FLGT - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Fulgent Genetics 2Q 2021 Earnings Conference Call. At this time, I would like to turn the conference over to Nicole Borsje with Investor Relations. Please go ahead.

Nicole Borsje

Great. Thanks. to Call. Genetics welcome Financial Quarter and Conference Results afternoon, the Second Fulgent XXXX Good

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

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

Ming Hsieh

Paul given the to the We than down in need second the volume molecular highlight and of we call. time items RT-PCR XXXX the being The recently said, announcement our call who That today now almost exciting was of sought dynamic year. and diagnosis Weiss, quarter have the Nicole. testing. in somehow related and Gap] accelerated Larry revenue, oncology of was fully a very detail Medical exciting quarter much, thank had of Good to for our vaccination based end, two strategy you anticipated. This present strategic year-over-year [Audio of to not you testing. for core on today will around exceeded we call across revenue testing the our for volume COVID-XX Thank last in Dr. second see afternoon, quarter drop by Helio XXXX and with was quarter Officer, test acquisition of the which Taking XXX% and the strategy, updates $XXX for of to and second a joining in driver [Audio faster grew to faster we that to in in Health, majority cover I'm slowdown expected. To quarter we the sole our about Fulgent minutes. as million. decreasing broadened which detail today, our financial quarter number at commercial CFO cover totaled will expectation at to our emerging we the with was appointed very expected and pace Chief discuss and who demand, results. joined to X pleased Brandon Gap] to will vast second times CSI go-to-market first [Audio quarter discussing be revenue the in results Perthuis, revenue, sequentially our specific our again million, I'm expect in Paul our will will the partnership country. XXX% from Commercial and the but Kim, compared than the core cover outlook quarter our more who COVID-XX. our Gap] of the discuss few Revenue our the look Laboratories by second testing also the market detail. not test joined and $XX.X across up NGS the our Officer, a Chief

operating the share in EPS $XX.X profitable $X.XX very cash quarter, generating million GAAP the remain in also flow. We per in and

that beyond are and are short fell top of very While at the we excited -- of our about in COVID disappointed expectations quarter, results this the line our future we holds. are looking our opportunities

demonstrated still While number of for NGS we area the to and across a testing long-term hope business. on with our that plan for and believe, we for testing The response of focused capabilities of [Indiscernible] COVID acquisition the to we the country, scale market testing. are well how core testing high a capture place these testing, execute for demand as both level have That the translate on said, COVID ability positioned sustainable and precision We prime pandemic of business CSI to our COVID-XX is in of has a growth. and remain strategically we expand agreements capabilities our and commercial our genomic areas genomic adjacency to excellence our we other expanding being Laboratories with to other dictates. of example the into

we NGS and With add expansive already and add molecular has and solutions of CSI a diagnostic to operation approximately acquisition our menu. menu. the in are to of CSI Georgia oncology tests Laboratories, unique excited test testing our diverse to menu Florida XXX will

the which XXX We Weiss strong In on this addition, our his to sequencing will more has platform States. and very Dr. to leverage board manage United Dr. look in lives we million relationship covered this NGS, cover up discuss execution to opportunity our shortly. in Weiss the in open conjunction menu front, presence best-in-class next-generation brought expertise reimbursement detail with on and oversee to and operation capability scale will our across CSI incremental market. this forward

excellence company and and We'll the agreement test partnership -- commercial of exclusive in into large genetic the market gives very for the Health, ground US. is on majority partnership, JV This rights access presence, the maintain same in the liquid have in in discussed detection acquisition foothold market. the Taking focused operational to Helio are going distribution cancer. space in opportunity made early strategic this testing U.S. And liquid announced the announcement completing past. biopsy on the our America, the entity China of in JV been China, that growing feet China. in and of the of North large the exciting in emerging forward. With an a Another ownership our could a Helio's we today both with we direct we which us commercial established detection to finally, translate have we early biopsy us investment gaining as in an labs

are expand very and We ahead. pipeline are opportunity in forging opportunities this for this in investment our creating China excited about world. the years to they excited the in about post-pandemic I'm

