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 third fiscal quarter ended September 30, 2020.
Third quarter revenue was $101.7 million, an increase of 883%
from $10.3 million in the third quarter of 2019. GAAP income for
the third quarter of 2020 was $46.6 million, or $1.98 per share,
and non-GAAP income was $49.0 million, or $2.08 per share.
Adjusted EBITDA was $67.4 million in the third quarter of 2020,
compared to $3.0 million in the third 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.
For the fourth quarter of 2020, the company expects to generate
revenue of at least $110 million. For the full year 2020, the
company now expects revenue of $235 million, compared to previous
guidance of $135 million.
Ming Hsieh, Chairman and Chief Executive Officer, said, “I am
very pleased with our outstanding third quarter results, which
demonstrate the true scalability of our technology platform for
genetic testing. As the COVID-19 pandemic continues to threaten
both our health and our way of life, we have been relentless in
scaling our testing capabilities to offer fast, accurate and
reliable COVID-19 testing solutions for commercial organizations,
municipalities, universities and individuals across the country.
Our recent momentum is a result of the investments we have made in
our business and technology platform over many years. We expect to
continue investing in our platform to expand our capabilities as we
look to capture share in the broader genetic testing market in the
future. In addition to our technology investments, we believe the
relationships we have built during this pandemic from both a
customer and reimbursement standpoint, along with the expansion of
our commercial capabilities which includes our at-home platform,
Picture Genetics, will help drive our business in the years
ahead.”
Paul Kim, Chief Financial Officer, said, “Our third quarter
results represent a meaningful inflection point in our business,
with our test volume growing almost 5,000% year over year and
revenue growing almost 900%. This growth was made possible by our
capacity and laboratory expansion, including the opening of our new
laboratory in Houston, coupled with our highly efficient testing
and reporting systems that we worked to develop over the years.
While the majority of our testing volume this quarter comprised of
COVID-19 tests, our core genetic testing business rebounded nicely
and grew 57% sequentially from the second quarter. We also
demonstrated great leverage in the quarter as we continued to
scale, improving gross margin and generating non-GAAP earnings of
$2.08 per share in the quarter. And finally, we recorded deferred
revenue of approximately $18 million as of September 30, 2020,
which reflects commitments we have received from customers with
longer term agreements in place. We expect to see continued
momentum across our business in the fourth quarter, and are pleased
to be raising our revenue guidance for the full year. We will
provide a formal update 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 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 1466548. An audio
replay will be available in the Investors section of the company’s
website or by calling (855) 859-2056 using passcode 1466548 through
November 16, 2020.
Note Regarding Non-GAAP Financial Measures
Certain of the information set forth in this press release,
including non-GAAP income (loss), non-GAAP earnings per share 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 the non-GAAP
tax effect, plus or minus equity income (loss) in investee, plus
impairment loss in equity-method investment, and plus or minus
other charges or gains, as identified, that management believes are
not representative of the company’s core operations. The non-GAAP
tax effect is calculated by applying statutory corporate tax rate
on GAAP income (loss) before equity-based compensation expenses,
provisions (benefits) for income taxes, equity income (loss) in
investee and impairment loss in equity-method investment. 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, plus impairment loss in equity-method investment, 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 laboratory
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,
partnerships, relationships, inflection points, evaluations of the
company’s testing services as compared to competitors and the
company’s recent and future 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, capture market share and its ability to continue 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 September 30, 2020 for any revisions or
updates to the information in this release.
