FLGT - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Fulgent Genetics Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for conference call, Ms. Nicole Borsje.

You may begin.

Nicole Borsje

Great. you. Thank welcome Call. Genetics and Financial Quarter the Conference Results to afternoon, First Fulgent XXXX Good

call is company’s available will the the fulgentgenetics.com. Kim, its On An today call results shortly Investor Chief and Executive financial of the Financial after Paul Relations Officer; audio section the Officer. company’s available replay be The is press of discussing Ming release on Hsieh, website, Chief replay. call website visit prepared the section to views These statements. Investor answers management's access current your remarks Management’s may company’s based assumptions, incorrect. represent estimates to call audio Please and prove concludes. will today’s of the forward-looking Relations on to which statements and on the be forward-looking questions contain this

per in company's measures prepared Investor on various has Relations XXXX, financial of United be to matters to may forward-looking and accounting for earnings as company's results to events, financial of accepted GAAP. financial the earnings future assumes Exchange remarks, may including results Please in results, with to update Ming. described to any are for the rely including the turn now information, today these differ discussions in for accordance circumstances they for which earnings XX-K predictions and these website. reconciliation believes earnings I’d in forward-looking discussed and including as of measures Please release useful these changes filed in press in filings full more should earnings the contained today XXXX share, not quarter detailed the company future calculates quarter or review investors of those should statements is Securities Listeners with from reasons, Commission, from of to financial statements different discussions prepared forward-looking to forward-looking in forward-looking in on measures year with differ the contain the the factors the company’s measures. risks, results including and GAAP The that, understanding the superior company or Management’s results no the the it that available see like generally principles and the a actual some any may not fourth previously how share or risk with in and share cause and statements. these forward-looking substitute GAAP. of be accordance financial the prepared per statements. related discussing events forward-looking With to the not the the non-GAAP statements they call may in make discussions changes expectations. or by result, including these cause its implied results to the but the to reflect subject of that presented any materially may company’s first directly because actual remarks what described a more to and The statements, most viewed financial those is that management’s earnings company’s should obligation As actual listen for statements non-GAAP States comparable description and actual be it Management to uncertainties a described per over

Ming Hsieh

of year-over-year discusses before on $X.X our today review XX% the volume, discuss in to start the billable Good for joining the test us growth to increased first high afternoon, growth We I results which had call quarter year-over-year thank financial Nicole. in almost Paul volume. our quarter Revenue it first test detail. to year-over-year to and highlights the good record strong will in year XXXX results. X,XXX. you, demonstrates million. XX% We our and grew and solid saw a from a Thank new you revenue a

by down ASP $X.X fourth the in quarter $X million XXX quarter XXXX XXX margin approximately strong XX% the last points basis Adjusted clinical and was XX.X%, was quarter. points our Our year the GAAP up was $XXX, down business. gross from volume was compared $X.XX share the first Non-GAAP quarter momentum product a test non-GAAP $XXX,XXX negative first loss to loss was growth core quarter, the approximately in of saw first EBITDA loss mix. million. due Non-GAAP quarter. this fourth sequentially. to per and in was We basis driven in in

in We our increasing ongoing of tests. for diversification base has of and customer our through And been demand this business. the variety our investments made have paying off broad

In addition have such health we in as sequencing-as-a-service. areas, ongoing heading the and to success, reproductive the

help run. decreased seeing long to the businesses beyond business, recent we diversification the business. which of been driving over are growth XX% cancer fourth our are ASPs, our in has our We success diversification continuing compared increased we The will seeing product success our The about to the see sustainable pediatric across our mix increased which impacted are quarter.

gross However, as operating coming margin we improve should we're in increasing automation. scale, and quarters believe and efficiency our

continue year. see We have begun volume over test with the and to the we growth course to scale expect of

in quarter surpass have ability momentum are tests we the We I on to our our in as XX,XXX second discussed. area the build confident

our overall sequencing. market our ahead, look diversified to and growth the in on we XXXX opportunity for large will be As ability capitalization next-generation driven by

agreement technology footprint for and research to patients. care leveraging In sequencing our organizations pediatrics. their We the advanced our through deliver biopharma we market at reproductive actionable informed are time, more the to with organizations continue But health capability well partnership do expanding situation, institutions, this organizations. cash same the the and and and partnership in cancer, for are our

test we our help in our sustainable demands agreement business. have searching predictable we will partnership build for volume and growth create sequencing the us, to sales to for more stable Our which has has large agreements. agreement. been drive partnerships organization continued successful pipeline for And This helped believe

