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 fourth quarter and full year ended December 31,
2019.
Fourth quarter revenue was $8.4 million, an increase of 48% year
over year from $5.7 million in the fourth quarter of 2018. GAAP
loss for the fourth quarter of 2019 was $296,000, or $0.01 per
share, and non-GAAP income was $778,000, or $0.04 per share.
Full year 2019 revenue was $32.5 million, an increase of 52%
year over year from $21.4 million in the prior year. GAAP loss for
the full year 2019 was $411,000, or $0.02 per share, and non-GAAP
income was $3.6 million, or $0.19 per share.
Adjusted EBITDA was $1.1 million in the fourth quarter of 2019,
compared to $37,000 in the fourth quarter of 2018. Adjusted EBITDA
was $4.9 million for the full year 2019, compared to a loss of
$747,000 for the full year 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 had
a strong finish to the year, which was highlighted by revenue
growth of more than 50% and billable test volume growth of more
than 160%, year over year. We saw continued traction with our core
oncology and reproductive health businesses in the quarter, while
we continued to expand and diversify our customer base in both the
clinical and research markets. As we look ahead, we remain focused
on driving growth in our core test markets utilizing our technology
platform while expanding our reach through partnerships and
licensing agreements. We also see incremental opportunity to grow
our international business, where we are in the early stages of
expanding our sales organization. We look forward to providing
updates on these initiatives in the year ahead.”
Paul Kim, Chief Financial Officer, said, “We are pleased with
our fourth quarter results, which capped off a strong year of
growth for Fulgent. As our business continues to stabilize and
scale, we have seen ongoing improvements in gross margin and
operating leverage, which both improved year over year in the
fourth quarter. We were also pleased to generate $4.9 million in
Adjusted EBITDA and $5.5 million in operating cash flow for the
year, which together with the proceeds from the equity financing we
completed in November, position us very well for long term growth
and expansion.”
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 fourth
quarter and full year 2019 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 9135649. An audio
replay will be available in the Investors section of the company’s
website or by calling (855) 859-2056 using passcode 9135649 through
March 17, 2020.
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, 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 annual
report on Form 10-K for the year ended December 31, 2019 for any
revisions or updates to the information in this release.
Investor Relations Contact:The Blueshirt GroupNicole Borsje,
415-217-2633, nborsje@blueshirtgroup.com
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
|
December 31, 2019 and 2018 |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
ASSETS: |
2019 |
|
2018 |
|
Cash and cash equivalents |
$ |
11,965 |
|
$ |
6,736 |
|
Investments
in marketable securities |
|
58,251 |
|
|
30,684 |
|
Accounts
receivable, net |
|
6,555 |
|
|
5,948 |
|
Property and
equipment, net |
|
5,974 |
|
|
6,446 |
|
Other
assets |
|
6,011 |
|
|
4,090 |
|
Total
assets |
$ |
88,756 |
|
$ |
53,904 |
|
|
|
|
|
|
LIABILITIES & EQUITY: |
|
|
|
|
Accounts
payable, accrued liabilities and other liabilities |
$ |
5,979 |
|
$ |
2,752 |
|
Total
stockholders’ equity |
|
82,777 |
|
|
51,152 |
|
Total
liabilities & equity |
$ |
88,756 |
|
$ |
53,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DATA |
|
|
|
|
|
Three and Twelve Months Ended December 31, 2019 and
2018 |
|
|
|
|
|
|
|
(in
thousands, except per share data) |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Twelve
months ended |
|
December 31, |
December 31, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
Revenue |
$ |
8,387 |
|
|
$ |
5,673 |
|
|
$ |
32,528 |
|
|
$ |
21,351 |
|
|
Cost of
revenue (1) |
|
3,634 |
|
|
|
2,769 |
|
|
|
14,107 |
|
|
|
10,697 |
|
|
Gross
profit |
|
4,753 |
|
|
|
2,904 |
|
|
|
18,421 |
|
|
|
10,654 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Research and development (1) |
|
1,795 |
|
|
|
1,426 |
|
|
|
6,537 |
|
|
|
5,534 |
|
|
Selling and marketing (1) |
|
1,635 |
|
|
|
1,128 |
|
|
|
5,898 |
|
|
|
4,652 |
|
|
