million in core revenue was driven by momentum from the integration of CSI and investments in the NGS business [71][72] Question: Comprehensive oncology business capabilities - The company confirmed it has all necessary technologies for a complete oncology service offering, including NGS, IHC, and FISH [78][79] Question: Capital deployment strategy - Management indicated that while stock buybacks are an option, the primary focus is on investing in core business growth and technology [86] Question: COVID testing trends by region - Management acknowledged ongoing testing in various markets but noted the unpredictability of demand, emphasizing readiness to respond to potential surges [87]