Fulgent Reports Fourth Quarter and Full Year 2023 Financial Results
- None.
- The GAAP loss of $167.8 million for the full year 2023 is a negative financial aspect for Fulgent Genetics, Inc.
- Non-GAAP loss of $12.3 million, or $0.41 per share for the full year 2023 is another negative financial point to consider.
- Adjusted EBITDA loss of $6.8 million for the fourth quarter and a meager $1.5 million for the full year 2023 are concerning figures for investors.
- While the company repurchased shares under its stock repurchase program, the GAAP loss and non-GAAP loss figures raise concerns about financial stability and profitability.
Insights
The disclosed financial results from Fulgent Genetics, Inc. demonstrate a robust year-over-year growth in core revenue, which increased by 44% to $262.1 million in 2023. This growth is significant as it indicates the company's ability to expand its revenue streams beyond COVID-19 testing, which is critical given the potential decline in demand for such services post-pandemic. The cash position of $847.7 million provides the company with a solid foundation to pursue strategic initiatives and weather any potential market downturns. However, the reported GAAP loss of $167.8 million raises concerns about the company's profitability and cost management. The share repurchase program indicates a confidence in the intrinsic value of the company's stock, potentially signaling to investors a perceived undervaluation. The forecast for 2024 suggests a cautious outlook with an expected core revenue increase but also an anticipated GAAP loss, which could impact investor sentiment.
Examining Fulgent's performance within the broader diagnostics and therapeutic development industry, the company's emphasis on Precision Diagnostics and the development of its therapeutic pipeline, including the oncology drug candidate FID-007, positions it well amidst the growing personalized medicine market. The progression towards a Phase 2 clinical trial for FID-007 and the planned IND application for FID-022 reflect a strategic focus on innovation and long-term value creation. However, the market typically responds cautiously to heavy R&D investments, especially when coupled with net losses, as seen in Fulgent's GAAP figures. The company's ability to maintain its core gross margin improvements will be critical in translating its revenue growth into sustainable profitability. Investors should monitor the company's operational efficiency and the success of its R&D efforts, as these will be key drivers for future performance.
Fulgent's development of the Beacon787 Expanded Carrier screen and its therapeutic pipeline, including FID-007 and FID-022, highlights the company's investment in cutting-edge technologies and treatments. The medical community's interest in these developments, as indicated by presentations at prestigious medical meetings, underscores the potential clinical impact of these innovations. However, the true value of these investments will be determined by their clinical efficacy and market acceptance. The financial commitment to advancing the preclinical pipeline and exploring antibody drug conjugates using a nano-drug delivery platform suggests a strong focus on future growth areas in biotechnology. The success of these initiatives could lead to new revenue streams and partnerships, enhancing the company's market position.
-
Full Year 2023 Total Revenue of
$289.2 million $70.5 million -
Full Year 2023 Core Revenue grows
44% year-over-year to$262.1 million 21% year-over-year to$66.5 million -
Ended 2023 with
$847.7 million $28
Fourth Quarter 2023 Results:
-
Total Revenue of
$70.5 million -
Core Revenue1 grew
21% year-over-year to$66.5 million -
GAAP loss of
$128.1 million $4.30 -
Non-GAAP income of
$8.3 million $0.28 -
Adjusted EBITDA loss of
$6.8 million -
Cash from operations of
$14.9 million -
Repurchased approximately 873,000 shares of common stock at an aggregate cost of
$22.9 million
Full Year 2023 Results:
-
Total Revenue of
$289.2 million -
Core Revenue1 grew
44% year-over-year to$262.1 million -
GAAP loss of
$167.8 million $5.63 -
Non-GAAP loss of
$12.3 million $0.41 -
Adjusted EBITDA of
$1.5 million -
Cash from operations of
$27.0 million -
Repurchased over 953,000 shares of common stock at an aggregate cost of
$25.1 million -
Cash, cash equivalents, and investments in marketable securities of
$847.7 million $28
Note: |
1) Core Revenue excludes revenue from COVID-19 testing products and services including COVID-19 NGS testing revenue. |
Non-GAAP income (loss), non-GAAP income (loss) per share, and adjusted EBITDA income (loss) are described below under “Note Regarding Non-GAAP Financial Measures” and are reconciled to the most directly comparable GAAP financial measure, GAAP income (loss), in the accompanying tables.
