FLGT Fulgent Genetics Inc

• Full Year 2023 Total Revenue of $289.2 million; Q4 2023 Total Revenue of $70.5 million
• Full Year 2023 Core Revenue grows 44% year-over-year to $262.1 million; Q4 2023 Core Revenue grows 21% year-over-year to $66.5 million
• Ended 2023 with $847.7 million of cash, cash equivalents, and investments in marketable securities, representing cash per share of $28

Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent,” or the “Company”), a technology-based company with a well-established laboratory services business and a therapeutic development business, today announced financial results for its fourth quarter and full year ended December 31, 2023.

Fourth Quarter 2023 Results:

• Total Revenue of $70.5 million
• Core Revenue1 grew 21% year-over-year to $66.5 million
• GAAP loss of $128.1 million, or $4.30 per share
• Non-GAAP income of $8.3 million, or $0.28 per share
• Adjusted EBITDA loss of $6.8 million
• Cash from operations of $14.9 million
• Repurchased approximately 873,000 shares of common stock at an aggregate cost of $22.9 million under the stock repurchase program announced in March 2022

Full Year 2023 Results:

• Total Revenue of $289.2 million
• Core Revenue1 grew 44% year-over-year to $262.1 million
• GAAP loss of $167.8 million, or $5.63 per share
• Non-GAAP loss of $12.3 million, or $0.41 per share
• Adjusted EBITDA of $1.5 million
• Cash from operations of $27.0 million
• Repurchased over 953,000 shares of common stock at an aggregate cost of $25.1 million under the stock repurchase program announced in March 2022
• Cash, cash equivalents, and investments in marketable securities of $847.7 million as of December 31, 2023, representing cash per share of $28

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.

Ming Hsieh, Chairperson of the Board of Directors and Chief Executive Officer, said, “We are pleased with our results in 2023, a year in which we raised guidance twice and showed year-over-year growth of 44% in our core business, driven by continued momentum in Precision Diagnostics with our Beacon787 Expanded Carrier screen. We have also made good progress with our therapeutic development business, showcasing data for our lead oncology drug candidate, FID-007, at prestigious medical meetings and moving toward Phase 2 clinical testing, while also advancing our preclinical pipeline. We expect to file an Investigational New Drug (IND) application for FID-022 by the end of 2024 and are exploring potential antibody drug conjugates using our nano-drug delivery platform. I’m optimistic that 2024 will bring further progress in these areas as we serve additional patients.”

Paul Kim, Chief Financial Officer, said, “In 2023, we demonstrated efficiency in our business and superb cash management while continuing to advance our pharma pipeline and repurchase shares under our authorized stock repurchase program. We begin 2024 in a strong financial position, with record core revenues, improving core gross margin, and an enviable cash position with which to execute.”

Outlook:

For the full year 2024, Fulgent expects:

• Core Revenue of approximately $280 million
• GAAP loss of approximately $2.25 per share
• Non-GAAP loss of approximately $1.05 per share
• Cash, cash equivalents, and investments in marketable securities of approximately $800 million as of December 31, 2024*

*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 fourth quarter and full year 2023 results. The call may be accessed through a live audio webcast in 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 and/or to be discussed on the Company’s earnings call, including non-GAAP income (loss), non-GAAP income (loss) per share, non-GAAP operating margin 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 goodwill impairment loss, 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, goodwill impairment loss, 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, plus goodwill impairment loss, and plus or minus other charges or gains, as identified, that management believes are not representative of the Company’s operations. Fulgent defines non-GAAP gross profit as gross profit calculated in accordance with GAAP plus equity-based compensation included in cost of revenue as shown in the table below. Fulgent defines non-GAAP gross margin by taking non-GAAP gross profit and dividing it by GAAP revenue. Fulgent defines non-GAAP operating profit (loss) by taking GAAP operating profit (loss) and adding equity-based compensation, acquisition-related costs included in operating expenses, amortization of intangible assets, restructuring costs and goodwill impairment loss. Non-GAAP operating margin is calculated by taking non-GAAP operating profit (loss) and dividing by GAAP revenue. 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 laboratory services business and a therapeutic development business. Fulgent’s laboratory services business—to which was formerly referred as the clinical diagnostic business, includes technical laboratory services and professional interpretation of laboratory results by licensed physicians. 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, non-GAAP loss, and cash, cash equivalents and investments in marketable securities; 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, including its Beacon Expanded Carrier screen; 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, the expected timing of enrollment for these trials and the availability of data or results of these trials, including any implication that interim or preliminary data will be representative of final data; 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

