!
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 4, 2022, Fulgent Genetics, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended June 30, 2022. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure
From time to time, the Company presents and/or distributes slides and presentations to the investment community to provide updates and summaries of its business. On August 4, 2022, the Company updated its investor presentation, which is available on the “Investor Relations” section of the Company’s website at https://fulgentgenetics.com/. This presentation is also furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in Items 2.02 and 7.01, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
99.1 |
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Press Release of Fulgent Genetics, Inc., dated August 4, 2022 |
99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 4, 2022 |
FULGENT GENETICS, INC. |
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By: |
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/s/ Paul Kim |
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Name: |
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Paul Kim |
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Title: |
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Chief Financial Officer |
Exhibit 99.1
Fulgent Genetics Reports Second Quarter 2022 Financial Results
TEMPLE CITY, CA, August 4, 2022 —Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent Genetics”, “Fulgent”, or the “Company”), a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health, today announced financial results for its second quarter ended June 30, 2022.
Second Quarter 2022 Results:
Note:
Non-GAAP income (loss) and adjusted EBITDA 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, Chairman of the Board and Chief Executive Officer, said, “We saw strong growth in our core business in the second quarter while revenue from COVID-19 testing has returned to a more normalized level, as expected. We are still in the very early stages of integrating and streamlining the operations of Inform Diagnostics into the Fulgent platform, but we are encouraged by the early positive momentum we are seeing with the combined business. We also continued to gain traction in our oncology testing with the official opening of our west coast lab, while expanding our sequencing as a service business for Biopharma clients. With our focus shifted squarely on our long-term core strategy, we are continuing to evaluate ways to capitalize on strategic opportunities and expand our footprint across the genomic testing and therapeutics landscape. We are excited about the opportunities we see for Fulgent on the long-term horizon and expect to continue building on our momentum in the quarters ahead.”
Paul Kim, Chief Financial Officer, said, “Our second quarter results came in modestly ahead of our expectations with our core business doubling year-over-year amid a volatile macroeconomic backdrop. We have built a great team around a differentiated platform for genomic testing and are seeing the impact of these efforts materialize in our results. The acquisition of Inform Diagnostics, which closed in late April, contributed nicely to our growth this quarter, and we expect to see ongoing traction with the combined business as we capitalize on incremental synergies over time. We remain extremely well capitalized to execute on our growth strategy and plan to continue investing in our sales organization, geographic operational expansion and in opportunistic acquisitions and partnerships that may arise. We are pleased with the strong growth we expect to see in our core business, which we are forecasting will have an annual run rate above $200 million by the end of the third quarter. We will be providing a formal update during our investment community conference call to shortly follow the issuance of this press release.”
Outlook:
For the third quarter of 2022, Fulgent Genetics expects:
For the full year 2022, Fulgent Genetics expects:
Fulgent has not reconciled its expectations as to non-GAAP income per share to their most directly comparable GAAP measure because certain items are out of Fulgent’s control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP income per share is not available without unreasonable effort.
Conference Call Information
Fulgent Genetics will host a conference call for the investment community today at 4:30 PM ET (1:30 PM PT) to discuss its second quarter 2022 results. Press and industry analysts are invited to attend in listen-only mode.
The call can be accessed through a live audio webcast in the Investor Relations section of the Company’s website, http://ir.fulgentgenetics.com, and through a live conference call by dialing (888) 221-3881 using the confirmation code 6448347. An audio replay will be available in the Investor Relations section of the Company’s website.
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 are non-GAAP financial measures. Fulgent Genetics 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 Genetics defines non-GAAP income (loss) as 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 the recent acquisition, 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 Genetics defines adjusted EBITDA 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 Genetics 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; 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 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 Genetics may not be comparable to similarly titled metrics reported by other companies.
About Fulgent Genetics
Fulgent Genetics is a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health. Fulgent Genetics’ proprietary technology platform has created a broad, flexible test menu and the ability to continually expand and improve its proprietary genetic reference library while maintaining accessible pricing, high accuracy, and competitive turnaround times. Combining next generation sequencing, or NGS, with its technology platform, the Company performs full-gene sequencing with deletion/duplication analysis in an array of panels that can be tailored to meet specific customer needs. A cornerstone of the Company’s business is its ability to provide expansive options and flexibility for all clients’ unique testing needs through a comprehensive technology offering including cloud computing, pipeline services, record management, web portal services, clinical workflow, sequencing as a service and automated laboratory services.
