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Operator
Good day and welcome to the First Quarter 2021 Fulgent Genetics Earnings Call. At this time, I would like to turn the conference over to Nicole Borcia with Investor Relations. Please go ahead.
Nicole Borcia
Great, thanks. Good afternoon and welcome to the Fulgent Genetics First Quarter 2021 Financial Results Conference Call. On the call today are Ming Hsieh, Chief Executive Officer, Paul Kim, Chief Financial Officer, and Brandon Perthews, Chief Commercial Officer. The company's press release discussing its financial results is available in the investor relations section of the company's website, bulginggenetics.com. An audio replay of this call will be available shortly after the call concludes. Please visit the investor relations section of the company's website to access the audio replay. Management's prepared remarks and answers to your questions on today's call will contain forward-looking statements. These forward-looking statements represent management's estimates based on current views and assumptions, which may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ from those described in the forward-looking statements. The company assumes no obligation to update any of the forward-looking statements it may make today to reflect actual results or changes in expectations. Listeners should not rely on any forward-looking statements as predictions of future events and should listen to management's remarks today with the understanding that actual events including the company's actual future results, may be materially different in what is described in or implied by these forward-looking statements. Please review the more detailed discussions related to these forward-looking statements, including discussions of some of the risk factors that may cause results to differ from those described in these forward-looking statements contained in the company's filings with the SEC, including previously filed 10-K for the year ended December 31, 2020, which is available on the company's IR website. Management's prepared remarks, including discussions of earnings and earnings per share, contain financial measures not prepared in accordance with accounting principles generally accepted in the United States or GAAP. Management has presented these non-GAAP financial measures because it believes they may be useful to investors for various reasons, but they should not be viewed as a substitute for or superior to the company's financial results prepared in accordance with GAAP. Please see the company's press release discussing its financial statements for the first quarter of 2021 for more information. including the description of how the company calculates non-GAAP income and earnings per share, and a reconciliation of these financial measures to income and income per share, the most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Ming.
Ming Hsieh
Thank you, Nicole. Good afternoon. And thank you for joining our call today to discuss our first quarter 2021 results. I will provide some operating remarks, before handing it over to Chief Commercial Officer Brandon Perthes to provide updates on our commercial success. And finally, Paul will discuss our financial results and outlook in detail. The first quarter marks a meaningful milestone in our fight against COVID-19. It has been adjusted over a year ago since the lockdown began, and our lives were disrupted in many ways by the pandemic. While it appears that the vaccine rollout is progressing and lives slowly reaching to the state of normalcy, our thoughts remain with those who have been impacted by this pandemic. Our team has worked tirelessly over the last 12 months to provide testing solutions to customers across the country. And while our COVID-19 testing business has been sustained demand, we are turning our focus on how we can support recovery from the virus going forward and drive growth across our core NGS business. I will elaborate on these areas of the focus in a moment, but I will First touch on the highlights from the first quarter. We had a record start for the year with the Q1 revenue totaling $359 million, more than 46 times of the revenue in Q1 last year. And the increase of almost 22% compared the first quarter. We delivered approximately 3.8 million tests in the quarter. and increased roughly 19% compared to first quarter and almost 290 times the volume of the Q1 last year. What's most exciting is the growth with demands in our NGS revenue, which exceeded our expectations and a growth 115% year-over-year in the first quarter. We'll continue to drive with sustained substantial leverage, generating more than $6.59 per share in non-GAAP income in the first quarter and almost $222 million in free cash flow. Our team has continued to fire on all cylinders with great execution from our laboratory operations to our sales organizations. The growth we accomplished in the last year wouldn't have been possible without our support and dedication. And we're looking forward to grow our team and expanding our momentum in the year ahead. We