December 31, 2023 and 2022

(in thousands)

 

December 31,

 

2023

2022

ASSETS:

 

 

 

 

Cash and cash equivalents

$

97,473

$

79,506

Investments in marketable securities

 

750,252

 

773,377

Accounts receivable, net

 

51,132

 

52,749

Property, plant, and equipment, net

 

83,464

 

81,353

Other assets

 

253,007

 

399,068

Total assets

$

1,235,328

$

1,386,053

LIABILITIES & EQUITY:

 

 

 

 

Accounts payable, accrued liabilities and other liabilities

$

102,042

$

116,178

Total stockholders’ equity

 

1,133,286

 

1,269,875

Total liabilities & equity

$

1,235,328

$

1,386,053

FULGENT GENETICS, INC.

Condensed Consolidated Statement of Operations Data

Three and Twelve Months Ended December 31, 2023 and 2022

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

2023

2022

2023

2022

Revenue

$

70,505

 

$

67,704

 

$

289,213

 

$

618,968

Cost of revenue (1)

 

45,276

 

 

54,717

 

 

184,757

 

 

252,067

Gross profit

 

25,229

 

 

12,987

 

 

104,456

 

 

366,901

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development (1)

 

11,952

 

 

8,509

 

 

41,440

 

 

28,910

Selling and marketing (1)

 

10,500

 

 

10,253

 

 

41,467

 

 

38,918

General and administrative (1)

 

31,706

 

 

28,793

 

 

88,999

 

 

111,074

Amortization of intangible assets

 

1,958

 

 

2,010

 

 

7,845

 

 

6,497

Goodwill impairment loss

 

120,234

 

 

—

 

 

120,234

 

 

—

Restructuring costs

 

—

 

 

(26

)

 

—

 

 

2,975

Total operating expenses

 

176,350

 

 

49,539

 

 

299,985

 

 

188,374

Operating (loss) income

 

(151,121

)

 

(36,552

)

 

(195,529

)

 

178,527

Interest and other income, net

 

5,925

 

 

3,090

 

 

21,444

 

 

5,498

(Loss) income before income taxes

 

(145,196

)

 

(33,462

)

 

(174,085

)

 

184,025

(Benefit from) provision for income taxes

 

(10,862

)

 

(9,386

)

 

1,154

 

 

42,102

Net (loss) income from consolidated operations

 

(134,334

)

 

(24,076

)

 

(175,239

)

 

141,923

Net loss attributable to noncontrolling interests

 

6,185

 

 

244

 

 

7,414

 

 

1,480

Net (loss) income attributable to Fulgent

$

(128,149

)

$

(23,832

)

$

(167,825

)

$

143,403

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share attributable to Fulgent:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(4.30

)

$

(0.80

)

$

(5.63

)

$

4.76

Diluted

$

(4.30

)

$

(0.80

)

$

(5.63

)

$

4.63

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

29,771

 

 

29,625

 

 

29,784

 

 

30,097

Diluted

 

29,771

 

 

29,625

 

 

29,784

 

 

30,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Equity-based compensation expense was allocated as follows:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

2,375

 

$

2,521

 

$

9,749

 

$

8,704

Research and development

 

3,973

 

 

3,339

 

 

14,873

 

 

10,449

Selling and marketing

 

1,320

 

 

1,225

 

 

4,964

 

 

4,373

General and administrative

 

3,764

 

 

2,937

 

 

13,336

 

 

9,114

Total equity-based compensation expense

$

11,432

 

$

10,022

 

$

42,922

 

$

32,640

FULGENT GENETICS, INC.

