Fulgent Reports First Quarter 2024 Financial Results

Rhea-AI Summary

Fulgent Genetics, Inc. (NASDAQ: FLGT) announced its first quarter 2024 financial results, reporting a total revenue of $64.5 million with core revenue growing 1% year-over-year to $63.2 million. The company reiterated its full-year 2024 core revenue guidance of $280 million. Despite a GAAP loss of $13.5 million, or $0.45 per share, Fulgent showed a non-GAAP loss of $269,000, or $0.01 per share. The adjusted EBITDA loss was $3.2 million, with cash from operations at $7.3 million. Fulgent's cash, cash equivalents, and investments in marketable securities were $846.2 million as of March 31, 2024. The company highlighted strong momentum in Precision Diagnostics and milestones in its therapeutic development business, including progress in clinical testing for lead oncology drug candidate FID-007. Fulgent maintains a positive outlook for the full year 2024, expecting core revenue of approximately $280 million and a strong financial position with ample cash to execute.

Positive

• Fulgent Genetics reported total revenue of $64.5 million, showcasing a 1% year-over-year growth in core revenue to $63.2 million, demonstrating a steady increase in the company's financial performance.

• The company's Precision Diagnostics segment emerged as a significant growth driver within its laboratory services business, underscoring Fulgent's strong strategic positioning and potential for future growth.

• Fulgent's progress in its therapeutic development business, with lead oncology drug candidate FID-007 moving into Phase 2 clinical testing and FID-022 advancing in preclinical studies, showcases promising milestones and commitment to innovation.

• The company's cash position of $846.2 million as of March 31, 2024, coupled with cash from operations at $7.3 million, reflects a robust financial standing, instilling confidence in its ability to execute operational objectives.

Negative

• Fulgent Genetics reported a GAAP loss of $13.5 million, or $0.45 per share, indicating a financial setback for the company in the first quarter of 2024.

• The adjusted EBITDA loss of $3.2 million signifies operational challenges that Fulgent Genetics may need to address to improve profitability and financial performance in the future.

• The non-GAAP loss of $269,000, or $0.01 per share, raises concerns about the company's ability to manage expenses effectively and generate sustainable profitability in the long term.

• Fulgent's full-year 2024 outlook projecting a GAAP loss of approximately $2.25 per share and a non-GAAP loss of approximately $1.05 per share indicates potential financial hurdles that the company needs to overcome to achieve its financial targets.

Insights

Financial Analyst

Fulgent Genetics' first quarter 2024 financial results show a slight growth in core revenue by 1% year-over-year, which indicates stability in their primary business despite a relatively flat growth rate. The GAAP loss of $13.5 million suggests that the company is experiencing some challenges in profitability, likely due to increased operational costs or investment in their therapeutic development business. The company's cash position is robust, with over $846 million in cash and marketable securities. This significant cash reserve suggests a strong balance sheet, which can support future investments and operations. However, investors should consider whether the GAAP loss will persist and how it might affect the company's ability to sustain its cash burn rate in the long run. The reiteration of full-year guidance provides some assurance that management is confident in their strategic trajectory, despite current losses.

Biotechnology Analyst

From a biotech perspective, Fulgent's mention of their lead oncology drug candidate, FID-007, moving into Phase 2 clinical testing is noteworthy. Phase 2 trials are critical in assessing the efficacy of a drug and success here can significantly enhance its commercialization prospects. Given that drug development is a long-term and risky process, investors should be aware of the potential impact of these trials on the company's value. Positive outcomes could lead to substantial upside, while negative results could have a converse effect. Furthermore, the progression of FID-022 toward an IND application represents a pipeline expansion, which is essential for long-term growth in the biotech sector. However, the cost associated with these developments needs to be monitored since they can strain financial resources before any revenue from these candidates is realized.

Market Strategy Analyst

Considering Fulgent's operational outlook, the slight increase in core revenue and ongoing investments in their therapeutic development business suggest a strategic focus on diversifying beyond laboratory services. With a strong cash position, Fulgent appears to be using its funds to potentially secure future growth. However, market response to such strategies can be mixed, depending on the perceived balance between current losses and future potential. Investors should assess whether Fulgent's long-term strategic initiatives align with their investment goals, particularly given the company's confidence in reaffirming its annual guidance despite reporting a loss. The cash forecast for the end of 2024, estimated at approximately $800 million, indicates a projected decrease in cash reserves, which should be weighed against the company's investment in growth opportunities and the potential for stock repurchase programs.

• Total Revenue of $64.5 million
• Core Revenue grows 1% year-over-year to $63.2 million
• Reiterates Full Year 2024 Core Revenue Guidance of $280 million

EL MONTE, Calif.--(BUSINESS WIRE)-- Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent,” or the “Company”), a technology-based company with a well-established laboratory services business and a therapeutic development business, today announced financial results for its first quarter ended March 31, 2024.

