- Core Revenue of $66 million represents Growth of 17%
Year-over-Year
- Additional Reimbursement from COVID-19 Test Sales yields
Revenue of $19 million, for Total Revenue of $85 million
- Reiterates Full Year 2023 Core Revenue Guidance of $260
million
Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent” or the
“Company”), a technology-based company with a well-established
clinical diagnostic business and a therapeutic development
business, today announced financial results for its third quarter
ended September 30, 2023.
Third Quarter 2023 Results:
- Total Revenue of $85 million
- Core Revenue1 grew 17% year-over-year to $66 million
- GAAP loss of $13.1 million, or $0.44 per share
- Non-GAAP loss of $11.7 million, or $0.39 per share
- Adjusted EBITDA of $18.1 million
- Generated cash flow from operations of $10.2 million
- Cash, cash equivalents, and investments in marketable
securities of $851 million as of September 30, 2023
Note:
1) Core Revenue excludes revenue from
COVID-19 testing products and services including COVID-19 NGS
testing revenue.
Non-GAAP income (loss), non-GAAP income (loss) per share, and
adjusted EBITDA income (loss) 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.
Commenting on the results, Ming Hsieh, Chairman of the Board and
Chief Executive Officer, said, “We continue to see good momentum in
our core business, with particular strength in precision
diagnostics. I am pleased with the trajectory of the business and
our ability to use our resources efficiently as we continue to grow
our core revenue. At the same time, we are advancing our
therapeutics development business, Fulgent Pharma, with ongoing
clinical data of our lead drug candidate, FID-007, being presented
tomorrow at the Society for Immunotherapy of Cancer annual meeting
in San Diego. We believe these data continue to support our
program, and we are excited to initiate Phase 2 studies of FID-007
in head and neck cancer in the first quarter of 2024.”
Paul Kim, Chief Financial Officer, added, “We are pleased with
our performance as we near the end of 2023, with momentum in the
business and a strong financial profile. Even as we continue to
invest in our business and repurchase shares, we are maintaining an
enviable cash position with which to execute our strategy in 2024
and beyond.”
Outlook
For the full year 2023, Fulgent expects:
- Core Revenue of approximately $260 million
- GAAP loss of approximately $2.15 per share
- Non-GAAP loss of $0.95 per share
- Cash, cash equivalents, and investments in marketable
securities of approximately $830 million as of December 31,
2023*
*Cash expenditures may be higher or lower than currently
estimated due to a variety of facts and circumstances, including as
a result of the Company’s ongoing stock repurchase program or other
expenditures outside of ordinary course.
Conference Call Information
Fulgent will host a conference call for the investment community
today at 8:30 AM ET (5:30 AM PT) to discuss its third quarter 2023
results. The call may be accessed through a live audio webcast on
the Investor Relations section of the Company’s website,
http://ir.fulgentgenetics.com. An audio replay will be available at
the same location.
Note Regarding Non-GAAP Financial Measures
Certain information set forth in this press release, including
non-GAAP income (loss), non-GAAP income (loss) per share, and
adjusted EBITDA income (loss) are non-GAAP financial measures.
Fulgent 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 operating
results. Fulgent defines non-GAAP income (loss) as net income
(loss) calculated in accordance with accounting principles
generally accepted in the United States of America, or GAAP, plus
amortization of intangible assets, plus restructuring costs, plus
acquisition-related costs, including banking fees and legal fees
associated with acquisitions, plus equity-based compensation
expenses, plus or minus the non-GAAP tax effect, and plus or minus
other charges or gains, as identified, that management believes are
not representative of the Company’s operations. For the year 2022,
the non-GAAP tax effect is calculated by applying the statutory
corporate tax rate on the amortization of intangible assets,
restructuring costs, acquisition-related costs, and equity-based
compensation expenses. For the year 2023, the non-GAAP tax effect
is calculated by excluding from the GAAP provision the impact of
the amortization of intangible assets, restructuring costs,
acquisition-related costs, and equity-based compensation expenses.