Ming Hsieh, Chairperson of the Board of Directors and Chief Executive Officer, said, “We are pleased with our results in 2023, a year in which we raised guidance twice and showed year-over-year growth of
Paul Kim, Chief Financial Officer, said, “In 2023, we demonstrated efficiency in our business and superb cash management while continuing to advance our pharma pipeline and repurchase shares under our authorized stock repurchase program. We begin 2024 in a strong financial position, with record core revenues, improving core gross margin, and an enviable cash position with which to execute.”
Outlook:
For the full year 2024, Fulgent expects:
-
Core Revenue of approximately
$280 million -
GAAP loss of approximately
$2.25 -
Non-GAAP loss of approximately
$1.05 -
Cash, cash equivalents, and investments in marketable securities of approximately
$800 million
*Cash expenditures may be higher or lower than currently estimated due to a variety of facts and circumstances, including as a result of the Company’s ongoing stock repurchase program or other expenditures outside of ordinary course.
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 fourth quarter and full year 2023 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, non-GAAP operating margin and adjusted EBITDA income (loss) 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
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—to which was formerly referred 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 services and technologies and expansion, including its Beacon Expanded Carrier screen; 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 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, including its Beacon787 panel; 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
FULGENT GENETICS, INC. |
|||||
Condensed Consolidated Balance Sheet Data |
|||||
December 31, 2023 and 2022 |
|||||
(in thousands) |
|||||
|
December 31, |
||||
|
2023 |
2022 |
|||
ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
$ |
97,473 |
$ |
79,506 |
|
Investments in marketable securities |
|
750,252 |
|
773,377 |
|
Accounts receivable, net |
|
51,132 |
|
52,749 |
|
Property, plant, and equipment, net |
|
83,464 |
|
81,353 |
|
Other assets |
|
253,007 |
|
399,068 |
|
Total assets |
$ |
1,235,328 |
$ |
1,386,053 |
|
LIABILITIES & EQUITY: |
|
|
|
|
|
Accounts payable, accrued liabilities and other liabilities |
$ |
102,042 |
$ |
116,178 |
|
Total stockholders’ equity |
|
1,133,286 |
|
1,269,875 |
|
Total liabilities & equity |
$ |
1,235,328 |
$ |
1,386,053 |
|
FULGENT GENETICS, INC. |
||||||||||||||
Condensed Consolidated Statement of Operations Data |
||||||||||||||
Three and Twelve Months Ended December 31, 2023 and 2022 |
||||||||||||||
(in thousands, except per share data) |
||||||||||||||
(unaudited) |
||||||||||||||
|
||||||||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||||
Revenue |
$ |
70,505 |
|
$ |
67,704 |
|
$ |
289,213 |
|
$ |
618,968 |
|||
Cost of revenue (1) |
|
45,276 |
|
|
54,717 |
|
|
184,757 |
|
|
252,067 |
|||
Gross profit |
|
25,229 |
|
|
12,987 |
|
|
104,456 |
|
|
366,901 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||
Research and development (1) |
|
11,952 |
|
|
8,509 |
|
|
41,440 |
|
|
28,910 |
|||
Selling and marketing (1) |
|
10,500 |
|
|
10,253 |
|
|
41,467 |
|
|
38,918 |
|||
General and administrative (1) |
|
31,706 |
|
|
28,793 |
|
|
88,999 |
|
|
111,074 |
|||