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: guidance regarding expected quarterly and annual financial results, including revenues, core revenues, GAAP income, and non-GAAP income; evaluations and judgments regarding market position, balance sheet, cash position, momentum, reinvestments, shareholder value, acquisition strategies, and synergies related to and the performance of acquired businesses (including Inform Diagnostics), investments and partnerships, relationships and the Company’s testing services and technology; future growth and the Company’s testing services and technologies and expansion; the Company’s identification and evaluation of opportunities and its ability to capitalize on opportunities, capture market share, or to 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 ongoing impacts of the COVID-19 pandemic, including the preventive public health measures that may continue to impact demand for its tests and the pandemic’s effects on the global supply chain; the market potential for, and the rate and degree of market adoption of, the Company’s tests, including its tests for COVID-19 and genetic testing generally; the Company’s ability to capture a sizable share of the developing market for genetic and COVID-19 testing and to compete successfully in these markets, including its ability to continue to develop new tests that are attractive to its various customer markets, 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, particularly as the Company makes investments across its business; the Company’s ability to maintain an acceptable margin on sales of its tests, particularly in light of increasing competitive pressures and other factors that may continue to reduce the Company’s sale prices for and margins on its tests; 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 ability to grow and diversify its customer base and increase demand from existing and new customers; the Company’s investments in its infrastructure, including its sales organization and operational capabilities, and the extent to which these investments impact the Company’s business and performance and enable it to manage any growth it may experience in future periods; the Company’s level of success in obtaining coverage and adequate reimbursement and collectability levels from third-party payors for its tests; the Company’s level of success in establishing and obtaining the intended benefits from partnerships, strategic investments, joint ventures, acquisitions, or other relationships; the Company’s compliance with the various evolving and complex laws and regulations applicable to its business and its industry; risks associated with the Company’s international operations; the Company’s ability to protect its proprietary technology platform; and general industry, economic, political and market conditions. 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 year ended December 31, 2021 filed with the SEC on February 28, 2022 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.
Investor Relations Contact:
The Blueshirt Group
Nicole Borsje, 415-217-2633, nicole@blueshirtgroup.com
FULGENT GENETICS, INC. |
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Condensed Consolidated Balance Sheet Data |
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June 30, 2022 and December 31, 2021 |
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(in thousands) |
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June 30, |
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December 31, |
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2022 |
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2021 |
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ASSETS: |
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Cash and cash equivalents |
$ |
138,780 |
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$ |
164,894 |
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Investments in marketable securities |
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792,243 |
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770,652 |
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Accounts receivable, net |
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133,303 |
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138,912 |
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Property, plant, and equipment, net |
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86,049 |
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62,287 |
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Other assets |
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311,287 |
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141,975 |
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Total assets |
$ |
1,461,662 |
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$ |
1,278,720 |
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LIABILITIES & EQUITY: |
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Accounts payable, accrued liabilities and other liabilities |
$ |
150,929 |
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$ |
112,840 |
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Total stockholders' equity |
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1,310,733 |
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1,165,880 |
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Total liabilities & equity |
$ |
1,461,662 |
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$ |
1,278,720 |
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FULGENT GENETICS, INC. |
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Condensed Consolidated Statement of Income Data |
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Three and Six Months Ended June 30, 2022 and 2021 |
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(in thousands, except per share data) |
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(unaudited) |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Revenue |
$ |
125,341 |
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$ |
153,616 |
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$ |
445,609 |