Fulgent defines adjusted EBITDA income (loss) as GAAP income (loss)
plus or minus interest (expense) income, plus or minus provisions
(benefits) for income taxes, plus restructuring costs, plus
acquisition-related costs, plus equity-based compensation expenses,
plus depreciation and amortization, and plus or minus other charges
or gains, as identified, that management believes are not
representative of the Company’s operations. Fulgent 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 income (loss); 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 net 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 may not be comparable to
similarly titled metrics reported by other companies.
About Fulgent
Fulgent is a technology-based company with a well-established
clinical diagnostic business and a therapeutic development
business. Fulgent’s clinical diagnostic business offers molecular
diagnostic testing services, comprehensive genetic testing, and
high-quality anatomic pathology laboratory services designed to
provide physicians and patients with clinically actionable
diagnostic information to improve the quality of patient care.
Fulgent’s therapeutic development business is focused on developing
drug candidates for treating a broad range of cancers using a novel
nanoencapsulation and targeted therapy platform designed to improve
the therapeutic window and pharmacokinetic profile of new and
existing cancer drugs. The Company aims to transform from a genomic
diagnostic business into a fully integrated precision medicine
company.
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: future performance;
guidance regarding expected quarterly and annual financial results,
core revenues, GAAP loss, and non-GAAP loss; evaluations and
judgments regarding the stability of certain revenue sources, the
Company’s cash position and sufficiency of its resources, momentum,
trajectory, vision, future opportunities and future growth of the
Company’s testing services and technologies and expansion; the
Company’s research and development efforts, including any
implications that the results of earlier clinical trials will be
representative or consistent with later clinical trials and the
expected timing of enrollment for these trials or the availability
of data or results of these trials; the Company’s identification
and evaluation of opportunities and its ability to capitalize on
opportunities, capture market share, or expand its presence in
certain markets; and the Company’s 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 market potential
for, and the rate and degree of market adoption of, the Company’s
tests, including its Beacon787 panel; 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; the Company’s ability to maintain an
acceptable margin; 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 level
of success in obtaining coverage and adequate reimbursement and
collectability levels from third-party payors for its tests and
testing services; the Company’s level of success in establishing
and obtaining the intended benefits from partnerships, strategic
investments, joint ventures, acquisitions, or other relationships;
the success of the Company’s development efforts, including the
Company’s ability to progress its candidates through clinical
trials on the timelines expected; the Company’s compliance with the
various evolving and complex laws and regulations applicable to its
business and its industry; and the Company’s ability to protect its
proprietary technology and intellectual property. 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, or the SEC, including its annual report on
Form 10-K for the fiscal year ended December 31, 2022, filed with
the SEC on February 28, 2023, and the other reports it files from
time to time, including subsequently filed annual, 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.
FULGENT GENETICS, INC.
Condensed Consolidated Balance Sheet
Data
September 30, 2023 and December 31,
2022
(in thousands)
September 30,
December 31,
2023
2022
ASSETS:
Cash and cash equivalents
$
84,076
$
79,506
Investments in marketable securities
767,385
773,377
Accounts receivable, net
49,277
52,749
Property, plant, and equipment, net
85,265
81,353
Other assets
372,395
399,068
Total assets
$
1,358,398
$
1,386,053
LIABILITIES & EQUITY:
Accounts payable, accrued liabilities and
other liabilities
$
96,564
$
116,178
Total stockholders’ equity
1,261,834
1,269,875
Total liabilities & equity
$
1,358,398
$
1,386,053
FULGENT GENETICS, INC.
