Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent” or the “company”),
a technology company providing comprehensive testing solutions
through its scalable technology platform, today announced financial
results for its second fiscal quarter ended June 30, 2020.
Second quarter revenue was $17.3 million, an increase of 105%
from $8.4 million in the second quarter of 2019. GAAP income for
the second quarter of 2020 was $3.3 million, or $0.14 per share,
and non-GAAP income was $4.0 million, or $0.17 per share.
Adjusted EBITDA was $4.3 million in the second quarter of 2020,
compared to $1.5 million in the second 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, “The
global COVID-19 pandemic has tested who we are as a company, and
now more than ever we have demonstrated that Fulgent is a
technology company with a proprietary platform built for massive
scale. Our technology is the cornerstone for all facets of our
business, including cloud computing, pipeline services, record
management, web portal services, clinical workflow, sequencing as a
service and automated lab services. Our second quarter results
illustrate how we quickly applied our technology to the needs of
today, organically developing and launching multiple tests to
detect COVID-19 with Emergency Use Authorization from the FDA,
including an at-home test offered through Picture Genetics, our
patient-initiated product. These offerings have attracted major new
customer accounts, resulting in an inflection point in our business
and outlook.”
Paul Kim, Chief Financial Officer, said, “Our second quarter
volume increased over 1200% sequentially, and we see the
opportunity for continued momentum through the balance of the year.
Our traditional genetic testing orders rebounded in June and July
and are on track for growth in the second half of 2020. By
aggressively applying our technology platform, we democratized and
made affordable the needs of COVID-19 testing to the public,
resulting in overall average selling price of less than $100 per
test, while shortening our average turnaround time to less than 24
hours from receipt of sample. We expanded our customer base for the
long term by winning large, strategic governmental and commercial
accounts. We will provide a formal update on our guidance for the
remainder of the year 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 second
quarter 2020 results. Press and industry analysts are invited to
attend in listen-only mode.
The call may be accessed through a live audio webcast on 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 2797888. An audio
replay will be available on the Investors section of the company’s
website or by calling (855) 859-2056 using passcode 2797888 through
August 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’ 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 (“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. In 2019, the Company
launched its first patient-initiated product, Picture Genetics, a
new line of at-home screening tests that combines the Company’s
advanced NGS solutions with actionable results and genetic
counseling options for individuals. Since March 2020, the Company
has commercially launched several tests for the detection of
SARS-CoV-2, the virus that causes the novel coronavirus
(“COVID-19”), including NGS and reverse transcription polymerase
chain reaction (“RT-PCR”) - based tests. The Company has received
Emergency Use Authorization (“EUA”) from the U.S. Food and
Drug Administration (“FDA”) for the RT-PCR-based tests for the
detection of SARS-CoV-2 using upper respiratory specimens (nasal,
nasopharyngeal, and oropharyngeal swabs) and for the at-home
testing service through Picture Genetics. 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 lab services.
About Picture Genetics
Through its Picture Genetics platform launched in 2019, Fulgent
Genetics offers consumers direct access to its advanced genetic
testing and analytics capabilities from the ease and comfort of
home, at an affordable price point. The Picture Genetics platform
provides a holistic approach to at-home genetic screening by
including oversight from independent physicians as well as genetic
counseling options to complement Fulgent Genetics’ comprehensive
genetic testing analysis. The Picture Genetics platform currently
offers multiple tests, providing medically actionable,
clinical-level results with professional medical follow-up in one
easy process. Visit www.picturegenetics.com for more
information.
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 the company’s and its technology platform’s ability to
scale, the company’s evaluations and judgments regarding momentum,
inflection points and the company’s recent performance; 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 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 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 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, 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 U.S. Securities and
Exchange Commission (“SEC”), including its annual report on Form
10-K for the year ended December 31, 2019 filed with the SEC 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
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. In particular, you are
encouraged to review the company’s quarterly report on Form 10-Q
for the quarter ended June 30, 2020 for any revisions or updates to
the information in this release.
Investor Relations Contact:The Blueshirt GroupMelanie Solomon,
