Fulgent Genetics, Inc. (FLGT)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered core revenue of $76.0M (+14% YoY, +6% QoQ) and non-GAAP EPS of $0.04; GAAP EPS was a loss of ($0.19). Gross margin improved to 41.8% GAAP and 44.2% non-GAAP, reflecting operational efficiencies .
• Management introduced FY 2025 guidance: core revenue $310M, GAAP EPS loss ($1.95), non-GAAP loss (~$0.65), and YE cash ~$780M; non-GAAP gross margin expected to slightly exceed 40% in 2025, with non-GAAP operating margin ~(-15%) as the company invests for growth .
• Strategic catalysts: Foundation Medicine partnership launching hereditary germline tests in March, VA contract ramping, and continued momentum in reproductive health (Beacon ECS) and AP turnaround; biopharma services grew 56% QoQ to $6.1M .
• Estimates comparison is unavailable due to S&P Global access limits; however, management noted upside potential to 2025 guidance from new wins (e.g., Foundation Medicine) not yet included .

What Went Well and What Went Wrong

• What Went Well

  • “Another strong quarter,” with Q4 growth of 14% YoY and 6% sequential; annual core revenue slightly exceeded the $280M guidance ($281.2M) .
  • Margin execution: GAAP gross margin 41.8% and non-GAAP gross margin 44.2% in Q4; adjusted EBITDA turned positive ($0.8M) .
  • Biopharma services accelerated: +56% QoQ from $3.9M to $6.1M, reflecting expanded multi-omics capabilities and pipeline; management sees path toward steadier growth as client base expands .
  • Strategic partnerships: Foundation Medicine partnership to launch germline tests in March; VA hereditary cancer contract progressing well and viewed as potentially transformational for oncology volume .
  • Quote: “We are optimistic these wins can be transformational for oncology volume” — Brandon Perthuis .

• What Went Wrong

  • Despite improvements, Q4 still posted a GAAP net loss of ($5.9M) and non-GAAP operating margin of (-4.9%); non-GAAP OpEx rose to $37.4M (vs. $32.9M in Q3) as the company invests for growth .
  • Seasonality expected to impact Q1 2025 (benefit resets, adverse weather in Texas), resulting in sequential revenue decline from Q4’s record level; no one-time lift in Q4, but timing shifts pushed new client wins into early 2025 .
  • Management cautioned biopharma services and AP can remain variable quarter-to-quarter due to project cycles and patient flows; 2025 non-GAAP operating margin guided to ~(-15%) as investment intensifies .

Financial Results

Segment metrics

KPIs

Estimates vs Actuals

Note: Wall Street consensus from S&P Global was unavailable at time of preparation due to access limits; therefore, we cannot present beat/miss vs consensus for Q4 2024.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We have shown growth in laboratory service business for the year and have good momentum in 2025…we now have a clinical pipeline” (FID-007 Phase II; FID-022 IND cleared) .
• CCO: “Delivering fourth quarter growth of 14% year-over-year and 6% sequentially…AP grew sequentially 9%…Precision Diagnostics +23% YoY; biopharma +56% QoQ” .
• CFO: “Non-GAAP gross margins…to slightly exceed 40% [in 2025]…non-GAAP operating margins at approximately minus 15% for the year as we continue to invest…core revenue ~$310M with PD $187M, AP $106M, biopharma $17M” .

Q&A Highlights

• Seasonality: Q1 2025 expected down from record Q4 due to benefit resets and adverse weather; no Q4 one-time boosts, but timing shifts pushed wins into 2025 .
• AP strategy: Focused on dermatopathology where competitors’ TATs are 2–3 weeks vs Fulgent’s 2–3 days; expanded sales team and revamped comp to drive new business .
• Guidance conservatism and upside: Foundation Medicine contribution is $0 in 2025 guide (too early to quantify); VA guide contribution is conservative and could provide upside .
• Therapeutics cash use: 2025 burn of ~$25M across R&D and clinical programs; FID-007 interim data expected at ASCO 2025; FID-022 Phase I patient enrollment targeted for Q2 2025 .

Estimates Context

• Street consensus from S&P Global for Q4 2024 EPS and revenue was unavailable due to access limits; as a result, we cannot determine beat/miss vs consensus for Q4 2024 at this time.
• Given management’s conservative 2025 guide excludes any Foundation Medicine contribution and modest VA assumptions, sell-side estimates may revisit upward revisions as these wins ramp and AP momentum continues .

Key Takeaways for Investors

• Sequential and YoY growth with margin expansion: Q4 revenue $76.2M, non-GAAP GM 44.2%, and positive non-GAAP EPS indicate operating leverage in core diagnostics .
• 2025 outlook is prudent with identifiable upside levers (Foundation Medicine, VA, KNOVA scale-up), but near-term seasonality will pressure Q1 sequential comps; monitor cadence of client onboarding .
• AP turnaround appears durable, anchored by service quality and digitization; continued sales scaling and dermatopathology focus should sustain growth despite patient-flow variability .
• Biopharma services volatility persists, but expanding capabilities and 56% QoQ growth in Q4 suggest improving trajectory; expect lumpiness but higher baseline over 2025 .
• Therapeutics is a call option funded by diagnostics cash flow: Phase II FID-007 and FID-022 Phase I could be catalysts (ASCO 2025) with ~$25M 2025 burn contemplated in guidance .
• Balance sheet strength provides optionality (M&A, buybacks): YE 2024 cash and securities $828.6M; buyback capacity remains significant; post-Q4 repurchases demonstrate capital deployment discipline .
• Trading lens: near-term—watch Q1 seasonality and early March FMI order flow; medium-term—track Beacon/KNOVA adoption, VA ramp, AP sales scaling, and margin discipline vs investment ramp to assess inflection into H2 2025 .