Amortization of intangible assets |
|
1,958 |
|
|
2,010 |
|
|
7,845 |
|
|
6,497 |
|||
Goodwill impairment loss |
|
120,234 |
|
|
— |
|
|
120,234 |
|
|
— |
|||
Restructuring costs |
|
— |
|
|
(26 |
) |
|
— |
|
|
2,975 |
|||
Total operating expenses |
|
176,350 |
|
|
49,539 |
|
|
299,985 |
|
|
188,374 |
|||
Operating (loss) income |
|
(151,121 |
) |
|
(36,552 |
) |
|
(195,529 |
) |
|
178,527 |
|||
Interest and other income, net |
|
5,925 |
|
|
3,090 |
|
|
21,444 |
|
|
5,498 |
|||
(Loss) income before income taxes |
|
(145,196 |
) |
|
(33,462 |
) |
|
(174,085 |
) |
|
184,025 |
|||
(Benefit from) provision for income taxes |
|
(10,862 |
) |
|
(9,386 |
) |
|
1,154 |
|
|
42,102 |
|||
Net (loss) income from consolidated operations |
|
(134,334 |
) |
|
(24,076 |
) |
|
(175,239 |
) |
|
141,923 |
|||
Net loss attributable to noncontrolling interests |
|
6,185 |
|
|
244 |
|
|
7,414 |
|
|
1,480 |
|||
Net (loss) income attributable to Fulgent |
$ |
(128,149 |
) |
$ |
(23,832 |
) |
$ |
(167,825 |
) |
$ |
143,403 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) income per common share attributable to Fulgent: |
|
|
|
|
|
|
|
|
|
|
|
|||
Basic |
$ |
(4.30 |
) |
$ |
(0.80 |
) |
$ |
(5.63 |
) |
$ |
4.76 |
|||
Diluted |
$ |
(4.30 |
) |
$ |
(0.80 |
) |
$ |
(5.63 |
) |
$ |
4.63 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
29,771 |
|
|
29,625 |
|
|
29,784 |
|
|
30,097 |
|||
Diluted |
|
29,771 |
|
|
29,625 |
|
|
29,784 |
|
|
30,964 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
(1) Equity-based compensation expense was allocated as follows: |
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of revenue |
$ |
2,375 |
|
$ |
2,521 |
|
$ |
9,749 |
|
$ |
8,704 |
|||
Research and development |
|
3,973 |
|
|
3,339 |
|
|
14,873 |
|
|
10,449 |
|||
Selling and marketing |
|
1,320 |
|
|
1,225 |
|
|
4,964 |
|
|
4,373 |
|||
General and administrative |
|
3,764 |
|
|
2,937 |
|
|
13,336 |
|
|
9,114 |
|||
Total equity-based compensation expense |
$ |
11,432 |
|
$ |
10,022 |
|
$ |
42,922 |
|
$ |
32,640 |
|||
FULGENT GENETICS, INC. |
|||||||||||||||
Non-GAAP Income (Loss) Reconciliation |
|||||||||||||||
Three and Twelve Months Ended December 31, 2023 and 2022 |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||
Net (loss) income attributable to Fulgent |
$ |
(128,149 |
) |
$ |
(23,832 |
) |
$ |
(167,825 |
) |
$ |
143,403 |
|
|||
Amortization of intangible assets |
|
1,958 |
|
|
2,010 |
|
|
7,845 |
|
|
6,497 |
|
|||
Goodwill impairment loss |
|
120,234 |
|
|
— |
|
|
120,234 |
|
|
— |
|
|||
Restructuring costs |
|
— |
|
|
(26 |
) |
|
— |
|
|
2,975 |
|
|||
Acquisition-related costs |
|
— |
|
|
1,359 |
|
|
— |
|
|
7,934 |
|
|||
Equity-based compensation expense |
|
11,432 |
|
|
10,022 |
|
|
42,922 |
|
|
32,640 |
|
|||
Non-GAAP tax effect (1) |
|
2,794 |
|
|
(3,742 |
) |
|
(15,473 |
) |
|
(14,013 |
) |
|||
Non-GAAP (loss) income attributable to Fulgent |
$ |
8,269 |
|
$ |
(14,209 |
) |
$ |
(12,297 |
) |
$ |
179,436 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) income per common share attributable to Fulgent: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic |
$ |
(4.30 |
) |
$ |
(0.80 |
) |
$ |
(5.63 |
) |
$ |
4.76 |
|
|||
Diluted |
$ |
(4.30 |
) |
$ |
(0.80 |
) |
$ |
(5.63 |
) |
$ |
4.63 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP (loss) income per common share attributable to Fulgent: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic |
$ |
0.28 |