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$ |
513,045 |
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Cost of revenue (1) |
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60,065 |
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35,858 |
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137,790 |
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109,933 |
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Gross profit |
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65,276 |
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117,758 |
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307,819 |
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403,112 |
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Operating expenses: |
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Research and development (1) |
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6,905 |
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5,312 |
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12,894 |
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10,734 |
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Selling and marketing (1) |
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10,866 |
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5,219 |
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18,806 |
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10,227 |
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General and administrative (1) |
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30,240 |
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8,329 |
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56,015 |
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16,331 |
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Amortization of intangible assets |
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1,575 |
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— |
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2,481 |
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— |
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Restructuring costs |
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2,896 |
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— |
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2,896 |
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— |
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Total operating expenses |
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52,482 |
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18,860 |
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93,092 |
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37,292 |
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Operating income |
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12,794 |
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98,898 |
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214,727 |
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365,820 |
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Interest and other income, net |
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958 |
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604 |
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1,003 |
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886 |
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Income before income taxes and gain on equity method investment |
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13,752 |
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99,502 |
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215,730 |
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366,706 |
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Provision for income taxes |
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2,653 |
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23,589 |
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51,074 |
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90,102 |
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Income before gain on equity method investment |
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11,099 |
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75,913 |
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164,656 |
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276,604 |
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Gain on equity method investment |
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— |
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3,734 |
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— |
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3,734 |
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Net income from consolidated operations |
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11,099 |
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79,647 |
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164,656 |
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280,338 |
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Net loss attributable to noncontrolling interests |
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438 |
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165 |
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860 |
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165 |
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Net income attributable to Fulgent |
$ |
11,537 |
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$ |
79,812 |
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$ |
165,516 |
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$ |
280,503 |
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Net income per common share attributable to Fulgent: |
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Basic |
$ |
0.38 |
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$ |
2.74 |
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$ |
5.46 |
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$ |
9.68 |
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Diluted |
