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Fulgent Genetics, Inc. (FLGT)·Q1 2025 Earnings Summary

Executive Summary

  • FLGT delivered Q1 2025 revenue of $73.5M and non-GAAP EPS of $0.04, outperforming S&P Global consensus of $71.3M revenue and -$0.18 EPS; GAAP EPS was -$0.37. Management reiterated FY2025 guidance (core revenue $310M; GAAP EPS -$1.95; non-GAAP EPS -$0.65), with end-2025 cash guidance trimmed to ~$770M due to buybacks . Q1 2025 consensus: revenue $71.26M*, EPS -$0.1794*; actuals: revenue $73.463M, EPS $0.04 .
  • Gross margins improved year-over-year (non-GAAP GM 41.0% vs 37.4%), and all three businesses grew year-over-year: Precision Diagnostics +$6.7M (+17.8%), Anatomic Pathology +$2.2M (+9.5%), BioPharma Services +$1.4M (+51.3%) .
  • Sequential revenue declined vs Q4 2024 ($76.2M) due to typical Q1 seasonality (benefit resets) and Dallas weather disruptions; Biopharma services fell 33.7% sequentially off a record Q4, consistent with expected lumpiness .
  • Potential upside catalysts not in FY guide: ramp of VA hereditary cancer program and new Foundation Medicine germline partnership; management may consider guidance increases later in 2025 as visibility improves .

What Went Well and What Went Wrong

What Went Well

  • Broad-based core growth: “year over year growth in all areas of our core business for the first quarter.” Non-GAAP GM rose to 41.0% (from 37.4% a year ago) and non-GAAP EPS was positive at $0.04 .
  • Precision Diagnostics momentum: “We continue to pick up market share… especially in reproductive health… Beacon expanded carrier screening,” with average TAT ~11 days in Q1; VA and Foundation Medicine onboarding progressing well .
  • Digital pathology and AI: >85% of slides digitized; >$1M digital billing in Q1; using commercial and in-house AI to enhance quality and TAT, enabling remote reading and broader pathologist recruiting .

What Went Wrong

  • Sequential softness: Revenue declined to $73.5M from $76.2M in Q4 due to benefit resets and severe weather in Texas; Biopharma revenue fell 33.7% sequentially after a record Q4, underscoring variability .
  • Operating leverage still negative: GAAP operating loss of $19.8M; non-GAAP operating margin -9.9% despite margin gains, reflecting continued investment (S&M expected to ramp to $10–$11M in Q2–Q4) .
  • Guidance unchanged near term: Management maintained FY25 outlook despite a quarterly beat, preferring more evidence before raising; share buybacks can mathematically worsen GAAP EPS during loss periods .

Financial Results

Headline P&L vs prior year and prior quarter

MetricQ1 2024Q4 2024Q1 2025
Revenue ($M)$64.485 $76.214 $73.463
GAAP EPS$(0.45) $(0.19) $(0.37)
Non-GAAP EPS$(0.01) $0.04 $0.04
GAAP Gross Margin %34.3% 41.8% 38.6%
Non-GAAP Gross Margin %37.4% 44.2% 41.0%
Adjusted EBITDA ($M)$(3.242) $0.774 $(2.889)

Notes: Non-GAAP EPS reconciles by adding back $10.55M SBC and $1.99M amortization (with non-GAAP tax effect) .

Segment/Business Mix (Q1 2025)

SegmentYoY Change ($M)YoY Change (%)Seq Change (%)
Precision Diagnostics+$6.7 +17.8% +1.2%
Anatomic Pathology+$2.2 +9.5% -3.9%
BioPharma Services+$1.4 +51.3% -33.7%

KPIs and Balance Sheet

KPIQ4 2024Q1 2025
Cash, cash equivalents, restricted cash & marketable securities ($M)$828.6 $814.6
Cash per share$26.87 $26.60
Non-GAAP Operating Margin-4.9% -9.9%
Share repurchases (period)185k shares; $3.1M since Q4 call date ~516k shares; $8.7M in Q1
YTD 2025 repurchases (through call)—~646k shares; $10.9M
Weighted avg diluted shares (M)31.184 30.891 (non-GAAP)

Guidance Changes

MetricPeriodPrevious Guidance (Feb 28, 2025)Current Guidance (May 2, 2025)Change
Core RevenueFY 2025~$310M ~$310M Maintained
GAAP EPSFY 2025~$(1.95) ~$(1.95) Maintained
Non-GAAP EPSFY 2025~$(0.65) ~$(0.65) Maintained
End-2025 Cash & InvestmentsFY 2025~$780M ~$770M Lowered (buybacks)
Non-GAAP Gross Margin %FY 2025Slightly >40% Slightly >40% Maintained
Non-GAAP Operating Margin %FY 2025~-15% ~-15% Maintained

