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Fulgent Genetics, Inc. (FLGT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered core revenue of $81.7M (+16% y/y, +11% q/q) and non-GAAP EPS of $0.07; GAAP gross margin expanded to 42.1% and non-GAAP gross margin to 44.2% . Versus consensus, revenue beat by ~$5.6M and EPS surprised positively vs a negative estimate, a clear catalyst for the stock narrative shift to execution in core lab services .*
  • Management raised FY25 core revenue guidance to $320M (from $310M) and improved non-GAAP EPS guidance to a loss of $0.35 (from $0.65), while GAAP EPS guidance widened to a loss of $2.10 reflecting a one-time, non-cash impairment .
  • Segment momentum was broad-based: Precision Diagnostics (+7% q/q), Biopharma Services (+54% q/q), and Anatomic Pathology (+11% q/q); COVID testing was negligible .
  • Strategic progress included EU CE Mark for FulgentExome and Fulgent PLM to support European expansion and differentiated genome/exome capabilities; managed care coverage expanded by 35M covered lives across 20+ agreements .
  • Risks include elevated operating expenses for R&D and sales build-out, an impairment charge ($9.9M), and a continuing legal overhang highlighted by external “investor alert” press releases referencing a DOJ civil investigative demand disclosed earlier in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Broad-based organic growth in core lab services: core revenue reached $81.7M (+16% y/y, +11% q/q) with COVID testing negligible .
  • Strong segment execution: Precision Diagnostics (+7% q/q), Biopharma Services (+54% q/q), Anatomic Pathology (+11% q/q). “We believe we are firing on all cylinders and investing in the right areas to continue to expand our capabilities and commercial reach.” — CCO Brandon Perthuis .
  • Margin improvement: GAAP gross margin 42.1% and non-GAAP gross margin 44.2%, with about half of the increase due to a one-time accounting adjustment and the rest from operational strength and efficiency .
  • Guidance raised: FY25 core revenue to $320M; non-GAAP EPS improved to a loss of $0.35; management emphasized momentum and execution into 2H25 .

What Went Wrong

  • GAAP net loss widened to $19.0M in Q2, including a $9.9M one-time, non-cash impairment of a prior investment; adjusted EBITDA remained negative at -$3.0M .
  • Operating expenses increased (GAAP OpEx $54.1M vs $48.1M in Q1) given higher R&D for clinical studies and increased sales and marketing spend with the sales team expansion .
  • AP seasonality risk cited for 2H, particularly around dermatological procedures; while management is optimistic, they cautioned against extrapolating Q2 AP strength until it materializes .

Financial Results

Core Actuals and Margins

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$76.214 $73.463 $81.803
Core Revenue ($USD Millions)$76.0 $73.5 $81.7
GAAP EPS ($USD)$0.04 ($0.37) ($0.62)
Non-GAAP EPS ($USD)$0.04 $0.04 $0.07
GAAP Gross Margin (%)41.8% 38.6% 42.1%
Non-GAAP Gross Margin (%)44.2% 41.0% 44.2%
Adjusted EBITDA ($USD Millions)$0.774 ($2.889) ($2.992)
GAAP Operating Loss ($USD Millions)($16.135) ($19.795) ($19.713)
Non-GAAP Operating Margin (%)(4.9%) (9.9%) (9.4%)

Actuals vs Wall Street Consensus

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD Millions)$74.86*$71.26*$76.21*
Revenue Actual ($USD Millions)$76.214 $73.463 $81.803
Primary EPS Consensus Mean ($USD)($0.123)*($0.179)*($0.185)*
Primary EPS Actual ($USD)$0.04 $0.04 $0.07

Values retrieved from S&P Global.*

Segment Performance

  • Q2 Sequential Growth | Segment | Q2 2025 Sequential Growth | |---------|---------------------------| | Precision Diagnostics | +7% | | Biopharma Services | +54% | | Anatomic Pathology | +11% |

  • Q1 Year-over-Year Growth | Segment | Q1 2025 YoY Growth | |---------|--------------------| | Precision Diagnostics | +17.8% (+$6.7M) | | Biopharma Services | +51.3% (+$1.4M) | | Anatomic Pathology | +9.5% (+$2.2M) |

KPIs

KPIQ4 2024Q1 2025Q2 2025
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$828.6 $814.6 $777.5
Share Repurchases (Shares / $USD Millions)N/A516,000 / $8.7 130,000 / $2.2
COVID Testing RevenueNegligible (implied) N/ANegligible

