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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37894
FULGENT GENETICS, INC.
(Exact name of registrant as specified in its charter)
|
|
Delaware |
81-2621304 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
4399 Santa Anita Avenue El Monte, CA |
91731 |
(Address of principal executive offices) |
(Zip Code) |
(626) 350-0537
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.0001 per share |
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FLGT |
|
The Nasdaq Stock Market
(Nasdaq Global Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☒ |
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Accelerated filer |
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☐ |
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|
Non-accelerated filer |
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☐ |
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Smaller reporting company |
|
☐ |
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Emerging growth company |
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☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 1, 2023, there were 29,633,057 outstanding shares of the registrant’s common stock.
Table of Contents
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
FULGENT GENETICS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except par value data)
(unaudited)
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September 30, |
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December 31, |
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2023 |
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2022 |
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Assets |
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|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
84,076 |
|
|
$ |
79,506 |
|
Marketable securities |
|
383,726 |
|
|
|
446,729 |
|
Trade accounts receivable, net of allowance for credit losses of $29,091 and $41,205 |
|
49,277 |
|
|
|
52,749 |
|
Other current assets |
|
32,776 |
|
|
|
48,889 |
|
Total current assets |
|
549,855 |
|
|
|
627,873 |
|
Marketable securities, long-term |
|
383,659 |
|
|
|
326,648 |
|
Redeemable preferred stock investment |
|
15,158 |
|
|
|
12,385 |
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Fixed assets, net |
|
85,265 |
|
|
|
81,353 |
|
Intangible assets, net |
|
144,489 |
|
|
|
150,643 |
|
Goodwill |
|
141,844 |
|
|
|
143,027 |
|
Other long-term assets |
|
38,128 |
|
|
|
44,124 |
|
Total assets |
$ |
1,358,398 |
|
|
$ |
1,386,053 |
|
Liabilities and Stockholders’ Equity |
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|
|
|
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Current liabilities |
|
|
|
|
|
Accounts payable |
$ |
15,772 |
|
|
$ |
23,093 |
|
Accrued liabilities |
|
21,031 |
|
|
|
24,981 |
|
Contract liabilities |
|
2,586 |
|
|
|
3,199 |
|
Customer deposit |
|
18,861 |
|
|
|
10,895 |
|
Investment margin loan |
|
— |
|
|
|
14,999 |
|
Notes payable, current portion |
|
2,890 |
|
|
|
5,639 |
|
Other current liabilities |
|
281 |
|
|
|
5,301 |
|
Total current liabilities |
|
61,421 |
|
|
|
88,107 |
|
Unrecognized tax benefits |
|
9,555 |
|
|
|
9,836 |
|
Deferred tax liability |
|
9,833 |
|
|
|
— |
|
Other long-term liabilities |
|
15,755 |
|
|
|
18,235 |
|
Total liabilities |
|
96,564 |
|
|
|
116,178 |
|
Commitments and contingencies (Note 8) |
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
Common stock, $0.0001 par value per share, 50,000 shares authorized, 31,925 and 31,248 shares issued, respectively, and 30,035 and 29,438 shares outstanding, respectively |
|
3 |
|
|
|
3 |
|
Preferred stock, $0.0001 par value per share, 1,000 shares authorized, no shares issued or outstanding |
|
|
|
|
— |
|
Additional paid-in capital |
|
514,262 |
|
|
|
486,585 |
|
Accumulated other comprehensive loss |