First Quarter 2024 Results:

• Total Revenue of $64.5 million
• Core Revenue¹ grew 1% year-over-year to $63.2 million
• GAAP loss of $13.5 million, or $0.45 per share
• Non-GAAP loss of $269,000, or $0.01 per share
• Adjusted EBITDA loss of $3.2 million
• Cash from operations of $7.3 million
• Cash, cash equivalents, and investments in marketable securities of $846.2 million as of March 31, 2024

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 directly comparable GAAP financial measure, GAAP income (loss), GAAP gross profit and margin, and GAAP operating income (loss) and margin, in the accompanying tables.

Ming Hsieh, Chairperson of the Board of Directors and Chief Executive Officer, said, “We are off to a good start in 2024 and are pleased with the momentum we see in Precision Diagnostics, currently the largest growth driver in our laboratory services business. We remain on track as we pursue development and milestones for the therapeutic development business, with our lead oncology drug candidate, FID-007, moving into Phase 2 clinical testing, and progressing FID-022 in preclinical studies toward an Investigational New Drug (IND) application by the end of 2024. We believe we are well-positioned to execute our strategy.”

Paul Kim, Chief Financial Officer, said, “We believe we are in a strong financial position in 2024, with ample cash to execute. I’m pleased to reiterate our guidance for the year as we remain on track with our operational objectives.”

Outlook:

For the full year 2024, Fulgent continues to expect:

• Core Revenue of approximately $280 million
• GAAP loss of approximately $2.25 per share
• Non-GAAP loss of approximately $1.05 per share
• Cash, cash equivalents, and investments in marketable securities of approximately $800 million as of December 31, 2024*

*Cash expenditures may be higher or lower than currently estimated due to a variety of factors and circumstances, including as a result of the Company’s ongoing stock repurchase program or other expenditures outside the ordinary course of business.

Conference Call Information

Fulgent will host a conference call for the investment community today at 8:30 AM ET (5:30 AM PT) to discuss its first quarter 2024 results. The call may be accessed through a live audio webcast in the Investor Relations section of the Company’s website, http://ir.fulgentgenetics.com. An audio replay will be available at the same location.

Note Regarding Non-GAAP Financial Measures

Certain information set forth in this press release and/or to be discussed on the Company’s earnings call, including 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 non-GAAP financial measures. Fulgent believes this information is useful to investors because it provides a basis for measuring the performance of the Company’s business, excluding certain income or expense items that management believes are not directly attributable to the Company’s operating results. Fulgent defines non-GAAP income (loss) as net income (loss) calculated in accordance with accounting principles generally accepted in the United States of America, or GAAP, plus amortization of intangible assets, plus equity-based compensation expenses, plus or minus the non-GAAP tax effect, and plus or minus other charges or gains, as identified, that management believes are not representative of the Company’s operations. For the three months ended March 31, 2023, the non-GAAP tax effect was calculated by applying the statutory corporate tax rate on the amortization of intangible assets and equity-based compensation expenses. For the three months ended March 31, 2024, the non-GAAP tax effect was calculated by excluding from the GAAP provision the impact of the amortization of intangible assets and equity-based compensation expenses. Fulgent defines adjusted EBITDA income (loss) as GAAP income (loss) plus or minus interest (expense) income, plus or minus provisions (benefits) for income taxes, plus equity-based compensation expenses, plus depreciation and amortization, and plus or minus other charges or gains, as identified, that management believes are not representative of the Company’s operations. Fulgent defines non-GAAP gross profit as gross profit calculated in accordance with GAAP plus equity-based compensation included in cost of revenue as shown in the table below. Fulgent defines non-GAAP gross margin by taking non-GAAP gross profit and dividing it by GAAP revenue. Fulgent defines non-GAAP operating profit (loss) by taking GAAP operating profit (loss) and adding equity-based compensation and amortization of intangible assets. Non-GAAP operating margin is calculated by taking non-GAAP operating profit (loss) and dividing by GAAP revenue. Fulgent may continue to incur expenses similar to the items added to or subtracted from GAAP income (loss) to calculate non-GAAP income (loss) and adjusted EBITDA income (loss); accordingly, the exclusion of these items in the presentation of these non-GAAP financial measures should not be construed as an implication that these items are unusual, infrequent or non-recurring. Management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measure of net income (loss), gross profit and margin, and operating income (loss) and margin, in evaluating the Company’s operating performance. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in conformity with GAAP, and non-GAAP financial measures as reported by Fulgent may not be comparable to similarly titled metrics reported by other companies.