415-217-4964, melanie@blueshirtgroup.com
|
|
|
|
FULGENT GENETICS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
June 30, 2020 and December 31, 2019 |
(in thousands) |
|
|
|
|
|
June 30, |
|
December 31, |
ASSETS: |
2020 |
|
2019 |
Cash and cash equivalents |
$ |
2,431 |
|
|
$ |
11,965 |
|
Investments
in marketable securities |
|
63,933 |
|
|
|
58,251 |
|
Accounts
receivable, net |
|
13,863 |
|
|
|
6,555 |
|
Property and
equipment, net |
|
6,013 |
|
|
|
5,974 |
|
Other
assets |
|
9,675 |
|
|
|
6,011 |
|
Total
assets |
$ |
95,915 |
|
|
$ |
88,756 |
|
|
|
|
|
LIABILITIES & EQUITY: |
|
|
|
Accounts
payable, accrued liabilities and other liabilities |
$ |
8,872 |
|
|
$ |
5,979 |
|
Total
stockholders’ equity |
|
87,043 |
|
|
|
82,777 |
|
Total
liabilities & equity |
$ |
95,915 |
|
|
$ |
88,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT
GENETICS, INC. |
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS DATA |
Three and Six
Months Ended June 30, 2020 and 2019 |
(in thousands,
except per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
$ |
17,265 |
|
|
$ |
8,424 |
|
|
$ |
25,018 |
|
|
$ |
13,794 |
|
Cost of
revenue (1) |
|
7,717 |
|
|
|
3,620 |
|
|
|
11,774 |
|
|
|
6,588 |
|
Gross profit |
|
9,548 |
|
|
|
4,804 |
|
|
|
13,244 |
|
|
|
7,206 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Research and development (1) |
|
1,849 |
|
|
|
1,574 |
|
|
|
3,827 |
|
|
|
2,998 |
|
Selling and marketing (1) |
|
3,260 |
|
|
|
1,304 |
|
|
|
4,857 |
|
|
|
2,576 |
|
General and administrative (1) |
|
1,799 |
|
|
|
1,631 |
|
|
|
3,834 |
|
|
|
3,160 |
|
Total
operating expenses |
|
6,908 |
|
|
|
4,509 |
|
|
|
12,518 |
|
|
|
8,734 |
|
Operating
income (loss) |
|
2,640 |
|
|
|
295 |
|
|
|
726 |
|
|
|
(1,528 |
) |
Interest
income and other, net |
|
275 |
|
|
|
192 |
|
|
|
516 |
|
|
|
399 |
|
Income
(loss) before income taxes and equity loss in investee |
|
2,915 |
|
|
|
487 |
|
|
|
1,242 |
|
|
|
(1,129 |
) |
Provision
for (benefit from) income taxes |
|
(599 |
) |
|
|
7 |
|
|
|
(565 |
) |
|
|
20 |
|
Income
(loss) before equity loss in investee |
|
3,514 |
|
|
|
480 |
|
|
|
1,807 |
|
|
|
(1,149 |
) |
Equity loss
in investee |
|
(193 |
) |
|
|
(149 |
) |
|
|
(442 |
) |
|
|
(428 |
) |
Net income
(loss) |
$ |
3,321 |
|
|
$ |
331 |
|
|
$ |
1,365 |
|
|
$ |
(1,577 |
) |
Net income
(loss) per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.15 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
(0.09 |
) |
Diluted |
$ |
0.14 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
(0.09 |
) |
Weighted
average common shares: |
|
|
|
|
|
|
|
Basic |
|
21,747 |
|
|
|
18,343 |
|
|
|
21,656 |
|
|
|
18,286 |
|
Diluted |
|
22,920 |
|
|
|
19,021 |
|
|
|
22,824 |
|
|
|
18,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Equity-based compensation expense was allocated as
follows: |
|
|
|
|
|
|
Cost of
revenue |
$ |
270 |
|
|
$ |
167 |
|
|
$ |
501 |
|
|
$ |
309 |
|
Research and
development |
|
364 |
|
|
|
233 |
|
|
|
676 |
|
|
|
411 |
|
Selling and
marketing |
|
222 |
|
|
|
186 |
|
|
|
393 |
|
|
|
311 |
|
General and
administrative |
|
224 |
|
|
|
151 |
|
|
|
434 |
|
|
|
289 |
|
Total
equity-based compensation expense |
$ |
1,080 |
|
|
$ |
737 |
|
|
$ |
2,004 |
|
|
$ |
1,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT
GENETICS, INC. |
Non-GAAP
Income Reconciliation |
Three and Six
Months Ended June 30, 2020 and 2019 |
(in thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
$ |
3,321 |
|
|
$ |
331 |
|
|
$ |
1,365 |
|
|
$ |
(1,577 |
) |
Provision
for (benefit from) income taxes |
|
(599 |
) |
|
|
7 |
|
|
|
(565 |
) |
|
|
20 |
|
Equity-based
compensation expense |
|
1,080 |
|
|
|
737 |
|
|
|
2,004 |
|
|
|
1,320 |
|
Non-GAAP tax
effect (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Equity loss
in investee |
|
193 |
|
|
|
149 |
|
|
|
442 |
|
|
|
428 |
|
Non-GAAP
income |
$ |
3,995 |
|
|
$ |
1,224 |
|
|
$ |
3,246 |
|
|
$ |
191 |
|
Net income
(loss) per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.15 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
(0.09 |
) |
Diluted |
$ |
0.14 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
(0.09 |
) |
Non-GAAP
income per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.18 |
|
|
$ |
0.07 |
|
|
$ |
0.15 |
|
|
$ |
0.01 |
|
Diluted |
$ |
0.17 |
|
|
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
Weighted
average common shares: |
|
|
|
|
|
|
|
Basic |
|
21,747 |
|
|
|
18,343 |
|
|
|
21,656 |
|
|
|
18,286 |
|
Diluted |
|
22,920 |
|
|
|
19,021 |
|
|
|
22,824 |
|
|
|
18,286 |
|
|
|
|
|
|
|
|
|
(1) Tax rates as
follows: |
Corporate tax rate of
zero for the three and six months ended June 30, 2020 and 2019 due
to full valuation allowance. |
|
|
|
|
|
|
|
|
|
|
|
|
|
FULGENT
GENETICS, INC. |
Non-GAAP
Adjusted EBITDA Reconciliation |
Three and Six
Months Ended June 30, 2020 and 2019 |
(in
thousands) |
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
$ |
3,321 |
|
|
$ |
331 |
|
|
$ |
1,365 |
|
|
$ |
(1,577 |
) |
Interest
income, net |
|
(249 |
) |
|
|
(204 |
) |
|
|
(575 |
) |
|
|
(418 |
) |
Provision
for (benefit from) income taxes |
|
(599 |
) |
|
|
7 |
|
|
|
(565 |
) |
|
|
20 |
|
Equity-based
compensation expense |
|
1,080 |
|
|
|
737 |
|
|
|
2,004 |
|
|
|
1,320 |
|
Depreciation |
|
549 |
|
|
|
511 |
|
|
|
1,118 |
|
|
|
1,046 |
|
Equity loss
in investee |
|
193 |
|
|
|
149 |
|
|
|
442 |
|
|
|
428 |
|
Adjusted
EBITDA |
$ |
4,295 |
|
|
$ |
1,531 |
|
|
$ |
3,789 |
|
|
$ |
819 |
|
|
|
|
|
|
|
|
|
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