So leveraging patient's for team our executed year, care a foundation their with and agreement has funding academic technology the and collaboration institutions our far that treatment research. major medical this are

we Another is our and carrier Fujian and couples carrier Beacon facility finalized capabilities results. particular timely technology, to Ontario to in our a in and Canada others. to due expand research screening lab screening leverage available [Indiscernible] to recently organization our the across the deliver a clinical to large our ability superior expertise partnership, technical selected bioinformatics This in

seeing of to superior which that technology opportunities hope capabilities are our work a testament of and continuing increasing The on upside later their year. partner are our provide We of to patients. and offer solutions this additional exciting we other growth can to number our partnerships, ability cost-effective number flexible is we for

our the solutions over the customers partners since of to us where we our with this which unique technology volume. of leverage data our continue partnerships core growth the extensive in continues for from maintain We ahead. time, are one agreements for able also from these of process biggest our business, deliver in agreements test leverage our cash they partnership to analysis. prompt volume give in processing quarters the comprehensive technology to test for large periods we and some analysis, to of see of in growth These to driver to sequencing packaged span our can ability momentum our reporting. offer Outside confidence Many our

and have clients, XXXX we the driving our the start to we platform. customers look continued position have beyond. to ahead about our solid feel with We while year of existing rest a relationships new to our and to expand we good Overall, as

We year that details in expect to on drive technology across also growth execution additional will over He an our performance platform. our outlook partnerships for XXXX. leverage financial industry leadership provide update the through call while our now I financial our to first business, would core provide the on to delivering the Paul Paul? consistent like and to signing full quarter. turn

Paul Kim

Thanks, Ming.

increase $X.X XX% totaled quarter to of XXXX. first compared First the revenue quarter of an million,

fourth first While XXXX. business the recently remains strong, through the our of positions while us quarter, JV recorded revenue of total China revenues our XX% fourth business U.S. represented from has the grew quarter, growth year-over-year, revenue grew we $XXX,XXX. in from the from as XX% JV XXXX, the JV the quarter U.S. up while year-over-year international from XX% XX% XX% in seeing Longer-term, Revenue been accelerating uniquely China to of of in in loss the year-over-year first net activities of large the quarter a the remained low, relatively that U.S. we our capture confident remain momentum market.

fourth quarter, method over a year balance our on Billable which over the we're QX equity increase the tests X,XXX in and of quarter is the last of being the an investment, an were JV using XX% of increase of accounting As XXXX. reminder, carried sheet. XX% of first for

as continues price a of from Our the increase to down revenue. average fourth business selling was quarter non-pediatric as $XXX, portion our overall

points margin operational of ticked associated has was on $XXX,XXX. costs down at volume, basis efficiencies, as to equity-based While with the sequentially, lower, productivity margin test higher efficiency. but XXX declined due has tests per compensation probe. year-over-year. improved per with Gross our a the per quarter has introduction the scale. has we stabilized Non-GAAP XXX generally enhanced improved stabilized points levels was basis increased test basis improved to cost excluding our gross of and for better GAAP the as $XXX began $XXX test and Costs per and Cost ASP test have lower

Now turning expenses. operating to

remained focusing our have in expenses different investing areas on We for business. controlling while

percentage improved percentage more points point’s year-over-year about sequentially. operating down was XX margin XX than Our and

in the million, up was what the GAAP a fourth marketing on $X.X $X.X quarter. to We in and see the flat term expense $X.X million scale. in quarterly from will expense as basis R&D slightly with Sales we saw quarter. the we continue fourth fluctuations was in near quarter, million

germline R&D We to we over aggressive bioinformatics be continue leverage from invest all maintaining demonstrate still while somatic. that probes a in to able test model can R&D to of be investments, improvements time. in it our and or offerings, business is and areas We whether in believe

