Fulgent Genetics (NASDAQ: FLGT) (“Fulgent Genetics” or the
“company”) today announced financial results for its first quarter
ended March 31, 2019.
First quarter revenue was $5.4 million, an increase of 15% year
over year from $4.7 million in the first quarter of 2018. GAAP loss
for the first quarter of 2019 was $1.9 million, or $0.10 per share,
and non-GAAP loss was $1.0 million, or $0.06 per share.
Adjusted EBITDA was a loss of $712,000 in the first quarter of
2019.
Non-GAAP 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 and Chief Executive Officer, said, “We had
a good start to the year with billable tests growing 63%
year-over-year, reaching a new quarterly high. Our business mix
continues to diversify, and we have continued to invest in our
infrastructure in anticipation of accelerating test volume in the
coming quarters.”
Paul Kim, Chief Financial Officer, said, “We are pleased with
our growth this quarter, but at the same time we made investments
in our operations which impacted our gross and operating
margins. Despite these investments, we generated
approximately $1 million in cash flow from operations.
Looking at our pipeline of opportunities, we expect to see further
growth throughout the year, and I believe we are well positioned to
build on our momentum.”
Mr. Kim added, “We will provide an update on our guidance
regarding certain financial measures during our investment
community conference call to shortly follow the issuance of this
press release.”
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 first
quarter 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,
www.fulgentgenetics.com, and through a live conference call by
dialing (855) 321-9535 using the conference ID 9394882. An audio
replay will be available in the Investors section of the company’s
website or by calling (855) 859-2056 using passcode 9394882 through
May 14, 2019.
Note Regarding Non-GAAP Financial Measures
Certain of the information set forth in this press release,
including non-GAAP income (loss) 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 Fulgent’s business excluding certain income or
expense items that management believes are not directly
attributable to the company’s core 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 (“GAAP”), plus or minus provisions
(benefits) for income taxes, plus equity-based compensation
expenses, plus or minus equity income (loss) in investee, plus or
minus the effect of a corporate tax rate, and plus or minus other
charges or gains, as identified, that management believes are not
representative of the company’s core operations. Fulgent Genetics
defines adjusted EBITDA as GAAP income (loss) plus or minus
interest expense (income), plus or minus provisions (benefits) for
income taxes, plus depreciation, plus equity-based compensation
expenses, plus or minus equity income (loss) in investee, and plus
or minus other charges or gains, as identified, that management
believes are not representative of the company’s core
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 company with a focus on
offering comprehensive genetic testing to provide physicians with
clinically actionable diagnostic information they can use to
improve the quality of patient care. The company has developed a
proprietary technology platform that allows it to offer a broad and
flexible test menu and continually expand and improve its
proprietary genetic reference library, while maintaining accessible
pricing, high accuracy and competitive turnaround times. The
company believes its test menu offers more genes for testing than
its competitors in today’s market, which enables it to provide
expansive options for test customization and clinically actionable
results.
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: anticipated growth of
and increased stability in the company’s business and performance,
including its volume and expected volume growth of billable tests
delivered, and evaluations and judgments regarding diversification
and momentum; the success of the company’s investments in its
business; the timing, commercial success and impact on the
company’s results of new product launches and other initiatives;
and the company’s identification and evaluation of opportunities
and its ability to capitalize on opportunities 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 and genetic testing generally; the company’s ability to
capture a sizable share of the developing market for genetic
testing and compete successfully in this market, including its
ability to continue to develop new tests that are attractive to its
various customer markets 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, joint ventures 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 Securities and Exchange
Commission, including its annual report on Form 10-K for the year
ended December 31, 2018 filed with the Securities and Exchange
Commission on March 22, 2019 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 Securities and Exchange Commission. 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. In particular, you are in encouraged to review the
Company’s quarterly report on Form 10-Q for the quarter ended March
31, 2019 for any revisions or updates to the information in this
release.