Our value unchanged. retained has

spending oncology look customers what driving focused to molecular remain call delivering the over initiative our and the in to products front future to recent I'll and continue discuss the across and Dr. Weiss turn investment. disciplined store. and further We best-in-class be with business on Weiss? our that, in With efficiency We forward his while services to our Dr. has our the partners. on to diagnostics

Larry Weiss

you, excited Thank pleased and team. COVID in I makes operational was with expanding doing believe COVID their rapidly NGS, operational joined was the I Fulgent, impressed to a fluke its for somatic, what part to combine be be to Fulgent testing. to in strengths they here am no when I and able oncologic NGS expertise. in IT And I because Fulgent to to pivot among today from germline this that very testing in were with It you combination strength testing. powerful allow quickly very leader -- a Ming. of a very the Fulgent a and leaders become and company it combination. that saw transition NGS become was Fulgent's will leadership

we cancer establish Southeast and a strategic complement with national presence oncologic Somatic different plan testing the we testing taking laboratory. excited testing traditional superb quickly the into acquisition, with and same a are of Labs those of CSI platform. to also mastered. several testing this the of testing and strong integration platform West Fulgent of develop about excited Helio processes will state-of-the-art announced operations are the gives from This to anchor rapidly be I'm Coast Fulgent's Fulgent to customer Health. combines very cancer I'm disbursements aspects, cancer cancer partnership a for new an already service. CSI leverage into CSI's access the in has mutation With germline but Fulgent base testing it CSI's as ownership essentially location platform. and is testing lab

of with wide excellent base early My cancer range Helio Our me Fulgent's with and the a past hope other testing without value as expertise operational cancer customer of oncologic NGS testing, to who primarily the NeoGenomics ourselves for large excellence as footprint combined Fulgent's With CSI's and services. capabilities oncologists companies who of in access providing differentiate testing in at cancer provide to service. taught testing we gives full experience relationship expertise options provide expanding of necessary NGS and for operational screening markets again of range a NGS, companies focus in testing to providing relative areas oncologic lack optimal testing. us for but well

acquisition on a to solutions well-positioned developing the execute a package of experience. years Fulgent with national NGS very the in level customer about expertise now a Brandon? look I Fulgent's call goal this program complete the of in testing combined forward and With opportunity of to CSI, Officer. am particular to our Chief superb turn on excited ahead. Brandon developing Commercial cancer is our Perthuis, I'll over oncologic with testing

Brandon Perthuis

Thanks, Larry.

At progress in in the progress by contagious the June of being led pandemic COVID improvement in same to threatened fighting testing, Delta lower for see of pandemic. especially While than expected country our variant. time, spread much highly the the this is dramatic to the the

our revenue. testing total quarter, cases, second under While in business came expectations of accessions core records the COVID-XX terms and in shattered in

for our role For with [Audio to the testing records amount we to highlights as the our us business In new by confidence see using Therefore, level no further orders able over execution not expansion the client significant core our advantage business continue XXX done technology Fulgent COVID-XX ability in and sequencing been we and expanded focus turnaround some a of these institutions really this pricing, or sales be that platform. full power that core Gap] as quality opportunities with are of the competitive or we partnerships this unique tests. unique services will by expand clients studies. from in had of gives our team. to testing This many continues us off both the of commercial clients the created driven is to our a for of be core our This tremendous new growth business menu The in have test Fulgent a play consolidator not something taking COVID-XX we penetration service as shelf. of were time could space. opportunity a continued rather for our for quarter, incredible handle volume of in systems and genomic have issues expand to as menu, our that bolted be a together more core and