|
$ |
(0.48 |
) |
$ |
(0.41 |
) |
$ |
5.96 |
|
|||
Diluted |
$ |
0.28 |
|
$ |
(0.48 |
) |
$ |
(0.41 |
) |
$ |
5.79 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
29,771 |
|
|
29,625 |
|
|
29,784 |
|
|
30,097 |
|
|||
Diluted |
|
29,771 |
|
|
29,625 |
|
|
29,784 |
|
|
30,964 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
(1) Tax rates as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate tax rate of |
|||||||||||||||
FULGENT GENETICS, INC. |
|||||||||||||||
Non-GAAP Adjusted EBITDA Reconciliation |
|||||||||||||||
Three and Twelve Months Ended December 31, 2023 and 2022 |
|||||||||||||||
(in thousands) |
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||
Net (loss) income attributable to Fulgent |
$ |
(128,149 |
) |
$ |
(23,832 |
) |
$ |
(167,825 |
) |
$ |
143,403 |
|
|||
Interest income, net |
|
(5,947 |
) |
|
(3,023 |
) |
|
(21,124 |
) |
|
(4,610 |
) |
|||
(Benefit from) provision for income taxes |
|
(10,862 |
) |
|
(9,386 |
) |
|
1,154 |
|
|
42,102 |
|
|||
Goodwill impairment loss |
|
120,234 |
|
|
— |
|
|
120,234 |
|
|
— |
|
|||
Restructuring costs |
|
— |
|
|
(26 |
) |
|
— |
|
|
2,975 |
|
|||
Acquisition-related costs |
|
— |
|
|
1,359 |
|
|
— |
|
|
7,934 |
|
|||
Equity-based compensation expense |
|
11,432 |
|
|
10,022 |
|
|
42,922 |
|
|
32,640 |
|
|||
Depreciation and amortization |
|
6,533 |
|
|
9,802 |
|
|
26,143 |
|
|
32,662 |
|
|||
Adjusted EBITDA |
$ |
(6,759 |
) |
$ |
(15,084 |
) |
$ |
1,504 |
|
$ |
257,106 |
|
|||
FULGENT GENETICS, INC. |
|||||||||||||||
Non-GAAP Operating Margin |
|||||||||||||||
Three and Twelve Months Ended December 31, 2023 and 2022 |
|||||||||||||||
| (in thousands) | |||||||||||||||
|
|||||||||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||
Revenue |
$ |
70,505 |
|
$ |
67,704 |
|
$ |
289,213 |
|
$ |
618,968 |
|
|||
Cost of revenue |
|
45,276 |
|
|
54,717 |
|
|
184,757 |
|
|
252,067 |
|
|||
Gross profit |
|
25,229 |
|
|
12,987 |
|
|
104,456 |
|
|
366,901 |
|
|||
Gross margin |
|
35.8 |
% |
|
19.2 |
% |
|
36.1 |
% |
|
59.3 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Equity-based compensation included in cost of revenue |
|
2,375 |
|
|
2,521 |
|
|
9,749 |
|
|
8,704 |
|
|||
Non-GAAP gross profit |
|
27,604 |
|
|
15,508 |
|
|
114,205 |
|
|
375,605 |
|
|||
Non-GAAP gross margin |
|
39.2 |
% |
|
22.9 |
% |
|
39.5 |
% |
|
60.7 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
176,350 |
|
|
49,539 |
|
|
299,985 |
|
|
188,374 |
|
|||
Equity-based compensation included in operating expenses |
|
9,057 |
|
|
7,501 |
|
|
33,173 |
|
|
23,936 |
|
|||
Acquisition-related costs included in operating expenses |
|
— |
|
|
1,359 |
|
|
— |
|
|
7,934 |
|
|||
Amortization of intangible assets |
|
1,958 |
|
|
2,010 |
|
|
7,845 |
|
|
6,497 |
|
|||
Restructuring costs |
|
— |
|
|
(26 |
) |
|
— |
|
|
2,975 |
|
|||
Goodwill impairment loss |
|
120,234 |
|
|
— |
|
|
120,234 |
|
|
— |
|
|||
Non-GAAP operating expenses |
|
45,101 |
|
|
38,695 |
|
|
138,733 |
|
|
147,032 |
|
|||
Non-GAAP operating (loss) profit |
$ |
(17,497 |
) |
$ |
(23,187 |
) |
$ |
(24,528 |
) |
$ |
228,573 |
|
|||
Non-GAAP operating margin |
|
-24.8 |
% |
|
-34.2 |
% |
|
-8.5 |
% |
|
36.9 |
% |
|||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240227268853/en/
Investor Relations Contact:
The Blueshirt Group
Melanie Solomon, melanie@blueshirtgroup.com
Source: Fulgent Genetics, Inc.
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