have built a genetic testing business on a strong technology foundation, and that is scalable into new areas with minimum overhead and investment, and we believe this position is extremely well for substantial growth and allow us to become a leader in the very broad genomic diagnostic market. On that note, one of the recent developments I'm most excited about is the announcement of Dr. Larry Weiss. as our new chief medical officer. Dr. Weiss has an extensive background and expertise in pathology and molecular science, and has a successful track record in building healthcare business for sustainability and scale. Dr. Weiss joining us from the new genomics, where he oversaw companies' medical and R&D teams and help to expand their business during his tenure. We are very excited about Dr. Weiss' commitment to 4GEN and look forward to expand our presence in the molecular diagnosis market under his expert oversight. We see a number of opportunities in oncology testing, which we have just begun to scratch the surface. And we believe that with our scalable technology platform and track record for execution, we are extremely well positioned to capitalize on the large opportunities in this area. Moving on our COVID-19 testing business, while our RT-PCR-based testing for COVID-19 has continued to drive sustainable testing volume and the cash flow for our business. We are focusing on leveraging our success in RT-PCR testing into other areas for COVID-19 and the research. In particular, we have been working on various large-scale opportunities for NGIN-S-based testing for COVID-19, evidenced by the large contract were announced with the CDC in March. Folding the differentiation and the success in this contract, it is clear. We were one of the top received by award, the value, and the contract duration compared to other labs that were also selected by the CDC for this contract. Brandon will elaborate on this win in more detail. But we believe this contract work represents accumulations of our efforts in both NGS testing and the COVID-19 expertise. We see an additional opportunity of this nature that we are being considered for an ongoing basis. We also have continued to support vaccine rollout with our vaccine management platform. as well as community software platform. As we look ahead, we expect to continue to invest in our technology platform, our team, and our testing offering to expand our reach into new markets and the geographic area. In particular, we intend to expand our investment in our China JV in the coming months. We have had a president in China through our JV venture in 2017 in the genetic rare disease market. And we see a significant opportunity with additional investment to meaningfully grow our presence in this large and growing genetic death diagnostic market. Our operations on the ground in China leverage our same technology platform, extensive test menu, and the efficiency level management system as our infrastructure in the U.S. We are also continue to evaluate M&A opportunities that will be a natural expansion for our existing business to field our expansion. I remain very optimistic about our future opportunities in NGS testing and other areas that we are just getting our feet wet in. We have proved our ability to rapidly scale up our business with our COVID-19 testing initiatives, and we see opportunities that will underpin our momentum more broadly going forward. We look forward to discuss our progress in the coming quarters ahead. With that, I would like to turn over the call to Brandon to dive in more on the customer dynamics we saw in this quarter.
Nicole
Brandon? Thanks, Ming. We are proud of what we accomplished in the first quarter, setting numerous new financial records for our company, and we are equally proud of our company's efforts to fight the pandemic. In the first quarter, we processed over 3 million RT-PCR tests. This is roughly 284 times the total volume we processed the same quarter of last year. Since the first signs of the virus, testing has been one of the best tools in the fight against SARS-CoV-2. With a number of new cases down, we like to thank the Fulgent lab team's relentless efforts to scale, meet turnaround times, and deliver quality results played a small but meaningful role in our country's improvement. That said, cases appear to have plateaued at a high level and some states are still dealing with surges as we continue to deploy our testing resources across the United States. While we demonstrated very strong performance in COVID-19 testing in the first quarter, we also saw a record in terms of our next generation sequencing business. Our NGS volume grew 185% year over year, from 13,000 to 38,000 tests, representing sales of 16.7 million compared to 7.8 million in the first quarter of last year, an increase of 115%. This growth was driven by our clients beginning to return to a more normal run rate, continued traction in our biopharma business, and new strategic partnerships with commercial organizations. The investments we made in R&D to launch new tests in new diseases and markets has continued