NASDAQ listed Genetic Testing Co. Whose Q4 FY20 Revenue was up  3,400%

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The genetic testing market is a billion-dollar industry that has already surpassed US$13 billion as of 2019. According to the industry experts, the market is still in its early growth phase and is expected to grow at a CAGR of 12.2 per cent.

Genetic testing involves testing the genome in order to spot and identify any sign of alteration in chromosomes, genes or proteins. The recent COVID-19 pandemic has helped the industry bolster to new levels with the sheer demand in the testing for COVID-19.

One company standing on the frontline to provide high quality and fast testing solutions, especially related to COVID-19, is Fulgent Genetics Inc (NASDAQ:FLGT).

About Fulgent Genetics

Fulgent Genetics is a genetic testing solutions provider aiming to deliver flexible and affordable services to the customers for their everyday life. The company was founded in 2011 and has grown rapidly to offer one of the broadest range of tests in the market.

To maintain the highest quality standards, the company has CLIA- certification and is CAP-accredited for the standards of diagnostic testing.

Particular focus on COVID-19 testing: During challenging times, the company has stayed true to its vision to help people with its affordable solutions. The company had spent a good chunk of cash on its R&D for COVID-19 testing kits with a much higher production capacity level.

Focusing on the scalability of the testing solutions, it offers its screening facilities at home or via drive-thru. The company also offers a comprehensive portfolio of tests to allow the customers flexibility to opt for tests according to affordability and their requirement. The standard RT-PCR test helps to detect COVID-19, Influenza etc.

Specific to COVID-19, Fulgent also has a better version of the RT-PCR test, known as RTR-PCR and Next Generation Sequencing (NGS), which is claimed to be more effective in detecting COVID-19 infection with higher accuracy.

An antibody test is also on the offering, which evaluates the immune response to COVID-19 and assesses the risk of severe complications. This test also monitors the long-term immunity from COVID-19. All the tests are FDA-EUA authorised.

Stock Performance, Over 10x in 1 year, beats benchmark in short term

Last three-month comparative chart of FLGT (Yellow) and NASDAQ (Purple) (Source: Thomson Eikon)

Fulgent’s share price has given a decent run-up in the last few months, outperforming its benchmark index NASDAQ 100. The stock is up by 10 per cent this year and 28.7 per cent up in the previous six months. In comparison, NASDAQ is down by 3.29 per cent for this year (as of 5 March 2021).

From the March 2020 lows of US$ 6.70, the shares of the company have delivered returns in excess of 10X.

Financial Snapshot- Q4 FY20 revenue up 3,400%

The Q4 FY20 revenue was reported at US$295.0 million, an increase of a mind-boggling 3,400% from US$8.4 million in the fourth quarter of 2019. GAAP income for the reported period stood at US$166.3 million, or US$6.16 per share, and non-GAAP income was US$167.5 million, or $6.20 per share.

The adjusted EBITDA was reported at US$230.1 million in Q4 FY20, compared to US$1.1 million in Q4 FY19. The adjusted EBITDA for the entire financial year 2020 was US$301.3 million, as compared to just US$4.9 million a year ago.

Data Source: Refinitiv, Thomson Reuters

For FY20, the company has recorded a 1200 per cent increase in the revenue to US$421.7 million, compared to US$32.5 million in FY19. With the recent numbers, the company has maintained its upward trend of recording consecutively higher revenue for the last five years.

Data Source: Refinitiv, Thomson Reuters

The gross profit of the company is also on the same trajectory. The FY20 gross profit of US$89.8 million is higher compared to the US$18.42 million reported last year. The current year’s revenue is also the highest in the previous five years.

Outlook

For the first quarter of 2021, Fulgent Genetics expects to generate revenue of at least US$325 million. For the full year 2021, the company is aiming at a revenue of approximately US$800 million, which would represent a growth of a massive 90% year-over-year.

According to the company, out of US$800.0 million of estimated revenue of FY21, approximately US$70.0 million will be realized from Next Generation Sequencing (NGS) testing, and the remaining US$730.0 million will be realized from non-NGS testing.

The company is also targeting robust operating margins and gross margins by leveraging its proprietary technology platform, which would enable the company to garner a GAAP income of approximately US$380.0 million. This translates to earnings of more than US$12.00 per share.

Management’s commentary

Ming Hsieh, Chairman and Chief Executive Officer, acknowledged the company’s record Q4 FY20 numbers capped off a transformational year. While the management did not envision 2020 to unfold in the way it did, Ming Hsieh was proud of the team for supporting the business's pivot to rapidly scale to become one of the top providers of COVID-19 testing in the US. The achieved results were possible because of the differentiated technology platform that the company has built since it has been founded.

While most of the business in FY20 was from COVID-19 testing, the management believes that a solid foundation has been laid for continued growth in the coming years. The company has made inroads with numerous new customers, established new reimbursement agreements, expanded the capacity and commercial capabilities, and have grown the direct-to-consumer genetic testing platform, Picture Genetics.

The company has also begun utilising NGS based COVID testing capabilities to help the masses in the identification and screening of potential new strains and mutations of the virus, which have made a buzz in other parts of the world.

All the figures are in USD unless stated otherwise. Fulgent Genetics Inc (NASDAQ:FLGT) is not listed on the Australian stock exchanges. This article is to cater to the readers who follow the US stock market and for educational purpose only.

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