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core Revenue ($USD Millions)FY 2025$310 $320 Raised
GAAP EPS ($USD)FY 2025($1.95) ($2.10) Lowered (reflects impairment)
Non-GAAP EPS ($USD)FY 2025($0.65) ($0.35) Improved
Non-GAAP Gross Margin (%)FY 2025N/ASlightly >40% Initiated
Non-GAAP Operating Margin (%)FY 2025(15%) (prior) (13%) Improved
Year-end Cash & Securities ($USD Millions)FY 2025~$770 ~$770 Maintained

Earnings Call Themes & Trends

TopicQ4 2024Q1 2025Q2 2025Trend
Managed Care CoverageNot highlightedHiring S&M; RCM strength implied 20+ agreements; +35M covered lives Strengthening access/realization
Exome/Genome with RNANot highlightedLaunched RISE (RNA-Integrated WGS) and early momentum New PCR-free WGS; RNA integrated; higher diagnostic yield; AAP guideline tailwind Accelerating adoption/innovation
Anatomic PathologyNot highlightedDigital pathology scale-up (85% scanned; $1M digital billing) +11% q/q; geographic sales expansion; seasonality caution Sustained turnaround; cautious 2H
VA & Foundation MedicineNot highlighted“Nice momentum” onboarding; demand evident VA contributed to PD; FMI revenue not material yet but strengthening Building commercial pull-through
LDT Regulation / LegalN/ADistrict court ruling overturns FDA LDT final rule (near-term regs unlikely) External “investor alert” references DOJ CID (disclosed 2/28) Regulatory relief vs separate legal overhang
Therapeutics PipelinePreclinical emphasisFID-007 Phase 2 progressing; FID-022 to start Phase 1 FID-007: 32 dosed; broadened eligibility; FID-022 ongoing; ANP IP acquisition Advancing, IP consolidated

Management Commentary

  • CEO: “We have shown both sequential and year-over-year growth in laboratory services… Our first clinical candidate, FID-007, is progressing through a phase two clinical trial… We expect to complete patient enrollment by the end of this year with data readout in 2026.” .
  • CCO: “We are one of the only laboratories who integrates RNA sequencing into the interpretation… we executed over 20 new agreements, adding over 35 million new covered lives to our in-network contracts.” .
  • CFO: “To reflect current business performance, we're adjusting our revenue outlook… increasing revenue guidance from $310 million to $320 million for 2025… We expect non-GAAP operating margins to improve from a -15% to -13% for the year.” .

Q&A Highlights

  • Guidance drivers: PD improvement (~$7M) includes VA contribution; Foundation Medicine partnership strengthening but Q2 contribution not material yet .
  • AP momentum and seasonality: Growth driven by sales expansion into new geographies and operational execution; some seasonality expected in late Q3–Q4, but pipeline may offset .
  • Gross margin dynamics: About half of the Q2 gross margin increase was a one-time accounting adjustment; the rest from underlying business strength and efficiency .
  • Therapeutics timeline: FID-007 enrollment accelerating with broadened eligibility; aim to complete Phase 2 enrollment by YE25 with readout in 2026 .

Estimates Context

  • Q2 2025 beat: Revenue $81.8M vs $76.21M consensus; EPS $0.07 vs ($0.185) consensus — both significant positive surprises .*
  • Q1 2025 beat: Revenue $73.46M vs $71.26M; EPS $0.04 vs ($0.179) — execution ahead of expectations .*
  • Q4 2024 beat: Revenue $76.21M vs $74.86M; EPS $0.04 vs ($0.123) — upside vs modest expectations .*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Broad-based core growth with margin expansion and multi-quarter estimate beats suggest improving execution and pricing/realization, supported by expanded managed care coverage and stronger RCM .
  • Guidance raise (core revenue to $320M; non-GAAP EPS loss narrowed to $0.35) reframes FY25 trajectory; GAAP EPS headwind reflects one-time impairment rather than operational softness .
  • AP turnaround looks durable with expanded sales footprint and digital pathology leverage, though seasonality warrants caution on near-term extrapolation .
  • Differentiated WGS/exome (PCR-free; RNA integration) and CE Mark in EU provide credible product and geographic expansion vectors, with pediatric and rare disease guidelines as tailwinds .
  • Near-term trading implications: Positive estimate revisions likely for revenue/EPS; watch for sustainability of gross margin excluding one-time adjustments and AP seasonality in Q3–Q4 .
  • Medium-term thesis: Managed care scale, platform breadth, and biopharma services diversification can underpin growth; therapeutics pipeline (FID-007/022) is a longer-dated option with de-risked delivery IP post-ANP acquisition .
  • Risk monitor: Elevated OpEx from R&D and sales build, continued adjusted EBITDA losses, and the external legal overhang (DOJ CID reference) — track disclosures and any resolution timing .