Fulgent Genetics (NASDAQ: FLGT) (“Fulgent Genetics” or the
“company”), a provider of comprehensive genetic testing and Next
Generation Sequencing (NGS) solutions, today announced financial
results for its third quarter ended September 30, 2019.
Third quarter revenue was $10.3 million, an increase of 84% year
over year from $5.6 million in the third quarter of 2018. GAAP
income for the third quarter of 2019 was $1.5 million, or $0.08 per
share, and non-GAAP income was $2.6 million, or $0.14 per
share.
Adjusted EBITDA was $3.0 million in the third quarter of 2019,
an increase of 950% year over year from $281,000 in the third
quarter of 2018.
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 and Chief Executive Officer, said, “We
continued to build on our momentum in the third quarter and once
again posted very strong results. Revenue and billable test volume
reached new record highs in the third quarter, while cost per test
continued to improve. Our strong top line results have been driven
by the growing traction with our oncology and reproductive health
businesses, as well as our sequencing-as-service offering. Our
established strategic investments and partnerships are contributing
to our ongoing momentum, and we have been successful in meeting the
growing demand from our new commercial genomic customers. We
believe our superior test capabilities, extensive and flexible test
menu, along with our competitive pricing will continue to drive
strong growth across our business.”
Paul Kim, Chief Financial Officer, said, “We once again achieved
record results in the third quarter, exceeding our expectations for
test volume, revenue and profit. At the same time, we have seen
increasing efficiencies across our business which have resulted in
ongoing improvements in gross and operating margins. These
efficiencies coupled with our increasing scale resulted in
meaningful EBITDA, net income and cash flow generation in the
quarter. We expect to see continued progress as we close out the
year.”
Mr. Kim added, “We will provide a formal 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 third
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
Investors section of the company’s website,
http://ir.fulgentgenetics.com, and through a live conference call
by dialing (855) 321-9535 using the conference ID 8069749. An audio
replay will be available in the Investors section of the company’s
website or by calling (855) 859-2056 using passcode 8069749 through
November 11, 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,
traction, momentum, partnerships and the company’s recent
performance; 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 encouraged to review the
Company’s quarterly report on Form 10-Q for the quarter ended
September 30, 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 |
|
September 30, 2019 and December 31, 2018 |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
September
30, 2019 |
December
31, |
|
ASSETS: |
(unaudited) |
|
|
2018 |
|
Cash and cash equivalents |
$ |
20,522 |
|
$ |
6,736 |
|
Investments
in marketable securities |
|
23,083 |
|
|
30,684 |
|
Accounts
receivable, net |
|
5,292 |
|
|
5,948 |
|
Property and
equipment, net |
|
6,396 |
|
|
6,446 |
|
Other
assets |
|
5,852 |
|
|
4,090 |
|
Total
assets |
$ |
61,145 |
|
$ |
53,904 |
|
|
|
|
|
|
LIABILITIES & EQUITY: |
|
|
|
|
Accounts
payable and accrued liabilities |
$ |
6,619 |
|
$ |
2,752 |
|
Total
stockholders’ equity |
|
54,526 |
|
|
51,152 |
|
Total
liabilities & equity |
$ |
61,145 |
|
$ |
53,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DATA |
|
|
|
|
|
Three and Nine
Months Ended September 30, 2019 and 2018 |
|
(in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Nine months
ended |
|
September 30, |
September 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Revenue |
|
$ |
10,347 |
|
|
$ |
5,625 |
|
|
$ |
24,141 |
|
|
$ |
15,678 |
|
|
Cost of
revenue (1) |
|
|
3,885 |
|
|
|
2,612 |
|
|
|
10,473 |
|
|
|
7,928 |
|
|
Gross profit |
|
|
6,462 |
|
|
|
3,013 |
|
|
|
13,668 |
|
|
|
7,750 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Research and development (1) |
|
|
1,744 |
|
|
|
1,438 |
|
|
|
4,742 |
|
|
|
4,108 |
|
|
Selling and marketing (1) |
|
|
1,687 |
|
|
|
1,115 |
|
|
|
4,263 |
|
|
|
3,524 |
|
|
General and administrative (1) |
|
|
1,522 |
|
|
|
1,306 |
|
|
|
4,682 |
|
|
|
4,159 |
|
|
Total