$ |
0.37 |
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$ |
2.59 |
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$ |
5.30 |
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$ |
9.10 |
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Weighted average common shares: |
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Basic |
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30,362 |
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29,150 |
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30,298 |
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28,991 |
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Diluted |
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31,189 |
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30,830 |
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31,225 |
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30,809 |
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(1) Equity-based compensation expense was allocated as follows: |
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Cost of revenue |
$ |
2,243 |
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$ |
692 |
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$ |
3,708 |
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$ |
1,366 |
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Research and development |
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2,502 |
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1,481 |
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4,423 |
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2,704 |
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Selling and marketing |
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1,080 |
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620 |
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1,905 |
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1,046 |
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General and administrative |
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2,205 |
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733 |
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3,610 |
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1,372 |
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Total equity-based compensation expense |
$ |
8,030 |
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$ |
3,526 |
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$ |
13,646 |
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$ |
6,488 |
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FULGENT GENETICS, INC. |
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Non-GAAP Income Reconciliation |
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Three and Six Months Ended June 30, 2022 and 2021 |
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(in thousands, except per share data) |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Net income attributable to Fulgent |
$ |
11,537 |
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$ |
79,812 |
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$ |
165,516 |
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$ |
280,503 |
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Amortization of intangible assets |
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1,575 |
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— |
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2,481 |
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— |
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Restructuring costs |
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2,896 |
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— |
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2,896 |
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— |
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Acquisition-related costs |
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5,158 |
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— |
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6,409 |
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— |
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Equity-based compensation expense |
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8,030 |
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3,526 |
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13,646 |
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6,488 |
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Non-GAAP tax effect (1) |
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(4,945 |
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(952 |
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(7,121 |
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(1,752 |
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Gain on equity method investment |
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— |
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(3,734 |
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— |
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(3,734 |
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Non-GAAP income attributable to Fulgent |
$ |
24,251 |
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$ |
78,652 |
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$ |
183,827 |
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$ |
281,505 |
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Net income per common share attributable to Fulgent: |
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Basic |
$ |
0.38 |
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$ |
2.74 |
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$ |
5.46 |
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$ |
9.68 |
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Diluted |
$ |
0.37 |
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$ |
2.59 |
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$ |
5.30 |
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$ |
9.10 |
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Non-GAAP income per common share attributable to Fulgent: |
