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 first quarter of fiscal year 2020 ended March 31,
2020.
First quarter revenue was $7.8 million, an increase of 44% year
over year from $5.4 million in the first quarter of 2019. GAAP loss
for the first quarter of 2020 was $2.0 million, or $0.09 per share,
and non-GAAP loss was $749,000, or $0.03 per share.
Adjusted EBITDA loss was $506,000 in the first quarter of 2020,
compared to $712,000 in the first quarter of 2019.
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 very good start to the year, which was impacted by the global
proliferation of the novel coronavirus, or COVID-19, that
materialized in the first quarter. While volume from our core rare
disease, oncology and reproductive health businesses has been
challenged in this unprecedented macro environment, particularly in
March, we were pleased to deliver strong year over year growth in
both revenue and billable test volume in the first quarter.
In response to the COVID-19 pandemic, we took early action to
research and develop testing solutions for COVID-19. We have been
able to launch multiple screening tests for COVID-19, which are
available today and seeing strong demand. Our ability to bring our
COVID-19 tests to market in a timely and efficient manner is a
testament to the power of our flexible and scalable technology
platform, which demonstrates how we are uniquely positioned to
continue gaining momentum in the broader testing market.”
Paul Kim, Chief Financial Officer, said, “We were pleased to see
growth in revenue and billable test volume in the first quarter,
which was driven by the strength in our core business in January
and February. Coinciding with timing of our launch for COVID-19
offerings, we began seeing demand for our COVID-19 tests in the
final week of the quarter. We also made significant investments
across our business during the quarter, that are directly
attributable to the research, development and launch efforts for
our COVID-19 tests. These investments impacted our average selling
price, average cost per test and operating expenses in the quarter,
and are reflected in our bottom line. Despite these dynamics, we
generated approximately $1.4 million in cash flow from operations
in the quarter. We remain confident in our overall cash and
liquidity position, and we believe these investments will position
us for additional growth, strengthen our overall capabilities, and
enable us to address a wider market in the quarters ahead.”
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 first
quarter 2020 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 8333715. An
audio replay will be available in the Investors section of the
company’s website or by calling (855) 859-2056 using passcode
8333715 through May 11, 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 the company’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 offering comprehensive
genetic testing providing 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 ongoing impacts
of the COVID-19 pandemic, including the preventive public health
measures that may continue to impact demand for our genetic
tests; the market potential for, and the rate and degree of
market adoption of, the company’s tests, including the
newly-developed tests for COVID-19 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 filed with the Securities and Exchange
Commission on March 13, 2020 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 March
31, 2020 for any revisions or updates to the information in this
release.
Investor Relations Contacts:The Blueshirt GroupNicole Borsje,
415-217-2633, nborsje@blueshirtgroup.com Melanie Solomon,
415-217-4964, melanie@blueshirtgroup.com
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|
FULGENT GENETICS, INC. |
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
March 31, 2020 and December 31, 2019 |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
ASSETS: |
2020 |