About Fulgent

Fulgent is a technology-based company with a well-established laboratory services business and a therapeutic development business. Fulgent’s laboratory services business, which was formerly referred to as the clinical diagnostic business, includes technical laboratory services and professional interpretation of laboratory results by licensed physicians. Fulgent’s therapeutic development business is focused on developing drug candidates for treating a broad range of cancers using a novel nanoencapsulation and targeted therapy platform designed to improve the therapeutic window and pharmacokinetic profile of new and existing cancer drugs. The Company aims to transform from a genomic diagnostic business into a fully integrated precision medicine company.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements in this press release include statements about, among other things: future performance; guidance regarding expected quarterly and annual financial results, core revenues, GAAP loss, non-GAAP loss, and cash, cash equivalents and investments in marketable securities; evaluations and judgments regarding the stability of certain revenue sources, the Company’s cash position and sufficiency of its resources, momentum, trajectory, vision, future opportunities and future growth of the Company’s testing and laboratory services, technologies and expansion; the Company’s research and development efforts, including any implications that the results of earlier clinical trials will be representative or consistent with later clinical trials, the expected timing of enrollment and regulatory filings for these trials and the availability of data or results of these trials, including any implication that interim or preliminary data will be representative of final data; the Company’s identification and evaluation of opportunities and its ability to capitalize on opportunities, capture market share, or expand its presence in certain markets; and the Company’s ability to continue to grow its business.

Forward-looking statements are statements other than historical facts and relate to future events or circumstances or the Company’s future performance, and they are based on management’s current assumptions, expectations, and beliefs concerning future developments and their potential effect on the Company’s business. These forward-looking statements are subject to a number of risks and uncertainties, which may cause the forward-looking events and circumstances described in this press release to not occur, and actual results to differ materially and adversely from those described in or implied by the forward-looking statements. These risks and uncertainties include, among others: the market potential for, and the rate and degree of market adoption of, the Company’s tests; its ability to maintain turnaround times and otherwise keep pace with rapidly changing technology; the Company’s ability to maintain the low internal costs of its business model; the Company’s ability to maintain an acceptable margin; risks related to volatility in the Company’s results, which can fluctuate significantly from period to period; risks associated with the composition of the Company’s customer base, which can fluctuate from period to period and can be comprised of a small number of customers that account for a significant portion of the Company’s revenue; the Company’s level of success in obtaining coverage and adequate reimbursement and collectability levels from third-party payors for its tests and testing services; the Company’s level of success in establishing and obtaining the intended benefits from partnerships, strategic investments, joint ventures, acquisitions, or other relationships; the success of the Company’s development efforts, including the Company’s ability to progress its candidates through clinical trials on the timelines expected; the Company’s compliance with the various evolving and complex laws and regulations applicable to its business and its industry; and the Company’s ability to protect its proprietary technology and intellectual property. As a result of these risks and uncertainties, forward-looking statements should not be relied on or viewed as predictions of future events.

The forward-looking statements made in this press release speak only as of the date of this press release, and the Company assumes no obligation to update publicly any such forward-looking statements to reflect actual results or to changes in expectations, except as otherwise required by law.

The Company’s reports filed with the U.S. Securities and Exchange Commission, or the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024, and the other reports it files from time to time, including subsequently filed annual, quarterly and current reports, are made available on the Company’s website upon their filing with the SEC. These reports contain more information about the Company, its business and the risks affecting its business, as well as its results of operations for the periods covered by the financial results included in this press release.

FULGENT GENETICS, INC.
Condensed Consolidated Balance Sheet Data
March 31, 2024 and December 31, 2023
(in thousands)
		March 31,				December 31,
		2024				2023
ASSETS:
Cash and cash equivalents		$	54,677			$	97,473
Investments in marketable securities			791,513				750,252
Accounts receivable, net			52,060				51,132
Property, plant, and equipment, net			86,723				83,464
Other assets			244,912				253,007
Total assets		$	1,229,885			$	1,235,328
LIABILITIES & EQUITY:
Accounts payable, accrued liabilities and other liabilities		$	103,239			$	102,042
Total stockholders’ equity			1,126,646				1,133,286
Total liabilities & equity		$	1,229,885			$	1,235,328