|
(16,891 |
) |
|
|
(20,903 |
) |
Retained earnings |
|
761,324 |
|
|
|
801,000 |
|
Total Fulgent stockholders’ equity |
|
1,258,698 |
|
|
|
1,266,685 |
|
Noncontrolling interest |
|
3,136 |
|
|
|
3,190 |
|
Total stockholders’ equity |
|
1,261,834 |
|
|
|
1,269,875 |
|
Total liabilities and stockholders’ equity |
$ |
1,358,398 |
|
|
$ |
1,386,053 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
FULGENT GENETICS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
$ |
84,687 |
|
|
$ |
105,655 |
|
|
$ |
218,708 |
|
|
$ |
551,264 |
|
Cost of revenue |
|
44,843 |
|
|
|
59,560 |
|
|
|
139,481 |
|
|
|
197,350 |
|
Gross profit |
|
39,844 |
|
|
|
46,095 |
|
|
|
79,227 |
|
|
|
353,914 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
10,014 |
|
|
|
7,507 |
|
|
|
29,488 |
|
|
|
20,401 |
|
Selling and marketing |
|
10,161 |
|
|
|
9,859 |
|
|
|
30,967 |
|
|
|
28,665 |
|
General and administrative |
|
17,498 |
|
|
|
26,266 |
|
|
|
57,293 |
|
|
|
82,281 |
|
Amortization of intangible assets |
|
1,957 |
|
|
|
2,006 |
|
|
|
5,887 |
|
|
|
4,487 |
|
Restructuring costs |
|
— |
|
|
|
105 |
|
|
|
— |
|
|
|
3,001 |
|
Total operating expenses |
|
39,630 |
|
|
|
45,743 |
|
|
|
123,635 |
|
|
|
138,835 |
|
Operating income (loss) |
|
214 |
|
|
|
352 |
|
|
|
(44,408 |
) |
|
|
215,079 |
|
Interest and other income, net |
|
6,646 |
|
|
|
1,405 |
|
|
|
15,519 |
|
|
|
2,408 |
|
Income (loss) before income taxes |
|
6,860 |
|
|
|
1,757 |
|
|
|
(28,889 |
) |
|
|
217,487 |
|
Provision for income taxes |
|
20,326 |
|
|
|
414 |
|
|
|
12,016 |
|
|
|
51,488 |
|
Net (loss) income from consolidated operations |
|
(13,466 |
) |
|
|
1,343 |
|
|
|
(40,905 |
) |
|
|
165,999 |
|
Net loss attributable to noncontrolling interests |
|
359 |
|
|
|
376 |
|
|
|
1,229 |
|
|
|
1,236 |
|
Net (loss) income attributable to Fulgent |
$ |
(13,107 |
) |
|
$ |
1,719 |
|
|
$ |
(39,676 |
) |
|
$ |
167,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share attributable to Fulgent: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.44 |
) |
|
$ |
0.06 |
|
|
$ |
(1.33 |
) |
|
$ |
5.53 |
|
Diluted |
$ |
(0.44 |
) |
|
$ |
0.06 |
|
|
$ |
(1.33 |
) |
|
$ |
5.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
30,013 |
|
|
|
30,174 |
|
|
|
29,789 |
|
|
|
30,256 |
|
Diluted |
|
30,013 |
|
|
|
30,867 |
|
|
|
29,789 |
|
|
|
31,107 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
FULGENT GENETICS, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net (loss) income from consolidated operations |
$ |
(13,466 |
) |
|
$ |
1,343 |
|
|
$ |
(40,905 |
) |
|
$ |
165,999 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
(230 |
) |
|
|
(1,925 |
) |
|
|
(2,027 |
) |
|
|
(3,680 |
) |
Net gain (loss) on available-for-sale debt securities, net of tax |
|
4,017 |
|
|
|
(2,502 |
) |
|
|
7,214 |
|
|
|
(22,708 |
) |
Comprehensive (loss) income from consolidated operations |
|
(9,679 |
) |
|
|
(3,084 |
) |
|
|
(35,718 |
) |
|
|
139,611 |
|
Net loss attributable to noncontrolling interest |
|
359 |
|
|
|
376 |
|
|
|
1,229 |
|
|
|
1,236 |
|
Foreign currency translation loss (gain) attributable to noncontrolling interest |
|
68 |
|
|
|
1,242 |
|
|
|
(1,175 |
) |
|
|
1,545 |
|
Comprehensive loss attributable to noncontrolling interest |
|
427 |
|
|
|
1,618 |
|
|
|
54 |
|
|
|
2,781 |
|
Comprehensive (loss) income attributable to Fulgent |
$ |
(9,252 |
) |
|
$ |
(1,466 |
) |
|
$ |
(35,664 |
) |
|
$ |
142,392 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
FULGENT GENETICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulgent Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares (1) |
|
|
Amount |
|
|
Additional
Paid-In Capital |
|
|
Accumulated
Other Comprehensive
Loss |
|
|
Retained Earnings |
|
|
Fulgent Stockholders’ Equity |
|
|
Noncontrolling Interest |
|
|
Total
Equity |
|
Balance at December 31, 2022 |
|
|
29,438 |
|
|
$ |
3 |
|
|
$ |
486,585 |
|
|
$ |
(20,903 |
