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Fulgent Genetics Revenues Increase Nearly Ninefold as Firm Makes Acquisition, Cancer Testing Deal

NEW YORK – Fulgent Genetics reported after the close of the market on Monday that its second quarter revenues increased nearly ninefold, driven primarily by increased test volumes.

For the three-month period ended June 30, Fulgent's revenues skyrocketed to $153.6 million from $17.3 million in Q2 2020, but were below the average Wall Street analysts' estimate of $197.3 million. The number of billable tests delivered during the quarter grew ninefold year over year to 1.6 million tests from 180,513 tests.

The firm announced separately Monday that it has acquired Alpharetta, Georgia-based cancer testing lab CSI Laboratories. Fulgent also announced that it will partner with Helio Health to exclusively commercialize Helio's liquid biopsies tests in North America, with an initial focus on a liver cancer assay called HelioLiver. It also announced it has made an incremental controlling investment in FF Gene Biotech, a joint venture in China.

"With the acquisition of CSI Laboratories and commercial agreement with Helio Health, we believe we are now well positioned to grow our presence in the molecular diagnostics and oncologic testing markets," said CEO Ming Hsieh said in a statement. And with the China JV investment, "we seek to further solidify our foothold in one of the fastest growing genetic testing markets in the world," Hsieh added.

Paul Kim, Fulgent's CFO, said the widespread slowdown in RT-PCR testing for COVID-19 decreased demand for testing in the second quarter faster than the firm had expected. However, "We are closely monitoring the proliferation of the delta variant and expect that ongoing testing will be an important part of fighting this surge," he added.

In addition to COVID-19 testing, Kim also noted that the firm nearly quadrupled its core next-generation sequencing business in the quarter year over year to $25.7 million.

On a call with investors to discuss the earnings, Hsieh addressed the revenue miss. "While we are disappointed that our top-line results fell short of expectations in this quarter, we are looking at our opportunities beyond COVID and are very excited about what the future holds," he said.

The firm also noted on the call that it was chosen to continue COVID-19 testing for New York City schools for the fall semester after a competitive bid process and has secured additional "meaningful wins" related to back-to-school testing on the West Coast and in the Southeast.

The Temple City, California-based genetic testing company posted a Q2 profit of $79.8 million, or $2.59 per diluted share, versus a net profit of $3.3 million, or $.14 per diluted share, a year ago. Its adjusted EPS was $2.55, short of the Wall Street estimate of $2.81.

R&D spending in the quarter tripled to $5.3 million from $1.8 million, while SG&A costs jumped 165 percent to $13.5 million from $5.1 million.

Fulgent adjusted previous full-year guidance to revenues of $800 million, including core revenues of $110 million. It had previously guided for revenues of $830 million, including core revenues of $100 million. Guidance for a non-GAAP income of $12.50 per share remained the same.

Fulgent ended the quarter with cash and cash equivalents of $100 million and investments in marketable securities totaling $667 million.

In Tuesday morning trading on the Nasdaq, Fulgent shares were down approximately 16 percent to $92.54.

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