$X.X excluding and allowance. non-GAAP rate at equity-based totaled $X.X zero, loss fourth by $X.X $X.XX $XX,XXX rate of was full outstanding. end $X.XX The The for last and the was the tax due from first common on from valuation also $X first the $X.X XXXX. fourth based million of expenses on to was was quarter On quarter. at first basis compensation, to impacted a approximately $XXX,XXX allowance shares million positive tax was recording negatively the million, quarter, the per in expense XX.X of quarter million in share the compared loss valuation in fourth up slightly $X.X Total $X.X EBITDA G&A expenses up up quarter operating for Adjusted XXXX. non-GAAP quarter the quarter. million the million, Lastly, quarter. million operating GAAP Non-GAAP average the from weighted GAAP loss a or were million the was for non-GAAP zero end

with growth strong balance accounts to We in to flow compared comfortable Cash first support by operating remain was Turning by Positive the collections the and our our $XXX,XXX activities was provided XXXX. position. driven quarter. approximately cash $X.X sheet. in to of well-capitalized receivable cash QX million we're

We $X.XX the manage no cash to goal securities to by the cash for sustainable of equates achieving with ended flow the We with around business marketable time, cash, our first This and cash continue share. $XX.X million year. generation debt. some quarter breakeven with per in end flow the of of equivalents cash

onto moving year. the for guidance our and Now outlook

expectations Based we executed, growth feel in anticipate and that XXXX. Ming on on our in As going forward. expectations notable our the we've pipeline we discussed, growth volume confident for for having collaborations

XX% For exceed anticipate the we we will first over and expect quarter. sequentially the mentioned, grow revenue to in XX,XXX test volume the quarter quarter, as approximately second Ming by see

For year-over-year the revenues $XX be represents we full growth year of than XXXX, which XX%. greater a than more will expect million,

We improving leverage investing while growth. also remain focused for on

to in we now the it forward Operator, scale, can As return XXXX. profitability the for the towards to to questions. we open end ahead. updating of for and on about to GAAP Fulgent our quarters We're continue still up excited opportunities momentum look you ahead you expect

Operator

Bill from Quirk Instructions] Piper Jaffray. Our [Operator with comes question first

Unidentified Analyst

Rachel is questions. for for Hi. the on Bill. This taking Thanks

just your CMS' for on you update hereditary cancer could an about give NGS? changes and around So potential reimbursement thoughts

Ming Hsieh

are contracts. the we business Yes. on Thank present cash our working we to are collection you the for on focus time, question. At insurance the while continuing

insurance the for year, the cash-driven will the the we however, of see revenue we’ll collection. be still rest we potentials And As do the business. get our majority see of

Paul Kim

This Ming with is what agree Paul. I completely. said

made recognize thing And the hard portion their to have and indicated think impact CMS are some does we reimbursement revenue be the this small as only that a their amendments have as second the volume working and continues meaningful add Ming a business. our quite get our on the would reimbursement I that I be to of portion and of giving amendment the is a bigger very quarter it for the that revenues. But from is, had fact very decision, to incorporated indicated, in regardless for accelerating year way of we not for of guidance business we XXXX. color we

Unidentified Analyst

Final great. question. Yes,

Canadian more touched of just you So carrier on us partnership, you but on screening the an can update test? give the

Ming Hsieh

U.S. carrier and screening continuing also doing the in major business. we the the Europe, offer the a The with test. Canada, for of as test. screening institution in growth well which Canada, to the America see are build would Beside to test momentum the South see carrier as the carrier Canada, is in in collaboration we demand In partnerships screening

Unidentified Analyst

Thanks.

Operator

any like to time. [Operator the back at host. I'm to Instructions] not And call our I'd showing this turn over questions further

Ming Hsieh

All call the forward talk much our are right. coming to quarters. business Thank to you. next for our you Thank you you and joining on in very and conference update looking you

Operator

presentation. conclude today's and this gentlemen, Ladies does

have now You day. disconnect, and a may wonderful

Fulgent Genetics (FLGT) 11 May 192019 Q1 Earnings call transcript