to create opportunities for our company, meaning most of the growth has been outside our traditional pediatric rare disease menu and includes adult neurogenetics, hereditary cancer, hereditary cardiovascular genetics, reproductive health, and sequencing as a service. With the number of new COVID-19 cases decreasing, we are seeing a bit of a paradigm shift. As people begin to return to the office, travel, attend events, etc., we are seeing testing shift to return to normalcy testing. We believe our history of delivering gold standard RT-PCR testing at scale with rapid turnaround time positions us perfectly to address this demand. Many of the screening programs are not allowing less sensitive antigen tests or rapid molecular tests to be used as the evidence shows sensitivity in asymptomatic populations to be less than RT-PCR. Several of our larger testing operations now include schools and employers. We have talked about New York City schools and Las Vegas schools on previous calls. We continue to screen students there and have been successful in detecting many positives, enabling effective isolation to minimize spread. We have also seen our picture at home test play a meaningful role as we are able to send families kits to their home for continued test monitoring. Regarding New York City specifically, we are now processing thousands of students per day across many hundreds of schools and plans call for even more testing in the future as additional students return to in-person learning. In mid-March, it was announced as part of President Biden's National Strategy for the COVID-19 Response and Pandemic Preparedness, the US Department of Health and Human Services will invest $10 billion from the American Rescue Plan to ramp up testing to help schools reopen. It is estimated that over 1 million tests per day will be needed with this new program. At this time, we are actively onboarding new schools and have additional schools in our sales pipeline as we await to hear how the new HHS National School Testing Program will be rolled out. During our fourth quarter earnings call, we mentioned Next Generation Sequencing entering the spotlight of this pandemic due to its ability to identify strains and mutations and screen for potential new mutations, and that we hit a perfect intersection of Fulgent's core competencies, and we were primed and ready to take on massive NGS testing volume. Along these lines, in the first quarter, we had the privilege to announce a monumental new contract with the CDC for COVID-19 genomic studies to track and identify new variants. awarded up to $47 million in CDC funding to support the National COVID-19 Surveillance Program for SARS-CoV-2. Such large-scale viral genomic surveys have played an important role to provide essential baseline information for national and state-level surveillance, defining important changes in transmission, identifying unusual or emerging variants, and ultimately improving public health responses and decision-making with better laboratory data. Before the award in early February, we had already initiated a pilot surveillance program partnering with public health laboratories in California. Important discoveries such as the two emerging West Coast variants, B.1.426 and B.1.429, were also confirmed in our pilot studies. These two variants were quickly identified as variants of concerns by the CDC. Our pilot study set a good baseline for the surveillance on the West Coast and helped the public health laboratories overcome issues with the complexity of sequencing and bioinformatic workflows and limited access to timely remnant samples for sequencing and analysis. With the CDC partnership, we have successfully identified the first B.1.315 in Santa Clara, the first P.1 in San Bernardino, the outbreak of P.1 in Colorado, and many more. Genomic data has proven its value to prioritize contact tracing efforts so that effective measures are deployed to control transmission. Moreover, this enables the epidemiologist sources of exposure either through travel, workplace, or other community transmission. At this point, we are sequencing thousands of positives per week from our lab and collaborator labs across the United States. And in mid-April, it was announced that the Biden administration would be dedicating $1.7 billion in funding from the American Rescue Plan to fight COVID-19 variants, helping the CDC and governors monitor, track, and defeat emerging variants. We look forward to fulfilling our part of the existing contract with the CDC and any additional opportunities we can help with. Turning to capacity, we continue to increase our testing capacity with very little investment. At this point, by continuing to improve workflows and efficiencies, Between our two laboratory locations, we can handle north of a quarter of a million tests per day. Considering the size of some of the return to normalcy opportunities, such as the national K-8 program, we think our capacity, turnaround time, mobile applications will allow us, will allow Fulgent to compete at a high level for these contracts. During the first