Fulgent Genetics(FLGT) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Total revenue for Q3 2023 was $85 million, down from$106 million in Q3 2022, with $19 million coming from COVID-19 testing, which was not part of the guidance [8] - Core revenue for Q3 2023 was$66 million, exceeding the guidance of $65 million and growing 17$18.1 million, compared to $19.7 million in Q3 2022 [9] - Non-GAAP loss for the quarter was$11.7 million or $0.39 per share based on 30 million weighted average shares outstanding [9] - The company ended Q3 with approximately$851 million in cash, cash equivalents, and marketable securities, an increase of $4 million from Q2 [29] Business Line Data and Key Metrics - Precision Diagnostics revenue for Q3 2023 was$37.5 million, up 16% sequentially and 45% year-over-year [5] - Pharma Services revenue for Q3 2023 was $3.7 million, down 50$260 million for 2023, excluding additional revenues from COVID-19 testing [10] - Management is pleased with the trajectory and sees good momentum ahead, with a strong balance sheet and cash position [30] - The company expects to end the year with approximately $830 million of cash, cash equivalents, and investments, excluding stock repurchases since Q3 or other expenditures outside the ordinary course [30] Other Important Information - The company repurchased approximately 80,000 shares of common stock at an aggregate cost of$2.2 million in Q3, and an additional 533,000 shares at an aggregate cost of $13.7 million subsequent to the end of the quarter [29] - The company recognized a tax expense of$20 million in Q3 as it put up a reserve against deferred tax assets [28] Q&A Session Summary Question: Potential for additional COVID-19 collections - There is a chance for additional collections from COVID-19 in Q4 and beyond, but it is not something the company is counting on [34] Question: Seasonality and revenue guidance - Some seasonality is expected, especially in the Anatomic Pathology division, and the company is taking a conservative approach due to lumpiness in Pharma Services [40] Question: Anatomic Pathology (AP) business update - The AP business is stable but has seen a slight downtrend, partly due to seasonality and account-level profitability adjustments [41] Question: Fulgent Oncology expansion - The company has onboarded two new sales reps in different territories and is continuing to look for additional sales talent [43] Question: FDA LDT regulations impact - The company is monitoring FDA LDT regulations closely and is prepared to respond with its subject matter and operational expertise [48] Question: COVID reimbursement payments - The company has mostly exited COVID testing but continues to appeal claims and collect on accounts receivable from previous COVID testing [32] Question: Pharma Services lumpiness and macro environment - The company anticipates lumpiness in Pharma Services but expects over 100% increase in that business for 2023 compared to 2022 [36] Question: R&D spend for Phase II studies - The company expects an annual burn rate of around $50 million for new drug development efforts, including Phase II studies [57] Question: Beacon carrier screening and OB market - The company is seeing continued momentum in Beacon carrier screening and is planning for a rollout to the OB market [45] Question: Share gains in IVF setting - The company continues to see opportunities to gain share in the IVF setting as clients reassess their laboratory choices [64]