operating expenses |
|
|
4,953 |
|
|
|
3,859 |
|
|
|
13,687 |
|
|
|
11,791 |
|
|
Operating
income (loss) |
|
|
1,509 |
|
|
|
(846 |
) |
|
|
(19 |
) |
|
|
(4,041 |
) |
|
Interest
income and other income |
|
|
189 |
|
|
|
143 |
|
|
|
588 |
|
|
|
336 |
|
|
Income
(loss) before income taxes and equity loss in investee |
|
|
1,698 |
|
|
|
(703 |
) |
|
|
569 |
|
|
|
(3,705 |
) |
|
Provision
for (benefit from) income taxes |
|
|
61 |
|
|
|
(318 |
) |
|
|
81 |
|
|
|
(852 |
) |
|
Income
(loss) before equity loss in investee |
|
|
1,637 |
|
|
|
(385 |
) |
|
|
488 |
|
|
|
(2,853 |
) |
|
Equity loss
in investee |
|
|
(175 |
) |
|
|
(210 |
) |
|
|
(603 |
) |
|
|
(701 |
) |
|
Net income
(loss) |
|
$ |
1,462 |
|
|
$ |
(595 |
) |
|
$ |
(115 |
) |
|
$ |
(3,554 |
) |
|
Basic and
diluted income (loss) per common share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.20 |
) |
|
Diluted |
|
$ |
0.08 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.20 |
) |
|
Weighted
average common shares: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
18,501 |
|
|
|
18,012 |
|
|
|
18,358 |
|
|
|
17,931 |
|
|
Diluted |
|
|
19,456 |
|
|
|
18,012 |
|
|
|
18,358 |
|
|
|
17,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Equity-based compensation expense was allocated as
follows: |
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
$ |
174 |
|
|
$ |
121 |
|
|
$ |
483 |
|
|
$ |
396 |
|
|
Research and
development |
|
|
279 |
|
|
|
214 |
|
|
|
690 |
|
|
|
517 |
|
|
Selling and
marketing |
|
|
332 |
|
|
|
115 |
|
|
|
643 |
|
|
|
336 |
|
|
General and
administrative |
|
|
166 |
|
|
|
138 |
|
|
|
455 |
|
|
|
457 |
|
|
Total
equity-based compensation expense |
|
$ |
951 |
|
|
$ |
588 |
|
|
$ |
2,271 |
|
|
$ |
1,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
|
|
|
|
Non-GAAP Income (Loss) Reconciliation |
|
|
|
|
|
|
|
|
Three and Nine
Months Ended September 30, 2019 and 2018 |
|
(in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Nine months
ended |
|
September 30, |
September 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
|
2018 |
|
|
Net income (loss) |
$ |
1,462 |
|
$ |
(595 |
) |
|
$ |
(115 |
) |
|
$ |
(3,554 |
) |
|
Provision
for (benefit from) income taxes |
|
61 |
|
|
(318 |
) |
|
|
81 |
|
|
|
(852 |
) |
|
Equity-based
compensation expense |
|
951 |
|
|
588 |
|
|
|
2,271 |
|
|
|
1,706 |
|
|
Non-GAAP tax
effect (1) |
|
- |
|
|
75 |
|
|
|
- |
|
|
|
621 |
|
|
Equity loss
in investee |
|
175 |
|
|
210 |
|
|
|
603 |
|
|
|
701 |
|
|
Non-GAAP
income (loss) |
$ |
2,649 |
|
$ |
(40 |
) |
|
$ |
2,840 |
|
|
$ |
(1,378 |
) |
|
Basic and
diluted income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.08 |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.20 |
) |
|
Diluted |
$ |
0.08 |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.20 |
) |
|
Non-GAAP
income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.14 |
|
$ |
(0.00 |
) |
|
$ |
0.15 |
|
|
$ |
(0.08 |
) |
|
Diluted |
$ |
0.14 |
|
$ |
(0.00 |
) |
|
$ |
0.15 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares: |
|
|
|
|
|
|
|
|
Basic |
|
18,501 |
|
|
18,012 |
|
|
|
18,358 |
|
|
$ |
17,931 |
|
|
Diluted |
|
19,456 |
|
|
18,012 |
|
|
|
18,358 |
|
|
$ |
17,931 |
|
|
|
|
|
|
|
|
|
|
|
(1) Tax
rates as follows: |
|
|
|
|
|
|
|
|
Corporate tax rate of
zero for the three and nine months ended September 30, 2019 due to
full valuation allowance. Corporate tax rate of 23% for the three
and nine months ended September 30, 2018. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA Reconciliation |
|
|
|
|
|
|
|
|
Three and Nine
Months Ended September 30, 2019 and 2018 |
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Nine months
ended |
|
September 30, |
September 30, |
|
2019 |
|
|
|
2018 |
|
|
2019 |
|
|
|
2018 |
|
Net income (loss) |
$ |
1,462 |
|
|
$ |
(595 |
) |
|
$ |
(115 |
) |
|
$ |
(3,554 |
) |
|
Interest
(income) |
|
(202 |
) |
|
|
(151 |
) |
|
|
(619 |
) |
|
|
(410 |
) |
|
Provision
for (benefit from) income taxes |
|
61 |
|
|
|
(318 |
) |
|
|
81 |
|
|
|
(852 |
) |
|
Equity-based
compensation expense |
|
951 |
|
|
|
588 |
|
|
|
2,271 |
|
|
|
1,706 |
|
|
Depreciation |
|
503 |
|
|
|
547 |
|
|
|
1,549 |
|
|
|
1,625 |
|
|
Equity loss
in investee |
|
175 |
|
|
|
210 |
|
|
|
603 |
|
|
|
701 |
|
|
Adjusted
EBITDA |
$ |
2,950 |
|
|
$ |
281 |
|
|
$ |
3,770 |
|
|
$ |
(784 |
) |
|
|
|
|
|
|
|
|
|
|
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