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Basic |
$ |
0.80 |
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$ |
2.70 |
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$ |
6.07 |
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$ |
9.71 |
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Diluted |
$ |
0.78 |
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$ |
2.55 |
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$ |
5.89 |
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$ |
9.14 |
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Weighted average common shares: |
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Basic |
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30,362 |
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29,150 |
|
|
|
30,298 |
|
|
|
28,991 |
|
Diluted |
|
31,189 |
|
|
|
30,830 |
|
|
|
31,225 |
|
|
|
30,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Tax rates as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate tax rate of 28% for the three and six months ended June 30, 2022. |
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|
|
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||||||||
Corporate tax rate of 27% for the three and six months ended June 30, 2021. |
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FULGENT GENETICS, INC. |
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Non-GAAP Adjusted EBITDA Reconciliation |
|
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|
|
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|
|
|
|
|
|
|
|
Three and Six Months Ended June 30, 2022 and 2021 |
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|
||||||
(in thousands) |
|
|
|
|
|
|
|
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|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income attributable to Fulgent |
$ |
11,537 |
|
|
$ |
79,812 |
|
|
$ |
165,516 |
|
|
$ |
280,503 |
|
Interest income, net |
|
(874 |
) |
|
|
(566 |
) |
|
|
(135 |
) |
|
|
(796 |
) |
Provision for income taxes |
|
2,653 |
|
|
|
23,589 |
|
|
|
51,074 |
|
|
|
90,102 |
|
Restructuring costs |
|
2,896 |
|
|
|
— |
|
|
|
2,896 |
|
|
|
— |
|
Acquisition-related costs |
|
5,158 |
|
|
|
— |
|
|
|
6,409 |
|
|
|
— |
|
Equity-based compensation expense |
|
8,030 |
|
|
|
3,526 |
|
|
|
13,646 |
|
|
|
6,488 |
|
Depreciation and amortization |
|
8,345 |
|
|
|
2,418 |
|
|
|
13,040 |
|
|
|
4,340 |
|
Gain on equity method investment |
|
— |
|
|
|
(3,734 |
) |
|
|
— |
|
|
|
(3,734 |
) |
Adjusted EBITDA |
$ |
37,745 |
|
|
$ |
105,045 |
|
|
$ |
252,446 |
|
|
$ |
376,903 |
|
Disclaimer Forward-Looking Statements and Market Data This presentation contains forward-looking statements, which are statements other than those of historical facts and which represent the estimates and expectations of Fulgent Genetics, Inc. (the “Company”) about future events based on current views and assumptions. Examples of forward-looking statements made in this presentation include, among others, those related its anticipated growth and positioning, addressable market estimates, the Company’s mission and strategies, the success of its business model and strategy, anticipated future revenue and guidance, evaluations and judgments regarding the Company’s business, products, technologies, competitive landscape, scalability, plans regarding development and launch of potential future products, and any businesses the Company may seek to acquire or has acquired, including statements regarding Inform Diagnostics, CSI Laboratories, Helio Health, and any potential synergies. The Company’s views and assumptions on which these forward-looking statements are based may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties and changes in circumstances that may cause actual results to differ materially from those discussed or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from those implied by forward-looking statements are disclosed under “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s reports filed with the Securities and Exchange Commission ("SEC"), including its annual report on Form 10-K filed on February 28, 2022, and other reports it files from time to time. Because of these factors, you should not rely upon forward-looking statements as predictions of future events. The forward-looking statements in this presentation are made only as of the date hereof, and, except as required by law, the Company assumes no obligation to update any forward-looking statements in the future. The company’s reports filed with the SEC, including its annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022 and the other reports it files from time to time, including subsequently filed 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. This presentation also includes market data and forecasts with respect to the industry in which the Company operates. In some cases, the Company relies upon and refers to market data and certain industry forecasts that have been obtained from third-party surveys, market research, consultant surveys, publicly available information and industry publications that the Company believes to be reliable. These data and estimates involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Non-GAAP Financial Measures This presentation contains certain supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to GAAP measures is contained in this presentation.
Mission, Core Values, and Strategy Mission Develop flexible and affordable genomic testing that improves the everyday lives of those around us Core Values Innovation Customer service and commitment Quality Efficiency Strategy Leverage our proprietary NGS platform for broad application Operational excellence Disciplined M&A We are a premier global, technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health
