Fulgent Genetics Inc (FLGT) Q3 2024 Earnings Call Highlights: Strategic Growth Amid Revenue Decline

GuruFocus News
4 min read

In This Article:

  • Total Revenue: $71.7 million for Q3 2024.

  • Core Business Revenue: $71.7 million, excluding negligible COVID-19 testing revenue.

  • GAAP Gross Margin: 37.3%.

  • Non-GAAP Gross Margin: 40%.

  • GAAP Operating Expenses: $43.9 million for Q3 2024.

  • Non-GAAP Operating Expenses: $32.9 million for Q3 2024.

  • Non-GAAP Operating Margin: -6%.

  • Adjusted EBITDA Income: Approximately $400,000 for Q3 2024.

  • Non-GAAP Income: $9.4 million or $0.31 per share.

  • Cash and Equivalents: Approximately $815.4 million at the end of Q3 2024.

  • 2024 Revenue Guidance: Total core revenue expected to be approximately $280 million.

  • 2024 Non-GAAP Gross Margin Guidance: High 30% range, targeting 40% by year-end.

  • 2024 Non-GAAP EPS Guidance: Improved to a net income of $0.33 per share.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Fulgent Genetics Inc (NASDAQ:FLGT) reported $71.7 million in total revenue for Q3 2024, driven by momentum in precision diagnostics, particularly in reproductive health and oncology.

  • The company has initiated a Phase 2 clinical trial for FID-007, with encouraging preliminary results and plans to enroll approximately 40 patients.

  • Fulgent Genetics Inc (NASDAQ:FLGT) secured a significant contract with VA hospitals worth up to $99 million over five years for hereditary cancer and other germline tests.

  • The company achieved MolDX approval for several hereditary cancer panels, expanding its portfolio of approved cancer tests.

  • Fulgent Genetics Inc (NASDAQ:FLGT) maintains a strong balance sheet with approximately $815.4 million in cash, cash equivalents, restricted cash, and marketable securities.

Negative Points

  • Revenue decreased from $84.7 million in Q3 2023 to $71.7 million in Q3 2024, with negligible revenue from COVID-19 testing.

  • The company recorded a $10.1 million impairment of available-for-sale debt securities, negatively impacting EPS by 33%.

  • Non-GAAP operating margin was negative at minus 6%, despite improvements in gross margins.

  • The therapeutic development business is expected to incur a cash burn of about $15 million to $17 million this year.

  • The VA contract, while significant, will take time to scale, and revenue contributions are not expected to be evenly distributed over the five-year period.

Q & A Highlights

Q: How do you see the trends in Precision Diagnostics and Anatomic Pathology over the next 12 months? A: Brandon Perthuis, Chief Commercial Officer: We see continued momentum in both areas. Precision Diagnostics and Anatomic Pathology are long-term, sticky businesses. We are strengthening our position with excellent turnaround time, quality, and ease of use, which should sustain momentum into next year. The pipelines in both areas have significant opportunities, and we expect to exit 2024 with strong momentum heading into 2025.

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