quarter, Fulgent obtained authorization from the state of California to aid in the distribution of vaccines. Starting in March, we deployed our mobile vaccination fleet and have since serviced 40-plus locations, primarily in underrepresented communities, and have administered tens of thousands of doses in partnership with Los Angeles County. We are using the newly launched Fulgent vaccine management platform to allow patients to find a location, schedule their appointment, receive reminders, and track their vaccination. This platform is fully integrated with our test management system allowing existing clients to expand their present operations and new clients to take advantage of the full suite of services at program outset. Combined with the rapid deployability of our mobile fleet, full managed vaccination efforts usually see a turnaround of one week from site request to execution. While we continue to run one of the largest COVID-19 operations in the United States, we also continue to invest in new areas of genomics. As Ming mentioned, We are very excited to have Dr. Larry Weiss join the Fulgent team. Dr. Weiss is a renowned pathologist and will help lead our oncology product development and strategy, including strategic partnerships. We believe combining Dr. Weiss's expertise with our capabilities and technology platform, we can make significant progress in areas such as liquid biopsy, minimal residual disease, companion diagnostics, and traditional cancer testing such as FISH, flow cytometry, and immunohistochemistry. Over the last couple of years, the Fulgent test menu has exploded to include over 18,000 genetic tests, all of which have been germline testing. With Dr. Weiss on board, we intend to expand our somatic test menu and do so quickly. A question we often receive is, how does Fulgent plan to invest in the business going forward? It's a fairly straightforward answer. We are believers in our market and we believe we can continue to be a disruptive force. With our scale, cost structure, test menu, and underlying technology platform, we believe we can continue to launch new services in new markets at record pace, investing in continued organic growth. Since the founding of this company, we have built everything organically, the hard way, we like to say. By doing so, we've been able to build a lab with systems that are seamlessly integrated and not a series of acquired platforms stitched together or even more inefficient, relying on third parties for technology. With our operational capabilities, we believe we can be a consolidator in this market, and we continue to actively look for acquisitions and other strategic opportunities. In addition, as we expand our go-to-market capabilities, we believe we can recruit elite sales talent to build out a national sales force, something we have not done to date. It continues to be a dynamic time at Fulgent as we navigate this hyper-growth path. We believe we are in a strong position to continue to execute on our growth strategy and scale our business, and we look forward to keeping our investors updated as we make additional progress. With that, I would like to turn the call over to our Chief Financial Officer, Paul Kim. Paul?
Brandon
Thanks, Brandon. We again achieved record results in the first quarter with revenues totaling $359 million, an increase of more than 4,500% compared to the first quarter of 2020. Available tests in the quarter totaled almost 3.8 million, growing almost 290 times the volume of Q1 last year. The vast majority of this volume was from our business related to COVID-19. As the country began to reopen and people have begun returning to a more regular way of life, we have seen ongoing momentum in our traditional genetic testing business. Our NGS revenues in Q1 was up 115% year over year and 39% sequentially from Q4. Overall, we're very pleased with our Q1 results, which saw ongoing momentum with RT-PCR testing for COVID-19, complemented by our NGS testing for both COVID-19 and our core genetic testing business. Our ASP in the first quarter was $95, slightly higher than the 93 we saw in the fourth quarter. While our ASP has largely remained stable over the last few quarters, the modest mix of NGS tests we saw. in this quarter. Cost per test in the quarter was $20, slightly higher to even versus the fourth quarter, also due to the increased mix of NGS testing. Gross margins were comparable with the fourth quarter at 79.4%. Turning over to operating expenses, total gap operating expenses were $18.4 million in the first quarter, up from $17.3 million In the fourth quarter, non-GAAP operating expenses totaled $16.1 million, up from $14.8 million last quarter. Non-GAAP operating margin declined 252 basis points from the fourth quarter to 75.1%. As Ming discussed, we continue to invest in our business, particularly in headcount, as we look to position ourselves for sustainable growth. Adjusted EBITDA in the first quarter was $271.9 million compared to the negative $506,000 in the first quarter of 2020. On a non-GAAP basis and excluding equity-based compensation, income in the