|
2019 |
Cash and cash equivalents |
$ |
9,302 |
|
$ |
11,965 |
Investments in marketable securities |
|
61,322 |
|
|
58,251 |
Accounts receivable, net |
|
6,371 |
|
|
6,555 |
Property and equipment, net |
|
5,698 |
|
|
5,974 |
Other assets |
|
6,632 |
|
|
6,011 |
Total assets |
$ |
89,325 |
|
$ |
88,756 |
|
|
|
|
|
|
LIABILITIES & EQUITY: |
|
|
|
|
|
Accounts payable, accrued liabilities and other liabilities |
$ |
7,953 |
|
$ |
5,979 |
Total stockholders’ equity |
|
81,372 |
|
|
82,777 |
Total liabilities & equity |
$ |
89,325 |
|
$ |
88,756 |
|
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DATA |
Three Months Ended March 31, 2020 and 2019 |
|
|
(in thousands, except per share data) |
|
|
|
(unaudited) |
|
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|
|
|
|
|
Three Months Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
Revenue |
$ |
7,753 |
|
|
$ |
5,370 |
|
Cost of revenue (1) |
|
4,057 |
|
|
|
2,968 |
|
Gross profit |
|
3,696 |
|
|
|
2,402 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development (1) |
|
1,978 |
|
|
|
1,424 |
|
Selling and marketing (1) |
|
1,597 |
|
|
|
1,272 |
|
General and administrative (1) |
|
2,035 |
|
|
|
1,529 |
|
Total operating expenses |
|
5,610 |
|
|
|
4,225 |
|
Operating loss |
|
(1,914 |
) |
|
|
(1,823 |
) |
Interest income and other income, net |
|
241 |
|
|
|
207 |
|
Loss before income taxes and equity loss in investee |
|
(1,673 |
) |
|
|
(1,616 |
) |
Provision for income taxes |
|
34 |
|
|
|
13 |
|
Loss before equity loss in investee |
|
(1,707 |
) |
|
|
(1,629 |
) |
Equity loss in investee |
|
(249 |
) |
|
|
(279 |
) |
Net loss |
$ |
(1,956 |
) |
|
$ |
(1,908 |
) |
Net loss per common share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.09 |
) |
|
$ |
(0.10 |
) |
Diluted |
$ |
(0.09 |
) |
|
$ |
(0.10 |
) |
Weighted average common shares: |
|
|
|
|
|
|
|
Basic |
|
21,566 |
|
|
|
18,228 |
|
Diluted |
|
21,566 |
|
|
|
18,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Equity-based compensation expense was allocated as
follows: |
|
|
|
|
|
|
|
Cost of revenue |
$ |
231 |
|
|
$ |
142 |
|
Research and development |
|
312 |
|
|
|
178 |
|
Selling and marketing |
|
171 |
|
|
|
125 |
|
General and administrative |
|
210 |
|
|
|
138 |
|
Total equity-based compensation expense |
$ |
924 |
|
|
$ |
583 |
|
|
|
|
|
FULGENT GENETICS, INC. |
|
|
|
Non-GAAP Loss Reconciliation |
|
|
|
Three Months Ended March 31, 2020 and 2019 |
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2020 |
|
|
|
2019 |
|
Net loss |
$ |
(1,956 |
) |
|
$ |
(1,908 |
) |
Provision for income taxes |
|
34 |
|
|
|
13 |
|
Equity-based compensation expense |
|
924 |
|
|
|
583 |
|
Non-GAAP tax effect (1) |
|
— |
|
|
|
— |
|
Equity loss in investee |
|
249 |
|
|
|
279 |
|
Non-GAAP loss |
$ |
(749 |
) |
|
$ |
(1,033 |
) |
Net loss per common share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.09 |
) |
|
$ |
(0.10 |
) |
Diluted |
$ |
(0.09 |
) |
|
$ |
(0.10 |
) |
Non-GAAP loss per common share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
Diluted |
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
|
|
|
Basic |
|
21,566 |
|
|
|
18,228 |
|
Diluted |
|
21,566 |
|
|
|
18,228 |
|
|
|
|
|
|
|
|
|
(1) Tax rates as follows: |
|
|
|
|
|
|
|
Corporate tax rate of zero for the three months ended March 31,
2020 and 2019 due to full valuation allowance. |
|
FULGENT GENETICS, INC. |
|
|
|
Non-GAAP Adjusted EBITDA Reconciliation |
|
|
|
Three Months Ended March 31, 2020 and 2019 |
(in thousands) |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2020 |
|
|
|
2019 |
|
Net loss |
$ |
(1,956 |
) |
|
$ |
(1,908 |
) |
Interest income, net |
|
(326 |
) |
|
|
(214 |
) |
Provision for income taxes |
|
34 |
|
|
|
13 |
|
Equity-based compensation expense |
|
924 |
|
|
|
583 |
|
Depreciation |
|
569 |
|
|
|
535 |
|
Equity loss in investee |
|
249 |
|
|
|
279 |
|
Adjusted EBITDA |
$ |
(506 |
) |
|
$ |
(712 |
) |
|
|
|
|
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