Investor Relations Contacts:The Blueshirt GroupNicole Borsje,
415-217-2633, nborsje@blueshirtgroup.com
|
|
|
|
|
FULGENT
GENETICS, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
|
March 31,
2019 and December 31, 2018 |
|
(in
thousands) |
|
|
|
|
|
|
|
March 31, 2019 |
|
December 31, |
|
ASSETS: |
(unaudited) |
|
|
2018 |
|
Cash and cash equivalents |
$ |
5,288 |
|
$ |
6,736 |
|
Investments in marketable securities |
|
33,122 |
|
|
30,684 |
|
Accounts receivable, net |
|
4,563 |
|
|
5,948 |
|
Property and equipment, net |
|
6,046 |
|
|
6,446 |
|
Other assets |
|
6,633 |
|
|
4,090 |
|
Total assets |
$ |
55,652 |
|
$ |
53,904 |
|
|
|
|
|
|
LIABILITIES & EQUITY: |
|
|
|
|
Accounts payable, accrued liabilities, and other liabilities |
$ |
5,691 |
|
$ |
2,752 |
|
Total stockholders’ equity |
|
49,961 |
|
|
51,152 |
|
Total liabilities & equity |
$ |
55,652 |
|
$ |
53,904 |
|
|
|
|
|
|
|
|
|
|
|
FULGENT
GENETICS, INC. |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DATA |
Three Months Ended March 31, 2019 and 2018 |
(in
thousands, except per share data) |
(unaudited) |
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
|
2019 |
|
|
|
2018 |
|
Revenue |
|
$ |
5,370 |
|
|
$ |
4,653 |
|
Cost of revenue (1) |
|
|
2,968 |
|
|
|
2,772 |
|
Gross profit |
|
|
2,402 |
|
|
|
1,881 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Research and development (1) |
|
|
1,424 |
|
|
|
1,458 |
|
Selling and marketing (1) |
|
|
1,272 |
|
|
|
1,130 |
|
General and administrative (1) |
|
|
1,529 |
|
|
|
1,487 |
|
Total operating expenses |
|
|
4,225 |
|
|
|
4,075 |
|
Operating loss |
|
|
(1,823 |
) |
|
|
(2,194 |
) |
Interest income and other
income, net |
|
|
207 |
|
|
|
95 |
|
Loss before income taxes and equity loss in investee |
|
|
(1,616 |
) |
|
|
(2,099 |
) |
Provision for (benefit from) income taxes |
|
|
13 |
|
|
|
(434 |
) |
Loss before equity loss in investee |
|
|
(1,629 |
) |
|
|
(1,665 |
) |
Equity loss in investee |
|
|
(279 |
) |
|
|
(245 |
) |
Net loss |
|
$ |
(1,908 |
) |
|
$ |
(1,910 |
) |
Net loss per common share: |
|
|
|
|
Basic |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Weighted average common shares: |
|
|
|
|
Basic |
|
|
18,228 |
|
|
|
17,864 |
|
Diluted |
|
|
18,228 |
|
|
|
17,864 |
|
|
|
|
|
|
|
|
|
|
|
(1) Equity-based compensation expense was allocated as
follows: |
|
|
|
|
Cost of revenue |
|
$ |
142 |
|
|
$ |
124 |
|
Research and development |
|
|
178 |
|
|
|
132 |
|
Selling and marketing |
|
|
125 |
|
|
|
108 |
|
General and administrative |
|
|
138 |
|
|
|
181 |
|
Total equity-based compensation expense |
|
$ |
583 |
|
|
$ |
545 |
|
|
|
|
|
|
|
|
|
|
FULGENT
GENETICS, INC. |
Non-GAAP
Income (Loss) Reconciliation |
Three Months Ended March 31, 2019 and 2018 |
(in
thousands, except per share data) |
|
|
|
|
|
Three months ended |
|
March 31, |
|
|
2019 |
|
|
|
2018 |
|
Net loss |
$ |
(1,908 |
) |
|
$ |
(1,910 |
) |
Provision for (benefit from) income taxes |
|
13 |
|
|
|
(434 |
) |
Equity-based compensation expense |
|
583 |
|
|
|
545 |
|
Non-GAAP tax effect (1) |
|
— |
|
|
|
396 |
|
Equity loss in investee |
|
279 |
|
|
|
245 |
|
Non-GAAP loss |
$ |
(1,033 |
) |
|
$ |
(1,158 |
) |
Net loss per common share: |
|
|
|
Basic |
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Diluted |
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Non-GAAP loss per common share: |
|
|
|
Basic |
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
Diluted |
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
Weighted average common shares: |
|
|
|
Basic |
|
18,228 |
|
|
|
17,864 |
|
Diluted |
|
18,228 |
|
|
|
17,864 |
|
|
|
|
|
|
|
|
|
(1) Tax rates as follows: |
|
|
|
Corporate tax rate of zero for the three months ended March 31,
2019 due to full valuation allowance. |
Corporate tax rate of 22% for the three months ended March 31,
2018. |
|
|
|
|
|
|
|
|
FULGENT
GENETICS, INC. |
Non-GAAP
Adjusted EBITDA Reconciliation |
Three Months Ended March 31, 2019 and 2018 |
(in
thousands) |
|
|
|
|
|
Three months ended |
|
March 31, |
|
|
2019 |
|
|
|
2018 |
|
Net loss |
$ |
(1,908 |
) |
|
$ |
(1,910 |
) |
Interest income |
|
(214 |
) |
|
|
(126 |
) |
Provision for (benefit from) income taxes |
|
13 |
|
|
|
(434 |
) |
Equity-based compensation expense |
|
583 |
|
|
|
545 |
|
Depreciation |
|
535 |
|
|
|
516 |
|
Equity loss in investee |
|
279 |
|
|
|
245 |
|
Adjusted EBITDA |
$ |
(712 |
) |
|
$ |
(1,164 |
) |
|
|
|
|
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