quarter was $202.9 million or $6.59 per share based on 30.8 million weighted average deleted shares outstanding. This takes into account the tax effect for stock-based compensation in the quarter. Turning over to the balance sheet, we ended the first quarter with $697.4 million in cash, cash equivalents, and marketable securities. We generated over $233 million of cash from operations in the quarter, fueling our cash balance. We did not take any action on our equity issuance programs in place in the quarter to minimize solutions to our shareholder base. On the other side of the balance sheet, contract liabilities stood at $14 million. Now moving on to Outlook. We remain very excited about our positioning, and we see an ongoing opportunity to extend our leadership in COVID-19 testing while our traditional genetic testing business should continue to expand. Our revenue guidance is in the two primary buckets, RT-PCR testing for COVID-19 and NGS testing, which includes NGS testing for COVID plus our core genetic testing business. Though we feel confident in our ability... more share in the RT-PCR market, more cognizant of the impact of the changing landscape in RT-PCR by vaccine administration, asymptomatic versus symptomatic testing, and timing and size of testing policies by various organizations with reopening. On the flip side, we see tremendous growth in our expanded capabilities as a whole, demonstrated by our diverse menu, operating experience, traction with reimbursement, reputation with customers, and quality of service, to name a few. We see durability in our NGS business, and we see additional opportunities for further growth. As such, we're raising our revenue guidance from NGS testing from $70 million previously to over $100 million in 2021. This represents organic growth of over 200% in our NGS business, or more than triple compared to the pre-COVID levels, or 32.2 million in revenues in 2019, and growth of over 170% compared to our 2020. ACE Center raised outlook for NGS revenues. We're raising our full-year revenue guidance to 830 million from 800 million previously. We expect our test volume for 2021 to be between 8.5 and 9 million, representing a growth of 93% year over year. In the second quarter of 2021, we expect revenues to be approximately 200 million. From a profitability standpoint, we continue to expect to show ongoing leverage in our business, which drops down to the bottom line and drives cash flow generation. We continue to rely on our foundational technology from operating our business which is producing gross margins of about 80% and operating margins above 70%. Even with aggressive hiring and investments we're making in our business, we anticipate growth and operating margins will remain extremely strong. As such, for full year 2021, utilizing a 27% tax rate and a share count of $31 million, we expect net income of approximately $380 million or $12.50 per share for our shareholders. excluding stock-based compensation. And looking at the balance sheet, this quarter has once again proven the viability of our business model and the power of our technology platform, given our ability to drive hundreds of millions of dollars of cash flow in a single quarter. We remain well on our path of having a billion dollars of cash, cash equivalents, and marketable securities on our balance sheet, excluding any potential M&A transactions, which we continue to evaluate on a regular basis. Thank you for joining our call today. Operator, you can now open it up for questions.
Operator
Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal.
Steven
And our first question comes from Steven Ma. Please go ahead. Congrats on the quarter. Thank you.
Steven Ma
See you. Okay. First question, on the NGS business, how much was from the core genetic testing business and how much was from COVID surveillance? And then on the new revenue guide in NGS, could you help us bridge the $70 million to the $100 million new guide on the NGS side?
Brandon
Sure. So, Steven, very little came from the CDC NGS, less than a million dollars. The bulk of the NGS business during Q1 came from our traditional genetic testing. We're actually very excited about the prospects of CDC. We see this as a multi-year opportunity. And, you know, in terms of the guide, the raise from the $70 to $100 million, we anticipate that a chunk of that will be the CDC, but the primary portion is just the growth and our ability to capture, share, and be more successful in posting higher NGOs revenue.
Steven
Okay, got it. All right. Thanks for that.
Steven Ma
And then on the, you know, maybe I'm pivoting over to the COVID-19 surveillance opportunity. So, you know, you mentioned the $1.7 billion opportunity for American Rescue Plan. Maybe, could you give us some sense how, you know, that might transition throughout the year? Because I know, you know, Biden is setting up these six Centers of Excellence for Genetic Epidemiology Studies. Maybe give a sense on your guys' thoughts on on the split of that 1.7 million between those centers and between, you know, send-out services such as Folgen?