Investor Relations Contact:The Blueshirt GroupNicole Borsje,
415-217-2633, nicole@blueshirtgroup.com
|
|
|
|
|
FULGENT GENETICS,
INC. |
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
|
September 30, 2020 and
December 31, 2019 |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
ASSETS: |
2020 |
|
2019 |
|
Cash and cash equivalents |
$ |
53,031 |
|
$ |
11,965 |
|
Investments in marketable securities |
|
50,939 |
|
|
58,251 |
|
Accounts receivable, net |
|
90,680 |
|
|
6,555 |
|
Property and equipment, net |
|
17,385 |
|
|
5,974 |
|
Other assets |
|
35,276 |
|
|
6,011 |
|
Total assets |
$ |
247,311 |
|
$ |
88,756 |
|
|
|
|
|
|
LIABILITIES & EQUITY: |
|
|
|
|
Accounts payable, accrued liabilities and other liabilities |
$ |
60,356 |
|
$ |
5,979 |
|
Total stockholders’ equity |
|
186,955 |
|
|
82,777 |
|
Total liabilities & equity |
$ |
247,311 |
|
$ |
88,756 |
|
|
|
|
|
|
|
|
|
FULGENT GENETICS,
INC. |
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DATA |
|
|
|
|
Three and Nine Months Ended September 30, 2020 and
2019 |
|
|
|
|
|
|
(in thousands, except
per share data) |
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
$ |
101,716 |
|
|
$ |
10,347 |
|
|
$ |
126,734 |
|
|
$ |
24,141 |
|
Cost of revenue (1) |
|
26,261 |
|
|
|
3,885 |
|
|
|
38,035 |
|
|
|
10,473 |
|
Gross profit |
|
75,455 |
|
|
|
6,462 |
|
|
|
88,699 |
|
|
|
13,668 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development (1) |
|
3,177 |
|
|
|
1,744 |
|
|
|
7,004 |
|
|
|
4,742 |
|
Selling and marketing (1) |
|
5,014 |
|
|
|
1,687 |
|
|
|
9,871 |
|
|
|
4,263 |
|
General and administrative (1) |
|
3,741 |
|
|
|
1,522 |
|
|
|
7,575 |
|
|
|
4,682 |
|
Total operating expenses |
|
11,932 |
|
|
|
4,953 |
|
|
|
24,450 |
|
|
|
13,687 |
|
Operating income (loss) |
|
63,523 |
|
|
|
1,509 |
|
|
|
64,249 |
|
|
|
(19 |
) |
Interest income and other,
net |
|
421 |
|
|
|
189 |
|
|
|
937 |
|
|
|
588 |
|
Income before income taxes, equity loss in investee and impairment
loss |
|
63,944 |
|
|
|
1,698 |
|
|
|
65,186 |
|
|
|
569 |
|
Provision for income taxes |
|
14,526 |
|
|
|
61 |
|
|
|
13,961 |
|
|
|
81 |
|
Income before equity loss in investee and impairment loss |
|
49,418 |
|
|
|
1,637 |
|
|
|
51,225 |
|
|
|
488 |
|
Equity loss in investee |
|
(189 |
) |
|
|
(175 |
) |
|
|
(631 |
) |
|
|
(603 |
) |
Impairment loss in equity-method investment |
|
(2,591 |
) |
|
|
— |
|
|
|
(2,591 |
) |
|
|
— |
|
Net income (loss) |
$ |
46,638 |
|
|
$ |
1,462 |
|
|
$ |
48,003 |
|
|
$ |
(115 |
) |
Net income (loss) per common share: |
|
|
|
|
|
|
|
Basic |
$ |
2.11 |
|
|
$ |
0.08 |
|
|
$ |
2.20 |
|
|
$ |
(0.01 |
) |
Diluted |
$ |
1.98 |
|
|
$ |
0.08 |
|
|
$ |
2.07 |
|
|
$ |
(0.01 |
) |
Weighted average common shares: |
|
|
|
|
|
|
|
Basic |
|
22,062 |
|
|
|
18,501 |
|
|
|
21,793 |
|
|
|
18,358 |
|
Diluted |
|
23,539 |
|
|
|
19,456 |
|
|
|
23,135 |
|
|
|
18,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Equity-based compensation expense was