team reach build beyond and one-stop first of purchase by CSI in XXX a excellence CSI flow Coast a and been in disruptive the cancer Southeast acquisition being testing contracts. platform, footprint From Fulgent out We to cytogenetics Ming CSI disease quality by One oncology will cancer the for a comprehensive a mentioned, and pathologists. tests, of to an biopsy of our genetics. be that MRD, cancer combined Los is United which the creates really expanding managed test, Laboratories. commercial test, has the test acquisition and dramatically We become CSI. As lab shop sales small turnaround operational FISH, our CSI's of unique traditional platform, NGS for and a professionals test we with Angeles market CSI's historically made national rare testing true West sales to establish on [Audio offer molecular Fulgent's benefits companies. with the combination believe in believe plan perspective, and make adult a other care on menu, team. for liquid medical Gap] this able hereditary States to Fulgent time, expand specialized technology first is industry and dominated CSI combining Fulgent's Houston impact We to menus area offers a cytometry, By with and with and presence we histology. and oncologists the poised the test ever oncology, cancer CSI few NGS focus only

on only have putting [Audio has pay begun Gap] other emphasis recently and to contracts cash with more be successful We securing these institutions clients.

been in covered over can coverage subspecialties. for successful opens network. neurologists hospitals, more as However, expanding network This our our into be Fulgent now have has we billing, clinics, fetal of care XXX market a acquisition to team brings accounts medicine, now and sell -- many it maternal million effectively insurance the our require private we new other lives that essentially those managed CSI in reach and OB-GYNs,

able more Our minimal existing of to clients onboard limitation many sell sales team team as without members, on. now we call insurance sales And has new to they will contracts. the be

to development. of In gives cancer currently Helio This clinical Helio's biopsy Fulgent license liquid products in Health, emerging Fulgent has made LBT investment to for addition acquisition are investment an detection. exclusive in early million the CSI, a which company commercial $XX an

cause The and diagnosed cancer by liquid XXXX. commonly third the It a first sixth cancer leading This for leading product cause a is the is cancer to of bring projected we is market in to the in will liver fourth cancer. most plan to world. large world a considering be of death liver cancer the biopsy market be test death

liver been increase In X.X-fold addition United XX has there the in cancer a States over last the years. in

of and of improved survival. cancer surveillance a cirrhotic have Multiple curative approach size and early detection associated the believe Helio's BMI way the While and therapy overall guidelines the of the confirmed population the cancer sensitivity for six shift screening cancer an quality, studies and in existing and et skill operator, will is on is liver the and survival dependent training receipt liver ultrasound paradigm benefit the cetera. of is lesion, with months, location be lack ultrasound and We instrument recommend surveillance new of liver every in diagnosed monitored.

this an We working with will year. goal initial exciting diligently be launch of test to bring new to this market later

having the our to ongoing an submit patients coming [Audio addition completed in which the in United to quarters. been the data XXX Helio goal In has States FDA and the clinical of have effort Gap] launch to of study these

our to quarter. decreased and we expand liver methylation-based and in screening further early the to Switching Testing from in first to Fulgent Helio COVID-XX. Helio's liquid addition will including cancers In cancer technologies using capabilities the highs cancer, oncology other develop testing. for biopsy saw

semester web-based the We schools turnaround bid. However, fall after believe the out secure put are came for wins. meaningful a Fulgent to contributor fall is staffing announce for that City all and York continue lines Along it still contributed very excited to New the we semester. to to our This to revenue these quality platforms, time, was and decision. chosen medical competitive for we meaningful testing decision Fulgent York City continue New

to be part York our doing to safe. schools keep We honored look are to forward City and chosen New

In we testing. wins securing are addition to and to on New York related the City West meaningful Southeast back-to-school schools, Coast

healthcare seen mandate opportunities some which significant also government are have testing We workers, and states for also for Fulgent.