Leadership Team Esteemed background in molecular science and pathology Most recently Chief Medical Officer at NeoGenomics; prior senior role at Clarient. Chairman Emeritus of Pathology at City of Hope National Medical Center Brandon Perthuis Chief Commercial Officer Dr. Lawrence Weiss Chief Medical Officer Ming Hsieh Chief Executive Officer Dr. Harry Gao Lab Director and Chief Scientific Officer James Xie Chief Operating Officer Paul Kim Chief Financial Officer Extensive experience leading genetic testing commercialization programs since 2003 Previously VP of Sales and Marketing of the Medical Genetics Laboratory at Baylor College of Medicine Prior to Baylor, held senior roles at PerkinElmer and Spectral Genomics B.S. in Biomedical Science Responsible for managing all global operations, product vision and product engineering Served as an SVP of Cogent B.A. in Engineering, M.S. in Industrial Engineering and an M.S. in Computer Science Experienced financial leader and Certified Public Accountant Previously CFO of Cogent Systems; sold to 3M for $943M in 2010 B.A. in Economics from University of California at Berkeley Previously Lab Director at City of Hope Clinical molecular genetics training fellowship and post-doctoral fellowship at Harvard Medical School M.S. in Immunology, and M.D. and Ph.D. in Microbiology, Immunology, and Medical Genetics Experienced operational leader, entrepreneur and philanthropist Previously CEO, President, and Chairman of Cogent Systems Member of the National Academy of Engineering; Fellow of the National Academy of Inventors; Trustee of USC
Dr. Larry Weiss Ming Hsieh Paul Kim James Xie Dr. Harry Gao History of Fulgent Genetics Vision of being one-stop shop for genomic testing Integrating acquisitions and partnerships Capital deployment in M&A opportunities Disciplined execution with expanding team 2011 2022 & Beyond 2020 2021 2015-2019 Founded with initial focus on pediatric rare disease Women’s health and prenatal testing added Launched Picture, at-home genetic test offering Launched JV with Xi Long in China Nasdaq IPO Tests for oncology, cardiovascular, and neurological disorders added Combined technology approach from Cogent with genetics expertise from the City of Hope Launched COVID-19 testing Opened lab in Houston, TX Rapid Expansion enabled by proprietary technology platform Awarded CDC contract to study variants Awarded multiple testing contracts from a variety of States Brandon Perthuis Acquired controlling ownership of Chinese JV Second Oncology Lab in Southern California
Well positioned to execute on a growth strategy that includes organic and inorganic initiatives, including: Transformational acquisition of Inform Diagnostics Ramping and integration of capabilities of CSI Labs Scaling partnerships – Helio Health and Spatial Genomics Potential future acquisitions with a strategy of short and long term ROI, tangible synergies and efficient capital deployment Fulgent is Positioned to Execute on Our Growth Strategy Proprietary technology platform allows for rapid scaling of a broad, flexible test menu 18,400+ Genes | 900+ Panels | Customizable Offerings $125M Q2 Revenue 1.3M Q2 Billable Tests +102% Q2 YoY Core Revenue Increase Next-generation sequencing (NGS) platform complemented with growing portfolio of emerging testing technologies with a focus on oncology
Inform Diagnostics Acquisition Inform Diagnostics Strategic Highlights Test Menu Expansion: Acquisition extends Fulgent’s capabilities into the pathology testing market Commercial Synergies: With the addition of Inform Diagnostics’ extensive testing capabilities, nationwide salesforce, and significant managed care contracts, Fulgent is better positioned to become a one-stop shop for diagnostic services throughout the healthcare continuum and across the U.S Managed Care Relationships: Extends Fulgent’s in-network relationships with managed care organizations to over 300 million covered lives Geographic Reach: Expands Fulgent’s geographic footprint with the addition of CLIA, CAP, and NY State certified laboratories in New York, Arizona, Massachusetts, and Texas Attractive Financial Profile: Transaction has the potential to contribute meaningfully to Fulgent’s annual core revenue and is expected to have a positive impact to pro forma EBITDA Core Products and Services Portfolio Breast Pathology: Full spectrum of care, including services for interventional radiologists, breast surgeons, and breast oncologists Dermatopathology: Fellowship trained dermatopathologists Gastrointestinal Pathology: GI pathologists have a collective 500 years of post-training pathology experience and 1,500 peer reviewed studies between them Hematopathology: Is a subspecialty whereby each member of the Company sees >1,000 bone marrow specimens each year Neuropathology: Offers specialized neuropathology testing services Urologic Pathology: Is comprised of subspecialists that specialize in areas such as prostate, bladder/urinary tract, and testis pathology Operates anatomic pathology laboratories that provide diagnostic services in the fields of breast health, dermatology, GI, hematology, neuropathology, urology, and COVID-19 Founded in 1996 and headquartered in Irving, Texas 500+ Preferred Provider Agreements; 70-80% in-network CLIA-certified and CAP-accredited laboratories ~20 Sales Professionals ~550 total employees
CSI Laboratories Acquisition CSI Laboratories Strategic Highlights Enter High Value Markets: Expansion into somatic genetic testing market, which is expected to grow to $16.8 billion by 2030 Revenue Synergy Opportunities: Leveraging Fulgent’s best-in-class technology and Next Generation Sequencing (“NGS”) expertise in new oncology markets Geographic Footprint: Geographic expansion of CSI’s reach beyond the Southeastern part of the United States Specialized Personnel: CSI’s team includes laboratory industry veterans, a salesforce with deep relationships, and oncology-focused scientific expertise Core Products and Services Portfolio Flow Cytometry Cytogenetic Analysis Fluorescence in-situ hybridization (FISH) Immunohistochemistry Molecular genetics Consultations in the areas of hemopathology and surgical pathology Next-Generation Sequencing (NGS) through an affiliated partner Specialized cancer diagnostics laboratory focused on meeting the needs of pathologists and community hospitals Founded in 1997 and headquartered in Alpharetta, Georgia Offers more than 400 unique tests with a focus on oncology CLIA-certified and CAP-accredited laboratory Profitable with quality customers, reimbursement contracts, and established service offerings Sales team focused in the South-Southeast United States