allocated as follows: |
|
|
|
|
|
|
|
Cost of revenue |
$ |
428 |
|
|
$ |
174 |
|
|
$ |
929 |
|
|
$ |
483 |
|
Research and development |
|
887 |
|
|
|
279 |
|
|
|
1,563 |
|
|
|
690 |
|
Selling and marketing |
|
1,184 |
|
|
|
332 |
|
|
|
1,577 |
|
|
|
643 |
|
General and administrative |
|
651 |
|
|
|
166 |
|
|
|
1,085 |
|
|
|
455 |
|
Total equity-based compensation expense |
$ |
3,150 |
|
|
$ |
951 |
|
|
$ |
5,154 |
|
|
$ |
2,271 |
|
|
|
|
|
|
|
|
|
FULGENT GENETICS,
INC. |
|
|
|
|
|
|
|
Non-GAAP Income
Reconciliation |
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2020 and
2019 |
|
|
|
|
(in thousands, except
per share data) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
$ |
46,638 |
|
|
$ |
1,462 |
|
$ |
48,003 |
|
|
$ |
(115 |
) |
Provision for income taxes |
|
14,526 |
|
|
|
61 |
|
|
13,961 |
|
|
|
81 |
|
Equity-based compensation expense |
|
3,150 |
|
|
|
951 |
|
|
5,154 |
|
|
|
2,271 |
|
Non-GAAP tax effect (1) |
|
(18,115 |
) |
|
|
— |
|
|
(18,992 |
) |
|
|
— |
|
Equity loss in investee |
|
189 |
|
|
|
175 |
|
|
631 |
|
|
|
603 |
|
Impairment loss in equity-method investment |
|
2,591 |
|
|
|
— |
|
|
2,591 |
|
|
|
— |
|
Non-GAAP income |
$ |
48,979 |
|
|
$ |
2,649 |
|
$ |
51,348 |
|
|
$ |
2,840 |
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
Basic |
$ |
2.11 |
|
|
$ |
0.08 |
|
$ |
2.20 |
|
|
$ |
(0.01 |
) |
Diluted |
$ |
1.98 |
|
|
$ |
0.08 |
|
$ |
2.07 |
|
|
$ |
(0.01 |
) |
Non-GAAP income per common share: |
|
|
|
|
|
|
|
Basic |
$ |
2.22 |
|
|
$ |
0.14 |
|
$ |
2.36 |
|
|
$ |
0.15 |
|
Diluted |
$ |
2.08 |
|
|
$ |
0.14 |
|
$ |
2.22 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
|
|
|
Basic |
|
22,062 |
|
|
|
18,501 |
|
|
21,793 |
|
|
|
18,358 |
|
Diluted |
|
23,539 |
|
|
|
19,456 |
|
|
23,135 |
|
|
|
18,358 |
|
|
|
|
|
|
|
|
|
(1) Tax rates as follows: |
|
|
|
|
|
|
|
Corporate tax rate of 27% for the three and nine months ended
September 30, 2020. |
|
|
|
|
Corporate tax rate of zero for the three and nine months ended
September 30, 2019 due to full valuation allowance. |
|
|
|
|
|
|
|
|
FULGENT GENETICS,
INC. |
|
|
|
|
|
|
|
Non-GAAP Adjusted
EBITDA Reconciliation |
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2020 and
2019 |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
$ |
46,638 |
|
|
$ |
1,462 |
|
|
$ |
48,003 |
|
|
$ |
(115 |
) |
Interest income, net |
|
(424 |
) |
|
|
(202 |
) |
|
|
(999 |
) |
|
|
(619 |
) |
Provision for income taxes |
|
14,526 |
|
|
|
61 |
|
|
|
13,961 |
|
|
|
81 |
|
Equity-based compensation expense |
|
3,150 |
|
|
|
951 |
|
|
|
5,154 |
|
|
|
2,271 |
|
Depreciation |
|
722 |
|
|
|
503 |
|
|
|
1,840 |
|
|
|
1,549 |
|
Equity loss in investee |
|
189 |
|
|
|
175 |
|
|
|
631 |
|
|
|
603 |
|
Impairment loss in equity-method investment |
|
2,591 |
|
|
|
— |
|
|
|
2,591 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
67,392 |
|
|
$ |
2,950 |
|
|
$ |
71,181 |
|
|
$ |
3,770 |
|
|
|
|
|
|
|
|
|
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