Non-GAAP Income (Loss) Reconciliation

Three and Twelve Months Ended December 31, 2023 and 2022

(in thousands, except per share data)

 

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

2023

2022

2023

2022

Net (loss) income attributable to Fulgent

$

(128,149

)

$

(23,832

)

$

(167,825

)

$

143,403

 

Amortization of intangible assets

 

1,958

 

 

2,010

 

 

7,845

 

 

6,497

 

Goodwill impairment loss

 

120,234

 

 

—

 

 

120,234

 

 

—

 

Restructuring costs

 

—

 

 

(26

)

 

—

 

 

2,975

 

Acquisition-related costs

 

—

 

 

1,359

 

 

—

 

 

7,934

 

Equity-based compensation expense

 

11,432

 

 

10,022

 

 

42,922

 

 

32,640

 

Non-GAAP tax effect (1)

 

2,794

 

 

(3,742

)

 

(15,473

)

 

(14,013

)

Non-GAAP (loss) income attributable to Fulgent

$

8,269

 

$

(14,209

)

$

(12,297

)

$

179,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share attributable to Fulgent:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(4.30

)

$

(0.80

)

$

(5.63

)

$

4.76

 

Diluted

$

(4.30

)

$

(0.80

)

$

(5.63

)

$

4.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP (loss) income per common share attributable to Fulgent:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.28

 

$

(0.48

)

$

(0.41

)

$

5.96

 

Diluted

$

0.28

 

$

(0.48

)

$

(0.41

)

$

5.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

29,771

 

 

29,625

 

 

29,784

 

 

30,097

 

Diluted

 

29,771

 

 

29,625

 

 

29,784

 

 

30,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Tax rates as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate tax rate of 28% for the three and twelve months ended December 31, 2022. During the three and twelve months ended December 31, 2023, the Company maintained a valuation allowance for deferred tax assets.

FULGENT GENETICS, INC.

Non-GAAP Adjusted EBITDA Reconciliation

Three and Twelve Months Ended December 31, 2023 and 2022

(in thousands)

 

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

2023

2022

2023

2022

Net (loss) income attributable to Fulgent

$

(128,149

)

$

(23,832

)

$

(167,825

)

$

143,403

 

Interest income, net

 

(5,947

)

 

(3,023

)

 

(21,124

)

 

(4,610

)

(Benefit from) provision for income taxes

 

(10,862

)

 

(9,386

)

 

1,154

 

 

42,102

 

Goodwill impairment loss

 

120,234

 

 

—

 

 

120,234

 

 

—

 

Restructuring costs

 

—

 

 

(26

)

 

—

 

 

2,975

 

Acquisition-related costs

 

—

 

 

1,359

 

 

—

 

 

7,934

 

Equity-based compensation expense

 

11,432

 

 

10,022

 

 

42,922

 

 

32,640

 

Depreciation and amortization

 

6,533

 

 

9,802

 

 

26,143

 

 

32,662

 

Adjusted EBITDA

$

(6,759

)

$

(15,084

)

$

1,504

 

$

257,106

 

FULGENT GENETICS, INC.

Non-GAAP Operating Margin

Three and Twelve Months Ended December 31, 2023 and 2022

(in thousands)

 

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

2023

2022

2023

2022

Revenue

$

70,505

 

$

67,704

 

$

289,213

 

$

618,968

 

Cost of revenue

 

45,276

 

 

54,717

 

 

184,757

 

 

252,067

 

Gross profit

 

25,229

 

 

12,987

 

 

104,456

 

 

366,901

 

Gross margin

 

35.8

%

 

19.2

%

 

36.1

%

 

59.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation included in cost of revenue

 

2,375

 

 

2,521

 

 

9,749

 

 

8,704

 

Non-GAAP gross profit

 

27,604

 

 

15,508

 

 

114,205

 

 

375,605

 

Non-GAAP gross margin

 

39.2

%

 

22.9

%

 

39.5

%

 

60.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

176,350

 

 

49,539

 

 

299,985

 

 

188,374

 

Equity-based compensation included in operating expenses

 

9,057

 

 

7,501

 

 

33,173

 

 

23,936

 

Acquisition-related costs included in operating expenses

 

—

 

 

1,359

 

 

—

 

 

7,934

 

Amortization of intangible assets

 

1,958

 

 

2,010

 

 

7,845

 

 

6,497

 

Restructuring costs

 

—

 

 

(26

)

 

—

 

 

2,975

 

Goodwill impairment loss

 

120,234

 

 

—

 

 

120,234

 

 

—

 

Non-GAAP operating expenses

 

45,101

 

 

38,695

 

 

138,733

 

 

147,032

 

Non-GAAP operating (loss) profit

$

(17,497

)

$

(23,187

)

$

(24,528

)

$

228,573

 

Non-GAAP operating margin

 

-24.8

%

 

-34.2

%

 

-8.5

%

 

36.9

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240227268853/en/

Investor Relations Contact: The Blueshirt Group Melanie Solomon, melanie@blueshirtgroup.com