Nicole
Hey, Sam, it's Brandon. You know, I think it's to be determined. I think what we can say is the initial grant that we received from the CDC is, you know, multiple larger than any other grants combined to date. which was, you know, I think a real sign of faith in Fulgian's abilities and capabilities. And so far, we've performed at a very high level for the CDC. We've been doing this for a few weeks now. The collaboration with the CDC has been fantastic. We're turning out results quickly, a lot of NGS results, making new discoveries. And, you know, so I think the working relationship, you know, couldn't be stronger. So, Hopefully that bodes well for Fulgine in the future as these new programs get rolled out, and hopefully we can continue to be included in them.
Brandon
Steven, just one other thing. The NGS revenues for Q1, it was a little less than $16 million, and less than a million dollars of that came from the CDC.
Steven Ma
Okay, got it. And the balance of some of the core genetic, traditional genetic testing.
Brandon
That's right. And that actually surpassed our expectations. from what we thought that we can achieve when we initially laid out our $70 million guidance, which gives us even more confidence in our ability to achieve more than $100 million this early on in the year.
Steven Ma
Okay, got it. And then maybe a follow-up on the core genetic testing business. So, what drove the strength? I know you guys mentioned, you know, increasing, you know, increasing menu and increasing adoption. But, you know, has there been any progress on moving into network with the large payers?
Nicole
Hey, Brandon, again. Not measurably, Stephen. We're having those conversations. We are now quite visible to those payers. They're seeing the claims from our COVID-19 claims. So we're having those conversations more so than ever, but no meaningful new contracts, so to speak, national contracts, right? So we haven't become in network with United or Cigna or something like that. Had we done that, we certainly would have updated the investment community. So No, the growth is not coming from penetrating the direct pay market. It's coming from execution on our traditional business, taking advantage of our industry-leading cost structure, being more aggressive on our pricing. Some return to normalcy effect, right? No doubt about that. And some of these partnerships we've established have done well for us, and we continue to onboard clients who are taking advantage of our expanded test menu, and again, at these discounted pricing capitalizing on our cost structure.
Brandon
We actually see that as upside, Stephen, meaning that should we land even one of those contracts, we'll probably have to adjust our NGS guidance, again, and the same thing for the COVID as well. So, you know, since we're on the topic of guidance, I'd like to make a few commentaries about how we established the guidance, the original $800 million, the assumptions that went into it, and the reason and why we're upping the guidance for our base business now after the first quarter. So when we initially formed the guidance, we did take into account a number of things. You know, including aggressive vaccination timeline, which is happening, a drop-off in positivity rates. We didn't think that it would be this low in California. A significant shift from symptomatic to asymptomatic testing. All those things that we incorporated, which was conservative when we initially laid out the guidance, have, you know, taken hold and we're experiencing it today. But we're not changing our guidance for the COVID because we have plenty of conservatism built in there. We continue to capture market share, and should we land some of these big opportunities that Brandon has mentioned that's coming from the administration, particularly for the schools, the COVID revenues and the RTPCR revenues might have more longevity and upside to it. Now, in turning to the NGS portion of the business, we made a lot of comments in the previous quarters. about how the strength of the company and the volumes that we're doing, the quality, the reputation, would aid our base business. And that's exactly what's happening. I mean, we've experienced throughout the course of 2020, as well as in the early part of this year, expanded capabilities, homing in an operational protocol, validation, validation from the CDC, a lower cost per test. And the cost per test and our cost structure It's probably one of the lowest in the industry, whether you're looking at the RT-PCR or the traditional NGS. So how we're going to be taking the company in terms of our approach for investment is we're going to get more aggressive this year, particularly in the areas of R&D as well as sales and marketing. And we're going to get more aggressive in terms of our price because we believe that the cost structure that we have for this company is unlike the other companies in the diagnostic space.