) |
|
$ |
801,000 |
|
|
$ |
1,266,685 |
|
|
$ |
3,190 |
|
|
$ |
1,269,875 |
|
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
10,265 |
|
|
|
— |
|
|
|
— |
|
|
|
10,265 |
|
|
|
— |
|
|
|
10,265 |
|
Restricted stock awards |
|
|
280 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock withholding for employee tax obligations |
|
|
(26 |
) |
|
|
— |
|
|
|
(869 |
) |
|
|
— |
|
|
|
— |
|
|
|
(869 |
) |
|
|
— |
|
|
|
(869 |
) |
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,707 |
|
|
|
— |
|
|
|
3,707 |
|
|
|
1,790 |
|
|
|
5,497 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,340 |
) |
|
|
(15,340 |
) |
|
|
(509 |
) |
|
|
(15,849 |
) |
Balance at March 31, 2023 |
|
|
29,692 |
|
|
|
3 |
|
|
|
495,981 |
|
|
|
(17,196 |
) |
|
|
785,660 |
|
|
|
1,264,448 |
|
|
|
4,471 |
|
|
|
1,268,919 |
|
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
10,323 |
|
|
|
— |
|
|
|
— |
|
|
|
10,323 |
|
|
|
— |
|
|
|
10,323 |
|
Exercise of common stock options |
|
|
8 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
Restricted stock awards |
|
|
225 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock withholding for employee tax obligations |
|
|
(8 |
) |
|
|
— |
|
|
|
(232 |
) |
|
|
— |
|
|
|
— |
|
|
|
(232 |
) |
|
|
— |
|
|
|
(232 |
) |
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,550 |
) |
|
|
— |
|
|
|
(3,550 |
) |
|
|
(547 |
) |
|
|
(4,097 |
) |
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,229 |
) |
|
|
(11,229 |
) |
|
|
(361 |
) |
|
|
(11,590 |
) |
Balance at June 30, 2023 |
|
|
29,917 |
|
|
$ |
3 |
|
|
$ |
506,075 |
|
|
$ |
(20,746 |
) |
|
$ |
774,431 |
|
|
$ |
1,259,763 |
|
|
$ |
3,563 |
|
|
$ |
1,263,326 |
|
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
10,902 |
|
|
|
— |
|
|
|
— |
|
|
|
10,902 |
|
|
|
— |
|
|
|
10,902 |
|
Restricted stock awards |
|
|
211 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock withholding for employee tax obligations |
|
|
(13 |
) |
|
|
— |
|
|
|
(517 |
) |
|
|
— |
|
|
|
— |
|
|
|
(517 |
) |
|
|
— |
|
|
|
(517 |
) |
Repurchase of common stock |
|
|
(80 |
) |
|
|
— |
|
|
|
(2,198 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,198 |
) |
|
|
— |
|
|
|
(2,198 |
) |
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,855 |
|
|
|
— |
|
|
|
3,855 |
|
|
|
(68 |
) |
|
|
3,787 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13,107 |
) |
|
|
(13,107 |
) |
|
|
(359 |
) |
|
|
(13,466 |
) |
Balance at September 30, 2023 |
|
|
30,035 |
|
|
$ |
3 |
|
|
$ |
514,262 |
|
|
$ |
(16,891 |
) |
|
$ |
761,324 |
|
|
$ |
1,258,698 |
|
|
$ |
3,136 |
|
|
$ |
1,261,834 |
|
(1) As of September 30, 2023, 371,006 shares of the Company's common stock were not issued and were held back by the Company as partial security for the indemnification obligations in connection with the business combination of Fulgent Pharma Holdings, Inc., or Fulgent Pharma, in 2022.
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
FULGENT GENETICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulgent Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Additional
Paid-In Capital |
|
|
Accumulated
Other Comprehensive
Loss |
|
|
Retained Earnings |
|
|
Fulgent Stockholders’ Equity |
|
|
Noncontrolling Interest |
|
|
Total
Equity |
|
Balance at December 31, 2021 |
|
|
30,160 |
|
|
$ |
3 |
|
|
$ |
501,908 |
|
|
$ |
(759 |
) |
|
$ |
657,597 |
|
|
$ |
1,158,749 |
|
|
$ |
7,131 |
|
|
$ |
1,165,880 |
|
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
5,616 |
|
|
|
— |
|
|
|
— |
|
|
|
5,616 |
|
|
|
— |
|
|
|
5,616 |
|
Exercise of common stock options |
|
|
3 |
|
|
|
— |
|
|
|
16 |
|
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
— |
|
|
|
16 |
|
Restricted stock awards |
|
|
172 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock withholding for employee tax obligations |
|
|
(8 |
) |
|
|
— |
|
|
|
(494 |
) |
|
|
— |
|
|
|
— |
|
|
|
(494 |
) |
|
|
— |
|
|
|
|