Condensed Consolidated Statement of
Operations Data
Three and Nine Months Ended September
30, 2023 and 2022
(in thousands, except per share
data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
84,687
$
105,655
$
218,708
$
551,264
Cost of revenue (1)
44,843
59,560
139,481
197,350
Gross profit
39,844
46,095
79,227
353,914
Operating expenses:
Research and development (1)
10,014
7,507
29,488
20,401
Selling and marketing (1)
10,161
9,859
30,967
28,665
General and administrative (1)
17,498
26,266
57,293
82,281
Amortization of intangible assets
1,957
2,006
5,887
4,487
Restructuring costs
—
105
—
3,001
Total operating expenses
39,630
45,743
123,635
138,835
Operating income (loss)
214
352
(44,408
)
215,079
Interest and other income, net
6,646
1,405
15,519
2,408
Income (loss) before income taxes
6,860
1,757
(28,889
)
217,487
Provision for income taxes
20,326
414
12,016
51,488
Net (loss) income from consolidated
operations
(13,466
)
1,343
(40,905
)
165,999
Net loss attributable to noncontrolling
interests
359
376
1,229
1,236
Net (loss) income attributable to
Fulgent
$
(13,107
)
$
1,719
$
(39,676
)
$
167,235
Net (loss) income per common share
attributable to Fulgent:
Basic
$
(0.44
)
$
0.06
$
(1.33
)
$
5.53
Diluted
$
(0.44
)
$
0.06
$
(1.33
)
$
5.38
Weighted average common shares:
Basic
30,013
30,174
29,789
30,256
Diluted
30,013
30,867
29,789
31,107
(1) Equity-based compensation expense was
allocated as follows:
Cost of revenue
$
2,621
$
2,475
$
7,374
$
6,183
Research and development
3,782
2,687
10,900
7,110
Selling and marketing
1,189
1,243
3,644
3,148
General and administrative
3,310
2,567
9,572
6,177
Total equity-based compensation
expense
$
10,902
$
8,972
$
31,490
$
22,618
FULGENT GENETICS, INC.
Non-GAAP Income (Loss)
Reconciliation
Three and Nine Months Ended September
30, 2023 and 2022
(in thousands, except per share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net (loss) income attributable to
Fulgent
$
(13,107
)
$
1,719
$
(39,676
)
$
167,235
Amortization of intangible assets
1,957
2,006
5,887
4,487
Restructuring costs
—
105
—
3,001
Acquisition-related costs
—
166
—
6,575
Equity-based compensation expense
10,902
8,972
31,490
22,618
Non-GAAP tax effect (1)
(11,402
)
(3,150
)
(18,267
)
(10,271
)
Non-GAAP (loss) income attributable to
Fulgent
$
(11,650
)
$
9,818
$
(20,566
)
$
193,645
Net (loss) income per common share
attributable to Fulgent:
Basic
$
(0.44
)
$
0.06
$
(1.33
)
$
5.53
Diluted
$
(0.44
)
$
0.06
$
(1.33
)
$
5.38
Non-GAAP (loss) income per common share
attributable to Fulgent:
Basic
$
(0.39
)
$
0.33
$
(0.69
)
$
6.40
Diluted
$
(0.39
)
$
0.32
$
(0.69
)
$
6.23
Weighted average common shares:
Basic
30,013
30,174
29,789
30,256
Diluted
30,013
30,867
29,789
31,107
(1) Tax rates as follows:
Corporate tax rate of 28% for the three
and nine months ended September 30, 2022. During the three months
ended September 30, 2023, the Company established a valuation
allowance for deferred tax assets.
FULGENT GENETICS, INC.
Non-GAAP Adjusted EBITDA
Reconciliation
Three and Nine Months Ended September
30, 2023 and 2022
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net (loss) income attributable to
Fulgent
$
(13,107
)
$
1,719
$
(39,676
)
$
167,235
Interest income, net
(6,402
)
(1,452
)
(15,177
)
(1,587
)
Provision for income taxes
20,326
414
12,016
51,488
Restructuring costs
—
105
—
3,001
Acquisition-related costs
—
166
—
6,575
Equity-based compensation expense
10,902
8,972
31,490
22,618
Depreciation and amortization
6,419
9,820
19,610
22,860
Adjusted EBITDA
$
18,138
$
19,744
$
8,263
$
272,190
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231103381079/en/
The Blueshirt Group Melanie Solomon,
melanie@blueshirtgroup.com
Fulgent Genetics (NASDAQ:FLGT)
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