Steven Ma
Okay, great, thanks. And maybe one last quick one. How much vaccination revenue from your software as a service business was in Q1, and how much of vaccine revenue is in the new guide? Thank you.
Brandon
Yeah, so if we did this call over a year ago, we probably would have called that out, but because the numbers are just getting so large at the company, it's an immaterial amount, but it's not an insignificant amount, meaning that we continue to record those revenues. and it is a driver for our business. Not in a meaningful kind of a way, but as they get more traction, we might call those numbers out separately.
Steven
Okay, thank you.
Operator
Thank you. Our next question comes from Kevin DeGieter. Please go ahead.
Kevin DeGieter
Hi, this is Susan calling in for Kevin DeGieter. I have a few questions. So it's no secret we follow your California testing volume, and we've noticed a change in the competitive landscape. Can you comment on market share trends that you're seeing and, you know, what other competitors might be offering that would make them more attractive? And then a couple other questions.
Nicole
Hey, certainly, Susan. You know, so we look at the California market for Fulgen. You know, it was largely driven by drive-through operations. And a lot of the patients that are going to Fulgen, they think they may have the virus. And it's no secret that California's done a good job decreasing the amount of cases on the West Coast. So as the number of cases come down, the number of drive-through tests that we were doing is coming down. So what we're seeing is as the number of, you know, cases come down, there's sort of an inverse reaction, which is more back to work, back to school. And for whatever reason, we're just particularly strong in those areas outside California. So that's not to say we're not focused on driving more return to normalcy type opportunities on the West Coast. It's just kind of the nature of our business and sort of where our business fell in place. So, you know, we're seeing a lot of these, you know, I mentioned as a paradigm shift, right, really see more return to normalcy type testing. And we just have a large presence in that type of testing across the United States. It's not you know, so centered in the West Coast as our drive-thru testing business was.
Kevin DeGieter
Okay, great. I'm glad that I was not totally off. So my follow-up is, you know, I understand California drive-thru testing. Where in the U.S. do you see kind of your market share growing in this back-to-normal testing? You say it's like New York, just kind of getting an idea of the geography. Okay.
Nicole
I think at this point we do business in every single state, including Alaska and Hawaii. I know Alaska for sure. So we're national. We've had to show that for some of these large contracts that we've been on. They want to see someone who can handle a national business, a national customer base. So we're in every single state. You know, it's hard to single out states, but New York has been incredibly important for us, right? Not only from a revenue perspective, but from a credibility perspective. It's the largest school district in the United States. partners with Fulgen to run their testing up there. And we've done so in a beautiful way. I mean, we've done a spectacular job together. Their efforts, our efforts have been really, really successful in New York. But, you know, we're Midwest, Southeast, South. I mean, we have large customers in many states. And there's not a lot of sort of geographical concentration outside of New York, meaning that's probably one of our larger geographies.
Kevin DeGieter
Just one more question. So, you know, the CDC contract for NGS is really big. Do you guys expect to get any other surveillance NGS-type contracts, maybe in China or just private companies looking to do research?
Ming Hsieh
Well, Susan, this pandemic, it is global. Definitely, we are getting calls from all over the place. to see whether we can play a role in some of those outbreaks. We are working on the worst of the opportunities, and we'll update to you in the street once we land the contract.
Nicole
Yeah, and just kind of thinking back, just thinking real quick on your last question, you know, I have to say some of the surveillance programs we've implemented, you know, Some of these large employers we have, some very large biotech companies and large school districts, and we've detected hundreds, hundreds of positives, right, that were otherwise coming to work or going to school, either mildly ill or perhaps asymptomatic. So we're seeing these programs work. We're able to identify these hundreds of people, get them isolated, get them home, test them while they're home, you know, and when they're back, you know, bring them back into the workforce or bring them back, you know, in a school and You know, we think, you know, the isolation of these positives asymptomatically or early symptomatic is going to be really powerful in controlling the spread.