General and administrative (1) |
|
1,732 |
|
|
|
1,379 |
|
|
|
6,414 |
|
|
|
5,538 |
|
|
Total
operating expenses |
|
5,162 |
|
|
|
3,933 |
|
|
|
18,849 |
|
|
|
15,724 |
|
|
Operating
loss |
|
(409 |
) |
|
|
(1,029 |
) |
|
|
(428 |
) |
|
|
(5,070 |
) |
|
Interest
income and other income |
|
249 |
|
|
|
98 |
|
|
|
837 |
|
|
|
434 |
|
|
Income
(loss) before income taxes and equity loss in investee |
|
(160 |
) |
|
|
(931 |
) |
|
|
409 |
|
|
|
(4,636 |
) |
|
Provision
for (benefit from) income taxes |
|
(38 |
) |
|
|
888 |
|
|
|
43 |
|
|
|
36 |
|
|
Income
(loss) before equity loss in investee |
|
(122 |
) |
|
|
(1,819 |
) |
|
|
366 |
|
|
|
(4,672 |
) |
|
Equity loss
in investee |
|
(174 |
) |
|
|
(234 |
) |
|
|
(777 |
) |
|
|
(935 |
) |
|
Net
loss |
$ |
(296 |
) |
|
$ |
(2,053 |
) |
|
$ |
(411 |
) |
|
$ |
(5,607 |
) |
|
Net loss per
common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.01 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.31 |
) |
|
Diluted |
$ |
(0.01 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.31 |
) |
|
Weighted
average common shares: |
|
|
|
|
|
|
|
|
Basic |
|
19,984 |
|
|
|
18,117 |
|
|
|
18,709 |
|
|
|
17,978 |
|
|
Diluted |
|
19,984 |
|
|
|
18,117 |
|
|
|
18,709 |
|
|
|
17,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Equity-based compensation expense was allocated as
follows: |
|
|
|
|
|
|
|
|
Cost of
revenue |
$ |
193 |
|
|
$ |
127 |
|
|
$ |
676 |
|
|
$ |
523 |
|
|
Research and
development |
|
334 |
|
|
|
215 |
|
|
|
1,024 |
|
|
|
732 |
|
|
Selling and
marketing |
|
202 |
|
|
|
124 |
|
|
|
845 |
|
|
|
460 |
|
|
General and
administrative |
|
209 |
|
|
|
132 |
|
|
|
664 |
|
|
|
589 |
|
|
Total
equity-based compensation expense |
$ |
938 |
|
|
$ |
598 |
|
|
$ |
3,209 |
|
|
$ |
2,304 |
|
|
|
|
|
|
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
|
|
|
|
Non-GAAP Income (Loss) Reconciliation |
|
|
|
|
|
|
|
|
Three and Twelve Months Ended December 31, 2019 and
2018 |
|
|
|
|
|
(in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Twelve
months ended |
|
December 31, |
December 31, |
|
2019 |
|
|
2018 |
|
2019 |
|
|
2018 |
|
|
Net loss |
$ |
(296 |
) |
|
$ |
(2,053 |
) |
|
$ |
(411 |
) |
|
$ |
(5,607 |
) |
|
Provision
for (benefit from) income taxes |
|
(38 |
) |
|
|
888 |
|
|
|
43 |
|
|
|
36 |
|
|
Equity-based
compensation expense |
|
938 |
|
|
|
598 |
|
|
|
3,209 |
|
|
|
2,304 |
|
|
Non-GAAP tax
effect (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Equity loss
in investee |
|
174 |
|
|
|
234 |
|
|
|
777 |
|
|
|
935 |
|
|
Non-GAAP
income (loss) |
$ |
778 |
|
|
$ |
(333 |
) |
|
$ |
3,618 |
|
|
$ |
(2,332 |
) |
|
Net loss per
common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.01 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.31 |
) |
|
Diluted |
$ |
(0.01 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.31 |
) |
|
Non-GAAP
income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.04 |
|
|
$ |
(0.02 |
) |
|
$ |
0.19 |
|
|
$ |
(0.13 |
) |
|
Diluted |
$ |
0.04 |
|
|
$ |
(0.02 |
) |
|
$ |
0.19 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares: |
|
|
|
|
|
|
|
|
Basic |
|
19,984 |
|
|
|
18,117 |
|
|
|
18,709 |
|
|
|
17,978 |
|
|
Diluted |
|
19,984 |
|
|
|
18,117 |
|
|
|
18,709 |
|
|
|
17,978 |
|
|
|
|
|
|
|
|
|
|
|
(1) Tax
rates as follows: |
|
|
|
|
|
|
|
|
Corporate tax rate of
zero for the three and twelve months ended December 31, 2019 and
2018 due to full valuation allowance. |
|
|
|
FULGENT GENETICS, INC. |
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA Reconciliation |
|
|
|
|
|
|
|
|
Three and Twelve Months Ended December 31, 2019 and
2018 |
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Twelve
months ended |
|
December 31, |
December 31, |
2019 |
|
|
2018 |
|
2019 |
|
|
2018 |
|
Net loss |
$ |
(296 |
) |
|
$ |
(2,053 |
) |
|
$ |
(411 |
) |
|
$ |
(5,607 |
) |
|
Interest
income, net |
|
(252 |
) |
|
|
(168 |
) |
|
|
(871 |
) |
|
|
(578 |
) |
|
Provision
for (benefit from) income taxes |
|
(38 |
) |
|
|
888 |
|
|
|
43 |
|
|
|
36 |
|
|
Equity-based
compensation expense |
|
938 |
|
|
|
598 |
|
|
|
3,209 |
|
|
|
2,304 |
|
|
Depreciation |
|
558 |
|
|
|
538 |
|
|
|
2,107 |
|
|
|
2,163 |
|
|
Equity loss
in investee |
|
174 |
|
|
|
234 |
|
|
|
777 |
|
|
|
935 |
|
|
Adjusted
EBITDA |
$ |
1,084 |
|
|
$ |
37 |
|
|
$ |
4,854 |
|
|
$ |
(747 |
) |
|
|
|
|
|
|
|
|
|
|
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