FULGENT GENETICS, INC.
Condensed Consolidated Statement of Operations Data
Three Months Ended March 31, 2024 and 2023
(in thousands, except per share data)
(unaudited)
		Three Months Ended March 31,
		2024				2023
Revenue		$	64,485			$	66,168
Cost of revenue (1)			42,381				47,357
Gross profit			22,104				18,811
Operating expenses:
Research and development (1)			11,434				9,782
Selling and marketing (1)			8,989				10,083
General and administrative (1)			21,489				21,802
Amortization of intangible assets			1,990				1,968
Total operating expenses			43,902				43,635
Operating loss			(21,798	)			(24,824	)
Interest and other income, net			7,625				3,775
Loss before income taxes			(14,173	)			(21,049	)
Benefit from income taxes			(327	)			(5,200	)
Net loss from consolidated operations			(13,846	)			(15,849	)
Net loss attributable to noncontrolling interests			384				509
Net loss attributable to Fulgent		$	(13,462	)		$	(15,340	)
Net loss per common share attributable to Fulgent:
Basic		$	(0.45	)		$	(0.52	)
Diluted		$	(0.45	)		$	(0.52	)
Weighted average common shares:
Basic			29,769				29,536
Diluted			29,769				29,536
(1) Equity-based compensation expense was allocated as follows:
Cost of revenue		$	2,009			$	2,394
Research and development			3,844				3,448
Selling and marketing			1,050				1,361
General and administrative			4,615				3,062
Total equity-based compensation expense		$	11,518			$	10,265

FULGENT GENETICS, INC.
Non-GAAP Loss Reconciliation
Three Months Ended March 31, 2024 and 2023
(in thousands, except per share data)
		Three Months Ended March 31,
		2024				2023
Net loss attributable to Fulgent		$	(13,462	)		$	(15,340	)
Amortization of intangible assets			1,990				1,968
Equity-based compensation expense			11,518				10,265
Non-GAAP tax effect (1)			(315	)			(3,425	)
Non-GAAP loss attributable to Fulgent		$	(269	)		$	(6,532	)
Net loss per common share attributable to Fulgent:
Basic		$	(0.45	)		$	(0.52	)
Diluted		$	(0.45	)		$	(0.52	)
Non-GAAP loss per common share attributable to Fulgent:
Basic		$	(0.01	)		$	(0.22	)
Diluted		$	(0.01	)		$	(0.22	)
Weighted average common shares:
Basic			29,769				29,536
Diluted			29,769				29,536
(1) Tax rates as follows:
During the three months ended March 31, 2024, the Company calculated an income tax provision on a non-GAAP basis. For the three months ended March 31, 2023, the Company calculated the non-GAAP tax effect by applying the statutory corporate tax rate on the amortization of intangible assets and equity-based compensation expenses for a tax rate of 28%.

FULGENT GENETICS, INC.
Non-GAAP Adjusted EBITDA Reconciliation
Three Months Ended March 31, 2024 and 2023
(in thousands)
		Three Months Ended March 31,
		2024				2023
Net loss attributable to Fulgent		$	(13,462	)		$	(15,340	)
Interest income, net			(7,634	)			(3,772	)
Benefit from income taxes			(327	)			(5,200	)
Equity-based compensation expense			11,518				10,265
Depreciation and amortization			6,663				6,879
Adjusted EBITDA		$	(3,242	)		$	(7,168	)

FULGENT GENETICS, INC.
Non-GAAP Operating Margin
Three Months Ended March 31, 2024 and 2023
(in thousands)
		Three Months Ended March 31,
		2024				2023
Revenue		$	64,485			$	66,168
Cost of revenue			42,381				47,357
Gross profit			22,104				18,811
Gross margin			34.3	%			28.4	%
Equity-based compensation included in cost of revenue			2,009				2,394
Non-GAAP gross profit			24,113				21,205
Non-GAAP gross margin			37.4	%			32.0	%
Operating expenses			43,902				43,635
Equity-based compensation included in operating expenses			9,509				7,871
Amortization of intangible assets			1,990				1,968
Non-GAAP operating expenses			32,403				33,796
Non-GAAP operating loss		$	(8,290	)		$	(12,591	)
Non-GAAP operating margin			-12.9	%			-19.0	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240502657236/en/

Investor Relations Contact:

The Blueshirt Group

Melanie Solomon, melanie@blueshirtgroup.com

Source: Fulgent Genetics, Inc.

FAQ

What was Fulgent Genetics' total revenue for the first quarter of 2024?

Fulgent Genetics reported a total revenue of $64.5 million for the first quarter of 2024.

What was the year-over-year growth in core revenue for Fulgent in the first quarter of 2024?

Fulgent Genetics experienced a 1% year-over-year growth in core revenue to $63.2 million in the first quarter of 2024.

What was the GAAP loss per share reported by Fulgent Genetics in the first quarter of 2024?

Fulgent Genetics reported a GAAP loss of $0.45 per share for the first quarter of 2024.

What progress did Fulgent Genetics make in its therapeutic development business in the first quarter of 2024?

Fulgent Genetics made progress in its therapeutic development business, with lead oncology drug candidate FID-007 moving into Phase 2 clinical testing and FID-022 advancing in preclinical studies in the first quarter of 2024.

What is Fulgent Genetics' full-year 2024 core revenue guidance?

Fulgent Genetics expects core revenue of approximately $280 million for the full year 2024.