Kevin DeGieter
Great. Thank you so much. That's all I have.
Operator
Thank you. And once again, if you would like to ask a question, please press star 1. Our next question will come from Erin Wright. Please go ahead.
Erin Wright
Hi. This is Katie Trihane on for Erin. I have a few questions for you here. How are you thinking about the cadence of COVID testing over the balance of the year, particularly as you have some of these back to school, back to life type of testing opportunities?
Nicole
Well, Katie, we hope the number of cases continue to come down, right? This country needs the number of cases to continue to come down. We mentioned it's plateaued at a high level, and certain states are still struggling with it, and certainly the globe is still struggling with it. But we want the number of cases to come down. And we think as the number of cases come down, we continue to reopen. We continue to get back to work, back to school, back to travel, back to cruising on cruise lines, things we love to do, right? But we think there's going to be a big role for testing in all of that. So The national school program is certainly unprecedented. It's estimated to be over a million tests per day is going to be needed on a national level to screen the K-8 grades. So we see the cadence picking up significantly from employers, from travel, and other organizations that are going to need to test to enable a safe and successful return to full normalcy.
Brandon
Katie, this is Paul. You talked about the cadence, and like I indicated in the commentary about the guidance, when we initially laid out our guidance, we took into account pretty conservative assumptions about the impact of the vaccine and the positivity rates. So, if you take a look at what we have incorporated into our business plan, as well as all the analyst models that are out there, I think everyone has our COVID and the RT-PCR revenues going down. So that's fully been baked in. I think if you take a look at our business, the diversification of our customers and the strength of where the RT-PCR revenues are coming from, we have less customer concentration than we've had ever. I mean, L.A. County has one customer that continues to keep popping up. But as Brandon mentioned, New York, Colorado, Ohio, Florida, Wisconsin, I mean, all these are big customers. So based on our positioning, because we do have conservative assumptions built into the RT-PCR, Should the level of testing pick up for various different reasons, we think that those assumptions might have to be re-evaluated. But the way things sit right now, we feel comfortable with the estimates that are out there for our COVID-19 RT-PCR for the balance of the year.
Erin Wright
Okay, got it. That's helpful. And then maybe on the Salesforce commentary that you that you had mentioned. I mean, what does the timing look like for building that out? And what exactly are, I mean, how exactly do you expect that to play out? You know, how is that? Yeah, so thanks.
Nicole
Yeah, it's happening in real time. You know, it's To build a national Salesforce, it doesn't happen overnight, right? So we don't have a hard deadline and we want to have the positions filled, but it's happening in real time, a bit opportunistic now, so to speak, as we are getting a lot of talent interested in joining Fulgent. We're really happy to have Dr. Weiss on board. I think he's an amazing talent and he'll be helpful in building out the commercial side too, right? So It's happening in real time. We think we've positioned our company, our capabilities, and our go-to-market strategy in a way where we will be able to recruit elite salespeople internationally. I think we're going to focus primarily on the United States initially as we build internationally, but I think – From the international growth perspective, we do have some more strategic type opportunities in international markets that may allow us to penetrate those markets a little bit faster than just building organic sales teams internationally.
Ming Hsieh
Yeah, Katie, it's not that we don't have sales force. We have very, very effective sales force. But we're not satisfied. We're not stopping there. We'll continue adding the talent and sales force to broaden our coverage. and successfully when we introduce a new test, a new platform.
Katie
Okay, got it. That's helpful. Thank you.
Steven
Thanks, Katie.
Operator
Thank you, and we have no additional questions at this time.
Steven
All right. Great.
Katie
Thanks, everyone, for joining us on our call today.
Steven
Thank you. Bye-bye.
Operator
And this concludes today's call. Thank you all for your participation. You may now disconnect.
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