Fulgent Genetics(FLGT) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue growth of 84% year-over-year to a record $10.3 million in Q3 2019 [10][28] - Billable tests increased by 272% year-over-year to a new record high of 20,697 [11][29] - Non-GAAP gross margin improved to 64%, up approximately 8 percentage points year-over-year [11][30] - GAAP income was $1.5 million, while non-GAAP income was $2.6 million, with non-GAAP earnings per share at $0.14 [12][34] - Cash provided by operating activities was approximately $3.9 million, compared to $675,000 in the previous quarter [35][36] Business Line Data and Key Metrics Changes - Strong demand for oncology tests and reproductive health business, particularly hereditary cancer panels [13] - Increased demand for sequencing service business from channel partners in genomics [14] - New test offerings, including a reproductive health test for IVF, contributing to growth [26] Market Data and Key Metrics Changes - U.S. business revenue grew 159% year-over-year, representing 82% of total revenue [28][29] - ASP remained flat at $500 per test, with cost per test improving to $179 [11][29] - The company anticipates fluctuations in short-term demand as it diversifies its business [16] Company Strategy and Development Direction - Focus on commercialization strategy, including international growth and collaborations with key medical institutions [41] - Emphasis on maintaining a sustainable business model while driving down costs [56] - Introduction of Picture Genetics, a consumer genetic testing offering, aimed at expanding market reach [22][24] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about market position and growth opportunities despite potential fluctuations in demand [15][37] - Anticipation of approximately $8 million in revenue for Q4, leading to a full-year revenue estimate of $32 million, representing a 50% growth rate [39] - Confidence in the company's ability to sustain growth and manage operational efficiencies [70] Other Important Information - The company has no debt and ended the quarter with $43.6 million in cash and equivalents [36] - Continued investment in research and development to enhance test offerings [26] Q&A Session Summary Question: Key drivers of volume growth and outlook for Q4 - Management noted that growth was driven by new test introductions and strong demand in oncology and reproductive health [44][45] Question: Pricing environment and ASP dynamics - Management acknowledged competitive pricing pressures but emphasized maintaining a sustainable business model with strong gross margins [56][58] Question: Product mix and payer network dynamics - Management indicated strong demand for carrier screening tests and noted ongoing relationships with cancer research institutions [61][63] Question: Volume growth drivers and operational capabilities - Management highlighted the impact of technology investments and operational efficiencies in handling increased volume [66][70]