there's in Delta a improvement saw during we rapid the significant variant. of second While the still uncertainty especially the COVID-XX emergence around much quarter,

new X, average and volume November In time cases XXX,XXX XX,XXX testing States cases recent rate new been high As and we the of seen equivalent compared customer of the have to United our in XXX,XXX have the August in as a as the positivity recently X-day year our the across period. significant daily increase which ago to is base. weeks, one was

saw we During rates as the dip second positivity X.X%. low quarter, as

However as seen high recent in the have days, as we X%.

monitor business. market to fuel the continues the our variants Fulgent can companies CSI be colleges, to of the to very continuing excited local now and and agencies, we XXXX. the our helping Paul as turn remain a long-term and with we for and CDC's resources are to Kim, our capabilities meaningfully well growth Helio closely look genomic as addressable with forward invest and schools Fulgent about at have we expect contributing testing to monitoring dynamic and state of part the we It where a testing. can and dramatically of K-XX to broadened situation Chief track and trajectory Paul? forward to revenue we transactions complete, and With efforts the we our testing footprint expand as are success. Financial Officer. meaningful We remainder I'll over as of call to COVID-XX and look We to time

Paul Kim

Billable the growing compared XXXX. second revenue increase in of totaled Thanks, Brandon. QX volume $XXX almost of million The quarter second totaled X.X last an quarter the of in almost X times million, to quarter the the XXX% year. tests

majority the was COVID-XX up related the [Audio core [Audio our revenue our Gap]. previously revenue While of which we business, to XX% year-over-year XXX% this core Gap] revenue called NGS in and was

revenue As a were COVID QX well but foundation due post-COVID-XX generally drive-thru future on our growth we're achieving vaccinations in expectations demand our more on and have for to been And said, particularly and drop-off way opportunity has Ming mentioned, we the being anticipated. as of disappointed and testing, successful invested in was and investment this expectations That and at drastic for result, goal. significant stance sites volatile. a senior revenue that talent from we conservative M&A California. than our out of testing in came this laying Brandon we overall resources was the below time rapid we drop taken and a COVID through bringing on Demand have

quarter first we the the saw second Our $XX than $XX the in slightly quarter. was higher ASP in

expected increase to Gross quarters per ASP due in volume stable saw. quarter slightly tests ticked QX NGS is quarter modest first quarter saw due the testing. the increasing we the test the we increased to in of than mix to of compared higher over the has the slightly the given core last Cost our down XX.X% mix to lighter few While as margins the quarter. was the in that $XX largely remained

in down over last $XX.X $XX Non-GAAP Looking quarter. from operating were million expenses. million Total million expenses totaled the operating quarter. quarter to million $XX.X in GAAP second from expenses operating first $XX.X up the

organization points activity. to increased second with costs across declined from expenses primarily million our as a and to shares well margin effect operating EBITDA as quarter and income M&A a the Non-GAAP Our quarter in for legal investments equity-based $XXX was This per outstanding. $X.XX in average XX.X operating $X.X increase the our strategic compensation in $XX.X XX.X%. basis associated on excluding due second tax an quarter first percentage the or XXXX. eight million On share in takes headcount Adjusted accounting for non-GAAP stock-based was the account of the for million based into million quarter diluted compensation quarter. to expense weighted compared

the turning ended from We cash to include cash our million QX in generated which was China sheet. Helio, to also which in CSI quarter cash marketable $XX.X the with We investment million impact securities. operations the the and in could $XXX yet Now investment cash closed early which JV, equivalents not This This the includes August. was in cash, $XX $XX million of impact million be our and $XX the over does in up the from fueling balance. acquisition, which balance during in of million. balance and quarter our cash

on moving to our outlook. Now

a making China acquisition COVID of the taken guidance revenue into small to including how CSI, dynamic consideration, are we our parts discuss JV. the moving consolidation We and due into our the landscape, in testing were change

core in the what core CSI's reflecting revenue revenue, our breaking be future We NGS contribution. guidance COVID with we with will the and addition by out of called previously

all from COVID revenue at RT-PCR Our tests. revenue testing, COVID home including includes picture

from our COVID NGS from includes revenues NGS contribution our revenues and core JV, Our CSI, business, contribution our China traditional tests. from our