Target Market Opportunity Cancer Diagnostics $80B market1 Market sizes sourced from Wall Street equity research Market size sourced from Frost & Sullivan Genes & Panels Tumor Profiling Known Mutation Newborn Genetics Hereditary Cancer Carrier Screens Genomic Testing Sequencing Service Infectious Disease Spatial Biology $18B market1 Early Detection / Liquid Biopsy Reproductive Health $7B market2 Anatomic Pathology Capabilities Services Include: Breast pathology Gastrointestinal pathology Dermatopathology Urologic pathology Neuropathology Hematopathology Substantial Geographic Footprint Provides services to 1,300 clients representing 2,700 physicians across the United States Expansive in-network relationships with over 300 million covered lives
Building Fulgent’s Platform and Capabilities Cancer Diagnostics Reproductive Health Early Detection / Liquid Biopsy Genes & Panels Tumor Profiling Known Mutation Newborn Genetics Hereditary Cancer Carrier Screens Genomic Testing Sequencing Service seqFISH Technology Comprehensive Diagnostics Platform Anatomic Pathology Infectious Disease Spatial Biology
What Sets Fulgent Apart? Represents genes covered by single-gene tests. For Q2 2022. Includes all tests available for sale (e.g., Whole Exome, Whole Genome, Large Panels, Small Panels, Comprehensive and Focus Cancer Panels and Single-Gene Tests, COVID-19 Tests, and vaccines). Also excludes stock-based compensation. See GAAP reconciliation. Technology Platform A New Approach to NGS Proprietary probes and engineered chemistry Comparison and Suppression Algorithms Comprehensive analytics powered by AI and ML Extensive Test Menu Superior Cost Structure And a Better Cost Structure Average COGS per Test: $43 (2) Lab efficiencies, automation and scale have translated to a sustainable cost structure Partnerships create leverage with sales and marketing Process 100% of volume without the need for outsourcing Leads to a Broader Test Menu 18,400+ single-gene tests (1) 900+ panels Whole Genome and Exome Flexibility enables custom tests for any genes or conditions Preset panels have grown 350% since IPO in 2016
Proprietary Technology Platform Differentiated Technology... Engineered genetic biochemistry, including reagents and probes Data suppression and comparison algorithms Adaptive learning software Automated reporting …Provides a Multitude of Advantages Broadest test menu Ability to rapidly develop and launch new tests Customizable test offerings Lower costs per billable test High efficiency Clinical Workflow for: Cancer Carrier Exome Genome Mito Somatic Other Web Services for: Patients and Providers Fulgent and Picture Websites Research Portal Benefit Analysis Sequencing Services: WSG/WES RNA Oncology Single Cell Methylation Mitochondrial Rent-a-lane Lab Workflow: Wet Lab Auto Lab BioBank Record Management: Patient Record FulgentDB Pipeline Services: Germline Somatic Custom Dry Lab Service Data Analysis Curation Cloud: Report Editor Curation Warehouse Curation Tools Curation Content
Commercialized Commercialized COVID-19 Testing Specialized Oncology Testing Core NGS Recent Traction with: Hereditary Cancer Cardiovascular Genetics Reproductive Health Neurodegenerative Genetics Newly launched pharmacogenetic test Aggressively expanding sales and commercial organization Wide Array of Technologies Services Include: Flow cytometry Cytogenetic analysis Fluorescence in-situ hybridization (FISH) Immunohistochemistry Molecular genetics Consultations in the areas of hematopathology and surgical pathology NGS Fulgent’s Broad Capabilities COVID NGS Research driven platform working with local and federal government on genomic studies CDC contract awarded Fulgent worth up to $47M to study SARS-CoV-2 using Fulgent’s NGS platform Capacity of 10,000 NGS tests per day Used to identify new strains and mutations Primarily RT-PCR Based Testing Contracts with: School systems Nursing homes Athletic organizations Specialty health clinics Travel organizations Government agencies Offered through: Drive through sites Picture at-home kits Managed on-site programs Next Generation Sequencing Opportunities Comprehensive Anatomic Pathology Services Broad Anatomic Pathology Capabilities Breast pathology Gastrointestinal pathology Dermatopathology Urologic pathology Neuropathology Hematopathology Managed care contract network and physician relationships will be leveraged to provide diagnostic products and services complementary to Fulgent’s portfolio Expansive geographic presence with several CLIA-licensed laboratories across the United States
For Q2 2022. Includes all tests available for sale (e.g., Whole Exome, Whole Genome, Large Panels, Small Panels, Comprehensive and Focus Cancer Panels and Single-Gene Tests, COVID-19 Tests, and vaccines). Also excludes stock-based compensation. See GAAP reconciliation. Fulgent’s Menu is Scalable and Affordable to Customers Large Panel Small Panel Focus Panel Single-Gene / Custom Comprehensive Panel Average Sales Price / Test Whole Genome Whole Exome Q2 ’22 Average Sales Price / Test: ~$94 Q2 ’22 Average COGS / Test: ~$43(1) Clinical Exome GREATER OFFERINGS THAN COMPETITORS CNV+ MANY COMPETITORS DO NOT OFFER Flow Cytometry FISH Histopathology Cytogenetics Molecular
NGS Testing – Offerings Site-Specific Testing Known Mutation Focus (30 Genes) Comprehensive (127 Genes) Somatic Cancer Panels 19 Panels Repeat Expansion 18,400+ Genes Single Gene 900+ Panels Customizable Panels Disease Panels Clinical Exome (4,500+ Genes) Whole Exome Exome Tests
NGS Testing – Germline Oncology Test Menu Fulgent Focus Cancer Panels Fulgent Comprehensive Cancer Panels Customizable: Add additional cancer genes or panels at no charge Genes: 30 Methods: NGS & Del/Dup Coverage: 99% at 50x Del/Dup ≥ 1 Exon TAT: 2 – 3 Weeks Customizable: Add additional cancer genes or panels at no charge Methods: NGS & Del/Dup Genes: 127 Coverage: 99% at 50x Del/Dup ≥ 1 Exon TAT: 2 – 3 Weeks Focused Comprehensive
