- Total Revenue of $68 million
- Record Core Revenue of $67 million, growth of 48%
year-over-year
- Raises Full Year 2023 Core Revenue Guidance to $260 million and
Narrows Expected Loss
Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent” or the
“Company”), a technology-based company with a well-established
clinical diagnostic business and a therapeutic development
business, today announced financial results for its second quarter
ended June 30, 2023.
Second Quarter 2023 Results:
- Total Revenue of $68 million
- Core Revenue1 grew 48% year-over-year to $67 million
- GAAP loss of $11.2 million, or $0.38 per share
- Non-GAAP loss of $2.4 million, or $0.08 per share
- Adjusted EBITDA loss of $2.7 million
- Generated cash flow from operations of $9.7 million
- Cash, cash equivalents, and investments in marketable
securities of $846.8 million as of June 30, 2023, with the decrease
from last quarter primarily related to non-operating activities
including the full repayment of a margin loan and purchase of real
estate
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.
Commenting on the results, Ming Hsieh, Chairman of the Board and
Chief Executive Officer, said, “We are pleased with our results so
far in the first half of the year, with record revenue for our core
genetics business showing continued momentum in our three main
areas -- precision diagnostics, anatomic pathology, and pharma
services. In our therapeutics development business, we are pleased
with the medical community’s response to Phase 1b data for our lead
drug candidate, FID-007, in various cancers, as presented at the
American Society of Clinical Oncology annual meeting, and look
forward to furthering this clinical program as we prepare for
initiation of Phase 2 studies by the end of 2023.”
Paul Kim, Chief Financial Officer, added, “We are again raising
our core guidance for the year due to our outperformance in the
second quarter. Looking ahead, we believe our gross margins and
operating margins will continue to improve as we implement
efficiencies through our integration efforts. Our current cash
position enables us to continue investing in our business.”
Outlook:
For the third quarter of 2023, Fulgent expects:
- Core Revenue of approximately $65 million
For the full year 2023, Fulgent now expects:
- Core Revenue of approximately $260 million
- GAAP loss of approximately $2.15 per share
- Non-GAAP loss of approximately $0.95 per share
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 second quarter 2023
results. The call may be accessed through a live audio webcast on
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, including
non-GAAP income (loss), non-GAAP income (loss) per share, 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 the United States of America, or GAAP, plus
amortization of intangible assets, plus restructuring costs, plus
acquisition-related costs, including banking fees and legal fees
associated with acquisitions, plus equity-based compensation
expense, 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. The non-GAAP tax
effect is calculated by applying the statutory corporate tax rate
on the amortization of intangible assets, restructuring costs,
acquisition-related costs, and equity-based compensation expense.
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 restructuring costs, plus
acquisition-related costs, plus equity-based compensation expense,
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 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) 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
clinical diagnostic business and a therapeutic development
business. Fulgent’s clinical diagnostic business offers molecular
diagnostic testing services, comprehensive genetic testing, and
high-quality anatomic pathology laboratory services designed to
provide physicians and patients with clinically actionable
diagnostic information to improve the quality of patient care.
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, and non-GAAP loss; evaluations and
judgments regarding the stability of certain revenue sources, the
Company’s cash position and sufficiency of its resources, momentum,
vision, future opportunities and future growth the Company’s
testing services and 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 and the expected availability
of data or results of these trials; 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 U.S. Securities and
Exchange Commission, or the SEC, including its annual report on
Form 10-K for the fiscal year ended December 31, 2022, filed with
the SEC on February 28, 2023, 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
June 30, 2023 and December 31,
2022
(in thousands)
June 30,
December 31,
2023
2022
ASSETS:
Cash and cash equivalents
$
58,348
$
79,506
Investments in marketable securities
788,466
773,377
Accounts receivable, net
34,809
52,749
Property, plant, and equipment, net
87,556
81,353
Other assets
385,398
399,068
Total assets
$
1,354,577
$
1,386,053
LIABILITIES & EQUITY:
Accounts payable, accrued liabilities and
other liabilities
$
91,251
$
116,178
Total stockholders’ equity
1,263,326
1,269,875
Total liabilities & equity
$
1,354,577
$
1,386,053
FULGENT GENETICS, INC.