QX revenues, to these expected sites. lower drive-thru the in from demand non-COVID vaccinations [Technical -- due with COVID and While we better CSI addition we saw sharper rapid our than really discussed, Difficulty] segments of given volume testing Helio. as revenue and changed reflects haven't decline in reflects a business Starting

the the through of expect continue volume year. to decline will We balance the

the has parts our Delta for moving duration variant created However, [ph] the guidance. additional proliferation of

at seeking with the With ongoing could incremental more effectiveness revenues And that, believe We new seen higher we expect testing. regular assessment and more while of we trend for year schools QX COVID that environment. will $XX vaccine testing a test meet drive to the volumes reduction have also be cases, are uncertain governmental million, amid agencies expectations of of due the QX are our million and still last volumes testing This slightly essentially track we set million. $XXX in previous down and we from $XXX QX shortfall to our on quarter. guidance believe is

which to core and our and revenue core on investments COVID expect build continue be and guidance, as is into on customers we will the NGS, CSI, broken Moving core NGS from momentum NGS business our with capitalize we strong impact to recent key hires.

core million, NGS total in revenues approximately expect guidance. $XX We will previous $XX our up million from

COVID positivity situation our CDC, are This from it appears revenues million. For with COVID we is we're largely obviously million which low a this volume $XX NGS on quarter. contract the about very from fluid. variant to during record is the lowering $XX guidance and fell optimistic rates, Delta the Though predicated to

will year. taking XXXX. $XX contribute As of CDC anticipate it the for such, revenues CSI a contract. we're revenues part our $XXX of very finally, the conservative relates approximately the expect And be for core million will Altogether, as million revenue view we we remaining total from to

cash to million $XXX revenues we for revenue, will COVID slightly show expect to be flow previous drops and which million. with ongoing of standpoint, to leverage combined business, With year, down From in profitability expect our from a million generation. guidance the the approximately we drives continue of $XXX $XXX core revenues $XXX bottom in line the our million

We foundational though get anticipate margins. be produced to internal the active has operating that our still in will investments. slightly likely which continue on superior our growth business, technology as in case operating M&A, rely to percentages for and more hiring those we lower We be

XX rate XX% a compensation. the and This guidance income $XX share expect even unchanged a $XX.XX estimate our approximately EPS or shareholders stock-based is full our revenue we us be our XXXX utilizing count QX per to lowering for $XXX of from such million, estimate As to million. with from previous net by million year tax share excluding $XXX for million,

in confidence to revenues the $XXX our $XXX of detail in the Relations we're expect posted be and core slides specifically, to hope third For approximately range COVID be website have and total to million. that and the in $XX with of the for Investor million year, $XX We $XXX in detail. reflects the have to we revenues quarter outlines revenues range the we is helpful our we million growing on today outlook million, our million, providing to guidance

This and power our the of of $XXX nearly a our cash again quarter. ability viability once proven technology of given quarter flow business has model platform, in drive million the the to single

post-COVID our platform In world. CSI, which and addition, to open initiatives you for perspective. a of fruit we very get demonstrated and and sustainable in different to investments the future Operator, active growth and our M&A all We our in in bear a to questions. execute M&A on range may bolder now our technologies. the evaluating companies in Helio are expand with We through feel it should intend China, good about have of strategic positioning immediate ability up from drive we as strategic more

Operator

with our take first We'll Instructions] DeGeeter [Operator Oppenheimer. Kevin question from