Management attributed the $10M reduction in end-2025 cash guidance to ~$10.9M of YTD share repurchases .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3’24)Previous Mentions (Q-1: Q4’24)Current Period (Q1’25)Trend
Product performance (Beacon, RISE, KNOVA)Momentum in lab services; FID-022 toward IND Beacon driving RH; RISE (DNA+RNA) launched; KNOVA early; Foundation Medicine partnership announced Beacon TAT ~11 days; RISE gaining adoption; KNOVA not yet significant; VA contract ramping; Foundation Medicine onboarding Improving
Gross margin/mixGM improved QoQ; efficiencies GAAP GM 41.8%; non-GAAP 44.2% Non-GAAP GM ~41% in Q1; CFO expects >40% FY and possible increase in 2H Stable-to-better
Sales & marketing investment—Plan to lift S&M from ~$32M (2024) to ~$40M (2025) Q1 S&M $7.6M; plan $10–$11M per quarter in Q2–Q4 Ramping
BioPharma services variability—+56% QoQ in Q4; noted lumpiness +51% YoY; -33.7% QoQ; pipeline deepening; variability expected Mixed
Regulatory/legal——District court overturned FDA LDT final rule; appeal possible but may be unlikely near term; monitoring Reduced near-term risk
Therapeutics (FID-007, FID-022)Phase 2 H&N ongoing; 022 preclinical 17 dosed; expect 46 by late 2025; 022 cleared for Phase 1 17 dosed/23 enrolled; 022 Phase 1 to begin; ~$25M 2025 pharma cash burn On track

Management Commentary

  • CEO: “I am pleased with the first quarter results and momentum… Our Laboratory Services business is well-positioned for growth, and we continue to progress our Therapeutic Development pipeline.”
  • CFO: “We continue to expect non-GAAP gross margins for the full year to slightly exceed 40%… and non-GAAP operating margins of approximately minus 15% for the year,” with end-2025 cash now ~$770M reflecting buybacks .
  • CCO: “We continue to pick up market share… especially in reproductive health… Beacon expanded carrier screening,” and “digitized over 85% of our slides and recognized over $1 million in digital billing… we are currently building our own AI tools” .

Q&A Highlights

  • Guidance unchanged: Management prefers to raise only with “considerable” adjustments and wants more data; buybacks can mathematically worsen GAAP EPS during loss periods, affecting optics .
  • Sales & marketing ramp: Q1 S&M $7.6M; forecast $10–$11M in each of Q2–Q4 as sales hiring accelerates across pediatric/rare disease, reproductive health, and pathology .
  • Capital deployment: Aggressive buybacks continuing; evaluating M&A to enhance distribution and technology leverage .
  • Gross margin trajectory: Non-GAAP GM ~41% in Q1; CFO sees potential improvement into 2H 2025 given mix/efficiencies .
  • BioPharma variability: Strong YoY growth but “lumpy” quarter-to-quarter; expanded capabilities (proteomics, spatial, etc.) broadening addressable work; expect variability but upward trajectory over time .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $73.463M vs $71.26M* (beat); EPS $0.04 vs -$0.1794* (beat) . Number of estimates: 3 for revenue and EPS*.
MetricQ1 2025 EstimateQ1 2025 Actual
Revenue ($M)71.26*73.463
Primary EPS ($)-0.1794*0.04
# of Estimates3*—

Values marked with * retrieved from S&P Global.

  • Forward consensus (as of report time): Q4 2025 revenue $85.38M*; EPS $0.03*; Q1 2026 revenue $82.38M*; EPS -$0.11*; Q2 2026 revenue $89.34M*; EPS -$0.08*.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with reiterated FY guide: Strong print (revenue and EPS) with unchanged FY revenue/EPS outlook suggests prudent posture; potential for upward revisions if VA and Foundation Medicine ramps materialize .
  • Margin momentum durable: Non-GAAP gross margin at ~41% with management expecting >40% for FY and possible improvement in 2H; watch mix (Precision Diagnostics strength) and operating leverage as S&M ramps .
  • Go-to-market expansion: Hiring sales across divisions and accelerating digital pathology/AI should underpin share gains in RH, rare disease, and AP through 2025–2026 .
  • Biopharma is a swing factor: Growing pipeline and capability breadth but remains inherently lumpy; expect quarter-to-quarter variability .
  • Capital allocation supportive: ~$814.6M of liquidity and active buybacks (516k shares in Q1; $8.7M) with M&A optionality; end-2025 cash guide reduced to reflect repurchases .
  • Regulatory overhang diminished: Court ruling against FDA LDT authority lowers near-term risk for lab-developed tests, though appeals remain possible .
  • Trading implications: Beat + reiterated guide, margin stability, and visible commercialization levers (VA/FMI) are near-term positives; watch sequential cadence (seasonality) and S&M ramp on operating losses into mid-2025 .

Appendix: Additional Data

  • Reconciliation items (Q1 2025): SBC expense $10.55M (CFO: cost of revenue $1.78M; R&D $3.47M; S&M $0.89M; G&A $4.41M); amortization $1.99M; non-GAAP tax effect $0.156M .
  • Cash per share: $26.60 at Q1-end; 30.832M basic shares .
  • Operating loss/interest: GAAP operating loss $19.8M; interest income $8.0M .