Condensed Consolidated Statement of
Operations Data
Three and Six Months Ended June 30,
2023 and 2022
(in thousands, except per share
data)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
$
67,853
$
125,341
$
134,021
$
445,609
Cost of revenue (1)
47,281
60,065
94,638
137,790
Gross profit
20,572
65,276
39,383
307,819
Operating expenses:
Research and development (1)
9,692
6,905
19,474
12,894
Selling and marketing (1)
10,723
10,866
20,806
18,806
General and administrative (1)
17,993
30,240
39,795
56,015
Amortization of intangible assets
1,962
1,575
3,930
2,481
Restructuring costs
—
2,896
—
2,896
Total operating expenses
40,370
52,482
84,005
93,092
Operating (loss) income
(19,798
)
12,794
(44,622
)
214,727
Interest and other income, net
5,098
958
8,873
1,003
(Loss) income before income taxes
(14,700
)
13,752
(35,749
)
215,730
(Benefit from) provision for income
taxes
(3,110
)
2,653
(8,310
)
51,074
Net (loss) income from consolidated
operations
(11,590
)
11,099
(27,439
)
164,656
Net loss attributable to noncontrolling
interests
361
438
870
860
Net (loss) income attributable to
Fulgent
$
(11,229
)
$
11,537
$
(26,569
)
$
165,516
Net (loss) income per common share
attributable to Fulgent:
Basic
$
(0.38
)
$
0.38
$
(0.90
)
$
5.46
Diluted
$
(0.38
)
$
0.37
$
(0.90
)
$
5.30
Weighted average common shares:
Basic
29,813
30,362
29,675
30,298
Diluted
29,813
31,189
29,675
31,225
(1) Equity-based compensation expense was
allocated as follows:
Cost of revenue
$
2,359
$
2,243
$
4,753
$
3,708
Research and development
3,670
2,502
7,118
4,423
Selling and marketing
1,094
1,080
2,455
1,905
General and administrative
3,200
2,205
6,262
3,610
Total equity-based compensation
expense
$
10,323
$
8,030
$
20,588
$
13,646
FULGENT GENETICS, INC.
Non-GAAP Income (Loss)
Reconciliation
Three and Six Months Ended June 30,
2023 and 2022
(in thousands, except per share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net (loss) income attributable to
Fulgent
$
(11,229
)
$
11,537
$
(26,569
)
$
165,516
Amortization of intangible assets
1,962
1,575
3,930
2,481
Restructuring costs
—
2,896
—
2,896
Acquisition-related costs
—
5,158
—
6,409
Equity-based compensation expense
10,323
8,030
20,588
13,646
Non-GAAP tax effect (1)
(3,440
)
(4,945
)
(6,865
)
(7,121
)
Non-GAAP (loss) income attributable to
Fulgent
$
(2,384
)
$
24,251
$
(8,916
)
$
183,827
Net (loss) income per common share
attributable to Fulgent:
Basic
$
(0.38
)
$
0.38
$
(0.90
)
$
5.46
Diluted
$
(0.38
)
$
0.37
$
(0.90
)
$
5.30
Non-GAAP (loss) income per common share
attributable to Fulgent:
Basic
$
(0.08
)
$
0.80
$
(0.30
)
$
6.07
Diluted
$
(0.08
)
$
0.78
$
(0.30
)
$
5.89
Weighted average common shares:
Basic
29,813
30,362
29,675
30,298
Diluted
29,813
31,189
29,675
31,225
(1) Tax rates as follows:
Corporate tax rate of 28% for the three
and six months ended June 30, 2023 and 2022.
FULGENT GENETICS, INC.
Non-GAAP Adjusted EBITDA
Reconciliation
Three and Six Months Ended June 30,
2023 and 2022
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net (loss) income attributable to
Fulgent
$
(11,229
)
$
11,537
$
(26,569
)
$
165,516
Interest income, net
(5,003
)
(874
)
(8,775
)
(135
)
(Benefit from) provision for income
taxes
(3,110
)
2,653
(8,310
)
51,074
Restructuring costs
—
2,896
—
2,896
Acquisition-related costs
—
5,158
—
6,409
Equity-based compensation expense
10,323
8,030
20,588
13,646
Depreciation and amortization
6,312
8,345
13,191
13,040
Adjusted EBITDA
$
(2,707
)
$
37,745
$
(9,875
)
$
252,446
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230804852418/en/
Investor Relations Contact: The Blueshirt Group Melanie
Solomon, melanie@blueshirtgroup.com
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