Kevin DeGeeter

then to we capability built versus M&A. a in maybe for topics seem sort for you I question. have a Hey, interesting in-house about that about can NGS one be the at some Maybe you. of just assets, I to transaction, to more interesting more talk the guys. is us for Thanks I there? being for you interested the primarily footprint M&A. do On that might – regard interest reimbursement of you little for reimbursement, of Thank perhaps think perhaps is would think been of broader of reimbursement to me. should able buy it infrastructure quickly gain perspective how leverage bit three estimate? high through any with us think just can just you continued end, for out but which you frame terms highlighted Paul, a maybe kind CSI's broadly for Are today. oncology? it How done focus little in oncology build bit CSI Maybe mean taking And that's my outside of those

Ming Hsieh

Kevin questions. Yes. the Thank you, for

in cancer biopsy strategic in Fulgent $XX believe think molecular in level. a the have missing our I like Genetics We been diagnostics liquid We other It do big capabilities market. the will diagnostics. probably market more germline has but we're billion testing broad level, I it is a the market. is this do a in representative cover only the market. in

covered to So the broad cancer this coverage by the to I pretty space is the monitoring. from Genetics tumor germline early cancer disease minimum a Fulgent in give CSI detection diagnostics to together adding the and market Helio, solid the the two

this the billion this missing IPO is than market. So larger disease market. is disease rare the $XX Fulgent much, not rare And dismissed got We're Genetics, initially a on focused But the the the cancer we ask much to With I Dr. major want – bit little to a player market. diagnostic add we Weiss a that CSI. market. for the be more are playing in

Larry Weiss

have heard jump intention cancer acquisition our to you market. laboratory CSI as starts market. developing into of our the of get in the involved is but really the we Coast the entry intention So own And West cancer our on

to access dramatically expand base going a are you're when Coast that and of First of West laboratory. team lab, such in They already very menu sales in find West starting Coast. areas flow, Even is that importantly already hard specimens the and a immunohistochemistry, on the a FISH all, going – in base test of clients have have they have we're more to And they future. to cytogenetics. emulate have specimen a an they for as that we out the extensive to just

being huge although have CSI major the we think without jump in into a things these So business. I CSI, us player cancer clearly done a gives could start

Brandon Perthuis

little so -- a Yes, -- your add which I'll is goes there, to third Brandon. question. just bit really Kevin.

Larry versus have You much care especially what to asked, more In difficult, detailed, managed reimbursement. it build? buy we do why addition as in to would building been the contracts relates

Larry's It versus We think buying to and issue way quick I spot enter network insurance on. is address the So, us building. market. the by a for

Gap] team. geographically an expand focused And much that customer sales have a They But been In a business. team addition, we're have highly confident with way. a with it's we think It's successful. very wonderful we They business. sales a a national big little larger can [Audio amazing in a and base. presence small bit

So, I thought build versus justify process. those our sort of for reasons, think buy

Ming Hsieh

CSI's I a line. Brandon's Genetics it we adding could Weiss with improve technology profitable but Dr. Fulgent the and the do insertion and bottom with technology Kevin addition, in combination, we efficiency. significantly significantly improve we a operation think the technology, our comments; -- is business, have CSI, the will the believe profitable

Brandon Perthuis

if through the your Kevin, to work of want question. just And rest you

obviously We on of oncology a interest oncology us. So on your particular is I broad focused more area. second to question specifically mean, was M&A. or

it's You be our can bold, is made. and be no be by to broad. strategy going it's going broad, be M&A we've the That going to moves to to see fast. said, going It's aggressive

platform this to you looking these Ming, and deploying are if continuing in acquisitions way. leverage forward want a to add to capital any the We tuck-in comments to technology bolt-on But meaningful there.

