Fulgent Genetics Q1 Beat and Raise

FLGT reported on their Q1 last night.

First Quarter 2021 Results:

  • Revenue grew more than 4,500% yoy, to $359.4M
  • Record billable tests delivered, approx 3.8M, 290 times the volume of Q1 2020
  • Gross margin improved approx 32% yoy
  • NGS Revenue grew 115% year-over-year
  • Record GAAP income of $200.7 million, or $6.52 per share
  • Record Non-GAAP income of $202.9 million, or $6.59 per share
  • Record Adjusted EBITDA of $271.9 million
  • Cash from operations of $233.2 million; Cash and investments of $697.4 million as of March 31, 2021

2021 Outlook:

  • Raises full year total revenue outlook to $830 million from $800 million, representing growth of 97% year over year
  • Raises NGS revenue outlook to $100 million from $70 million, representing growth of 174% year over year
  • Expects GAAP income of approximately $12.00 per share; non-GAAP income of approximately $12.50 per share in 2021

For the second quarter of 2021, the company expects to generate revenue of approximately $200 million. For the full year 2021, the company now expects revenue of approximately $830 million, which would represent growth of 97% year over year, versus previous guidance of $800 million. The company anticipates that of this $830 million, approximately $100 million will be realized from Next Generation Sequencing (“NGS”) testing, and the remaining $730 million will be realized from non-NGS, RT-PCR based testing. The company also expects to drive strong gross and operating margins by leveraging the company’s proprietary technology platform, which would generate GAAP income of approximately $380 million, or $12.00 per share, and non-GAAP income of approximately $12.50 per share for the year.

Full press release:
https://ir.fulgentgenetics.com/news-releases/news-release-de…

Still looks like more than just a plain Covid play, but guidance already shows most of their revenue will disappear once the need for covid testing winds down. I hold FLGT shares, debating whether to stay or exit. Comps will be tough but on the other hand they’ll have a lot of cash to boost their continued growth, that was unexpected a year and a half ago. And the team have demonstrated an excellent ability to adapt to circumstances. Haven’t made up my mind.

Thanks

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I like Fulgent.

  • The need for Covid testing won’t disappear overnight. I think there will be a long tail to the pandemic.
    -I like their CEO
    -They have demonstrated their ability to succeed.
    -The are smack in the middle of the whole genetics mega trend.

Not a Saul Stock, but a pick that I think has huge potential as a speculative play.

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I thought Fulgent had a great quarter!

What I liked the most was the increased guidance from $70M for the year to $100M for their NGS testing! Basically, in the first quarter, they raised the growth rate for the year for their NGS (core) business from a growth rate of 90% to a growth rate of 170%!!! And I’m pretty sure that will get raised again. Yes, it’s still a small portion of their total revenue with the Covid testing business, but everyone seems to think that’s all going to go away immediately (I don’t). The bears can’t have it both ways, either the Covid testing ends quickly, and the core NGS testing then is the majority of their revenue, and growing extremely quickly, or the Covid testing doesn’t go away so easily, and ends up continuing to fill their coffers (while the NGS testing continues to grow quickly). Either way, I feel, their stock should be valued higher (and will be in time). :crossed_fingers:

Their yearly raise so far was just the additional $30M from the core NGS testing, they kept their estimate of their Covid business at $730M. That to me sounds like they’re being prudent at this time because they probably don’t even know what their Covid testing business will come out as at the end of the year. But I do feel that they have probably been very conservative with the Covid testing volume guidance and that they will end up raising it, too, before this year is up. It would not surprise me to see them end the year closer to, or even above $900M.

The reason that has always been given for the cheap valuation has been the fact that “all the Covid business” would go away and their NGS core business wasn’t large enough or growing fast enough to justify a higher valuation. I contend their results invalidated that viewpoint.

Too bad the market doesn’t agree with me… oh well, I’m holding about a 7% position currently (was up to 9% at one time), with no plans of selling any.

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