FISH Oncology Testing Platforms Expansive heme and solid tumor menu STAT testing available PML/RARA <1 day TAT CD138 cell enrichment for PCM 3-5 Day turnaround time 225+ stains Platform agnostic Roche, Agilent and Leica IHC Three levels of service – Tech, Global, Consultative PD-L1 - Various IVD platforms and indications <1 to 2 Day turnaround time HISTOLOGY Hematology and solid tumor menu Extensive single gene menu NGS and microarray available 5-7 day turnaround time [NGS 10-14 days] MOLECULAR 10-color platform Comprehensive panel design High-sensitivity for paroxysmal nocturnal hemoglobinuria Expert analysis and interpretation 12-24 hour turnaround time FLOW CYTOMETRY Oncology and constitutional >20% abnormality detection rate Mitogen stimulation/dual culture DSP30 (detection of B-cell disorders) Interleukin 4 for plasma cell myeloma Phytohemagglutinin and Interleukin 2 (detection of T-cell disorders) Children’s Oncology Group approved 5-7 Day turnaround time CYTOGENETICS
The Focus Carrier screen is a pan-ethnic screen that looks for pathogenic mutations known to cause autosomal recessive and X-linked disorders Gene Count: 30 The Ashkenazi Jewish carrier screens for pathogenic carrier variants known to cause recessive genetic disorders Gene Count: 61 The ACOG/ACMG panel screens for common genetic disorders seen in the general population Gene Count: 6 The Expanded Panel with “opt-in” genes, these 9 genes are associated with mild or adult-onset presentation disease Gene Count: 436 The Expanded Panel screens for more than 400 recessive and X-linked conditions that covers people of all ethnic backgrounds Gene Count: 427 NGS Testing – Panel Deep Dive Largest panel available, covering over 400 conditions NGS of entire genes, not just hotspots Deletion and duplication analysis TAT: 2 – 3 weeks Beacon Carrier Screening Beacon ACOG / ACMG Guidelines Panel Beacon Ashkenazi Jewish Panel Beacon Focus Panel Beacon Expanded Panel Beacon Expanded + Opt-in Genes Comprehensive Beacon Carrier Screening Tests
NGS Testing – Women’s Health: PGT-A Increased Chance of Pregnancy Embryos with a normal number of chromosomes have a better chance of resulting in successful pregnancy More Confidence in Transferring a Single Embryo Avoid health risks associated with twin or triplet pregnancies that can occur from multiple embryo implantation Reduced Risk of Miscarriage Embryos with an abnormal number of chromosomes (aneuploid) typically do not result in successful pregnancy or may result in birth defects Fewer Number of Embryo Transfer Cycles Needed Reduce the amount of time to pregnancy and the costs of additional IVF cycles PGT-A Can Expand a Patient’s Prospects of a Successful Pregnancy Preimplantation Genetic Testing for Aneuploidy (PGT-A) can identify potentially abnormal embryos for transfer in IVF, thereby expanding a patient’s prospects of a successful pregnancy Women 35+ Who is PGT-A testing for? Those who have experienced miscarriages Those who want to reduce the likelihood of having multiples Couples experiencing male factor infertility Those who have experienced IVF failure
NGS Testing – Rapid Whole Genome for Newborns Screens for over 200 health conditions Identifies potential health risks before symptoms arise Early detection known to have a positive impact Simple cheek swab collection for your baby : No pricks, sticks, or tears necessary Newborn Genetic Screening Goes Beyond Standard Newborn Screening Multiple congenital anomalies Inborn errors of metabolism Immunodeficiency Respiratory distress Epilepsy Ideal for Infants Experiencing: 20 out of the 35 infants (57%) received dx 13 out of the 20 dx infants (65%) had clinical usefulness for treatment In a Retrospective Analysis of Diagnostic and Clinical Finding with 35 Acutely Ill Infants (2015): TAT of 7 - 10 Days Designed for critically ill infants in the NICU or PICU to rapidly diagnose genetic disorders
Parenting Carrier test that screens for genes associated with 30 genetic conditions Newborn Screens newborns for genes associated with various genetic conditions Wellness Screens adults for genetic variants that indicate disease risk PD Aware Assesses risk for Parkinson's Disease COVID-19 Infection Test At-home collection kit for RT-PCR test for COVID-19 Consumer Initiated Tests – Picture Genetics Targeting the Large Consumer Market with Picture Genetics Launched in 2019 with significant growth amid COVID-19 A consumer-focused offering that merges clinical utility with accuracy of an accredited lab Extends Fulgent’s NGS capabilities to a broader market Validated by successfully scaling to several million billable tests performed within months for COVID-19, after receiving an EUA Performs a complete sequencing (vs genotyping) analysis for better, more accurate results Patient-friendly with easy to use “order from home” model – no doctor visits or insurance necessary, though many tests are eligible for reimbursement Full service offering that includes analysis and genetic counseling support COVID-19 Antibody Test Neutralizing antibody test for COVID-19
Summary Financial Performance $45M Core Revenue1 as of Q2’22 $429M LTM Operating Cash Flow as of Q2’22 ~339,000 LTM Core Tests as of Q2’22 102% growth year-over-year ~160% growth year-over-year ($ in thousands) +107% year-over-year Core Revenue excludes NGS COVID-19 test volume
Financial Performance: Revenue Profile ($ in thousands) (in thousands) ($ in thousands) (in thousands) Core Revenue excludes NGS COVID-19 test volume
Figure is not in accordance with GAAP because it does not include equity-based compensation, amortization, restructuring cost, and acquisition-related costs. (1) Financial Performance: Margin Profile (1) (in thousands) (1)
2022 Financial Guidance Q3 2022 Full Year 2022 Change from Prior Quarter RT-PCR COVID-19 $51 M $480 M Unchanged NGS COVID-19 (CDC) Fulgent Core NGS $54 M + 101% y/y1 $185 M + 99% y/y1 + $5 M CSI and Inform Diagnostics Contributions Total $105 M -54% y/y $665 M -33% y/y + $5 M COVID Core Core Revenue excludes NGS COVID-19 test revenue for more accurate year over year comparison purposes.
Balance Sheet
Non-GAAP Financial Adjustments
Founded in 2011 | Located in Los Angeles, CA | NASDAQ:FLGT