Ming Hsieh

comments. thank for you Great, the

Operator

Piper with on, Sandler. go Steven to Moving we'll Mah

Steven Mah

get a they're commercial tests colorectal is, is developing I for liver? also understanding for Thanks cancer, breast that of the my taking Because not LBTs exclusivity, cover questions. to question Helio. guys. on their and Hi just going lung. all The

Ming Hsieh

very Steven, a it think Yes I is question. good

I the think, steps. by we're taking

test. liver to to Helio cancer aren't We commercialize its going help

we So, Gap] and colon biomarkers But taking a action. for started the certain it's lung. methylation already technology definitely their liver, [Audio the and

do slightly in the to add opportunity in coming the are more but we different, they have tests quarters. So,

Steven Mah

partnership China your Okay. talk problem can a launching the with through potential Got JV liver your Is leverage cancer Helio? of cancer there Helio it. investment, big your to does and and And China with JV China? tests your some about these way you in lung

Ming Hsieh

independent China is ahead it very expect Helio's cancer slightly We US. in sooner of Actually test liver Yes. do China Yes. study, is the the the launch Steven, US question. good launch. a be will than

Steven Mah

Okay. for is commercialization? testing testing, also for or But is US your just China exclusivity for it

Ming Hsieh

and using and CFDA in US. the of both available for both for using its will which we'll different will test. Helio's is Exclusivities jointly to be a cancer laboratory services its in test liver the But the the Genetics the covers China, methylation China together. qPCR approval in Fulgent process US. both slightly and North finalize Canada. US process It's already provide be America, cancer the technology in our instead working But

Steven Mah

Okay.

in So of then it's China a okay. more collaboration

Ming Hsieh

Yes.

Steven Mah

Okay, got it.

Larry team. question Larry the a then and And for to maybe Okay. welcome

Larry Weiss

Thank you.

Steven Mah

to be platform might they and is migrated Could outdated of you can over cytogenetics traditional yeah, let a molecular understanding CSI of us is, I know little NGS and non-molecular that FISH, what my Fulgent's percent CSI because flow. more revenue mostly be were like tests immunohistochemistry,

sense give maybe a potential of me So with the synergies Fulgent? just

Ming Hsieh

but little third-party. sourced it's a currently CSI some genetic testing, cover will do bit. through all I offer Steven Yeah.

genetic transaction, with all really all and accelerate -- direct promoting Fulgent genetic more make pathology. testing. we the becomes this can be direct do CSI digital from to when combination, CSI of biopsy been as liquid have process a more transition unit But and not side. So this pathology its too test -- they than to the also transition the and its the But is stand-alone for much modern that -- with there much a digital will plan

Larry Weiss

Yeah.

stated flow, are strengths. immunohistochemistry, They the and pathology but the Fulgent acquisition FISH. because can Its testing, cytogenetics single-gene think being do at outsourced amount is As a we their traditional CSI That's is provide, we NGS present. is and complementary supplement a and of molecular assets provider. at NGS testing CSI's really such basically a fair this why in

background, think So has CSI we as for an for the into pathologists. I large when well. win provide with expansion a Historically, as see can been molecular base Fulgent. a we a customer and base a see oncology win CSI's client we win-win But

Paul Kim

philosophical offering a from is and don't surprised not one I structured. grew of, we standpoint. unlike We They the have. much mean of in a took than was the samples, a Paul. be lose the We of have look this very business different the This longer customers, other look kind very, just, at acquisition lot quality flow to of been that if would Yeah. put We took the also that business of the at money. for even frame companies. a the CSI is intend way their considerable we resources time full they like a in This operations a we our behind smaller businesses way.

of with up lot a us. things So line

to really piece think tap can get private were able and move they have smaller they -- in they resources a to were that being way. I business lacking meaningful that because a company They the the capital. into is the

Ming And So synergies. and why right, Larry intention and this and fully and Brandon to grow our that it's on the business. capitalize talked to asset about, reasons

Steven Mah

the of in one. have -- you addition year popping us just panel a to panel could sense season? test Great. last half includes the the hearing sense combination going I to in give squeeze -- And upcoming a flu Okay. that any if up but for developing Do be respiratory if in Hemisphere. been maybe been And includes and flu COVID know A RSV or back one we've There's some have RSV guys you that you're as of that a developing broader you B I well? Southern plus

Brandon Perthuis

it's Hi, It's for question Brandon. Steven, the Brandon. Steven. Yes thanks

panel. full respiratory We're are. a be to call pathogen we going We developing, what

or to somewhere has so respiratory I think XX around it XX pathogens.

same same would the it other handling same pathogens. equipment automation cover This our the COVID robotic cover would flu tests. on It many RSV So liquid B COVID-XX. as will and be the respiratory delivered A

and take be scale tremendously So structure our we what it's best-in-class -- to can we to in of continue something cost of cost assays. believe that best advantage the PCR-based

an are. for answer So we

Steven Mah

you/ Thank Okay.

Brandon Perthuis

much very you Thank

Operator

Katie with Tryhane Suisse. we'll next to And go Credit

Katie Tryhane

questions. my taking for thanks Hi,

that and to of further testing. New Just on school a be about starting the should the how think implications back to of up? York We've for how progressing? in little some Can And speak to the actually work conversations pick little Delta half with may we extent outside to can but slower maybe bit bit there? return what a you the the recent you participate they're of you for than system there? to weeks that heard the anticipated progressing those And previously just just variant are year school return is

Brandon Perthuis

COVID it's the and QX back not thank you guidance maintaining we're half our Brandon. QX revising guidance. of year the Katie, right? We're

Florida New that Texas think Louisiana area as strength as very on the progress opportunities we're the something York I opportunities. online then we're of says Coast, Midwest. opportunities And Outside the seeing the many schools of the some we the to West So in in well back-to-school coming seeing specifically see. Southeast meaningful

We've that's We've largest States. we New in is of our school York a experience good York. the So the and done done a New very testing think district in lot incredible. in United job

that. experience They how had. that incredibly what So successful these an to up can other -- school run we've look on districts We we've show program there. they lean

And in back be to the is going I very the I going continuing COVID testing testing believe, meaningful So way. year. of back-to-school big be fully in with we're a think to half

Katie Tryhane

ago bit in like recently could some JV CSI more mentioned JV. has second on it's insight as know quite how some more Great. just the curious the curious, which that since we've provide you intention Okay. on then was further your And quarter. investments quite of bit Helio your initially talked a if maybe performed time Biotech you about there Thanks. a performed I just in you But FF invested and well other little last quarter. invest I but as know Gene how to

Paul Kim

is excellent an this That's Katie, question. Paul. Yes.

I'm controlling of to can over of it then take be going who So and the that. reasons we piece you the I'm going interest give on to that strategic market turning a to took Ming, why

take quarter And the of a record service $XX in be process, we that from potential $X on who already million thought to why can market as So over to genetic and from $X that second in product well of out as marketplace. the million we -- China intend during the the interest additional of booked line in top the to of on able testing revenues the business offerings consolidation. we But market. this China year size believe to turn and comment we controlling I'll from the QX, million as we'll Ming it put China to that anywhere half as result

Ming Hsieh

Katie. Yes,

marketing providing and and to and used of partner our operations. is As you may Really back the JV running own let our we XX% sales around manages technologies the four ago. -to recall, our the and structure products function which years this was

and it'd demand in health in China from to think the disease, Fulgent see more oncology of of better the our put be coming for more rare As market. and we more terms women's China focus I

China. willing executives for focus our and the put They starting This control our lot and the do with but in it handling So the is there the very, team adding and more of the newly relationships the growth growing including management we opportunity are a then that operations. we're very we challenging the demand and us partner. operation -- do grow see to a is We over recruited of the also give the to that to us current have discussed market a our and also requirement for is expand market, operation. the we're it's market Helio's see and is We in competitive our taking it and market.

Katie Tryhane

That's Thanks. great. Okay.

Operator

this you today's Thank And call. for concludes your participation.

may You now disconnect.

Fulgent Genetics (FLGT) 10 Aug 212021 Q2 Earnings call transcript